G.R. No.
201701 June 3, 2013 Responding through an email, dated July 16, 2007, Rivera admitted the fund
UNILEVER PHILIPPINES, INC., Petitioner,
vs.
MARIA RUBY M. RIVERA, Respondent.
DECISION
MENDOZA, J.:
Subject of this disposition is the petition for review on certiorari 1 under Rule 45
of the Rules of Court filed by petitioner Unilever Philippines, Inc. (Unilever)
questioning the June 22, 2011 Decision2 and the April 25, 2012 Resolution3 of
the Court of Appeals (CA)-Cagayan de Oro City, in CA G.R. SP No. 02963-MIN, an
Illegal Dismissal case filed by respondent Maria Ruby M. Rivera (Rivera). The CA
affirmed with modification the March 31, 2009 Resolution of the National Labor
Relations Commission (NLRC) finding Rivera's dismissal from work to be valid
as it was for a just cause and declaring that she was not entitled to any
retirement benefit. The CA, however, awarded separation pay in her favor as a
measure of social justice.
The Facts
Unilever is a company engaged in the production, manufacture, sale, and
distribution of various food, home and personal care products, while Rivera was
employed as its Area Activation Executive for Area 9 South in the cities of
Cotabato and Davao. She was primarily tasked with managing the sales,
distribution and promotional activities in her area and supervising Ventureslink
International, Inc. (Ventureslink), a third party service provider for the
company’s activation projects. Unilever enforces a strict policy that every trade
activity must be accompanied by a Trade Development Program (TDP) and that
the allocated budget for a specific activity must be used for such activity only. 4
Sometime in 2007, Unilever’s internal auditor conducted a random audit and
found out that there were fictitious billings and fabricated receipts supposedly
from Ventureslink amounting to ₱11,200,000.00. It was also discovered that
some funds were diverted from the original intended projects. Upon further
verification, Ventureslink reported that the fund deviations were upon the
instruction of Rivera.
On July 16, 2007, Unilever issued a show-cause notice to Rivera asking her to
explain the following charges, to wit: a) Conversion and Misappropriation of
Resources; b) Breach of Fiduciary Trust; c) Policy Breaches; and d) Integrity
Issues.
diversions, but explained that such actions were mere resourceful utilization of
budget because of the difficulty of procuring funds from the head office.5She
insisted that the diverted funds were all utilized in the company’s promotional
ventures in her area of coverage.
Through a letter, dated August 23, 2007, Unilever found Rivera guilty of serious
breach of the company’s Code of Business Principles compelling it to sever their
professional relations. In a letter, dated September 20, 2007, Rivera asked for
reconsideration and requested Unilever to allow her to receive retirement
benefits having served the company for fourteen (14) years already. Unilever
denied her request, reasoning that the forfeiture of retirement benefits was a
legal consequence of her dismissal from work.
On October 19, 2007, Rivera filed a complaint for Illegal Dismissal and other
monetary claims against Unilever.
On April 28, 2008, the Labor Arbiter (LA) dismissed her complaint for lack of
merit and denied her claim for retirement benefits, but ordered Unilever to pay
a proportionate 13th month pay and the corresponding cash equivalent of her
unused leave credits. The decretal portion of the LA decision reads:
WHEREFORE, premises considered, judgment is hereby rendered dismissing for
lack of merit the illegal dismissal complaint. However, UNILEVER PHILIPPINES,
INC. is hereby ordered to pay complainant the total amount of PESOS: FIFTY
SEVEN THOUSAND EIGHTY TWO & 90/100 ONLY (₱57,082.90) representing
proportionate 13th month pay and unused leave credits.
The complaint against individual respondents Recto Sampang and Alejandro
Concha are likewise dismissed for it was not shown that they acted in bad faith
in the dismissal of complainant. Moreover, their legal personality is separate
and distinct from that of the corporation.
All other money claims are dismissed for lack of basis.6
On appeal, the NLRC partially granted Rivera’s prayer. In its Resolution, dated
November 28, 2008, the NLRC held that although she was legally dismissed
from the service for a just cause, Unilever was guilty of violating the twin notice
requirement in labor cases. Thus, Unilever was ordered to pay her ₱30,000.00
as nominal damages, retirement benefits and separation pay. The dispositive
portion reads:
1
WHEREFORE, foregoing premises considered, the appeal is PARTIALLY
GRANTED. The assailed Decision dated 28 April 2008 is hereby MODIFIED in
the sense that respondent UNILEVER PHILIPPINES, INC. is hereby ordered to
pay the following sums:
1. The amount of ₱30,000.00 representing nominal damages for
violation of complainant’s right to procedural due process;
2. Retirement benefits under the company’s applicable retirement
policy or written agreement, and in the absence of which, to pay
complainant her retirement pay equivalent to at least one-half (1/2)
month salary for every year of service, a fraction of at least six (6)
months being considered as one whole year;
3. Separation pay under the company’s applicable policy or written
agreement, and in the absence of which, to pay separation pay
equivalent to at least one-half (1/2) month salary for every year of
service, a fraction of at least six (6) months being considered as one
whole year.
The rest of the Decision is hereby AFFIRMED.
SO ORDERED.7
Unilever asked for a reconsideration of the NLRC decision. In its Resolution,
dated March 31, 2009, the NLRC modified its earlier ruling by deleting the
award of separation pay and reducing the nominal damages from ₱30,000.00 to
₱20,000.00, but affirmed the award of retirement benefits to Rivera. The fallo
reads:
WHEREFORE, foregoing premises considered, the instant Motion for Partial
Reconsideration is PARTLY GRANTED. The Resolution dated 28 November
2008 of the Commission is hereby
RECONSIDERED as follows:
(1)The award of separation pay is hereby deleted for lack of factual and
legal basis; and
(2)The award of nominal damages is hereby tempered and reduced to
the amount of ₱20,000.00.
The rest of the award for retirement benefits is affirmed in toto.
SO ORDERED.8
Unsatisfied with the ruling, Unilever elevated the case to CA-Cagayan de Oro
City via a petition for certiorari under Rule 65 of the Rules of Court.
On June 22, 2011, the CA affirmed with modification the NLRC resolution.
Justifying the deletion of the award of retirement benefits, the CA explained
that, indeed, under Unilever’s Retirement Plan, a validly dismissed employee
cannot claim any retirement benefit regardless of the length of service. Thus,
Rivera is not entitled to any retirement benefit. It stated, however, that there
was no proof that she personally gained any pecuniary benefit from her
infractions, as her instructions were aimed at increasing the sales efficiency of
the company and competing in the local market. For said reason, the CA
awarded separation pay in her favor as a measure of social justice.9 The decretal
portion of the CA decision reads:
WHEREFORE, the assailed Resolution dated March 31, 2009 of the NLRC
(Branch 5), Cagayan De Oro City is hereby AFFIRMED with MODIFICATION.
Consequently, UNILEVER is directed to pay MARIA RUBY M. RIVERA the
following:
a) Separation pay, to be computed based on the company’s applicable
policy or written agreement, or in the absence thereof, the equivalent of
at least one-half (1/2) month salary for every year of service, a fraction
of at least six (6) months being considered as one whole year;
b) ₱20,000.00 as nominal damages; and
c) Proportionate 13th month pay and unused leave credits, to be
computed based on her salary during the period relevant to the case.
The award of retirement benefits is hereby DELETED.
SO ORDERED.10
Unilever filed a motion for partial reconsideration, 11 but it was denied in a
Resolution, dated April 25, 2012.
Hence, this petition.12
2
In support of its position, Unilever submits for consideration the following
GROUNDS
I.
THE COURT OF APPEALS SERIOUSLY ERRED AND GRAVELY ABUSED ITS
DISCRETION IN GRANTING AFFIRMATIVE RELIEFS IN FAVOR OF RIVERA EVEN
IF SHE DID NOT FILE ANY PETITION FOR CERTIORARI TO CHALLENGE THE
NLRC RESOLUTIONS.
II.
THE COURT OF APPEALS SERIOUSLY ERRED AND GRAVELY ABUSED ITS
DISCRETION IN AWARDING SEPARATION PAY IN FAVOR OF RIVERA
CONSIDERING THAT THE LATTER WAS VALIDLY DISMISSED FROM
EMPLOYMENT BASED ON JUST CAUSES UNDER THE LAW.
III.
THE COURT OF APPEALS SERIOUSLY ERRED AND GRAVELY ABUSED ITS
DISCRETION IN RULING THAT THE COMPANY VIOLATED RIVERA’S RIGHT TO
PROCEDURAL DUE PROCESS BEFORE TERMINATING HER EMPLOYMENT, AND
CONSEQUENTLY, IN AWARDING NOMINAL DAMAGES. 13
Unilever argues that Rivera did not file any separate petition for certiorari
before the CA. Neither did she file any comment on its petition. Hence, it was
erroneous for the CA to grant an affirmative relief because it was inconsistent
with the doctrine that a party who has not appealed cannot obtain from the
appellate court any affirmative relief other than the ones granted in the
appealed decision. The petitioner stresses that Rivera misappropriated
company funds amounting to millions of pesos and that granting her separation
pay undermines the serious misdeeds she committed against the company.
Moreover, the length of her service with Unilever does not mitigate her offense,
but even aggravates the depravity of her acts.14
The petition is partly meritorious.
The pivotal issue in the case at bench is whether or not a validly dismissed
employee, like Rivera, is entitled to an award of separation pay.
As a general rule, an employee who has been dismissed for any of the just
causes enumerated under Article 28215of the Labor Code is not entitled to a
separation pay.16 Section 7, Rule I, Book VI of the Omnibus Rules Implementing
the Labor Code provides:
Sec. 7. Termination of employment by employer. — The just causes for
terminating the services of an employee shall be those provided in Article 282
of the Code. The separation from work of an employee for a just cause does not
entitle him to the termination pay provided in the Code, without prejudice,
however, to whatever rights, benefits and privileges he may have under the
applicable individual or collective agreement with the employer or voluntary
employer policy or practice.
In exceptional cases, however, the Court has granted separation pay to a legally
dismissed employee as an act of "social justice" or on "equitable grounds." In
both instances, it is required that the dismissal (1) was not for serious
misconduct; and (2) did not reflect on the moral character of the
employee.17 The leading case of Philippine Long Distance Telephone Co. vs.
NLRC18 is instructive on this point:
We hold that henceforth separation pay shall be allowed as a measure of social
justice only in those instances where the employee is validly dismissed for
causes other than serious misconduct or those reflecting on his moral character.
Where the reason for the valid dismissal is, for example, habitual intoxication or
an offense involving moral turpitude, like theft or illicit sexual relations with a
fellow worker, the employer may not be required to give the dismissed
employee separation pay, or financial assistance, or whatever other name it is
called, on the ground of social justice.
A contrary rule would, as the petitioner correctly argues, have the effect, of
rewarding rather than punishing the erring employee for his offense. And we do
not agree that the punishment is his dismissal only and the separation pay has
nothing to do with the wrong he has committed. Of course it has. Indeed, if the
employee who steals from the company is granted separation pay even as he is
validly dismissed, it is not unlikely that he will commit a similar offense in his
next employment because he thinks he can expect a like leniency if he is again
found out.1âwphi1 This kind of misplaced compassion is not going to do labor in
general any good as it will encourage the infiltration of its ranks by those who
do not deserve the protection and concern of the Constitution.
The policy of social justice is not intended to countenance wrongdoing simply
because it is committed by the underprivileged. At best, it may mitigate the
3
penalty but it certainly will not condone the offense. Compassion for the poor is
an imperative of every humane society but only when the recipient is not a
rascal claiming an undeserved privilege. Social justice cannot be permitted to be
refuge of scoundrels any more than can equity be an impediment to the
punishment of the guilty. Those who invoke social justice may do so only if their
hands are clean and their motives blameless and not simply because they
happen to be poor. This great policy of our Constitution is not meant for the
protection of those who have proved they are not worthy of it, like the workers
who have tainted the cause of labor with the blemishes of their own character. 19
In the subsequent case of Toyota Motor Philippines Corporation Workers
Association (TMPCWA) v. National Labor Relations Commission, 20 it was further
elucidated that "in addition to serious misconduct, in dismissals based on other
grounds under Art. 282 like willful disobedience, gross and habitual neglect of
duty, fraud or willful breach of trust, and commission of a crime against the
employer or his family, separation pay should not be conceded to the dismissed
employee."21 In Reno Foods, Inc, v. Nagkakaisang Lakas ng Manggagawa (NLM)-
Katipunan,22 the Court wrote that "separation pay is only warranted when the
cause for termination is not attributable to the employee’s fault, such as those
provided in Articles 283 and 284 of the Labor Code, as well as in cases of illegal
dismissal in which reinstatement is no longer feasible. It is not allowed when an
employee is dismissed for just cause."23
In this case, Rivera was dismissed from work because she intentionally
circumvented a strict company policy, manipulated another entity to carry out
her instructions without the company’s knowledge and approval, and directed
the diversion of funds, which she even admitted doing under the guise of
shortening the laborious process of securing funds for promotional activities
from the head office. These transgressions were serious offenses that warranted
her dismissal from employment and proved that her termination from work
was for a just cause. Hence, she is not entitled to a separation pay.
More importantly, Rivera did not appeal the March 31, 2009 ruling of the NLRC
disallowing the award of separation pay to her. It was Unilever who elevated
the case to the CA. It is axiomatic that a party who does not appeal, or file a
petition for certiorari, is not entitled to any affirmative relief. 24 Due process
prevents the grant of additional awards to parties who did not appeal. 25 An
appellee who is not an appellant may assign errors in his brief where his
purpose is to maintain the judgment, but he cannot seek modification or
reversal of the judgment or claim affirmative relief unless he has also
appealed.26 It was, therefore, erroneous for the CA to grant an affirmative relief
to Rivera who did not ask for it.
Lastly, Unilever questions the grant of nominal damages in favor of Rivera for
its alleged non-observance of the requirements of procedural due process. It
insists that she was given ample opportunity "to explain her side, interpose an
intelligent defense and adduce evidence on her behalf." 27
The Court is not persuaded. Section 2, Rule XXIII, Book V of the Rules
Implementing the Labor Code expressly states:
Section 2. Standard of due process: requirements of notice.
— In all cases of termination of employment, the following standards of due
process shall be substantially observed.
I. For termination of employment based on just causes as defined in Article 282
of the Code:
(a) 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;
(b) A hearing or conference during which the employee concerned,
with the assistance of counsel if the employee so desires, is given
opportunity to respond to the charge, present his evidence or rebut the
evidence presented against him; and
(c) A written notice of termination served on the employee indicating
that upon due consideration of all the circumstance, grounds have been
established to justify his termination.
In case of termination, the foregoing notices shall be served on the employee’s
last known address.
King of Kings Transport, Inc. v. Mamac28 detailed the steps on how procedural
due process can be satisfactorily complied with. Thus:
To clarify, the following should be considered in terminating the services of
employees:
(1) The first written notice to be served on the employees should
contain the specific causes or grounds for termination against them,
and a directive that the employees are given the opportunity to submit
4
 their written explanation within a reasonable period. "Reasonable
opportunity" under the Omnibus Rules means every kind of assistance
that management must accord to the employees to enable them to
prepare adequately for their defense. This should be construed as a
period of at least five (5) calendar days from receipt of the notice to
give the employees an opportunity to study the accusation against
them, consult a union official or lawyer, gather data and evidence, and
decide on the defenses they will raise against the complaint. Moreover,
in order to enable the employees to intelligently prepare their
explanation and defenses, the notice should contain a detailed
narration of the facts and circumstances that will serve as basis for the
charge against the employees. A general description of the charge will
not suffice. Lastly, the notice should specifically mention which
company rules, if any, are violated and/or which among the grounds
under Art. 282 is being charged against the employees.
(2) After serving the first notice, the employers should schedule and
conduct a hearing or conference wherein the employees will be given
the opportunity to: (1) explain and clarify their defenses to the charge
against them; (2) present evidence in support of their defenses; and (3)
rebut the evidence presented against them by the management. During
the hearing or conference, the employees are given the chance to
defend themselves personally, with the assistance of a representative
or counsel of their choice. Moreover, this conference or hearing could
be used by the parties as an opportunity to come to an amicable
settlement.
(3) After determining that termination of employment is justified, the
employers shall serve the employees a written notice of termination
indicating that: (1) all circumstances involving the charge against the
employees have been considered; and (2) grounds have been
established to justify the severance of their employment.29
In this case, Unilever was not direct and specific in its first notice to Rivera. The
words it used were couched in general terms and were in no way informative of
the charges against her that may result in her dismissal from employment.
Evidently, there was a violation of her right to statutory due process warranting
the payment of indemnity in the form of nominal damages. Hence, the Court
finds no compelling reason to reverse the award of nominal damages in her
favor. The Court, however, deems it proper to increase the award of nominal
damages from ₱20,000.00 to ₱30,000.00, as initially awarded by the NLRC, in
accordance with existing jurisprudence.30
WHEREFORE, the petition is hereby PARTIALLY GRANTED.1âwphi1 The June
22, 2011 Decision and the April 25, 2012 Resolution of the Court of Appeals
(CA)-Cagayan de Oro City in CA-G.R. SP No. 02963-MIN are AFFIRMED with
MODIFICATION. The dispositive portion should read as follows:
WHEREFORE, the March 31, 2009 Resolution of the NLRC (Branch 5), Cagayan
de Oro City, is hereby AFFIRMED with MODIFICATION. UNILEVER
PHILIPPINES, INC., is hereby directed to pay MARIA RUBY M. RIVERA the
following:
a) ₱30,000.00 as nominal damages; and
b) Proportionate 13th month pay and unused leave credits, to be
computed based on her salary during the period relevant to the case.
The award of retirement benefit is DELETED.
SO ORDERED.
G.R. No. 152048 April 7, 2009
FELIX B. PEREZ and AMANTE G. DORIA, Petitioners,
vs.
PHILIPPINE TELEGRAPH AND TELEPHONE COMPANY and JOSE LUIS
SANTIAGO, Respondents.
DECISION
CORONA, J.:
Petitioners Felix B. Perez and Amante G. Doria were employed by respondent
Philippine Telegraph and Telephone Company (PT&T) as shipping clerk and
supervisor, respectively, in PT&T’s Shipping Section, Materials Management
Group.
Acting on an alleged unsigned letter regarding anomalous transactions at the
Shipping Section, respondents formed a special audit team to investigate the
matter. It was discovered that the Shipping Section jacked up the value of the
freight costs for goods shipped and that the duplicates of the shipping
documents allegedly showed traces of tampering, alteration and
superimposition.
On September 3, 1993, petitioners were placed on preventive suspension for 30
days for their alleged involvement in the anomaly.1 Their suspension was
extended for 15 days twice: first on October 3, 19932 and second on October 18,
1993.3
5
On October 29, 1993, a memorandum with the following tenor was issued by
respondents:
In line with the recommendation of the AVP-Audit as presented in his report of
October 15, 1993 (copy attached) and the subsequent filing of criminal charges
against the parties mentioned therein, [Mr. Felix Perez and Mr. Amante Doria
are] hereby dismissed from the service for having falsified company
documents.4 (emphasis supplied)
On November 9, 1993, petitioners filed a complaint for illegal suspension and
illegal dismissal.5 They alleged that they were dismissed on November 8, 1993,
the date they received the above-mentioned memorandum.
The labor arbiter found that the 30-day extension of petitioners’ suspension and
their subsequent dismissal were both illegal. He ordered respondents to pay
petitioners their salaries during their 30-day illegal suspension, as well as to
reinstate them with backwages and 13th month pay.
The National Labor Relations Commission (NLRC) reversed the decision of the
labor arbiter. It ruled that petitioners were dismissed for just cause, that they
were accorded due process and that they were illegally suspended for only 15
days (without stating the reason for the reduction of the period of petitioners’
illegal suspension).6
Petitioners appealed to the Court of Appeals (CA). In its January 29, 2002
decision,7 the CA affirmed the NLRC decision insofar as petitioners’ illegal
suspension for 15 days and dismissal for just cause were concerned. However, it
found that petitioners were dismissed without due process.
Petitioners now seek a reversal of the CA decision. They contend that there was
no just cause for their dismissal, that they were not accorded due process and
that they were illegally suspended for 30 days.
We rule in favor of petitioners.
Respondents Failed to Prove Just
Cause and to Observe Due Process
The CA, in upholding the NLRC’s decision, reasoned that there was sufficient
basis for respondents to lose their confidence in petitioners8 for allegedly
tampering with the shipping documents. Respondents emphasized the
importance of a shipping order or request, as it was the basis of their liability to
a cargo forwarder.9
We disagree.
Without undermining the importance of a shipping order or request, we find
respondents’ evidence insufficient to clearly and convincingly establish the facts
from which the loss of confidence resulted.10 Other than their bare allegations
and the fact that such documents came into petitioners’ hands at some point,
respondents should have provided evidence of petitioners’ functions, the extent
of their duties, the procedure in the handling and approval of shipping requests
and the fact that no personnel other than petitioners were involved. There was,
therefore, a patent paucity of proof connecting petitioners to the alleged
tampering of shipping documents.
The alterations on the shipping documents could not reasonably be attributed
to petitioners because it was never proven that petitioners alone had control of
or access to these documents. Unless duly proved or sufficiently substantiated
otherwise, impartial tribunals should not rely only on the statement of the
employer that it has lost confidence in its employee.11
Willful breach by the employee of the trust reposed in him by his employer or
duly authorized representative is a just cause for termination. 12 However,
in General Bank and Trust Co. v. CA,13 we said:
[L]oss of confidence should not be simulated. It should not be used as a
subterfuge for causes which are improper, illegal or unjustified. Loss of
confidence may not be arbitrarily asserted in the face of overwhelming evidence
to the contrary. It must be genuine, not a mere afterthought to justify an earlier
action taken in bad faith.
The burden of proof rests on the employer to establish that the dismissal is for
cause in view of the security of tenure that employees enjoy under the
Constitution and the Labor Code. The employer’s evidence must clearly and
convincingly show the facts on which the loss of confidence in the employee
may be fairly made to rest.14 It must be adequately proven by substantial
evidence.15 Respondents failed to discharge this burden.
Respondents’ illegal act of dismissing petitioners was aggravated by their
failure to observe due process. To meet the requirements of due process in the
dismissal of an employee, an employer must furnish the worker with two
written notices: (1) a written notice specifying the grounds for termination and
6
giving to said employee a reasonable opportunity to explain his side and (2)
another written notice indicating that, upon due consideration of all
circumstances, grounds have been established to justify the employer's decision
to dismiss the employee.16
Petitioners were neither apprised of the charges against them nor given a
chance to defend themselves. They were simply and arbitrarily separated from
work and served notices of termination in total disregard of their rights to due
process and security of tenure. The labor arbiter and the CA correctly found that
respondents failed to comply with the two-notice requirement for terminating
employees.
Petitioners likewise contended that due process was not observed in the
absence of a hearing in which they could have explained their side and refuted
the evidence against them.
There is no need for a hearing or conference. We note a marked difference in
the standards of due process to be followed as prescribed in the Labor Code and
its implementing rules. The Labor Code, on one hand, provides that an employer
must provide the employee ample opportunity to be heard and to defend
himself with the assistance of his representative if he so desires:
ART. 277. Miscellaneous provisions. — x x x
(b) Subject to the constitutional right of workers to security of tenure and their
right to be protected against dismissal except for a just and authorized cause
and without prejudice to the requirement of notice under Article 283 of this
Code, the employer shall furnish the worker whose employment is sought to be
terminated a written notice containing a statement of the causes for
termination and shall afford the latter ample opportunity to be heard and to
defend himself with the assistance of his representative if he so desires in
accordance with company rules and regulations promulgated pursuant to
guidelines set by the Department of Labor and Employment. Any decision taken
by the employer shall be without prejudice to the right of the worker to contest
the validity or legality of his dismissal by filing a complaint with the regional
branch of the National Labor Relations Commission. The burden of proving that
the termination was for a valid or authorized cause shall rest on the employer.
(emphasis supplied)
The omnibus rules implementing the Labor Code, on the other hand, require a
hearing and conference during which the employee concerned is given the
opportunity to respond to the charge, present his evidence or rebut the
evidence presented against him:17
Section 2. Security of Tenure. — x x x
(d) In all cases of termination of employment, the following standards of due
process shall be substantially observed:
For termination of employment based on just causes as defined in Article 282 of
the Labor Code:
(i) A written notice served on the employee specifying the ground or
grounds for termination, and giving said employee reasonable
opportunity within which to explain his side.
(ii) A hearing or conference during which the employee concerned,
with the assistance of counsel if he so desires, is given opportunity
to respond to the charge, present his evidence or rebut the
evidence presented against him.
(iii) 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. (emphasis supplied)
Which one should be followed? Is a hearing (or conference) mandatory in cases
involving the dismissal of an employee? Can the apparent conflict between the
law and its IRR be reconciled?
At the outset, we reaffirm the time-honored doctrine that, in case of conflict, the
law prevails over the administrative regulations implementing it. 18 The
authority to promulgate implementing rules proceeds from the law itself. To be
valid, a rule or regulation must conform to and be consistent with the
provisions of the enabling statute.19 As such, it cannot amend the law either by
abridging or expanding its scope.20
Article 277(b) of the Labor Code provides that, in cases of termination for a just
cause, an employee must be given "ample opportunity to be heard and to defend
himself." Thus, the opportunity to be heard afforded by law to the employee is
qualified by the word "ample" which ordinarily means "considerably more than
adequate or sufficient."21In this regard, the phrase "ample opportunity to be
heard" can be reasonably interpreted as extensive enough to cover actual
7
hearing or conference. To this extent, Section 2(d), Rule I of the Implementing
Rules of Book VI of the Labor Code is in conformity with Article 277(b).
Nonetheless, Section 2(d), Rule I of the Implementing Rules of Book VI of the
Labor Code should not be taken to mean that holding an actual hearing or
conference is a condition sine qua non for compliance with the due process
requirement in termination of employment. The test for the fair procedure
guaranteed under Article 277(b) cannot be whether there has been a formal
pretermination confrontation between the employer and the employee. The
"ample opportunity to be heard" standard is neither synonymous nor similar to
a formal hearing. To confine the employee’s right to be heard to a solitary form
narrows down that right. It deprives him of other equally effective forms of
adducing evidence in his defense. Certainly, such an exclusivist and absolutist
interpretation is overly restrictive. The "very nature of due process negates any
concept of inflexible procedures universally applicable to every imaginable
situation."22
The standard for the hearing requirement, ample opportunity, is couched in
general language revealing the legislative intent to give some degree of
flexibility or adaptability to meet the peculiarities of a given situation. To
confine it to a single rigid proceeding such as a formal hearing will defeat its
spirit.
Significantly, Section 2(d), Rule I of the Implementing Rules of Book VI of the
Labor Code itself provides that the so-called standards of due process outlined
therein shall be observed "substantially," not strictly. This is a recognition
that while a formal hearing or conference is ideal, it is not an absolute, mandatory
or exclusive avenue of due process.
An employee’s right to be heard in termination cases under Article 277(b) as
implemented by Section 2(d), Rule I of the Implementing Rules of Book VI of the
Labor Code should be interpreted in broad strokes. It is satisfied not only by a
formal face to face confrontation but by any meaningful opportunity to
controvert the charges against him and to submit evidence in support thereof.
A hearing means that a party should be given a chance to adduce his evidence to
support his side of the case and that the evidence should be taken into account
in the adjudication of the controversy.23 "To be heard" does not mean verbal
argumentation alone inasmuch as one may be heard just as effectively through
written explanations, submissions or pleadings.24 Therefore, while the phrase
"ample opportunity to be heard" may in fact include an actual hearing, it is not
limited to a formal hearing only. In other words, the existence of an actual,
formal "trial-type" hearing, although preferred, is not absolutely necessary to
satisfy the employee’s right to be heard.
This Court has consistently ruled that the due process requirement in cases of
termination of employment does not require an actual or formal hearing. Thus,
we categorically declared in Skipper’s United Pacific, Inc. v. Maguad:25
The Labor Code does not, of course, require a formal or trial type
proceeding before an erring employee may be dismissed. (emphasis
supplied)
In Autobus Workers’ Union v. NLRC,26 we ruled:
The twin requirements of notice and hearing constitute the essential elements
of due process. Due process of law simply means giving opportunity to be heard
before judgment is rendered. In fact, there is no violation of due process even
if no hearing was conducted, where the party was given a chance to
explain his side of the controversy. What is frowned upon is the denial of the
opportunity to be heard.
xxxxxxxxx
A formal trial-type hearing is not even essential to due process. It is
enough that the parties are given a fair and reasonable opportunity to
explain their respective sides of the controversy and to present
supporting evidence on which a fair decision can be based. This type of
hearing is not even mandatory in cases of complaints lodged before the Labor
Arbiter. (emphasis supplied)
In Solid Development Corporation Workers Association v. Solid Development
Corporation,27 we had the occasion to state:
[W]ell-settled is the dictum that the twin requirements of notice and hearing
constitute the essential elements of due process in the dismissal of employees. It
is a cardinal rule in our jurisdiction that the employer must furnish the
employee with two written notices before the termination of employment can
be effected: (1) the first apprises the employee of the particular acts or
omissions for which his dismissal is sought; and (2) the second informs the
employee of the employer’s decision to dismiss him. The requirement of a
hearing, on the other hand, is complied with as long as there was an
opportunity to be heard, and not necessarily that an actual hearing was
conducted.
8
In separate infraction reports, petitioners were both apprised of the particular
acts or omissions constituting the charges against them. They were also
required to submit their written explanation within 12 hours from receipt of the
reports. Yet, neither of them complied. Had they found the 12-hour period too
short, they should have requested for an extension of time. Further, notices of
termination were also sent to them informing them of the basis of their
dismissal. In fine, petitioners were given due process before they were
dismissed. Even if no hearing was conducted, the requirement of due
process had been met since they were accorded a chance to explain their side
of the controversy. (emphasis supplied)
Our holding in National Semiconductor HK Distribution, Ltd. v. NLRC28 is of
similar import:
That the investigations conducted by petitioner may not be
considered formal or recorded hearings or investigations is immaterial. A
formal or trial type hearing is not at all times and in all instances essential
to due process, the requirements of which are satisfied where the parties are
afforded fair and reasonable opportunity to explain their side of the
controversy. It is deemed sufficient for the employer to follow the natural
sequence of notice, hearing and judgment.
The above rulings are a clear recognition that the employer may provide an
employee with ample opportunity to be heard and defend himself with the
assistance of a representative or counsel in ways other than a formal hearing.
The employee can be fully afforded a chance to respond to the charges against
him, adduce his evidence or rebut the evidence against him through a wide
array of methods, verbal or written.
After receiving the first notice apprising him of the charges against him, the
employee may submit a written explanation (which may be in the form of a
letter, memorandum, affidavit or position paper) and offer evidence in support
thereof, like relevant company records (such as his 201 file and daily time
records) and the sworn statements of his witnesses. For this purpose, he may
prepare his explanation personally or with the assistance of a representative or
counsel. He may also ask the employer to provide him copy of records material
to his defense. His written explanation may also include a request that a formal
hearing or conference be held. In such a case, the conduct of a formal hearing or
conference becomes mandatory, just as it is where there exist substantial
evidentiary disputes29 or where company rules or practice requires an actual
hearing as part of employment pretermination procedure. To this extent, we
refine the decisions we have rendered so far on this point of law.
This interpretation of Section 2(d), Rule I of the Implementing Rules of Book VI
of the Labor Code reasonably implements the "ample opportunity to be heard"
standard under Article 277(b) of the Labor Code without unduly restricting the
language of the law or excessively burdening the employer. This not only
respects the power vested in the Secretary of Labor and Employment to
promulgate rules and regulations that will lay down the guidelines for the
implementation of Article 277(b). More importantly, this is faithful to the
mandate of Article 4 of the Labor Code that "[a]ll doubts in the implementation
and interpretation of the provisions of [the Labor Code], including its
implementing rules and regulations shall be resolved in favor of labor."
In sum, the following are the guiding principles in connection with the hearing
requirement in dismissal cases:
(a) "ample opportunity to be heard" means any meaningful opportunity
(verbal or written) given to the employee to answer the charges against
him and submit evidence in support of his defense, whether in a
hearing, conference or some other fair, just and reasonable way.
(b) a formal hearing or conference becomes mandatory only when
requested by the employee in writing or substantial evidentiary
disputes exist or a company rule or practice requires it, or when similar
circumstances justify it.
(c) the "ample opportunity to be heard" standard in the Labor Code
prevails over the "hearing or conference" requirement in the
implementing rules and regulations.
Petitioners Were Illegally
Suspended for 30 Days
An employee may be validly suspended by the employer for just cause provided
by law. Such suspension shall only be for a period of 30 days, after which the
employee shall either be reinstated or paid his wages during the extended
period.30
In this case, petitioners contended that they were not paid during the two 15-
day extensions, or a total of 30 days, of their preventive suspension.
Respondents failed to adduce evidence to the contrary. Thus, we uphold the
ruling of the labor arbiter on this point.
9
Where the dismissal was without just or authorized cause and there was no due For resolution is the present Petition for Review on Certiorari[1] addressing the
process, Article 279 of the Labor Code, as amended, mandates that the decision[2]and resolution[3] of the Court of Appeals (CA) of November 18, 2008
employee is entitled to reinstatement without loss of seniority rights and other and April 17, 2009, respectively, in CA-G.R. SP No. 100406.[4]
privileges and full backwages, inclusive of allowances, and other benefits or
their monetary equivalent computed from the time the compensation was not THE ANTECEDENTS
paid up to the time of actual reinstatement.31 In this case, however,
reinstatement is no longer possible because of the length of time that has The facts are summarized below.
passed from the date of the incident to final resolution. 32 Fourteen years have
transpired from the time petitioners were wrongfully dismissed. To order The petitioner Technol Eight Philippines Corporation (Technol), located at 127
reinstatement at this juncture will no longer serve any prudent or practical East Main Avenue, Laguna Technopark, Bian, Laguna, manufactures metal parts
purpose.33 and motor vehicle components. It hired the respondent Dennis Amular
(Amular) in March 1998 and assigned him to Technols Shearing Line, together
WHEREFORE, the petition is hereby GRANTED. The decision of the Court of with Clarence P. Ducay (Ducay). Rafael Mendoza (Mendoza) was the lines team
Appeals dated January 29, 2002 in CA-G.R. SP No. 50536 finding that petitioners leader.
Felix B. Perez and Amante G. Doria were not illegally dismissed but were not
accorded due process and were illegally suspended for 15 days, is SET ASIDE. On April 16, 2002 at about 5:30 p.m., Mendoza went to the Surf City Internet Caf
The decision of the labor arbiter dated December 27, 1995 in NLRC NCR CN. 11- in Balibago, Sta. Rosa, Laguna. As Mendoza was leaving the establishment, he
06930-93 is hereby AFFIRMED with the MODIFICATIONthat petitioners was confronted by Amular and Ducay who engaged him in a heated argument
should be paid their separation pay in lieu of reinstatement. regarding their work in the shearing line, particularly Mendozas report to
Avelino S. De Leon, Jr. (De Leon), Technols Production Control and Delivery
SO ORDERED. (PCD) assistant supervisor, about Amulars and Ducays questionable behavior at
work. The heated argument resulted in a fistfight that required the intervention
of the barangay tanods in the area.
TECHNOL EIGHT PHILIPPINES G.R. No. 187605
CORPORATION, Upon learning of the incident, Technols management sent to Amular and Ducay
Petitioner, Present: a notice of preventive suspension/notice of discharge dated May 18,
2002[5] advising them that their fistfight with Mendoza violated Section 1-k of
CARPIO, J., Chairperson, Technols Human Resource Department (HRD) Manual. The two were given
- versus - BRION,
forty-eight (48) hours to explain why no disciplinary action should be taken
DEL CASTILLO,
against them for the incident. They were placed under preventive suspension
PEREZ, and for thirty (30) days, from May 19, 2002 to June 17, 2002 for Ducay, and May 21,
*MENDOZA, JJ.
2002 to June 20, 2002 for Amular. Amular submitted a written statement on
NATIONAL LABOR RELATIONS May 20, 2002.[6]
COMMISSION AND DENNIS AMULAR,
Respondents. -- - Thereafter, Amular received a notice dated June 8, 2002[7] informing him that
Promulgated:
Technol management will conduct an administrative hearing on June 14,
April 13, 2010
2002. He was also given two (2) days to respond in writing to the statements
DECISION attached to and supporting the notice. A day before the hearing or on June 13,
2002, Amular filed a complaint for illegal suspension/constructive dismissal
BRION, J.: with a prayer for separation pay, backwages and several money claims, against
Technol. Amular failed to attend the administrative hearing. On July 4, 2002,
Technol sent him a notice of dismissal.[8]

10
Before the Labor Arbiter, Amular alleged that in the afternoon of April 16, 2002,
while he and his co-employee Ducay were walking around the shopping mall in
Balibago, Sta. Rosa, Laguna, they incidentally saw Mendoza with whom they
wanted to discuss some personal matters. When they approached Mendoza, the
latter raised his voice and asked what they wanted from him; Amular
asked Mendoza what the problem was because Mendoza appeared to be always
angry at him (Amular). Mendoza instead challenged Amular and Ducay to a
fistfight and then punched Amular who punched Mendoza in return. Thereafter,
a full-blown fistfight ensued until the barangay tanods in the area pacified the
three.
Amular further alleged that he was asked by his immediate supervisor to
submit a report on the incident, which he did on April 18, 2002. [9] Subsequently,
Amular, Mendoza and Ducay were called by Technol management to talk to
each other and to settle their differences; they agreed and settled their
misunderstanding.
THE COMPULSORY ARBITRATION DECISIONS
On November 18, 2003, Executive Labor Arbiter Salvador V. Reyes rendered a
decision[10]finding that Amulars preventive suspension and subsequent
dismissal were illegal. He ruled that Amulars preventive suspension was based
solely on unsubscribed written statements executed by Mendoza, Rogelio R.
Garces and Mary Ann Palma (subscribed only on August 8, 2002) and that
Mendoza, Amular and Ducay had settled their differences even before Amular
was placed under preventive suspension. With respect to Amulars dismissal, the
Arbiter held that Technol failed to afford him procedural due process since he
was not able to present his side because he had filed a case before the National
Labor Relations Commission (NLRC) at the time he was called to a hearing;
Technol also failed to substantiate its allegations against Amular; the fistfight
occurred around 200 to 300 meters away from the work area and it happened
after office hours. Arbiter Reyes awarded Amular separation pay (since he did
not want to be reinstated), backwages, 13th month pay, service incentive leave
pay and attorneys fees in the total amount of P158,987.70.
Technol appealed to the NLRC. In its decision promulgated on March 30,
2005,[11] the NLRC affirmed the labor arbiters ruling. It found that Amular was
unfairly treated and subjected to discrimination because he was the only one
served with the notice to explain and placed under preventive suspension; his
co-employee Ducay who was also involved in the incident was not. Technol
moved for reconsideration, but the NLRC denied the motion in a resolution
rendered on May 30, 2007.[12] Technol thereafter sought relief from the CA
through a petition for certiorari under Rule 65 of the Rules of Court.[13]
THE CA DECISION
In its decision promulgated on November 18, 2008, the CA found no grave
abuse of discretion on the part of the NLRC when it affirmed the labor arbiters
ruling that Amular was illegally dismissed. While the appellate court noted that
Amular was dismissed on the ground of serious misconduct, a just cause for
employee dismissal under the Labor Code,[14] it opined that Technol failed to
comply with the jurisprudential guidelines that misconduct warranting a
dismissal: (1) must be serious; (2) must relate to the performance of the
employees duties; and (3) must show that the employee has become unfit to
continue working for the employer.[15]
The appellate court pointed out that the mauling incident occurred outside the
company premises and after office hours; it did not in any manner disrupt
company operations nor pose a threat to the safety or peace of mind of Technol
workers; neither did it cause substantial prejudice to the company. It explained
that although it was not condoning Amulars misconduct, it found that the
penalty of dismissal imposed by Technol on Amular was too harsh and evidently
disproportionate to the act committed.[16] The CA denied the motion for
reconsideration Technol subsequently filed;[17] hence, the present petition.[18]
THE PETITION
Technol posits that the CA gravely erred in ruling that Amular was illegally
dismissed, contending that Amular was discharged for violation of Section 1-k
of its HRD Manual which penalizes the commission of a crime against a co-
employee. It submits that Section 1-k of the HRD Manual is a reasonable
company rule issued pursuant to its management prerogative. It maintains that
the case should have been examined from the perspective of whether the
company rule is reasonable and not on the basis of where and when the act was
committed, or even whether it caused damage to the company. It adds that the
manual does not distinguish whether the crime was committed inside or
outside work premises or during or after office hours. It insists that if the rule
were otherwise, any employee who wishes to harm a co-employee can just wait
until the co-employee is outside the company premises to inflict harm upon
him, and later argue that the crime was committed outside work premises and
after office hours. It submits that the matter assumes special and utmost
significance in this case because Amular inflicted physical injuries on a
supervisor. In any event, Technol argues that even if the misconduct was
committed outside company premises, the perpetrator can still be disciplined as
11
long as the offense was work-related, citing Oania v. NLRC[19] and Tanala v.
NLRC[20] in support of its position.
Technol bewails the CAs appreciation of the implication of Amulars misconduct
in the workplace, especially the courts observation that it did not cause damage
to the company because it did not disrupt company operation, that it did not
create a hostile environment inside the company, and that the fight was nipped
in the bud by the timely intervention of those who saw the incident.[21] Technol
insists that it had to order Amulars dismissal in order to uphold the integrity of
the company rules and to avoid the erosion of discipline among its
employees. Also, it disputes the CAs conclusion that the fact that Amulars
liability should be mitigated because the fight was nipped in the bud. It submits
that Mendoza had already sustained grave injuries when the mauling was
stopped.
Further, Technol maintains that the CA gravely erred in going beyond the issues
submitted to it, since the NLRC decision only declared Amulars dismissal illegal
on the ground that he was the only one subjected to disciplinary action and that
the company merely relied on the written statements of Amulars co-employees.
On the rejection by the CA of the statements of Amulars co-employees regarding
the incident, Technol contends that the statements of the witnesses, together
with Amulars admission, constitute substantial evidence of guilt. It points out
that the statement of Mendoza on the matter submitted during the company
investigation and before the labor arbiter was not a stand
alone statement; Mendozas statement was corroborated by the statements of
Rogelio R. Garces and Mary Ann Palma, verified under oath in the reply [22] it
submitted to the arbiter.The statements were all in their handwriting, indicating
that they were not pro forma or prepared on command; a medical
certificate[23] and a barangay report[24] were likewise submitted.
Technol likewise disputes the NLRCs conclusion that Amular was discriminated
against and unfairly treated because he was the only one preventively
suspended after the mauling incident. It maintains that from the records of the
case and as admitted by Amular himself in his position paper, [25] his co-
employee Ducay was also preventively suspended.[26] That Mendoza was not
similarly placed under preventive suspension was considered by Technol as an
exercise of its management prerogative, since the circumstances surrounding
the incident indicated the existence of a reasonable threat to the safety of
Amulars co-employees and that Mendoza appeared to be the victim of Amulars
and Ducays assault.
THE CASE FOR AMULAR
In his Comment filed on August 12, 2009,[27] Amular asks that the petition be
dismissed for utter lack of merit. He admits that the mauling incident happened,
but claims however that on April 18, 2002, the Technols management called
Mendoza, Ducay, and him to a meeting, asked them to explain their sides and
thereafter requested them to settle their differences; without hesitation, they
agreed to settle and even shook hands afterwards. He was therefore surprised
that on May 18, 2002, he received a memorandum from Technols HRD charging
him and his co-employee Ducay for the incident. Without waiting for an
explanation, Technols management placed him under preventive suspension,
but not Ducay. Adding insult to injury, when Amular followed up his case while
on preventive suspension, he was advised by the HRD manager to simply resign
and accept managements offer of P22,000.00, which offer was reiterated during
the mandatory conference before the labor arbiter.
Amular particularly laments that his employment was terminated while the
constructive dismissal case he filed against the company was still pending. He
posits that his employment was terminated first before he was informed of the
accusations leveled against him an indication of bad faith on the part of Technol.
Amular asks: if it were true that the mauling incident was a serious offense
under company policy, why did it take Technol a month to give him notice to
explain the mauling incident? He submits that the memorandum asking him to
explain was a mere afterthought; he was dismissed without giving him the
benefit to be informed of the true nature of his offense, thus denying him his
right to be heard.
Finally, Amular questions the propriety of the present petition contending that
it only raises questions of fact, in contravention of the rule that only questions
of law may be raised in a petition for review on certiorari.[28] He points out that
the findings of facts of the labor tribunals and the CA are all the same and
therefore must be given respect, if not finality.[29]
THE RULING OF THE COURT
The Procedural Issue
We find no procedural impediment to the petition. An objective reading of the
petition reveals that Technol largely assails the correctness of the conclusions
drawn by the CA from the set of facts it considered. The question therefore is
one of law and not of fact, as we ruled in Cucueco v. Court of Appeals.[30] Thus,
while there is no dispute that a fight occurred between Amular and Ducay, on
12
the one hand, and Mendoza, on the other, the CA concluded that although
Amular committed a misconduct, it failed to satisfy jurisprudential standards to
qualify as a just cause for dismissal the conclusion that Technol now
challenges. We see no legal problem, too, in wading into the factual records, as
the tribunals below clearly failed to properly consider the evidence on
record. This is grave abuse of discretion on the part of the labor tribunals that
the CA failed to appreciate.
The Merits of the Case
The CA misappreciated the true nature of Amulars involvement in the
mauling incident.Although it acknowledged that Amular committed a
misconduct, it did not consider the misconduct as work-related and reflective of
Amulars unfitness to continue working for Technol. The appellate courts benign
treatment of Amulars offense was based largely on its observation that the
incident happened outside the company premises and after working hours; did
not cause a disruption of work operations; and did not result in a hostile
environment in the company. Significantly, it did not condone Amulars
infraction, but it considered that Amulars dismissal was a harsh penalty that is
disproportionate with his offense. It found support for this liberal view from the
pronouncement of the Court in Almira v. B.F. Goodrich Philippines,
Inc.,[31] that where a penalty less punitive would suffice, whatever missteps may be
committed by labor ought not to be visited with a consequence so severe.
The record of the case, however, gives us a different picture. Contrary to the
CAs perception, we find a work-connection in Amular's and Ducays assault
on Mendoza. As the CA itself noted,[32] the underlying reason why Amular and
Ducay confronted Mendoza was to question him about his report to De Leon
Technols PCD assistant supervisor regarding the duos questionable work
behavior. The motivation behind the confrontation, as we see it, was rooted on
workplace dynamics as Mendoza, Amular and Ducay interacted with one
another in the performance of their duties.
The incident revealed a disturbing strain in Amular's and Ducays characters the
urge to get even for a perceived wrong done to them and, judging from the
circumstances, regardless of the place and time. The incident could very well
have happened inside company premises had the two employees found time to
confront Mendoza in the workplace as they intimated in their written
statements.[33] Having been the subject of a negative report regarding his work
must have rankled on Amular that he resolved to do something about it; thus, he
confronted Mendoza.
From the records, Ducay appeared to have cooperated with Amular in the
violent confrontation with Mendoza. Ducay, however, resigned on June 7, 2002
a week before the filing of the complaint.[34] Hence, Technol did not act against
him a move that is within its prerogative to make.
In an obvious effort to mitigate his involvement in the mauling incident, Amular
claimed in the administrative proceedings that while he and Ducay were
walking around the shopping mall in Balibago, Sta. Rosa, Laguna,
they incidentally saw their co-employee Mendoza with whom they wanted to
clear some personal matters.[35] We find this claim a clear distortion of what
actually happened. Again, based on their written statements,[36] Amular and
Ducay purposely set out for the Balibago commercial area on April 16, 2002
looking for Mendoza. It was not an incidental or casual encounter. They
sought Mendoza out and confronted him regarding what they perceived
as Mendozas negative attitude towards them
or pamamarako as Mendoza described it.[37] Considering the subject Amular and
Ducay raised with Mendoza, it is not surprising that they had a heated verbal
exchange (mostly between Amular and Mendoza) that deteriorated into a
fistcuff fight, with Mendoza at the losing end as he suffered injuries from the
blows he received.
Amular and Ducay point to Mendoza as the proximate cause of the fight because
he challenged them to a one-on-one (isa-isa lang) bout.[38] Looking back at the
reason why Amular and Ducay were at the mall in the first place, this attributed
causation hardly makes sense. To reiterate, they were purposely there to
confront Mendoza about their work-related problem. They waited for him at the
place where they expected him to be. When Mendozaappeared, they accosted
him and put into motion the entire sorry incident.
Under these circumstances, Amular undoubtedly committed a misconduct or
exhibited improper behavior that constituted a valid cause for his dismissal
under the law[39] and jurisprudential standards.[40] The circumstances of his
misdeed, to our mind, rendered him unfit to continue working for Technol; guilt
is not diminished by his claim that Technols management called the three of
them to a meeting, and asked them to explain their sides and settle their
differences, which they did.[41] Mendoza significantly denied the alleged
settlement, maintaining that while they were summoned by De Leon after the
incident, he could not shake hands and settle with Amular and Ducay since they
did not even apologize or ask forgiveness for what they did. [42] We do not
find Mendozas denial of Amulars claim unusual as Mendoza would not have
stood his ground in this case if a settlement had previously been reached. That a
meeting had taken place does not appear disputed, but a settlement cannot be
inferred simply because a meeting took place.
Neither do we believe that Amular was discriminated against because he was
not the only one preventively suspended. As the CA itself acknowledged, Ducay
13
received his notice of preventive suspension/notice of charge[43] on May 19,
2002 while Amular received his on May 21, 2002. These notices informed them
that they were being preventively suspended for 30 days from May 19, 2002 to
June 17, 2002 for Ducay, and May 21, 2002 for Amular.[44]
Thus, Amular was not illegally dismissed; he was dismissed for cause.
The Due Process Issue
The labor arbiter ruled that Technol failed to afford Amular procedural due
process, since he was not able to present his side regarding the incident; at the
time he was called to a hearing, he had already filed the illegal dismissal
complaint.[45] The NLRC, on the other hand, held that the memorandum
terminating Amulars employment was a mere formality, an afterthought
designed to evade company liability since Amular had already filed an illegal
dismissal case against Technol.[46]
We disagree with these conclusions. The notice of preventive
suspension/notice of discharge served on Amular and Ducay required them to
explain within forty-eight (48) hours why no disciplinary action should be taken
against them for their involvement in the mauling incident.[47] Amular
submitted two written statements: the first received by the company on May 19,
2002[48] and the other received on May 20, 2002.[49] On June 8, 2002, Technol
management sent Amular a memorandum informing him of an administrative
hearing on June 14, 2002 at 10:00 a.m., regarding the charges against him. [50] At
the bottom left hand corner of the memorandum, the following notation
appears: accept the copy of notice but refused to receive, he will study first. A
day before the administrative hearing or on June 13, 2002, Amular filed the
complaint for illegal suspension/dismissal[51] and did not appear at the
administrative hearing. On July 4, 2002, the company sent Amular a notice of
dismissal.[52]
What we see in the records belie Amulars claim of denial of procedural due
process. He chose not to present his side at the administrative hearing. In fact,
he avoided the investigation into the charges against him by filing his illegal
dismissal complaint ahead of the scheduled investigation. Under these facts, he
was given the opportunity to be heard and he cannot now come to us protesting
that he was denied this opportunity. To belabor a point the Court has repeatedly
made in employee dismissal cases, the essence of due process is simply an
opportunity to be heard; it is the denial of this opportunity that constitutes
violation of due process of law.[53]
In view of all the foregoing, we find the petition meritorious.
WHEREFORE, premises considered, we hereby GRANT the petition. The
assailed decision and resolution of the Court of Appeals are REVERSED and SET
ASIDE. The complaint for illegal dismissal is DISMISSED for lack of merit. Costs
against respondent AMULAR.
SO ORDERED.
AUTOBUS WORKERS UNION (AWU) and RICARDO ESCANLAR, petitioners,
vs. NATIONAL LABOR RELATIONS COMMISSION and MR. ROBERT
ONG, respondents.
DECISION
MARTINEZ, J.:
This petition for certiorari and prohibition assails the Resolution dated
July 12, 1994 of the respondent National Labor Relations Commission which
affirmed the decision of the Labor Arbiter, the dispositive portion of which
reads:
CONFORMABLY WITH THE FOREGOING, judgment is hereby rendered finding
complainants dismissal valid and in accordance with procedural due process.
As financial assistance, however, respondents are hereby ordered to give
complainant the sum of P5,000.00.
SO ORDERED.[1]
and the Resolution dated October 3, 1994 denying the motion for
reconsideration of petitioner.
Petitioner Ricardo E. Escanlar worked with Autobus Industries, Inc.
(Autobus for brevity) as a Cutting Machine Operator since January 8, 1981 with
a salary of P162.16 per day. He was the recipient of two (2) Plaques of
Appreciation as Model Employee in 1987 and as Valuable Employee in 1988. He
was later elected President of the Autobus Workers Union (AWU), the union for
the rank and file employees.
On January 29, 1993, Engr. Zosimo Prospero Chavez, Production Manager
of Autobus, received a handwritten report[2] from one Reynaldo T. Andres, a
supervisor, pertinent portions of which are quoted hereunder:
14
1. That in the morning of January 29, 1993, Mr. Andres told the herein
complainant, together with another employee of the company their
reassignment to the other section of the company as these latter sections lack
manpower; that herein complainant shall be reassigned to the `Washer Section
while the other to the `Painting Section;
2. That despite being told of the reason for his transfer, Mr. Escanlar questioned
his transfer to the `Washer Section;
3. That on the way to his assigned section, herein complainant asked for an eye
goggle to be used in his work; that a certain Mr. Andres told complainant that
there was one goggle in the section where he is assigned;
4. That herein complainant refused to use the goggles saying that it might have
some `ketong in it;that no new goggles were issued to the complainant; that the
latter was given instructions by Mr. Andres; that Mr. Andres proceeded to the
`Painting Section;
5. That at around 6:55 a.m. while on his way back to the `Washer Section, Mr.
Andres saw herein complainant talking to a certain Odelon Gamora; that the
two talked for about two (2) minutes; that after their conversation, Mr. Andres
approached the complainant; that at this instance Mr. Escanlar told Mr. Andres
that he (complainant) did not like the way Mr. Andres chose personnel to go on
overtime; that complainant went on further saying that Mr. Andres chose only
persons who are close to him and from those who treat him for a drink; that Mr.
Andres told complainant to ask a certain Mr. Tomas Marahit who was near if the
complainants allegations were true;
6. That thereafter, herein complainant answered back by saying `Gago Ka to Mr.
Andres; that the latter told the former that they should talk later at his (Mr.
Andres) office but the complainant again called him (Mr. Andres) `Gago Ka;
7. That at this juncture, Mr. Andres deemed it proper to leave complainant; that
while Mr. Andres was already in the Seam Weld Section of the company,
complainant continued to stare at him without doing his job; that Mr. Andres
decided to ask complainant what his problem was; that herein complainant
retorted by saying: `BAKIT ANONG GUSTO MO, TANG INA MO; Mr. Andres just
left him (complainant);
8. That at about 8:30 a.m. of the same day, while Mr. Andres was on his way to
the canteen, herein complainant approached him (Mr. Andres) asking what he
told the office regarding the incident between them; that Mr. Andres told the
complainant to just ask the management about the matter;that complainant said
`Panapanahon lang yan, panahon mo ngayon;
9. That at 3:08 p.m. of the same day, complainant approached Mr. Andres in the
canteen and said `Patunayan mong minura kita at kung hindi, tandaan mo yan.
On February 5, 1993, Engr. Chavez issued a memorandum[3] to petitioner
Escanlar requiring the latter to explain in writing within 48 hours from receipt
thereof why no disciplinary action should be taken against him pursuant to the
companys Code of Discipline, for addressing Reynaldo T. Andres, his supervisor,
in profane or obscene language and for threatening him.
On February 6, 1993, Reynaldo Andres wrote a memorandum[4] to Engr.
Chavez that petitioner Escanlar had again threatened him the previous day at
the basketball court of the company premises.
On February 8, 1993, petitioner Escanlar submitted a written
explanation[5] to Engr. Chavez. On the same day, Engr. Chavez through a
memorandum[6] informed petitioner Escanlar of the scheduled hearing of the
January 29 incident on February 17, 1993. The hearing was continued on March
12, 1993.
After the administrative investigation, petitioner Escanlar was served a
Notice of Termination[7]dated April 19, 1993, for gross misconduct, i.e., uttering
unsavory remarks and threatening his supervisor with physical harm.
On April 21, 1993, petitioner filed a complaint for illegal dismissal against
Autobus. After the submission by the parties of their respective position papers,
the case was deemed submitted for resolution. On October 29, 1993, Labor
Arbiter Melquiades Sol D. Del Rosario rendered a decision finding the dismissal
of petitioner valid, pertinent portions of which are quoted hereunder:
Subjecting the evidence on record to a close scrutiny, this Arbitration Branch
notes that the immediate cause of the row was the order of transfer given by the
Supervisor, Mr. Andres to complainant and Julieto Anober from the Cutting
Section to the Washer and Painting Sections, respectively. Complainant felt that
being a machine operator and union president at that, his transfer to the washer
section is without legal and justifiable basis and this constituted
harassment. The records discloses, however, that the very Collective Bargaining
Agreement, signed by the union headed by complainant and respondent
provides for such transfer as management prerogative of respondent. Article VI
of the C.B.A. (Annex 1, Respondents Rejoinder to Reply to Position Paper),
reads:
15
The union hereby recognizes the companys right x x x to transfer employees
from one job to another; and to make changes in the duties of employees as the
company may consider fit and proper to the conduct of its business and to
exercise the inherent and customary prerogative and functions of management.
With this blanket grant of management prerogative, complainant who headed
the union panel that concluded the C.B.A. with respondent company is now
estopped to question his transfer of work.Further, the reason given for the
transfer is the lack of manpower to the two (2) sections and there is no showing
that the transfer is permanent. There is no evidence on record that showed
complainants transfer as permanent. If at all it was done by respondent to meet
the exigencies of the situation on account of a dearth in manpower. Finally,
complainants transfer and subsequent dismissal can not be termed unfair labor
practice on account of union busting because complainant failed to show by
concrete proof that all the other officers of the union have been removed or are
on the verge of being so. As it appears on records, the union has been in
existence prior to complainants ascendancy as president of the union and even
with complainant at the helm of the union as president, respondent company
readily concluded a Collective Bargaining Agreement with the union. If union
busting has been the agenda of respondent, complainant would not find himself
all alone in his present predicament but his co-union officers likewise; but this
is not the picture obtaining.
In fine, this Arbitration Branch does not find any unfair labor practice
committed by respondents as an aftermath of complainants dismissal.
With regard to the issue of illegal dismissal, there is evidence on record that
complainant violated Sec. 6 of Rule No. 28 of the Code of Discipline of
respondent company, which provides:
Seksiyon 6- ASAL AT KILOS pag-insulto o panghihiya, pagbanta ng pananakit o
pagpakita ng anumang sinasadyang di paggalang sa isang superbisor o sino
mang opisyal ng kumpanya.
The transfer of complainant from the cutting section to the washer section has
undoubtedly bruised complainants ego, and created a rancor in his heart not
only because he has been assigned for quite sometime to operate a machine but
also because he is the president of the workers union in the company. He had
therefore a reason to commit the acts complained of by respondents. This
Arbitration Branch therefore gives more weight and credence to the
supervisors complaint that on four (4) occasions on January 29, 1993,
complainant committed acts that violated said rule. These acts are:
That at around 6:55 a.m. when complainant uttered against his supervisor gago
ka (twice) when the latter was accused with playing favorites in the choosing of
employees for overtime work, when the supervisor pointed to one Tomas
Marahit who can deny the charge of favoritism; that the complainant uttered the
words bakit, anong gusto mo, tang ina mo upon being approached by the
supervisor to ask what the problem is because complainant was not doing his
work but merely staring at him; that at 8:30 a.m., when the supervisor on his
way to the canteen was threatened by complainant when he said, panapanahon
lang iyan, panahon mo ngayon when not told about the contents of the
supervisors report to management concerning the incident that transpired
between the two (2) of them; and that at 3:08 of the same day, again at the
canteen when complainant approached his supervisor and uttered the following
words: Patunayan mong minura kita at kung hindi, tandaan mo iyan.
To these claims of the supervisor, complainant could only give a general
denial. As between a positive averment and a mere denial the former should be
accorded more weight and belief.Moreover, in complainants attempt to twist
facts, he claims that it was the supervisor who uttered profane language but
during the investigation of February 17, 1993, he admitted that he did not hear
the supervisor uttered any bad word. Rather it was his co-worker Julieto
Anober who told him about it not at the time the statement was uttered but in
the afternoon when said co-worker was about to go home. This would
constitute an after thought not worthy of credence. Furthermore, the contents
of Julieto Anobers affidavit did not mention during the investigation by the fact
finding committee on March 12, 1993 said bad words but only the word gago as
having been uttered by the supervisor and relayed to complainant in the
afternoon when he was about to go home (Annex G-5, Respondents Rejoinder to
Reply to Position Paper). He simply said, iyan lang ang sinabi ko kay Ric
(Complainant) nuong kinahapunan x x x pauwi na ako (Annex G-6, Supra).
The utterance of complainant are four-square with the violated rule
aforecited. As there is legal cause and procedural due process accorded to
complainant, this Arbitration Branch so holds and declares complainants
dismissal to be valid.[8]
On appeal, the decision was affirmed by respondent National Labor
Relations Commission in its Resolution[9] dated July 12, 1994.
Dissatisfied with the NLRC decision, petitioner has come to this Court via this
petition for certiorari and prohibition, contending that respondent NLRC acted
with grave abuse of discretion in affirming the decision of the labor arbiter.
16
 Petitioner asserts that there are questions of fact which have been
overlooked and misconstrued by the labor arbiter and the NLRC.
It is well-settled in this jurisdiction that factual findings of the NLRC,
particularly when they coincide with those of the Labor Arbiter, are accorded
respect, even finality, and will not be disturbed for as long as such findings are
supported by substantial evidence.[10] In the instant case, we have no reason to
deviate from this policy as petitioner failed to convince us that the findings of
the labor arbiter as affirmed by the NLRC are devoid of basis or are otherwise
capricious or arbitrary.[11]
Petitioner was dismissed by respondent Autobus for violation of Section 6
(B) of the companys Code of Discipline, to wit:
B. SEKSIYON 6. ASAL AT KILOS
24. Pag-insulto o panghihiya, pagbabanta ng pananakit o pagpapakita ng
anumang sinasadyang di-paggalang sa isang superbisor o sino mang opisyal ng
kumpanya.
Takdang Parusa: Suspensiyon hanggang sa pagtitiwalag, ayon sa bigat ng
pagkakasala.[12]
which is considered as an act of gross misconduct and is a valid ground for
terminating an employee pursuant to Article 282 of the Labor Code.
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 must be of such a grave and aggravated character
and not merely trivial or unimportant.[13] The charge of serious misconduct
finds ample support in the record. Petitioner failed to satisfactorily rebut this
accusation, his only defense being self-serving denials.
The repeated utterances by petitioner of obscene, insulting or offensive
words against a superior were not only destructive of the morale of his co-
employees and a violation of the company rules and regulations, but also
constitute gross misconduct which is one of the grounds provided for by law to
terminate the services of an employee.[14] His attitude toward his supervisor,
Reynaldo T. Andres, amounted to insubordination and conduct unbecoming of
an employee which merited the penalty of dismissal.[15]
Suffice it to state that an employee may be validly dismissed for violation
of a reasonable company rule or regulation adopted for the conduct of the
companys business.[16] It is the recognized prerogative of the employer to
transfer and reassign employees according to the requirements of its
business. For indeed, regulation of manpower by the company clearly falls
within the ambit of management prerogative. A valid exercise of management
prerogative is one which, among others, covers: work assignment, working
methods, time, supervision of workers, transfer of employees, work
supervision, and the discipline, dismissal and recall of workers. Except as
provided for, or limited by special laws, an employer is free to regulate,
according to his own discretion and judgment, all aspects of employment.[17]
Then petitioner makes the farfetched claim that his dismissal is by reason
of his being the union president, thus Autobus is allegedly guilty of unfair labor
practice. This contention is devoid of any legal foundation. We agree with the
observation of the respondent NLRC that:
x x x. The records are devoid of any substantial evidence that would establish
the theory that the dismissal of herein complainant was entirely and exclusively
motivated by the employees union activities or affiliations nor brought about by
a clear discriminatory motive.[18]
Finally, petitioner assails the proceedings during the administrative
investigation claiming violation of due process. We are not convinced.
The twin requirements of notice and hearing constitute the essential
elements of due process. Due process of law simply means giving opportunity to
be heard before judgment is rendered. In fact, there is no violation of due
process even if no hearing was conducted, where the party was given a chance
to explain his side of the controversy. What is frowned upon is the denial of the
opportunity to be heard.[19]
A perusal of the record reveals that petitioner was duly notified of the
charges against him and given the opportunity to defend himself via a written
explanation and thereafter, to adduce evidence on his behalf during a formal
hearing where he was represented by a counsel of his own choice.
A formal trial-type hearing is not even essential to due process. It is
enough that the parties are given a fair and reasonable opportunity to explain
their respective sides of the controversy and to present supporting evidence on
which a fair decision can be based.[20] This type of hearing is not even
mandatory in cases of complaints lodged before the Labor Arbiter.[21]
WHEREFORE, the petition is DISMISSED. The resolution of respondent
NLRC affirming the decision of the Labor Arbiter is AFFIRMED.
SO ORDERED.
17
MANUEL C. FELIX, petitioner, vs. ENERTECH SYSTEMS INDUSTRIES, INC.
and COURT OF APPEALS, respondents.
DECISION
MENDOZA, J.:
This is a petition for review on certiorari of the decision[1] of the
respondent Court of Appeals, dated January 6, 2000, affirming the decision of
the National Labor Relations Commission (NLRC), dated June 17, 1998,
declaring the dismissal of petitioner Manuel C. Felix to be legal, although
granting his claim for 13thmonth pay, and the appeals courts resolution, dated
February 18, 2000, denying petitioners motion for reconsideration.
The facts, as found by the Court of Appeals, are as follows:
Respondent Enertech System Industries, Incorporated is engaged in the
manufacture of boilers and tanks.Petitioner Manuel C. Felix worked as a
welder/fabricator in respondent company. On August 5, 1994, petitioner and
three other employees, namely, Dante Tunglapan, Hilario Lamog, and Emerson
Yanos, were assigned to install a smokestack at the Big J Feedmills in Sta.
Monica, Bulacan. During the entire period they were working at the Big J
Feedmills, petitioner and his companions accomplished daily time records
(DTRs).Petitioner wrote in his DTR that he had worked eight hours a day on the
basis of which his wages were computed.
The work was estimated to be completed within seven days, but it actually
took the workers until August 17, 1994, or about two weeks, before it was
finished. On that day, petitioner and his three co-employees were each given
notice by respondent, which read in part:
Reports came to our office that for the past few days you were reporting at [the]
Big J jobsite at around eleven oclock in the morning and you were leaving said
site at two oclock.
We would like to inform you that said act constitutes Abandonment of Work
which is [a] violation of our Company Code on Employees Discipline that
warrants a penalty of DISMISSAL.
Therefore, you are hereby given 24 hours to explain your side on the said
matter.[2]
The next day, August 18, 1994, petitioner and his co-workers were placed
under preventive suspension for seven working days. On August 26, 1994,
respondent, through its personnel assistant, Ma. Imelda E. Samson (MIES), and
in the presence of two union officers, Armando B. Tumamao (ABT) and Jessie T.
Yanos (JTY), interviewed Johnny F. Legaspi (JFL), who owned the Big J
Feedmills, and his engineer, Juanito Avena.The transcript of their interview
reads:
MIES: Anong oras ho ba nagtatrabaho ang mga tao naming nai-assign dito?
JFL: Madalas nagsisimula sila ng alas-diyes ng umaga at minsan naman alas-
onse ng umaga; mula ng nag-umpisa sila dito hindi pa sila naka-buo ng
apat na oras na trabaho mag-hapon.
MIES: Bakit ho, anong oras ba sila dumarating?
JFL: Hindi pare-pareho, may alas-otso ng umaga, minsan 9:00, minsan 9:30
ng umaga, pero hindi sila sabay-sabay na dumarating ha. Madalas pa
nga mag-aalas-diyes na sila dumarating, pag kumpleto na silang apat
saka pa lang sila magsisimulang magtrabaho.
ABT: May mga araw ho nagdadaan sila sa Shop namin para pumick-up ng
gamit baka ito ho iyong tinatanghali sila ng dating?
JFL: Iyon nga ang sabi nila eh, kaya daw sila tinatanghali kasi nga kumukuha
sila ng gamit sa shop ninyo, pero hindi naman sila sabay-sabay
kumukuha ng gamit o suweldo, di ba? Saka nagpapapirma sila ng
delivery receipt kay Engr. Avena at isa-isa lang naman ang nagpupunta
sa Shop ninyo, yung naiiwan dito sa Shop hindi agad nagtatrabaho,
hinihintay pa nila yung kasama nila.
ABT: May dumarating ho ba ng alas-siyete ng umaga?
JFL: Wala nga eh, tanghali na nga sila dumarating, pagdating magtatabraho
sandali tapos titigil para kumain sa tindahan wala pang alas-dose
kumakain na sila kasi baka maubusan sila ng ulam o kakainin, tapos
alas-dose magpapahinga na sila, matutulog doon sa may boiler bago pa
lamang mag-alas-kuatro umaalis na sila kaya wala talagang otso oras
ang trabaho nila.
JTY: Paano nyo ho nalalaman kung nagtratrabaho sila o hindi?
JFL: Alam ninyo, galing ako sa sakit; kailangan ko ng pahinga pero imbes na
sa loob ako nagpapahinga dito na lang ako sa labas, umagang-umaga pa
lang, nandito na ako. Kita niyo naman mula dito nakikita ko ang
lumalabas at pumapasok dito, saka makikita mo kung may tao doon sa
bubong saka doon sa may boiler at maririning mo rin kung nag-we-
welding o may nag-pupukpok.
18
 Lumalapit nga itong si Manuel sa amin at nagpapagawa ng sulat na
nagpapatunay na pumapasok sila ng 7 to 4 pero hindi ako pumayag
kasi lalabas na nagsisinungaling na ako. Gusto lang naman namin
lumagay sa tama, kung ano yung totoo iyon na iyon, noong minsan nag-
report kami sa opisina ninyo na nag half-day sila, yun pala natutulog
lang sila sa ilalim ng boiler sa may skid. Kaya naman gumawa kami
agad ng sulat para ipaalam sa inyo na hindi pala sila umuwi, nandoon
pa pala sila, natutulog.[3]
These statements were corroborated by the affidavit[4] of petitioners co-
employee, Emerson G. Yanos, who stated that petitioner and his co-worker
Dante Tunglapan usually arrived for work at the Big J Feedmills between 9:30 to
10:00 a.m., stopped working at 12:00 noon, then resumed work at 1:00 p.m.,
continuing until 3:00 p.m. Before going home, they had snacks.
Reynaldo Tapiru, petitioners co-employee and neighbor in Sitio
Kabanatuan, Valenzuela, also stated in an affidavit[5] that he had seen petitioner
either in his house or within their compound on August 6, 7, 8, and 14, 1994,
between 3 and 4 oclock in the afternoon, when he was supposed to be working
at the Big J Feedmills in Bulacan at that time.
On September 9, 1994, respondent required petitioner to report to the
company lawyer on September 13, 1994 for investigation.[6] Then, on October
17, 1994, it issued a memorandum[7] placing petitioner under preventive
suspension for 30 days. Finally, on November 21, 1994, respondent sent
petitioner a memorandum terminating his employment on the following
grounds:
SECTION 7. DISHONESTY
6. Falsifying time cards or any other timekeeping records, or drawing
salary/allowance by virtue of falsified time cards.
SECTION 8. INSUBORDINATION
4. Willful holding back, slowing down, hindering, or limiting work
output.
5. Encouraging, coercing, inciting, bribing, or otherwise inducing any
employee to engage in any practice in violation of the Companys
work rules.[8]
Petitioner filed a complaint for illegal dismissal against respondent before
the Arbitration Branch of the NLRC. On June 19, 1997, Labor Arbiter Arthur
Amansec rendered a decision finding petitioner to have been illegally dismissed
and ordering respondent as follows:
WHEREFORE, complainant Manuel Felix is hereby found to have been illegally
DISMISSED from employment and concomitantly respondent is hereby ordered
to reinstate complainant with backwages and pay his proportionate 13th month
pay for 1994.
Other claims are hereby ordered DISMISSED for lack of merit. The Complaint of
Dante Tungpalan should be as it is hereby DISMISSED by reason of settlement.
SO ORDERED.[9]
Respondent appealed to the NLRC. Pending appeal, a writ of execution was
issued on September 23, 1997 directing respondent to reinstate petitioner
either physically or in the payroll.
On October 10, 1997, respondent filed an omnibus motion[10] arguing that
reinstatement was no longer possible as the violations of company rules
committed by petitioner had caused strained relations between petitioner and
itself. Respondent further alleged that because of petitioners falsification of his
daily time records which enabled him to collect his full salary, it could no longer
trust him. Respondent prayed that the writ of execution be recalled and that a
new order be issued allowing it to pay petitioner separation pay in lieu of
reinstatement.
On June 17, 1998, the NLRC rendered a decision reversing the labor
arbiters decision and dismissing petitioners complaint for illegal dismissal for
lack of merit. The NLRC found sufficient evidence to prove that petitioner put in
less than the required eight hours daily work during his detail at the Big J
Feedmills and, therefore, held that his dismissal was in accordance with the
Company Code of Discipline and the Labor Code.[11]
Petitioner filed a motion for reconsideration, but the same was
denied.[12] He appealed to the Court of Appeals which, on January 6, 2000,
affirmed the dismissal of petitioner although it granted his claim for 13thmonth
pay. In its resolution of February 18, 2000, the Court of Appeals denied
reconsideration of its decision.Hence this present petition.
Petitioner assails the decision of the Court of Appeals in not ordering the
award of backwages by reason of respondent corporations refusal to reinstate
him pending appeal of the case. He argues that the omnibus motion filed by
19
respondent during the pendency of the appeal should have been treated as
respondents admission of liability for reinstatement or, in lieu thereof, for
separation pay.
First. Petitioner prays that the Court reinstate the labor arbiters decision
finding respondent corporation guilty of illegal dismissal. The labor arbiter held
as doubtful the statement of Johnny Legaspi and petitioners two co-employees
to the effect that petitioner and his co-workers put in only four hours; that the
statements of Legaspi and Yanos were inaccurate as there was no timekeeper at
the job site to monitor the arrivals and departures of employees; and that the
delay in the completion of the project could be due to an erroneous estimate on
duration of work, lack of materials, or lack of work coordination.[13]
Petitioners argument has no merit. The Court of Appeals, taking into
account the findings of the NLRC, the interview with Johnny Legaspi and his
engineer, and the affidavits of Yanos and Tapiru, correctly concluded that there
was substantial evidence presented showing that petitioner did not really work
eight hours a day, as he had stated in his time cards.[14]
Indeed, the validity of petitioners dismissal is a factual question. It is not
for the reviewing court to weigh the conflicting evidence, determine the
credibility of witnesses, or otherwise substitute its own judgment for that of the
administrative agency. Well-settled is the rule that the findings of fact of quasi-
judicial agencies, like the NLRC, are accorded not only respect but at times even
finality if such findings are supported by substantial evidence.[15] This is
especially so in this case, in which the findings of the NLRC were affirmed by the
Court of Appeals. The findings of fact made therein can only be set aside upon a
showing of grave abuse of discretion, fraud, or error of law. [16] There is no such
showing of grave abuse of discretion in this case.
For this reason, we find petitioners dismissal to be in order. Falsification of
time cards constitutes serious misconduct and dishonesty or fraud,[17] which are
just causes for the termination of employment under Art. 282(a) and (c) of the
Labor Code which provides:
ART. 282. Termination by employer. An employer may terminate an employment
for any of the following causes:
(a) Serious misconduct or willful disobedience by the employee of the lawful
orders of his employer or representative in connection with his work;
....
(c) Fraud or willful breach by the employee of the trust reposed in him by his
employer or duly authorized representative;
(Emphasis added)
As to the labor arbiters observation that a timekeeper should have been
assigned to the Big J Feedmills, we think the Court of Appeals correctly disposed
of the same, thus:
Employees are hired in order to foster the employers business, and company
rules and regulations are part of such goal. If we adhere to the labor arbiters
view that a timekeeper should have been placed by private respondent or to
commission the latters client to act as timekeeper, it would be an additional
burden not only on the part of private respondent but also on its client. It would
be contrary to every business motto that clients should be given utmost
satisfaction and convenience. Moreover, if every time an assignment is given to
an employee, the employer will send out someone to spy, the atmosphere of
harmonious relationship between the employer and its employees will be
beclouded, thundering forth suspicion and distrust among themselves.[18]
Second. Petitioner contends that the omnibus motion filed by respondent
on October 10, 1997 during the pendency of the appeal is an admission that it is
liable for reinstatement or, in lieu thereof, for separation pay.
The contention has no merit. No such inference can be derived from a
reading of the omnibus motion filed by respondent. To the contrary, respondent
in fact vehemently opposed the implementation of the writ of execution issued
by the labor arbiter.20 Thus, respondent said:
2. That reinstatement can no longer be made or is no longer possible
considering the nature of the offense or violation (although an issue under
appeal) which the complainant committed. This offense or violation has caused
serious and severe strained relationship between the complainant and the
respondent employer;
3. That it must be recalled, and as the records of the case will confirm,
complainant committed a virtual criminal act of falsifying his daily time records
based on which he collected his salary. Due to the seriousness of this offense,
there is no way by which respondent employer can trust complainant again and
place the future and welfare of the company to shenanigans who try to defraud
it;21
20
 Respondent appears merely to have been mistaken about the options open
to it upon promulgation of the labor arbiters decision. As to the question of
whether separation pay in lieu of his reinstatement may be awarded to
petitioner, it is settled that such can be done only upon finality of judgment, that
is, when the judgment is no longer appealable, hence final and executory, and
where reinstatement can no longer be effected, as when the position previously
held by the employee no longer exists or when strained relations result in the
loss of trust and confidence.22
Rather, with the labor arbiters decision still pending appeal in the NLRC,
what is applicable is Art. 223 of the Labor Code, which in part provides:
[T]he decision of the Labor Arbiter reinstating a dismissed or separated
employee, insofar as the reinstatement aspect is concerned, shall immediately
be executory, even pending appeal. The employee shall either be admitted back
to work under the same terms and conditions prevailing prior to his dismissal
or separation or, at the option of the employer, merely reinstated in the
payroll. The posting of a bond by the employer shall not stay the execution for
reinstatement provided herein.
If at all, therefore, respondent should have reinstated petitioner in the
payroll, instead of offering him separation pay. Be that as it may, the omnibus
motion filed by respondent cannot be construed as an admission of its liability
for reinstatement.
Third. Anent petitioners claim that he is entitled to backwages from the
time the labor arbiter rendered a decision in his favor until said decision was
reversed by the NLRC, this issue should have been raised earlier in the Court of
Appeals and not only now in the present petition. Hence, this matter cannot be
considered by the Court.22
WHEREFORE, the decision of the Court of Appeals is AFFIRMED for lack of
showing that it committed a reversible error.
SO ORDERED.
G.R. No. 111110 August 2, 1994
ZENCO SALES, INC. and/or ZENCO FOOTSTEP, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, FIFTH DIVISION, CAGAYAN
DE ORO CITY, and ANASTACIO C. YAP, respondents.
Rebolos Valmorida and Associates for petitioner.
Rodulfo Uy for private respondent.
DAVIDE, JR., J.:
This is a special civil action under Rule 65 to nullify the resolution 1 of the public
respondent of 12 May 1993 in NLRC CA No. M-001029-92 which affirmed, with
modification, the decision 2 of the Executive Labor Arbiter, Hon. Benjamin
Pelaez, of 26 August 1992 in NLRC RABX Case No.
10-06-00351-91, entitled "Anastacio C. Yap vs. Zenco Sales, Inc. and/or Zenco
Footstep." The Labor Arbiter had dismissed the private respondent's complaint
for illegal dismissal, profit sharing, commission for 1990, and damages. The
public respondent affirmed the decision of the Labor Arbiter but awarded
"separation pay based on social justice."
In dismissing the complaint, the Labor Arbiter noted and held:
Anent the issue of illegal dismissal, We find for Respondent.
The Internal Audit Report clearly established Complainant's
misfeasance and malfeasance in the performance of his duty as
Branch Manager which resulted to a loss of substantial amount
of money and an act inimical to the interest of Respondent
corporation. Complainant is guilty of misfeasance for his
failure to closely monitor and control the sales transactions of
salesman Chua and malfeasance because he used Respondent
corporation's properties, equipments and personnel in
connection with his personal business of buy and sell of used
sacks. These acts of Complainant constitute gross neglect in the
performance of duty and serious misconduct resulting to loss
of trust and confidence which under Article 292 [should be
282] of the Labor Code, as amended, are ground [sic] to
terminate an employment.
We further noted that Complainant failed to dispute the
findings of the Internal Auditors of Respondent corporation.
However, he contended lack of due process in effecting the
termination of employment. On the contrary, We find
otherwise. Complainant was duly confronted by the findings of
the auditors during the investigation conducted by Mr. Lino Sy,
Assistant Vice-President for Sales in Mindanao, at De Luxe
Hotel on 1 April 1991. 3
In its resolution of 12 May 1993, the public respondent, acting on the
complainant's appeal from the aforesaid decision, found the appeal "devoid of
merit," declared that the Labor Arbiter's findings that the private respondent "is
21
guilty of misfeasance and malfeasance is substantially supported by the facts
and evidence on record," and sustained the Labor Arbiter's conclusion that the
complainant was validly dismissed for cause. It specifically stated that the acts
of the private respondent "constitute gross neglect in the performance of duty
and serious misconduct resulting to loss of trust and confidence which under
Article 292 [sic] of the Labor Code, as amended, are ground [sic] to terminate an
employment." Nevertheless, it modified the decision by granting the
complainant separation pay at the rate of one month's salary for every year of
service. Its justification therefor reads:
Considering, however, that the infractions of complainant
which involved violations of company policies does not
constitute a depraved act or those reflecting on his moral
character and taking into further account his ten (10) years of
unblemished service, except for the instant case, We find
justifiable basis in awarding his separation pay based on social
justice fixed at the rate of one (1) month salary for every year
of service (See PLDT vs. NLRC, 164 SCRA 671 [1988]). 4
Its motion to reconsider the modification having been denied by the public
respondent in the resolution of 17 June 1993, 5 the petitioner filed this special
civil action imputing upon the public respondent "patent abuse of discretion
amounting to lack of jurisdiction and/or excess of jurisdiction in modifying the
decision . . . of the Labor Arbiter." It maintains that giving the complainant
(private respondent) separation pay "in the interest of social justice as an act of
compassion is unwarranted under the given set of facts" and his ten years of
service "cannot be given any premium to justify the award." 6
In his comment posted on 28 September 1993, the private respondent defends
the modification because the same finds justification under the Constitutional
provision "for the improvement of the lot of the workers" and the ruling
in Philippine Long Distance Telephone Co. vs. National Labor Relations
Commission, 7 and asserts that the infraction he committed did not, as correctly
held by the public respondent, involve a depraved act or those reflecting on his
moral character. 8 It was, he claims, the petitioner's saleswoman, Ms. Chua, who
was directly responsible for the losses it sustained."
In its Manifestation in Lieu of Comment, 9 the Office of the Solicitor General
submits "that there is merit in petitioner's contention that since, as found by the
Labor Arbiter and the NLRC, private respondent was guilty of committing acts
which 'constitute gross neglect in the performance of duty and serious
misconduct resulting to loss of trust and confidence,' the award of separation
pay to private respondent was improper," and legally indefensible for it
contravenes Section 7, Rule 1, Book VI of the Omnibus Rules Implementing the
Labor Code. It argues that the only cases where separation pay shall be granted
although the employee was lawfully dismissed are when the cause of
termination was not attributable to the employee's fault but due to the
following reasons: (1) the installation of labor-saving devices, (2) redundancy,
(3) retrenchment, (4) cessation of the employer's business, or (5) when the
employee is suffering from a disease and his continued employment is
prohibited by law or is prejudicial to his health and to the health of his co-
employees. 10 It cites this Court's decisions in Eastern Paper Mills, Inc. vs.
NLRC, 11 Philippine Long Distance Telephone Co. vs. NLRC, 12 and Baguio Country
Club Corp. vs. NLRC. 13
The Office of the Solicitor General then concludes that from the established facts
in this case, "it is clear that private respondent was validly dismissed not only
because he committed neglect in the performance of his duties and serious
misconduct but that his acts of using petitioner's equipment and personnel for
his personal use and benefit constitutes an offense involving dishonesty."
In the resolution of 1 December 1993, 14 copy of which was received by the
public respondent on 20 December 1993, this Court granted the prayer of the
Office of the Solicitor General to give the public respondent a new period to file
its own comment. Despite three extensions of thirty days each, the last of which,
with warning, expired on 20 June 1994, the public respondent did not file the
required comment.
The Court then resolved to decide this case on the merits without the public
respondent's comment.
We rule for the petitioner.
The public respondent affirmed the findings of the Labor Arbiter that the
private respondent "is guilty of misfeasance for his failure to closely monitor
and control the sales transactions of salesman Chua and malfeasance because
he used respondent corporation's properties, equipments and personnel in
connection with his personal business of buy and sale of used sacks," which,
when brought within the ambit of Article 282 (not Article 292) of the Labor
Code "constitute gross neglect in the performance of duty and serious
misconduct resulting to loss of trust and confidence."
A reading of Articles 279 and 282 of the Labor Code and Section 7, Rule I, Book
V of the Omnibus Rules Implementing the Labor Code 15 reveals that an
22
employee who is dismissed for cause under Article 282 after appropriate
proceedings in compliance with the due process requirements 16 is not entitled
to an award of separation pay. Under Articles 283 and 284 of the Labor Code,
separation pay is authorized only in cases of dismissals due to the following
reasons: (a) the installation of labor-saving devices, (b) redundancy, (c)
retrenchment, (d) cessation of the employer's business, and (e) when the
employee is suffering from a disease and his continued employment is
prohibited by law or is prejudicial to his health and to the health of his
co-employees. 17
In the 23 August 1988 Decision in Philippine Long Distance Telephone Co. vs.
NLRC, 18 however, this Court, speaking through Mr. Justice Isagani A. Cruz,
recognized an exception.
Strictly speaking, however, it is not correct to say that there is no
express justification for the grant of separation pay to lawfully
dismissed employees other than the abstract consideration of
equity. The reason is that our Constitution is replete with positive
commands for the promotion of social justice, and particularly the
protection of the rights of the workers. The enhancement of their
welfare is one of the primary concerns of the present charter. In fact,
instead of confining itself to the general commitment to the cause of
labor in Article II on the Declaration of Principles and State Policies,
the new Constitution contains a separate article devoted to the
promotion of social justice and human rights with a separate sub-
topic for labor. Article XIII expressly recognizes the vital role of
labor, hand in hand with management, in the advancement of the
national economy and the welfare of the people in general. The
categorical mandates in the Constitution for the improvement of the
lot of the workers are more than sufficient basis to justify the award
of separation pay in proper cases even if the dismissal be for
cause. 19
Nevertheless, the Court re-examined the previous cases which granted
separation pay in cases of dismissals for cause in the light of their lack
of consistency as to the justification for the grant thereof and the
amount or rate of such award, and, thereafter, laid down the following
doctrine and its rationale:
We hold that henceforth separation pay shall be allowed as a measure of
social justice only in those instances where the employee is validly
dismissed for causes other than serious misconduct or those reflecting on
his moral character. Where the reason for the valid dismissal is, for
example, habitual intoxication or an offense involving moral turpitude,
like theft or illicit sexual relations with a fellow worker, the employer
may not be required to give the dismissed employee separation pay, or
financial assistance, or whatever other name it is called, on the ground of
social justice.
A contrary rule would, as the petitioner correctly argues, have the effect,
of rewarding rather than punishing the erring employee for his offense.
And we do not agree that the punishment is his dismissal only and that
the separation pay has nothing to do with the wrong he had committed.
Of course it has. Indeed, if the employee who steals from the company is
granted separation pay even as he is validly dismissed, it is not unlikely
that he will commit a similar offense in his next employment because he
thinks he can expect a like leniency if he is again found out. This kind of
misplaced compassion is not going to do labor in general any good as it
will encourage the infiltration of its ranks by those who do not deserve
the protection and concern of the Constitution.
The policy of social justice is not intended to countenance wrongdoing
simply because it is committed by the underprivileged. At best it may
mitigate the penalty but it certainly will not condone the offense.
Compassion for the poor is an imperative of every humane society but
only when the recipient is not a rascal claiming an undeserved privilege.
Social justice cannot be permitted to be refuge of scoundrels any more
than can equity be an impediment to the punishment of the guilty. Those
who invoke social justice may do so only if their hands are clean and their
motives blameless and not simply because they happen to be poor. This
great policy of our Constitution is not meant for the protection of those
who have proved they are not worthy of it, like the workers who have
tainted the cause of labor with the blemishes of their own character. 20
In the instant case, the private respondent was found guilty of gross misconduct
for having used his employer's (petitioner's) "properties, equipments and
personnel in connection with his personal business of buy and sale of used
sacks." His acts involve gross dishonesty deliberately done for his personal
advantage. The doctrine laid down in Philippine Long Distance Telephone Co.
that separation pay, as a measure of social justice, shall be allowed only where
the employee is validly dismissed for causes other than serious misconduct or
those reflecting on his moral character is applicable.
23
The public respondent acted with grave abuse of discretion in awarding the
private respondent separation pay despite its affirmance in toto of the findings
and conclusions of the Labor Arbiter.
WHEREFORE, the petition is GRANTED. The challenged resolution of public
respondent National Labor Relations Commission of 12 May 1993 in NLRC CA
No. M-001029-92 (Case No. RAB-10-06-00351-91) is MODIFIED by deleting the
award of separation pay.
No pronouncement as to costs.
SO ORDERED.
SENTINEL SECURITY AGENCY, INC., petitioner, vs. NATIONAL LABOR
RELATIONS COMMISSION, ADRIANO CABANO, JR., VERONICO C.
ZAMBO, HELCIAS ARROYO, RUSTICO ANDOY, and MAXIMO
ORTIZ, respondents.
PHILIPIPPINE AMERICAN LIFE INSURANCE COMPANY, petitioner,
vs.NATIONAL LABOR RELATIONS COMMISSION, VERONICO ZAMBO,
HELCIAS ARROYO, ADRIANO CABANO, MAXIMO ORTIZ, and
RUSTICO ANDOY, respondents.
DECISION
PANGANIBAN, J.:
The transfer of an employee involves a lateral movement within the
business or operation of the employer, without demotion in rank, diminution of
benefits or, worse, suspension of employment even if temporary. The recall and
transfer of security guards require reassignment to another post and are not
equivalent to their placement on floating status. Off-detailing security guards
for a reasonable period of six months is justified only in bona fide cases of
suspension of operation, business or undertaking.
The Case
This is the rationale used by the Court in dismissing the two consolidated
petitions for certiorari before us, seeking the reversal of the Decision dated
August 25, 1995, and the Resolution date October 24, 1995, both promulgated
by the National Labor Relations Commission[1] in NLRC Case No. V-0317-94
(RAB VII-01-0097-94, RAB VII-020173-94, and RAB VII-01-0133-94).
In the action for illegal dismissal and payment of salary differential, service
incentive leave pay and separation pay filed by private respondents, Labor
Arbiter Dominador A. Almirante rendered a Decision, which disposed:[2]
WHEREFORE, premises considered[,] judgment is hereby rendered ordering
xxx Sentinel Security Agency, Inc. jointly and severally with xxx Philamlife, Cebu
Branch, to pay complainants the total amount of [s]ixty [t]housand [o]ne
[h]undred [t]welve [p]esos and 50/100 (P60,112.50) in the concept of
13th month pay and service incentive leave benefits as computed by our Labor
Arbitration Associate whose computation is hereto attached and forming part
thereof.[3]
On appeal, the NLRC modified the labor arbiters Decision. The dispositive
portion of the NLRC Decision[4]reads:
WHEREFORE, the assailed Decision is hereby MODIFIED in so far as the award
of 13th month pay for the previous years which is hereby excluded. Further, xxx
Sentinel Security Agency, Inc. is hereby ORDERED to pay complainants
separation pay at the rate of month pay for every year of service and for both
xxx Philippine American Life Insurance, Inc. and Sentinel Security Agency, Inc.
and/or Daniel Iway to pay to the [complainants] jointly and severally their
backwages from January 16, 1994 to January 15, 1995 and the corresponding
13th month pay for the said year. The monetary awards hereby granted are
broken down as follows [into separation pay, back wages, 13th month pay and
service incentive leave pay]:
x x x x x x x x x.[5]
The challenged Resolution denied reconsideration for lack of merit.
The Facts
The undisputed factual backdrop is narrated by Respondent Commission
as follows:[7]
The complainants were employees of Sentinel [Security Agency, Inc. hereafter
referred to as the Agency] since March 1, 1966 in the case of Veronico Zambo;
October 27, 1975 in the case of Helcias Arroyo; September 20, 1985 in the case
of Adriano Cabano; February 1, 1990 in the case of Maximo Ortiz; and Ortiz and
November 1, 1967 in the case of Rustico Andoy. They were assigned to render
guard duty at the premises of [Philippine American Life Insurance Company] at
Jones Avenue, Cebu City. On December 16, 1993 Philippine American Life
Insurance Company [the Client, for brevity], through Carlos De Pano, Jr., sent
24
notice to all concerned that the [Agency] was again awarded the contract of
[s]ecurity [s]ervices together with a request to replace all the security guards in
the companys offices at the cities of Cebu, Bacolod, Cagayan de Oro, Dipolog and
Ilagan. In compliance therewith, [the Agency] issued on January 12, 1994, a
Relief and Transfer Order replacing the complainants as guards [of the Client]
and for then to be re-assigned [to] other clients effective January 16, 1994. As
ordered, the complainants reported but were never given new assignments but
instead they were told in the vernacular, gui-ilisa mo kay mga tigulang naman
mo which when translated means, you were replace[d] because you are already
old. Precisely, the complainants lost no time but filed the subject illegal
dismissal cases on January 18, January 26 and February 4, 1994 and prayed for
payment of separation pay and other labor standard benefits.
[The Client and the Agency] maintained there was no dismissal on the part of
the complainants, constructive or otherwise, as they were protected by the
contract of security services which allows the recall of security guards from
their assigned posts at the will of either party. It also advanced that the
complainants prematurely filed the subject cases without giving the [Agency] a
chance to give them some assignments.
On the part of [the Client], it averred further that there [was] no employer-
employee relationship between it and the complainants as the latter were
merely assigned to its Cebu Branch under a job contract; that [the Agency] ha[d]
its own separate corporate personality apart from that of [the Client]. Besides, it
pointed out that the functions of the complainants in providing security services
to [the Clients] property [were] not necessary and desirable to the usual
business or trade of [the Client], as it could still operate and engage in its life
insurance business without the security guards. In fine, [the Client] maintains
that the complainants have no cause of action against it.
Ruling of Respondent Commission
Respondent Commission ruled that the complainants were constructively
dismissed, as the recall of the complainants from their long time post[s] at [the
premises of the Client] without any good reason is a scheme to justify or
camouflage illegal dismissal.
It ruled Superstar Security Agency, Inc. vs. National Labor Relations
Commission[8] and A Prime Security Services, Inc. vs. national Labor Relations
Commission[9] were not applicable to the case at bar. In the former, the security
guard was placed on temporary off-detail due to his poor performance and lack
of elementary courtesy and tact, and to the cost-cutting program of the
agency. In the latter, the relief of the security guard was due to his sleeping
while on duty and his repeated refusal to resume work despite notice.
In the present case, the complainants case, the complainants were told by
the Agency that they lost their assignment at the Clients premises because they
were already old, and not because they had committed any infraction or
irregularity. The NLRC applied RA 7641,[10] which gives retirement benefits of
one-half month pay per year of service to retirable employees, viz.:
xxx As stated earlier xxx, the complainants were in the service of [the Client] for
nearly twenty (20) years in the cases of Helcias Arroyo and for more than
twenty (20) years in the cases of Veronico Zambo and Rustico Andoy, which
long years of service [appear] on record to be unblemished. The complainants
were then confronted with an impending sudden loss of earning for while the
order of [the Agency] to immediately report for reassignment momentarily gave
them hope, there was in fact no immediate reinstatement. While it could have
been prudent for the complainants to wait, they were set unstable and were
actually threatened by the statement of the personnel in charge of [the Agency]
that they were already old, that was why they were replaced.
Against these glaring facts is the new Retirement Law, R.A. 7641 which took
effect on January 7, 1993 giving retirement benefits of month pay per year of
service to an employee upon reaching retirement age to be paid by the
employer, in this case at quiet a sizeable amount and in not so long due time as
some of the complainants were described as already old.
As complainants were illegally dismissed, the NLRC ruled that they were
entitled to the twin remedies of back wages for one (1) year from the time of
their dismissal on January 15, 1994, payable by both the Client and the Agency,
and separation pay one-half month pay for every year of service payable only by
the Agency.Reinstatement was not granted due to the resulting antipathy and
resentment among the complainants, the Agency and the Client.
Hence, this petition.[11]
The Issues
In their memoranda, the Agency poses this question:[12]
xxx [W]hether xxx Sentinel is guilty of illegal dismissal[,]
On the other hand, the Client raises the following issues:[13]
25
Whether xxx [the complainants] were illegally dismissed by their employer,
Sentinel Security Agency, Inc., and in holding petitioner to be equally liable
therefor.
Whether xxx petitioner is jointly and severally liable with Sentinel Security
Agency, Inc., in the latters payment of backwages, 13th month pay and service
incentive leave pay to its employees xxx.
In sum, the resolution of these consolidated petitions hinges on (1)
whether the complainants were illegally dismissed, and (2) whether the Client
is jointly and severally liable for their thirteenth-month and service incentive
leave pays.
The Courts Ruling
The petition is partly meritorious.
First Issue: Illegal Dismissal
The private respondents transfer, according to Respondent Commission,
was affected to circumvent the mandate of Republic Act 7641 (New Retirement
Law), which by then had already taken effect, in view of the fact that the
complainants had worked for both the Client and the Agency for 10 to 20 years
and were nearing retirement age. With this premise, the NLRC concluded that
the guards were illegally dismissed. The complainants add that the findings of
the Commission match the remarks of the personnel manager of the Agency,
Feliciano Marticion; that is, that they were being replaced because they were
already old. They insist that their service records are unblemished; hence, they
could not have been dismissed by reason of any just cause.
We agree that the security guards were illegally dismissed, but not for the
reasons given by the public respondent. The aforecited contentions of the NLRC
are speculative and unsupported by the evidence on record. As the solicitor
general said in his Manifestation in Lieu of Comment, the relief and transfer
order was akin to placing private respondents on temporary off-detail.
Being sidelined temporarily is a standard stipulation in employment
contracts, as the availability of assignment for security guards is primarily
dependent on the contracts entered into by the agency with third parties. Most
contracts for security services, as in this case, stipulate that the client may
request the replacement of the guards assigned to it. In security agency
parlance, being placed off detail or on floating status means waiting to be
posted.[14] This circumstance is not equivalent to dismissal, so long as such
status does not continue beyond reasonable time.[15]
In the case at bar, the relief and transfer order per se did not sever the
employment relationship between the complainants and the Agency. Thus,
despite the fact that complainants were no longer assigned to the Client, Article
287 of the Labor Code, as amended by RA 7641, still binds the Agency to
provide them upon their reaching the retirement age of sixty to sixty-five years
retirement pay or whatever else was established in the collective bargaining
agreement or in any other applicable employment contract. On the other hand,
the Client is not liable to the complainants for their retirement pay because of
the absence of an employer-employee relationship between them.
However, the Agency claims that the complainants, after being placed off-
detail, abandoned their employ.The solicitor general, siding with the Agency
and the labor arbiter, contends that while abandonment of employment is
inconsistent with the filing of a complaint for illegal dismissal, such rule is not
applicable where [the complainant] expressly rejects this relief and asks for
separation pay instead.
The Court disagrees. Abandonment, as a just and valid cause for
termination, requires a deliberate and unjustified refusal of an employee to
resume his work, coupled with a clear absence of any intention of returning to
his or her work.[16] That complainants did not pray for reinstatement is not
sufficient proof of abandonment. A strong indication of the intention of
complainants to resume work is their allegation that on several dates they
reported to the Agency for reassignment, but were not given any. In fact, the
contention of complainant is that the Agency constructively dismissed
them. Abandonment has recently been ruled to be incompatible with
constructive dismissal. We, thus, rule that complainants did not abandon their
jobs.[17] We will now demonstrate why we believe complainants were illegally
dismissed.
In several cases, the Court has recognized the prerogative of management
to transfer an employee from one office to another within the same business
establishment, as the exigency of the business may require, provided that the
said transfer does not result in a demotion in rank or a diminution in salary,
benefits and other privileges of the employee;[18] or is not unreasonable,
inconvenient or prejudicial to the latter;[19] or is not used as a subterfuge by the
employer to rid himself of an undesirable worker.[20]
A transfer means a movement (1) from one position to another of
equivalent rank, level or salary, without a break in the service;[21] and (2) from
one office to another within the same business establishment. [22] It is
distinguished from a promotion in the sense that it involves a lateral change as
opposed to a scalar ascent.[23]
26
 In this case, transfer of the complainants implied more than a relief from
duty to give them time to rest a mere changing of the guards. Rather, their
transfer connoted a reshuffling or exchange of their posts, or their reassignment
to other posts, such that no security guard would be without an assignment.
However, this legally recognized concept of transfer was not
implemented. The agency hired new security guards to replace the
complainants, resulting in a lack of posts to which the complainants could have
been reassigned. Thus, it refused to reassign Complainant Andoy when he
reported for duty on February 2, 4 and 7, 1994; and merely told the other
complainants on various dates from January 25 to 27, 1994 that they were
already too old to be posted anywhere.
The Agency now explains that since, under the law, the Agency is given a
period of not more than six months to retain the complainants on floating
status, the complaint for illegal dismissal is premature. This contention is
incorrect.
A floating status requires the dire exigency of the employers bona fide
suspension of operation, business or undertaking. In security services, this
happens when the clients that do not renew their contracts with a security
agency are more than those that do and the new ones that the agency
gets. However, in the case at bar, the Agency was awarded a new contract by the
Client. There was no surplus of security guards over available assignments. If
there were, it was because the Agency hired new security guards. Thus, there
was no suspension of operation, business or undertaking, bona fide or not, that
would have justified placing the complainants off-detail and making them wait
for a period of six months. If indeed they were merely transferred, there would
have been no need to make them wait for six months.
The only logical conclusion from the foregoing discussion is that the
Agency illegally dismissed the complainants. Hence, as a necessary
consequence, the complainants are entitled to reinstatement and back
wages.[24] However, reinstatement is no longer feasible in this case. The Agency
cannot reassign them to the Client, as the former has recruited new security
guards; the complainants, on the other hand, refuse to accept other
assignments. Verily, complainants do not pray for reinstatement; in fact, they
refused to be reinstated. Such refusal is indicative of strained relations.[25] Thus,
separation pay is awarded in lieu of reinstatement.[26]
Second Issue:
Clients Liability
The Client did not, as it could not, illegally dismiss the complainants. Thus,
it should not be held liable for separation pay and back wages. But even if the
Client is not responsible for the illegal dismissal of the complainants, it is jointly
and severally liable with the Agency for the complainants service incentive
leave pay. In Rosewood Processing, Inc. vs. National Labor Relations
Commission,[27] the Court explained that, notwithstanding the service contract
between the client and the security agency, the two are solidarily liable for the
proper wages prescribed by the Labor Code, pursuant to Article 106, 107 and
109 thereof, which we quote hereunder:
ART. 106. Contractor or subcontractor.Whenever an employer enters into a
contract with another person for the performance of the former[s] work, the
employees of the contractor and of the latter[s] subcontractor, if any, shall be
paid in accordance with the provisions of this Code.
In the event that the contractor or subcontractor fails to pay the wages of his
employees in accordance with this Code, the employer shall be jointly and
severally liable with his contractor or subcontractor to such employees to the
extent of the work performed under the contract, in the same manner and
extent that he is liable to employees directly employed by him.
The Secretary of Labor may, by appropriate regulations, restrict or prohibit the
contracting out of labor to protect the rights of workers established under this
Code. In so prohibiting or restricting, he may make appropriate distinctions
between labor-only contracting and job contracting as well as differentiations
within these types of contracting and determine who among the parties
involved shall be considered the employer for purposes of this Code, to prevent
any violation or circumvention of any provision of this Code.
xxx In such cases [labor-only contracting], the person or intermediary shall be
considered merely as an agent of the employer who shall be responsible to the
workers in the same manner and extent as if the latter were directly employed
by him.
ART. 107. Indirect employer.The provisions of the immediately preceding Article
shall likewise apply to any person, partnership, association or corporation
which, not being an employer, contracts with an independent contractor for the
performance of any work, task, job or project.
ART. 109. Solidary liability.The provisions of existing laws to the contrary
notwithstanding, every employer or indirect employer shall be held responsible
with his contractor or subcontractor for any violation of any provision of this
27
Code. For purpose of determining the extent of their civil liability under this
Chapter, they shall be considered as direct employers.
Under these provisions, the indirect employer, who is the Client in the case
at bar, is jointly and severally liable with the contractor for the workers wages,
in the same manner and extent that it is liable to its direct employees. This
liability of the Client covers the payment of the service incentive leave pay of the
complainants during the time they were posted at the Cebu branch of the
Client. As service had been rendered, the liability accrued, even if the
complainants were eventually transferred or reassigned.
The service incentive leave is expressly granted by these pertinent
provisions of the Labor Code:
ART. 95. Right to service incentive leave.(a) Every employee who has rendered at
least one year of service shall be entitled to a yearly service incentive leave of
five days with pay.
(b) This provision shall not apply to those who are already enjoying the benefit
herein provided, those enjoying vacation leave with pay of at least five days and
those employed in establishments regularly employing less than ten employees
or in establishments exempted from granting this benefit by the Secretary of
Labor after considering the viability or financial condition of such
establishment.
(c) The grant of benefit in excess of that provided herein shall not be made a
subject of arbitration or any court [or] admnistrative action.
Under the Implementing Rules and Regulations of the Labor Code, an
unused service incentive leave is commutable to its money equivalent, viz.:
Sec. 5. Treatment of Banefit. - The service incentive leave shall be commutable to
its money equivalent if not used or exhausted at the end of the year.
The award of the thirteenth-month pay is deleted in view of the evidence
presented by the Agency that such claim has already been paid to the
complainants. Obviously then, the award of such benefit in the dispositive
portion of the assailed Decision is merely an oversight, considering that
Respondent Commission itself deleted it from the main body of the said
Decision.
WHEREFORE, the petition is DISMISSED and the assailed Decision and
Resolution are hereby AFFIRMED, but the award of the thirteenth-month pay
is DELETED. Costs against petitioners.
SO ORDERED.
WESTIN PHILIPPINE PLAZA HOTEL, petitioner, vs. NATIONAL LABOR
RELATIONS COMMISSION (THIRD DIVISION) and LEN
RODRIGUEZ, respondents.
DECISION
QUISUMBING, J.:
Petitioner seeks to annul the Decision[1] of the Third Division of the
National Labor Relations Commission dated March 29, 1995 in NLRC NCR Case
No. 00-07-04820-93, and its Resolution dated June 22, 1995 denying petitioners
motion for reconsideration.
Private respondent was continuously employed by petitioner in various
capacities from July 1, 1977 until his dismissal on February 16, 1993. Initially
hired as pest controller, he was later posted as room attendant.Next he served
as bellman, until he was finally assigned as doorman in November, 1981, and
stayed in that position until his employment was terminated by petitioner.
On December 28, 1992, private respondent received a memorandum from
the management transferring him from doorman to linen room attendant in the
Housekeeping Department effective December 29, 1992. The position of
doorman is categorized as guest-contact position while linen room attendant is
a non-guest contact position. The transfer was allegedly taken because of the
negative feedback on the manner of providing service to hotel guests by private
respondent. This assessment was primarily based on the report of professional
shoppers engaged by petitioner to evaluate and review the various services of
the hotel and its personnel. Earlier, private respondent had figured in
altercations with drivers of taxicabs servicing petitioners guests.
Instead of accepting his new assignment, private respondent went on
vacation leave from December 29, 1992, to January 16, 1993. In the meantime,
the President of the National Union of Workers in Hotels, Restaurants and Allied
Industries (NUWHRAIN) appealed to management concerning private
respondents transfer. In her response, Ms. Merceditas Santos, petitioners
director for human resources development, clarified that private respondents
transfer is merely a lateral movement. She explained that management believed
that private respondent was no longer suited to be in a guest-contact position,
but there was no demotion in rank or pay.
When private respondent reported back to work, he still did not assume
his post at the linen room. Notwithstanding several reminders from the
28
personnel department and even his union, private respondent refused to report
to his new work station.
Thus, on February 11, 1993, private respondent was served with a
memorandum asking him to explain in writing why no disciplinary action
should be taken against him for insubordination. The memorandum noted that
while private respondent regularly came to the hotel everyday, he just stayed at
the union office. Private respondent was again reminded to report to his new
job otherwise he would be clearly defying a lawful order. In his reply private
respondent, however, merely questioned the validity of his transfer without
giving the required explanation.
On February 16, 1993, petitioner terminated private respondents
employment on the ground of insubordination. Feeling aggrieved, private
respondent filed with the Department of Labor and Employment which later
indorsed to the NLRC for appropriate action a complaint for illegal dismissal
against petitioner. In a decision dated June 16, 1994, the labor arbiter declared
that the dismissal was legal. Accordingly, the complaint was dismissed for lack
of merit.
On appeal, public respondent reversed the judgment of the labor arbiter. In
its decision, it declared that the intended transfer was in the nature of a
disciplinary action.[2] It held that there was no just cause in dismissing private
respondent and disposed of the case as follows:
WHEREFORE, premises considered, the appealed decision is hereby VACATED
and a new one entered with the following dispositions:
a) Respondent is hereby ordered to pay backwages from February 16, 1993 to
the date of this decision; and
b) To pay complainant separation pay equivalent to one (1) month pay for
every year of service, in lieu of reinstatement.
All other claims are dismissed for lack of merit.
SO ORDERED.[3]
Its motion for reconsideration having been denied, petitioner filed this
instant petition.
The fundamental issue to be resolved in this case is whether or not public
respondent gravely abused its discretion in ruling that there was no just and
valid cause for dismissing private respondent. And the pivotal query is whether
private respondent was guilty of insubordination or not?
Petitioner contends that private respondents continued refusal to report to
his new work assignment constituted gross insubordination. It avers that the
transfer of private respondent was a valid exercise of its management
prerogative.
The contention of petitioner is meritorious. The labor arbiters decision,
dated June 16, 1994, is amply supported by substantial evidence and prevailing
jurisprudence. It is error as well as grave abuse of discretion on public
respondents part to hold otherwise.
Under Article 282 (a) of the Labor Code, as amended, an employer may
terminate an employment for serious misconduct or willful disobedience by the
employee of the lawful orders of his employer or representative in connection
with his work. But disobedience to be a just cause for dismissal envisages the
concurrence of at least two (2) requisites: (a) the employees assailed conduct
must have been willful or intentional, the willfulness being characterized by a
wrongful and perverse attitude; and, (b) the order violated must have been
reasonable, lawful, made known to the employee and must pertain to the duties
which he has been engaged to discharge.[4]
In the present case, the willfulness of private respondents insubordination
was shown by his continued refusal to report to his new work assignment. Thus,
upon receipt of the order of transfer, private respondent simply took an
extended vacation leave. Then, when he reported back to work, he did not
discharge his duties as linen room attendant despite repeated reminders from
the personnel office as well as his union. Worse, while he came to the hotel
everyday, he just went to the union office instead of working at the linen
room.More than that, when he was asked to explain why no disciplinary action
should be taken against him, private respondent merely questioned the transfer
order without submitting the required explanation. Based on the foregoing
facts, private respondents intransigence was very evident.
On the issue of legality and reasonableness of the order of transfer, it must
be emphasized that this Court has recognized and upheld the prerogative of
management to transfer an employee from one office to another within the
business establishment, provided that there is no demotion in rank or a
diminution of his salary, benefits and other privileges. This is a privilege
inherent in the employers right to control and manage its enterprise
effectively.[5] Besides, it is the employers prerogative, based on its assessment
and perception of its employees qualifications, aptitudes and competence, to
move him around in the various areas of its business operations in order to
ascertain where the employee will function with utmost efficiency and
29
maximum productivity or benefit to the company. An employees right to
security of tenure does not give him such a vested right in his position as would
deprive the company of its prerogative to change his assignment or transfer him
where he will be most useful.[6]
Indeed, petitioner is justified in reassigning private respondent to the linen
room. Petitioners right to transfer is expressly recognized in the collective
bargaining agreement between the hotel management and the employees union
as well as in the hotel employees handbook. The transfer order was issued in
the exercise of petitioners management prerogative in view of the several
negative reports vis--vis the performance of private respondent as doorman. It
was a lateral movement as the positions of doorman and linen room attendant
are equivalent in rank and compensation. It was a reasonable relocation from a
guest contact area to a non-guest contact area. Thus, public respondents
observation that private respondent was demoted because the position of
doorman is more glamorous than that of a linen room attendant is pure
conjecture. Public respondents conclusion that the transfer was punitive in
character could not be sustained for lack of substantial basis.
Finally it must be stressed that to sanction the disregard or disobedience
by employees of a reasonable rule or order laid down by management would be
disastrous to the discipline and order within the enterprise.It is in the interest
of both the employer and the employee to preserve and maintain order and
discipline in the work environment. Deliberate disregard of company rules or
defiance of management prerogative cannot be countenanced. This is not to say
that the employees have no remedy against rules or orders they regard as
unjust or illegal. They can object thereto, ask to negotiate thereon, bring
proceedings for redress against the employer. But until and unless the rules or
orders are declared to be illegal or improper by competent authority, the
employees ignore or disobey them at their peril.[7] In the case at bar, private
respondent was repeatedly reminded not only by management but also by his
union to report to his work station but to no avail. His continued refusal to
follow a legal order brought on the fit consequence of dismissal from his
position for which management could not be justly faulted.
WHEREFORE, the petition is hereby GRANTED. The assailed decision of
the National Labor Relations Commission is hereby SET ASIDE. The decision of
the Labor Arbiter dated June 16, 1994, is REINSTATED. No pronouncement as to
costs.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 110388 September 14, 1995
ARTEMIO LABOR, PEDRO BONITA, JR., DELFIN MEDILLO, ALLAN ROMMEL
GABUT, and IRENEO VISABELLA, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, GOLD CITY COMMERCIAL
COMPLEX, INC., and RUDY UY, respondents.
DAVIDE, JR., J.:
Petitioners filed this special civil action for certiorari seeking to reverse the
decision of 24 September 1992 of public respondent National Labor Relations
Commission (NLRC), Fifth Division, in NLRC CA No. M-000834-92 (RAB 11-08-
00742-91)1 which vacated and set aside the decision of 27 March 1992 of Labor
Arbiter Nicolas S. Sayon 2declaring illegal the petitioners' dismissal from their
employment by private respondent Gold City Commercial Complex, Inc.
(hereinafter Gold City) and ordering the latter to pay separation pay and other
money claims.
The petitioners were employees of Gold City at its Eye Ball Disco located at
Tagum, Davao. In a complaint dated 19 August 1991 filed with the Regional
Office No. XI of the Department of Labor and Employment (DOLE) in Davao City,
the petitioners charged Gold City with violations of labor standards laws,
specifically for underpayment of the minimum wage non-payment of 13th
month pay for 1991, premiums for holidays and rest days, holiday pay service
incentive leave pay, night shift differential and allowance pursuant to RTWPB-
XI-O2. 3
On 26 August 1991, the petitioners also filed with the NLRC Regional
Arbitration Branch No. XI in Davao City a complaint against Gold City and its
President, herein private respondent Rudy Uy, for illegal dismissal and for the
same violations of labor standards laws earlier complained of. 4 This case was
docketed as Case No. RAB-11-08-00742-91.
On 2 September 1991, one Atty. Rolando Casaway, representing Lee Manuela
Suelto, Ellen de Guzman, Mary Grace Verano, and Percy Hangad, all employees
of Gold City, and Joenel de Mesa, a customer of Eye Ball Disco, wrote the
Provincial Prosecutor of Davao requesting that a criminal action against the
petitioners for theft and/or estafa be instituted.5 In support thereof, he attached
to his letter the affidavits of de Mesa executed on 20 August 1991 and of the
others he represented executed on 23 August 1991 6 wherein the affiants
attested to alleged acts committed by the petitioners during the period from
June to August 1991 which deprived Eye Ball Disco of certain amounts of
30
money. According to the affiants, the petitioners would get the claim stubs from
customers of Eye Ball Disco that entitle them to one free drink each, but the
petitioners did not surrender these stubs to the cashier and instead made the
customers pay for the drinks; then, later, when other customers ordered drinks,
the petitioners would surrender these stubs to the cashier as "payment" for the
drinks of these other customers and pocket their payment. 7
On 11 September 1991, Labor Examiner Edgardo Diaz of the DOLE Regional
Office No. XI submitted his report8 to the Regional Director wherein he
confirmed the labor standards violations committed by Gold City, viz., (1)
record-keeping; (2) underpayment of minimum wage; (3) non-payment of
holiday pay; and, (4) overtime premium. He further stated that:
. . . complainants have personally appeared before this Office to
manifest that they have nor received the amounts indicated in
the Cash Vouchers submitted by the management of the
subject establishment on July 23, 1991 as payment for the
Compromise Settlement representing salary differentials and
allowances pursuant to Wage Order RTWPB-XI-02.
Said Labor Examiner also submitted a computation of the amounts due
the petitioners.9 He then recommended that the case be indorsed to the
NLRC because the amounts each of them is entitled to receive exceeded
the jurisdictional limit of P5,000.00 for money claims.
In the meanwhile, on 30 October 1991, 3rd Assistant Provincial Prosecutor
Justino Aventurado of Davao handed down a resolution10 dismissing the
criminal complaint against the petitioners He found the story of the petitioners'
co-employees and a customer incredible and concluded thus:
Let it not be forgotten that the name of the game is evidence
The precious time of the court, the efforts of all the parties
shall go to naught in cases bereft of evidence. This sort of
offense involving money needs physical evidence not mere
words of mouth of respondents' [herein petitioners] own co-
workers. Such weakness is worsened by the fact that the
complainant's [sic] witnesses who posture protectiveness of
their employer's interest spoke only about the alleged
irregularities several days and even months after their
commission. After the labor claims were filed.
If they are that loyal or protective of the establishment as they
now appear to be, they should have reported the irregularities
a day after each offense.
WHEREFORE, finding no cause to hold respondents liable for
estafa, this complaint is hereby dismissed.
The Provincial Prosecutor approved this resolution and the records fail
to disclose if Gold City had taken any action to reverse the resolution.
Thereafter, Case No. RAB-11-08-0042-91 pending before Labor Arbiter Nicolas
Sayon became the sole venue of the legal battle between the petitioners and
Gold City. Both parties therein were required to submit their respective position
papers. In their position paper, 11 the petitioners alleged that Gold City
prevented Labor, Visabella, Medillo, and Gabut from entering their work place
on 22 August 1991 and Bonita on 24 August 1991; that their time cards were
taken off the time card rack; and that they were advised to resign They assailed
the notice of termination given to them by Gold City dated 6 September
1991, 12 and denied having abandoned their work for, as a matter of fact, Labor
was on an approved leave from 19 August to 21 August 1991 but was not
allowed to return to work after that date. They accused Gold City of unfair labor
practice for illegally dismissing them in retaliation for their having filed a
complaint for labor standards violations against it. They also denied having
signed any quitclaim or compromise settlement They further claimed the
amounts found by the Labor Examiner as due them from Gold City for the labor
standards violations and prayed for full back wages and separation pay in lieu
of reinstatement.
In its Position Paper, 13 Gold City asserted that the petitioners were not illegally
terminated but had abandoned their work by not reporting to their place of
employment beginning on 19 August (petitioners Labor and Bonita), 21 August
(petitioners Medillo and Gabut), and 22 August (petitioner Visabella) 1991. It
further alleged that as early as June 1991, the petitioners were under
investigation for the dishonest acts for which they were charged with estafa
and/or theft in the Office of the Provincial Prosecutor, and to preempt any
action to be taken therein, the petitioners filed the "baseless and unfounded
complaint" with the DOLE for the labor standards violation and furthermore,
abandoned their work to make it appear that they were illegally dismissed. It
also alleged that on 6 September 1991, each of the petitioners was sent a notice
of possible termination due to abandonment or for absence without official
leave or notice for six consecutive days, with a warning that if no explanation is
given within seven days from receipt thereof, they will be terminated, 14 but the
31
petitioners failed to reply to the notice and did not report for work. It then We quote his ratiocinations in support thereof:
concluded that the abandonment justified their dismissal. As for the petitioners'
money claims, Gold City contended that the petitioners were paid the minimum After judicious scrutiny of the parties' pleadings, arguments,
wage and allowances, and that the computation made by the DOLE (through the counter-arguments and evidences, this office finds for the
Labor Examiner) did not take into account the other benefits given to the complainants.
petitioners, viz., board and lodging, meals, snacks, clothing and transportation
allowance, and the fact that their Social Security Services (SSS) contributions First, on the illegal dismissal issue.
and cash advances were deducted from their gross pay. It further alleged that
the petitioners had already "agreed to compromise settlement before the DOLE,
The approved application for leave of absence of complainants
concerning money claims, as evidenced by cash vouchers 15 duly signed" 16 by
Labor and Bonita negates the abandonment charge of
them.
respondents. Said applications, which were duly approved by
respondent Rudy Uy showed that complainant Labor was
The petitioners submitted their Reply 17 to Gold City's position paper. actually on leave from August 19 to 21, 1991; while
complainant Bonita, on August 20 to 23, 1991. With such
On 27 March 1992, the Labor Arbiter rendered his decisions 18 in favor of the reality, where could the abandonment of work lie?
petitioners, the dispositive portion of which reads as follows:
Besides, the fact that complainants have immediately filed this
WHEREFORE, in view of all the foregoing, judgment is hereby complaint for illegal dismissal against them proves that there
rendered: was no intention on their part to sever their employment with
respondents. It is well-settled in our jurisprudence that "For
1. Declaring the dismissal of complainants Artemio Labor, abandonment to constitute a valid cause for termination of
Pedro L. Bonita, Jr., Ireneo Visabella; Delfin Medillo and Allan employment, there must be a deliberate, unjustified refusal of
Rommel Gabut as ILLEGAL; and the employee to resume his employment. This refusal must be
clearly shown. Mere absence is not sufficient, it must be
1. Ordering respondent Gold City Commercial Complex, Inc. to accompanied by overt acts unerringly pointing to the fact that
pay the above-named complainants, the following: the employee does not want to work anymore" (Flexo
Manufacturing Corp. vs. NLRC, 135 SCRA 145, emphasis
supplied).
Name Separation Money Claims Total
Pay Less 20% Records likewise show that the issuance of notice of
(a) Artemio Labor P5,338.00 P24,741.80 P30,079.80 termination by respondents on September 6, 1991 was only a
(b) Pedro Bonita, Jr. 5,338.00 24,741.80 30,079.80 mere subterfuge to shield themselves from the sanction of the
law for having violated the mandatory requirements in the
(c) Ireneo Visabella 5,338.00 24,741.80 30,079.80
termination of employment, which was issued long after
(d) Allan Rommel 5,338.00 24,741.80 30,079.80 complainants had filed this case.
Gabut
(e) Delfin Medillo 5,338.00 18,251.41 23,589.41 Under the Labor Code, as amended, the requirements for the
lawful dismissal of an employee by his employer are two-fold:
or in the total amount of One Hundred Forty Three Thousand the substantive and the procedural. Not only must the
Nine Hundred Eight Pesos and 61/100 (P143,908.61). dismissal be for a valid or authorized cause as provided by law
(Article 279, 281, 282-284, New Labor Code), but the
SO ORDERED. rudimentary requirements of due process — notice and
32
hearing — must also be observed before an employee may be
dismissed. One does not suffice; without their concurrence, the
termination would, in the eyes of the law be illegal. (Salaw vs.
NLRC, G.R. No. 90786, Sept. 27, 1991).
Neither the alleged commission of acts of dishonesty by
complainants would warrant the dismissal. It has no leg to
stand on. There is no sufficient proof or evidence that tend to
show that complainants were really in cahoots with each other
in misappropriating the proceeds of the "unclaimed" free beer
or softdrink due to the disco pub customers, except the bare
allegations in the affidavits executed by one Joenel Mendoza
and respondents' cashiers. Undoubtedly, they are self-serving
testimonies. In fact, it is more apparent that the charges
imputed to complainants are pure prevarication as
respondents were bent to dismiss complainants in reprisal to
the complaint they have filed with the DOLE.
Absent such two requirements, their dismissal is thus patently
illegal. Complainants were constructively dismissed.
Payment of separation pay is proper under the circumstances,
and as alternately prayed for by the complainants, which will
be computed at one-month pay for every year of service, a
fraction of at least six months being considered as one year.
Thus, they are entitled [to the] equivalent [of] two months'
salary or in the month of P5,338.00 for each of them
(P102.00 x 314 x 2)
12
Albeit respondents rebutted complainants' money claims
through the submission of the latter's payslips, however, the
same could not be credited in their favor, being found spurious.
The payslips, vis-a-vis respondents, did not bear any entries
such as meals, snacks, lodging and SSS contributions (Annexes
"A", "B", Complainants' Reply to Respondents' Position Paper).
It is very obvious that those entries are belatedly added by
respondents to lessen their actual liabilities to complainants.
There being no other proofs like payrolls or vouchers that
would support their compliance of labor standard laws,
complainants are awarded the following benefits: representing
salary differential, 13th month pay for 1991 and holiday [pay]
as computed by this Office which is now part of the records of
the case, to wit:
1 Artemio Labor — P30,927.24;
2 Ireneo Visabella — 30,927.24;
3 Allan Rommel Gabut — 30,927.24;
4 Pedro Bonita, Jr. — 30,927.24; and
5 Delfin Medillo — 22,814.27
This Office, however, took cognizance of the fact that
complainants were extended free lodging, meals and snacks.
Considering that the monetary award due them was based on
straight computations, we deem it equitable that a twenty
(20%) percent deduction is proper to offset those fringe
benefits as well as absence, tardiness and non-working days
incurred during their tenure of employment.
As to the alleged receipt by complainants on the compromise
settlement of P2,000.00 each, we find that they are not
estopped from claiming the monetary benefits due them. The
Supreme Court has ruled:
The fact that petitioner received his
retirement benefits voluntarily end executed a
deed of release and quitclaim does not
militate against him. In the case of MRR Crew
Union vs. PNR, 72 SCRA 88, We held: "That the
employee has signed a satisfaction receipt
does not result in waiver, the law does not
consider as valid any agreement to receive
less compensation; that what a worker is
entitled to recover." A deed of release or
quitclaim cannot bar any employee from
demanding benefits to which he is legally
entitled. (Fuentes vs. NLRC, 167 SCRA 767).
The rest of [the] money claim are hereby denied for lack of
factual and legal basis.
33
As expected, Gold City appealed the Labor Arbiter's decision to the NLRC. On 24
September 1992, the NLRC promulgated the challenged decision reversing that
of the Labor Arbiter's and dismissing the petitioners' complaint. Essentially, the
NLRC gave full faith and credit to the same affidavits which were submitted in
the aforementioned criminal complaint for estafa or theft filed against the
petitioners, Accordingly, it declared that the findings of the Labor Arbiter that
the accusations made by Gold City are mere fabrications is not supported by the
evidence on record. To the NLRC, the filing by the petitioners of the complaint
with the DOLE was made "to preempt respondents' lawful prerogatives." It also
ruled that there was abandonment by the petitioners and that Gold City, in
terminating them, complied with the procedural requirements since it gave
notice and granted them an opportunity to explain their absences, which they
did not avail of. In ruling that the petitioners were not illegally dismissed, the
NLRC found that just cause existed, viz., their dishonest acts which do not
require proof beyond reasonable doubt. As to the money claims, the NLRC ruled
that the compromise settlements were freely and voluntarily executed by the
petitioners and their allegation that they were tricked into signing it and that
the P2,000.00 was not given to them deserve scant consideration; hence, they
were estopped from claiming such monetary benefits pursuant to the rule laid
down in Veloso vs. Department of Labor and Employment, 19 which abandoned
the ruling in Fuentes vs.National Labor Relations Commission 20 that the Labor
Arbiter relied upon.
Their motion for the reconsideration of the decision having been denied by the
NLRC, the petitioners filed this special civil action for certiorari where they
alleged that the NLRC acted with grave abuse of discretion amounting to lack or
excess of jurisdiction when:
(A) IT ABSOLUTELY AND TOTALLY DISMISSED THE CLAIMS
OF PETITIONERS DESPITE THE FINDINGS OF FACTS MADE BY
THE LABOR ARBITER AND THE ADMISSION OF PRIVATE
RESPONDENTS OF LIABILITIES AS STATED IN THEIR
POSITION PAPER.
(B) IT HELD THAT PETITIONERS ABANDONED THEIR WORK
DESPITE KNOWLEDGE THAT THE INSTANT CASE IS ALREADY
INSTITUTED AND THAT THEY COMMITTED ACTS OF
DISHONESTY DESPITE SELF-SERVING AFFIDAVITS AND
DISMISSAL OF THE COMPLAINT.
We required the respondents to comment on the petition.
As expected, the private respondents in their comment support the NLRC and
quoted the arguments adduced in their Memorandum of Appeal filed with the
NLRC. 21
The Office of the Solicitor General filed a Manifestation in lieu of a
Comment 22 and prayed that the NLRC be required to file its own comment. The
said Office takes a stand adverse to the NLRC and in favor of the petitioners, and
opines that Gold City was not able to prove its charge of dishonesty. It disagrees
with the NLRC's finding that, because its evidence consisting of the affidavits of
its witnesses "very clearly stated in detail how the complainants [petitioners
herein] cheated the customers and the respondents as well," the petitioners are
unworthy of their employer's trust and confidence. On the contrary, the Office of
the Solicitor General argues that the affidavits do not specify the individual
participation of the petitioners in the alleged losses incurred by Gold City, and it
proceeds to examine the affidavits and point out their flaws. It also noted that
the affidavits which support the NLRC's decision were the very same affidavits
upon which the complaint filed with the Provincial Prosecutor was based and
which was eventually dismissed for lack of evidence. It added that, although it
may be argued that the dismissal of the criminal case does not bar the
employee's termination, the evidence, nevertheless, does not support a
conclusion that the petitioners committed the dishonest acts complained of.
The Office of the Solicitor General also maintains that the petitioners did not
abandon their work, again disagreeing with the findings of the NLRC. It sounded
off its doubts as to the truth of the claim of dishonesty because these acts were
not mentioned at all in the notices of 6 September 1991 given to the petitioners
which referred only to their alleged absences without leave. If the accusations
are true, contends the Office of the Solicitor General, Gold City could have
immediately acted upon them by, for instance, placing the petitioners under
preventive suspension or giving them the requisite notice and opportunity to be
heard in the investigation it was allegedly conducting, but it did not do anything.
The Office of the Solicitor General concludes that there is no basis for the charge
of loss of confidence. Furthermore, the immediate filing of the case for illegal
dismissal by the petitioners negates the theory of abandonment.
With respect to the money claims, the Office of the Solicitor General opines that
the petitioners are entitled to them and their recovery is not barred by the
compromise settlement. It contradicts the opinion of the NLRC that the case of
Veloso had abandoned the rule in Fuentes, citing Philippine National Oil
Company vs. National Labor Relations Commission 23 decided by this Court
more recently than Veloso wherein we reaffirmed the rule that quitclaims do
not bar recovery by the employees of their claims because such quitclaims are
frowned upon as contrary to public policy. It also said that the petitioners are
34
still entitled to their money claims because the alleged compromise settlement
was for an unconscionably lower amount than that awarded to them by the
Labor Arbiter.
It its own comment, 24 the NLRC sustains its challenged resolution and submits
that the issues raised are factual and that there is no showing that the NLRC
committed such abuse of discretion but rather, its assailed decision "is based on
the records and ably supported by the evidences presented by the parties." As
to the compromise agreements, it maintained that they are valid since they
were freely and voluntarily executed by the parties.
We resolved to give due course to the petition and required the parties to
submit their respective memoranda. Only the petitioners submitted their
memorandum. 25 The NLRC and the private respondents manifested that their
separate comments will serve as their memoranda.
We decide in favor of the petitioners.
The first assigned error involves the question of whether or not Gold City is
guilty of labor standards violations. The findings regarding this issue made by
the Labor Arbiter and the NLRC are opposed to one another. While it is well-
established that the findings of facts of the NLRC are entitled to great respect
and are generally binding on this Court, it is equally well-settled that the Court
will not uphold erroneous conclusions of the NLRC when the Court finds that
the latter committed grave abuse of discretion in reversing the decision of the
labor arbiter or when the findings of facts from which the conclusions were
based were not supported by substantial evidence. 26
The Labor Arbiter adopted the findings of the Labor Examiner that Gold City
committed violations of the labor standards laws. Gold City did not contest nor
protest the findings when it was presented with a copy of the report made by
the Labor Examiner. 27 It raised its defenses only in the position paper it
submitted to the Labor Arbiter. The unexplained delay in presenting pertinent
documents to support its defenses strengthens the assertion of the petitioners
that the pay slips presented by Gold City, which the latter claims show proper
deductions that the petitioners knew of, were falsified, and that the deductions
were added only after these had already been signed by them.
Recovery of the petitioners' money claims for the violations of labor standard
laws are not barred by the alleged compromise agreements signed by the
petitioners. Contrary to the NLRC's opinion, Veloso did not overturn the rule laid
down in Fuentes The said cases are not founded on similar or identical facts,
thus accounting for the difference in the rulings made therein. In fact, we said
in Veloso that the case of Pampanga Sugar Development Co., Inc. vs.Court of
Industrial Relations 28 relied upon by the petitioners therein and which
enunciated the same rule later applied in Fuentes, is not applicable
to Veloso because the pertinent facts differ. Veloso did not lay down a rule totally
different from what this Court had set in Pampanga or even in Fuentes and
other similar cases. Veloso does not even apply in this case because the
petitioners had asserted, and Gold City did not prove the contrary, that they
initially refused to sign a document purportedly waiving their claims but were
later tricked into signing the vouchers which turned out to be for alleged
compromise settlements at P2,000.00 for: each of them. We are inclined to
agree with the petitioners. Gold City has not submitted any compromise
agreement attended with the formulations of law. 29 All that it has are the cash
vouchers, dated 17 July 1991, which states under the heading PARTICULARS:
"To payment of Compromise Settlement representing Salary Differentials and
Allowances as per RTWPB-X1-02." Of course, a voucher purporting to represent
payment of the consideration in a compromise agreement in not the
compromise agreement, itself. Since Gold City did not submit any compromise
agreement, then it is logical to presume that none existed for it had the burden
of proving its own assertions.
Even if the petitioners did enter into a compromise settlement with Gold City,
such agreement would be valid and binding only if, per Veloso, quoting Periquet
vs. National Labor Relations Commission, 30 the agreement was voluntarily
entered into and represents a reasonable settlement of the claims. In this case, as
in Fuentes, the amounts purportedly received by the petitioners were
unreasonably lower than what they were legally entitled to.
Furthermore, like in Pampanga, the "compromise settlements" with the
petitioners were not executed with the assistance of the Bureau of Labor
Relations or the Regional Office of the DOLE pursuant to Article 227 of the
Labor Code. The records do not disclose that the assistance of such office was
ever solicited. What Gold City did was merely to file with the Regional Office of
the DOLE in Davao City the vouchers purporting to show payments of the
alleged considerations of the "compromise settlements." Such filing can by no
stretch of the imagination be considered as the requisite assistance in the
execution of compromise settlements.
Finally, we also note that the alleged vouchers were dated 17 July 1991 or
before the filing of any complaint with the DOLE on 19 August 1991 and even
before the Labor Examiner submitted his findings of violations by Gold City. If
indeed the parties entered into such compromise agreements, then Gold City
35
should have submitted the vouchers to the Labor Examiner to refute the
petitioners' claim and put an end to the controversy.
Having dispensed with the first error ascribed to the NLRC, the next issue to be
resolved is whether the petitioners abandoned their jobs and, consequently,
whether their dismissal due to abandonment was lawful.
To constitute abandonment, two elements must concur: (1) the failure to report
for work or absence without valid or justifiable reason, and (2) a clear intention
to sever the employer-employee relationship, with the second element as the
more determinative factor and being manifested by some overt acts. 31 Mere
absence is not sufficient. 32 It is the employer who has the burden of proof to
show a deliberate and unjustified refusal of the employee to resume his
employment without any intention of returning. 33 Gold City failed to discharge
this burden. It did not adduce any proof of some overt act of the petitioners that
clearly and unequivocally show their intention to abandon their posts. On the
contrary, the petitioners lost no time in filing the case for illegal dismissal
against them, taking only four days from the time most of them were prevented
from entering their work place on 22 August 1991 to the filing of the complaint
on 26 August 1991. They cannot, by any reasoning, be said to have abandoned
their work, for as we have also previously ruled, the filing by an employee of a
complaint for illegal dismissal is proof enough of his desire to return to work,
thus negating the employer's charge of abandonment. 34 Furthermore,
petitioners Labor and Bonita presented proof that during some of those days
that they were supposedly on AWOL (absence without official leave), they were
actually on official leave as approved by no less than Rudy Uy himself. 35 Neither
Gold City nor Rudy Uy had disputed this.
It may further be observed that the timing of Gold City's alleged refusal to allow
the petitioners to enter their work place is highly suspicious. It happened on 22
August 1991 or only two days after the petitioners filed their complaint for
labor standards violations with the DOLE. Mere coincidence? We think not.
What it is, though, is evidence that lends credence to the allegation of the
petitioners that they did not abandon their employment as Gold City asserts but
were prevented from going to work. Thus, we cannot agree with the NLRC when
it said that the petitioners "ha[d] to jump the gun against the respondents in
order to save their faces from their own wrong doings, dishonest acts" by filing
the case for illegal dismissal against the respondents.
Equally baseless is the charge of dishonesty which Gold City also relies upon to
justify the dismissal of the petitioners from their employment.
A charge of dishonesty involves serious misconduct on the part of the employee,
a breach of the trust reposed by the employer upon him. The rule that proof
beyond reasonable doubt is not required to terminate an employee on the
charge of loss of confidence and that it is sufficient that there is some basis for
such loss of confidence is not absolute. 36 The right of an employer to dismiss
employees on the ground that it has lost its trust and confidence in him must
not be exercised arbitrarily and without just cause. 37 For loss of trust and
confidence to be a valid ground for an employee's dismissal, it must be
substantial and not arbitrary, and must be founded on clearly established facts
sufficient to warrant the employee's separation from work. 38
Unfortunately for Gold City, the evidence it adduced is insubstantial, inadequate,
and unreliable to support a conclusion that the petitioners are even remotely
guilty of the acts they are accused of committing. On this matter, we agree with
the observations and conclusions of the Office of the Solicitor General which we
quote with approval, to wit:
Indeed, an examination of the affidavits would reveal that the
alleged offenses complained of and through which private
respondent Gold City sustained losses estimated at
P216,000.00 are couched in general terms and do not
specifically mention the individual participation of each of the
petitioners in the alleged losses. For instance, in the affidavit . .
. of Lee Manuela Suelto, the following will be noted:
(i) allegedly the order slip marked "Mrs. Ima
V" was missing but it does [not] mention who
is responsible for it;
(ii) allegedly petitioner Visabella or Arnold
Veloso did not remit the amount of P60.00
collected by Visabella from a customer but
goes on to conclude that both of them
pocketed the amount;
(iii) allegedly the amount paid by a customer
for several bottles of beer and soft drinks to
petitioner Visabella was turned over to Veloso
but concludes that both of them pocketed it;
(iv) allegedly petitioner Visabella crumpled
and threw away an order slip he made out for
36
 four (4) bottles of beer and four (4) soft
drinks after receiving payment from the said
order but does not indicate if he appropriated
the same;
(v) allegedly petitioner Gabut admitted to
affiant that he and Arnold Veloso made some
money on an order slip for draft beer and the
former would give the latter part of the
money, if he was inclined to do so since they
were at odds at that time. The admission,
however, is hearsay and inadmissible against
petitioner Gabut.
On the other hand, the affidavits of Mary Grace Verano, Ellen
de Guzman and Renato Dalugdog (Annexes "C", "D" ,and "F",
respectively, of Annex "D", Petition) are pro forma and, except
for the different sates of the incidents mentioned therein,
invariably show that petitioners, on three separate occasions
from June to August, 1991, failed to remit the money collected
by them allegedly remitted stubs of entrance tickets which
entitled customers to free drinks.
If it is true that petitioners were cheating their employer in the
manner described in the affidavits of private respondents'
witnesses, how come that they, who held the position of
confidence as cashiers, tolerated the practice from June 1991
and blew the whistle only after petitioners filed a complaint of
underpayment of wages in August 19, 1991? As pointed out by
the investigating prosecutor, the affiants should have reported
the irregularities a day after each offense.
The same may be said of the affidavit (Annex "A" of Annex "D",
Petition) of Joenel de Mesa and the affidavit of Percy Hangad
(Annex "B" of Annex "D", Petition), both of which substantiate
the alleged modus operandi of petitioners. The alleged offenses
happened in June, 1991 and they came with a clean breast of it
only on August 20 and 23, 1991. Moreover, establishing the
mode by which petitioners allegedly cheated private
respondent Gold City does not necessarily prove their
complicity.
It is private respondents' posture that great weight should be
given to the affidavit of Joenel de Mesa, a mere customer whose
only alleged desire is to protect the public similarly situated
with him. However, de Mesa charges only Visabella of using his
(Mesa's) entrance ticket stub deprive private respondents of
P60.00. The same could not be imputed to his so-petitioners.
Although the employer's evidence is not required to be of such
degree as is required in criminal cases, i.e., proof beyond
reasonable doubt, such must be substantial The same
must clearly and convincingly establish the facts upon which
loss of confidence in the employer may be made to rest.
(Starlite Plastic Industrial Corporation v. NLRC, 171 SCRA 315
[1989].
In the instant case, private respondents have not clearly and
convincingly shown by substantial evidence the individual
participation of each of the petitioners in depriving their
employer of the estimated amount of P216,000.00 per year. As
correctly pointed out by the investigating prosecutor, there
was no cause to hold petitioners liable for the offense imputed
to them.
It may be argued by private respondents that the acquittal of
an employee in a criminal case does not guarantee his
reinstatement or that the dropping of a criminal prosecution
for an employee's alleged misconduct does not bar his
dismissal. (Starlite Plastic Industrial Corp. Supra).
Still, such an argument would fail to impress since petitioners'
actual involvement or participation in the irregularities
complained of have not been proven. Private respondents
failed miserably even to establish a prima facie case against
them in the prosecutor's office and, precisely, because of such
absence of evidence, the case was dismissed. What private
respondents had were "mere words of mouth" and generalities
which are not sufficient to afford reasonable ground for belief
that petitioners were responsible for the misconduct imputed
to them.
In the words of the Labor Arbiter, the alleged commission of
acts of dishonesty had no leg to stand on. They are but
37
 prevarications in reprisal to the complaint filed by petitioners
with the DOLE.
There being no abandonment or commission of dishonest acts by the
petitioners, no just cause exists to dismiss them, hence, their termination by
Gold City is illegal. The fact that Gold City sent them notices on 6 September
1991 becomes irrelevant. It does not cure the illegality of their dismissal for lack
of just cause. It is interesting to note, however, that in its letters of 6 September
1991 individually addressed to the petitioner, Gold City sought an explanation
from the petitioners on their alleged absence without official leave or, in short,
their abandonment, and warned them in the form of a reminder that such
absence is a ground for separation or dismissal from the company. Nothing is
mentioned about dishonesty or any other misconduct on the part of the
petitioners. If indeed the petitioners were guilty of both abandonment and
dishonesty or misconduct, then Gold City should have put them down in black
and white. The letters cum notice cannot then be considered to include
dishonesty or misconduct. It would be a gross violation of the petitioners' right
to due process to dismiss them for that cause of which they were not given
notice or for a charge for which they were never given an opportunity to defend
themselves. A dismissal must not only be for a valid or substantial cause; the
employer must also observe the procedural aspect of due process in giving the
employee notice and the opportunity to be heard and to defend himself. 39
At the same time, when the petitioners were dismissed by preventing them
from entering their work place, no previous notice of any kind was given to
them at all. The case for illegal dismissal was filed on 26 August 1991, or at least
eleven days before the date of the notices. The subsequent notices cannot cure
the lack of notice prior to the illegal dismissal of the petitioners on 22 August
and 24 August 1991.
As for the money claims of the petitioners, the award made by the Labor Arbiter
must be upheld, subject to the modification with respect to the addition of an
award for back wages which the Labor Arbiter should have made but did not.
This Court, after scrutinizing the documents and evidence before it, agrees with
the findings of the Labor Arbiter on Gold City's disclaimer of liability for the
money claims and adopts them herein, the pertinent portions of which are as
follows:
Albeit respondents rebutted complainants' money claims
through the submission of the latter's payslips, however, the
same could not be credited in their favor, being found spurious.
The payslips, vis-a-vis respondents, did not bear any entries
such as meals, snacks, lodgings and SSS contributions (Annexes
"A," "B," Complainants' Reply to Respondents' Position Paper).
It is very obvious that those entries [were] belatedly added by
respondents to lessen their actual liabilities to complainants.
There being no other proofs like payrolls or vouchers that
would support their compliance [with] labor standard benefits:
representing salary differentials, 13th month pay for 1991 and
holiday [pay] as computed by this Office which is now part of
the records of this case, to wit:
1 Artemio Labor — P30,927.24;
2 Ireneo Visabella — 30,927.24;
3 Allan Rommel Gabut — 30,927.24;
4 Pedro Bonita, Jr. — 30,927.24; and
5 Delfin Medillo — 22,814.27 40
From the above amounts, the Labor Arbiter deducted twenty percent (20%)
therefrom to represent the benefits which the petitioners received, such as
lodging, meals and snacks, as well as for absences, tardiness, and for non-
working days when no work was performed by them because, as it stated, "the
monetary award due to them was based on straight computations." 41 Though
the Labor Arbiter did not explain why an arbitrary figure of 20% was used to
represent these deductions, since the petitioners did not raise this as an issue
and we do not find any reason to delete or modify it, this value for deductions,
from the total money claims to be awarded to the petitioners must stay.
With respect to the award of separation pay, the same was properly made and is
affirmed. Ordinarily, a finding that an employee has been illegally dismissed
entitles him to reinstatement to his former position without loss of seniority
rights and to the payment of back wages. 42 But in this case, the petitioners did
not pray for reinstatement in the position paper they filed with the Labor
Arbiter. 43 The latter in turn ordered the payment of separation pay in lieu of
reinstatement and this is part of the decision that the petitioners seek to be
affirmed by this Court. That being the case, and as we have said before, if the
employee decides not to be reinstated, the employer shall pay him separation
pay in lieu of reinstatement. 44 This is only just and practical because
reinstatement of the petitioners will no longer be in the best interest of both the
petitioners and Gold City considering the animosity and antagonism that exists
between them brought about by filing of charges both parties against each other
38
in the criminal as well as in the labor proceedings. 45 Gold City had also refused
entry to the petitioners into their work place, giving rise to strained relations
between the parties which make reinstatement unacceptable to them. The
petitioners would then be entitled to separation pay equivalent to at least one
month's salary for every year of service in lieu of reinstatement in addition to
their full back wages.
The Labor Arbiter, however, failed to award wages despite its ruling that the
petitioners were illegally dismissed. We thus deem it proper to make such an
award herein in addition to the money claims for labor standards violations and
for the separation pay. As a rule, full back wages are computed from the time of
the employee's illegal dismissal until his actual reinstatement, but since in this
case, reinstatement is not possible, the back wages must be computed from the
time of the petitioners' illegal dismissal until the finality of our decision
herein. 46 This amount due the petitioners for back wages, however, is subject to
deductions for any amount which the petitioners may have earned during the
period of illegal termination. 47 Computation of full back wages and
presentation of proof as to income earned elsewhere by the illegally dismissed
employees after their termination and before full payment is effected by Gold
City should be ventilated in the execution proceedings before the Labor Arbiter
in accordance with the appropriate rules of procedure of the NLRC. 48
WHEREFORE, the decision of public respondent National Labor Relations
Commission in NLRC CA No. M-000834-92 (RAB 11-08-00742-91) is hereby
SET ASIDE and the decision of the Labor Arbiter is REINSTATED, with the
addition of an award of full back wages to each of the petitioners from the time
of their illegal termination until the finality of this decision.
SO ORDERED.
TOP FORM MFG. CO., INC., petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and JULIANA
MALUBAY, respondents.
MELO, J.:
Before Us is a petition for certiorari under Rule 65 of the Rules of Court seeking
the annulment of the decision of respondent National Labor Relations
Commission (NLRC), in its NCR Case No. AB-1-9943-81 entitled, "Juliana
Malubay vs. Top Form Manufacturing (Phils.), Incorporated" which ordered
wherein petitioner to reinstate private respondent Juliana Malubay to her
former position, without loss of seniority rights and other privileges
appertaining thereto with one (1) year backwages without deduction.
The antecedent facts of this case are as follows:
Private respondent Jualiana Malubay began her employment with the petitioner
Top Form Manufacturing (Phils.), Incorporated in March, 1979, as Plant
Supervisor, with a starting salary of P1,200.00 per month. She was initially
assigned to supervise a factory line of sixty machine operators. One month
thereafter, she was given one more factory line, also with sixty workers, to
supervise. Sometime in August, 1979, she was given a salary adjustment of
P300.00 a month and in February of the following year, another increment in
salary was received by her in the amount of P150.00 per month. Moreover, in
October, 1980 she was promoted to the position of Over-All Quality Supervisor
in the first shift, from 5:45 a.m. to 1:45 p.m. with a corresponding increase in
salary of P350.00 a month. As such Head Supervisor, she had control and
supervision over the entire first shift consisting of 120 machine operators and
some six line-in-charge. She was also responsible not only for the production
and output but also for the quality of products. In addition to her functions, she
was likewise given the task of training newly-hired factory workers and of
supervising the repair group composed of several employees.
On January 10, 1981, a Saturday, at about 2:00 o'clock in the afternoon, private
respondent and her co-supervisors were called to a meeting at the conference
room by Dickson Chan, Production Manager. During the conference, Dickson
Chan reviewed and examined as usual the production report for the day and he
declared the he was not satisfied with the production output, berating private
respondent and the other supervisors, thus:
You Filipinos are lazy people, and your Philippine laws are no
good, even your government is no good. In Hongkong, factory
workers can buy the most expensive foods and clothes in the
world, but, here, you Filipinos are like beggars, it is just
because you are all lazy.
Thereafter, he crumpled the production report and again threw invectives at
private respondent and her co-supervisors, to wit:
You are bullshits, you Filipinos, get out, you are all lazy, you are
like pigs, all of you go home. I do not want to see your face
again.
Not satisfied and contended with what he had said. Dickson Chan picked up the
stapler on his desk and, but for some better impulse, would have thrown the
39
same at private respondent and her companions who, frightened, as they were,
dispersed.
As a result of this unfortunate incident, private respondent told and instructed
her co-supervisors, "Huwag pumasok sa lunes para matauhan si Dickson." Thus,
on the next working day, January 12, 1981, a Monday, they absented themselves
from work. However, on January 13, 1981, she and her companions reported for
work.
On January 16, 1981, petitioner filed an application for clearance to terminate
the services of private respondent on the ground of "Loss of Management
Confidence". Meanwhile, private respondent was placed under preventive
suspension leading to her termination effective January 13, 1981.
Thereafter, on January 19, 1981, private respondent filed a complaint for illegal
dismissal against herein petitioner before the Ministry of Labor and
Employment, National Capital Region, Arbitration Branch in Manila.
On May 29, 1981, Labor Arbiter Conrado O. Lasquite rendered a decision
dismissing private respondent's complaint. However, upon elevation of the
matter to the NLRC, said body, in a decision dated December 29, 1982, reversed
the Arbiter and accordingly disposed:
WHEREFORE. in view of the foregoing considerations, the
Decision appealed from is hereby set aside and another one
entered, directing the respondent company, thru its
responsible officials, to reinstate complainant to her former
position, without loss of seniority rights and other privileges
appertaining thereto with one (1) year backwages without
deduction considering that complainant is not entirely
blameless.
SO ORDERED. (p. 8. NLRC's Decision; p. 23, Rollo.)
On March 2, 1983, petitioner filed a motion for reconsideration of the
aforementioned decision of the NLRC but the same was denied on October 12,
1983, for lack of merit.
Hence, the instant petition.
Very simply, the crux of the matter to be resolved in the petition is whether or
not private respondent's services may be terminated for loss of trust and
confidence.
Petitioner argues that respondent Malubay committed willfull breach of trust
and confidence reposed upon her when she agitated and led the boycott against
petitioner. It is further averred that private respondent was not merely a
participant in the drama but the leader of the maverick group of supervisors
who staged the boycott; that Malubay, as a managerial employee, being Head
Supervisor of the entire first shift consisting of 120 machine operators, her
powers and functions are central to the effective operation of the company
which entails the conferment of the highest degree of trust and confidence, but
because of what she did, she had shown her unworthiness to continue in the
employ of the company.
On the other hand, private respondent submits that the contentions of the
petitioner are devoid of merit. Private respondent claims that she cannot be
dismissed for loss of trust and confidence if said prerogative of the employer is
abusively and whimsically exercised. As a matter of fact, according to private
respondent, it was Dickson Chan who was at fault when the latter vituperated
against private respondent and the other supervisors present at the conference.
Private respondent further asserts that Chan maligned not only the employees
but also the entire Filipino people, the laws and the government of this
Republic, so that the company should have understood her feelings and actions.
The petition is well-taken.
The employer has a distinct prerogative to dismiss an employee if the former
has ample reason to distrust the latter or if there is sufficient evidence to show
that the employee has been guilty of breach of trust. This authority of the
employer to dismiss an employee cannot be denied whenever acts of violation
are noted by the employer. The law does not require proof beyond reasonable
doubt of the employee's misconduct before the employer can invoke such
justification. It is sufficient that there is some basis for the loss of trust or that
the employer has reasonable grounds to believe that the employee is
responsible for the misconduct and that the nature of the employee's action
renders the employee unworthy of the trust and confidence demanded of the
position (Valladolid vs. Inciong. 121 SCRA 205 [1983]; DOLE Philippines, Inc. vs.
NLRC, 123 SCRA 673 [1983]; Ocean Terminal Services, Inc. vs. NLRC, 197 SCRA
491 [1991]; Baguio Country Club Corporation vs. NLRC and GENOVE, G.R. No.
102397, September 4, 1992).
40
It is an inherent right of the employer to dismiss an employee for loss of
confidence. We have a plethora of decisions that supports and recognizes this
authority of the employer to cut its relationship with the employee. In the case
at bar, it is an admitted fact that private respondent is an employee occupying a
high managerial position which entails great responsibility. Thus, petitioner
was justified in terminating the employment of the private respondent when
she committed acts inimical to her employer's interest. We shall not belabor the
time-honored tenet that while the law protects the rights of the employee, it
cannot authorize the oppression or self-destruction of the employer. As We
ruled in Almira vs. B.F. Goodrich Philippines, Inc.(58 SCRA 120 [1974]), through
then Chief Justice Enrique Fernando:
. . . The basic doctrine underlying the provisions of the
Constitution so solicitous of labor as well as the applicable
statutory norms is that both the working force and the
management are necessary components of the economy. The
right of labor has been expanded. Concern is evident for its
welfare. The advantages thus conferred, however, call for
attendant responsibilities. The ways of the law are not to be
ignored. Those who seek comfort from the shelter that it
affords should be the last to engage in activities which negate
the very concept of a legal order as antithetical to force and
coercion . . . It is even more important that reason and not
violence should be its milieu. (at pp. 131-132.)
In the present petition. We cannot condone the act of private respondent in
inciting her co-supervisors and leading them in the boycott and wildcat strike.
As aptly observed by the Labor Arbiter:
Even assuming that complainant was berrated by the
Production Manager due to under par production output, her
remedy is not to sabotage or boycott company operations; she
should have gone to higher management levels in order to
redress her grievances against her abusive immediate
supervisor. Getting even with the company for the misdeed of
only one person, the Production Manager, is totally uncalled
for. (p. 4, Labor Arbiter's Decision; p. 14, Rollo.)
Further, We have laws to protect her and her co-supervisors from oppressive
foreigners. She should not have taken the laws in her own hands. Private
respondent should have viewed the incident between her and the Production
Manager from a professional point of view. However, due to her precipitate and
irrational action, she hurt the company instead.
The Labor Code, specifically Article 283, acknowledges the right of the employer
to put an end to the covenant with the employee, thus:
Termination by employer. — An employer may terminate an
employee for any of the following just causes:
a. x x x
b. x x x
c. Fraud and willfull breach by the employee of the trust
reposed in him by his employer or his duly authorized agent.
It cannot be gainsaid, in this regard, that the act of private respondent in
initiating and leading the boycott, thereby disrupting and impairing company
operations, is sufficient reason for petitioner to lose its trust and confidence on
private respondent, considering that the latter is a managerial employee of the
company whose position carries the corresponding highest degree of
responsibility in improving and upholding the interests of the employer and in
exemplifying the utmost standard of discipline and good conduct among her co-
employees. Withal, the termination of her employment is justified.
In the light of the foregoing, We are of the opinion, and so hold, that respondent
NLRC acted with grave abuse of discretion in ordering the reinstatement of
Malubay because Top Form Mfg. (Phil.). Inc. had just cause to dispense with
services of private respondent. Nonetheless, considering that Juliana Malubay
had worked with the company, as the record shows, with zeal, competence and
dedication with no known previous bad record, the ends of social and
compassionate justice would be well served if she is paid full separation pay
(National Steel Corporation vs. Leogardo, Jr., 130 SCRA 502 [1984]: Engineering
Equipment, Inc. vs. NLRC, 133 SCRA 752 [1984]; Firestone Tire and Rubber Co.
of the Phils. vs. Lariosa, 148 SCRA 187 [1987]).
ACCORDINGLY, the petition is GRANTED. The decision of the National Labor
Relations Commission dated December 29, 1982 is REVERSED and SET ASIDE.
Petitioner Top Form Manufacturing (Phils.), Incoporated is directed to pay
private respondent Juliana Malubay separation pay to which she may be
entitled under the law, or any collective bargaining agreement or company rules
or practice, whichever is higher.
41
 G.R. No. 100749 April 24, 1992
GT PRINTERS and/or TRINIDAD G. BARBA, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION (4TH DIVISION) and EDWIN
RICARDO, respondents.
GRIÑO-AQUINO, J.:
The private respondent, Edwin Ricardo, was employed in 1968 as an apprentice
of GT Printers, a single proprietorship owned by Mrs. Trinidad Barba of East
Capitol Site, Cebu City. Having gained enough experience and expertise in the
printing business and after undergoing special schooling in Manila at company
expense, Ricardo was promoted to the position of production manager of GT
Printers. In 1978, he became general manager after the untimely demise of the
owner's husband, who held that position. Ricardo earned a monthly basic salary
of P1,680, an ECOLA of P485, representation allowance of P1,000 and or top of
these, a three (3%) per cent share in the gross receipts of the business.
In February, 1985, Ricardo's wife established Insta Printers, a rival printing
press, with Edwin Ricardo himself as consultant and owner. Since the
establishment of Insta Printers, Ricardo became a habitual absentee from his
job at GT Printers. He neglected his duties and responsibilities, and became lax
in directing and supervising the work force, resulting in numerous major
printing errors and failure to meet printing specifications leading to the
rejection of several job orders from regular customers.
Mrs. Barba noticed that Ricardo not only used GT Printers' bookcloth and other
printing materials for his Insta Printers, but he also gave specific instructions to
the production staff to give priority to book and magazine job orders for Insta
Printers. Eventually, the regular customers of GT Printers were pirated by Insta
Printers. Ricardo also manipulated price quotations during the canvassing of
bids to favor his own outfit instead of GT Printers.
Because of those irregularities, GT Printers suspended Ricardo as general
manager for 30 days. Effective June 18, 1986, Richard Barba was designated to
take his place. Contracts concluded by respondent Ricardo thereafter were no
longer honored. However, he continued to be a sales agent for GT Printers,
hence, he continued to receive commissions. Notices of his investigation
scheduled on July 24, 1986 and August 13, 1986 were sent to him but he did not
appear at the investigation. He stopped reporting for work and soon after filed a
complaint for illegal dismissal in the Regional Arbitration Branch No. VII, of the
Department of Labor and Employment in Cebu City, entitled "Edwin Ricardo vs.
GT Printers and/or Trinidad G. Barba." (NLRC Case No. RAB-VII-0398-86)
The case was heard by Labor Arbiter Bonifacio Tumanak who rendered a
decision on January 4, 1990 finding that Ricardo was lawfully dismissed from
employment. Nevertheless, the Labor Arbiter ordered the payment to him of
separation pay equivalent to one-half month pay for every year of service (pp.
28-42, Rollo).
Ricardo appealed that decision to the NLRC which on April 18, 1991 (pp. 43-
51, Rollo), set aside the labor arbiter's decision and entered a new one, finding
Ricardo's dismissal illegal and ordering his reinstatement with backwages.
However, aware that strained relations had developed between the parties, the
Commission ordered GT Printers to pay Ricardo backwages for three (3) years
and separation pay of one month for every year of service in lieu of
reinstatement.
GT Printers filed a motion for reconsideration but it was denied. Hence, this
petition for review on certiorari, with a prayer for the issuance of a writ of
preliminary injunction or temporary restraining order. On July 29, 1991, the
Court issued a temporary restraining order upon petitioner's filing a P100,000
bond enjoining the respondents to desist from enforcing the NLRC decision
during the pendency of this action.
The petition for review is premised on the petitioner's contention that grave
abuse of discretion was committed by the NLRC —
1. in disregarding the labor arbiter's findings of fact;
2. in finding that Ricardo was denied due process before being
dismissed on July 18, 1986;
3. in finding that Ricardo was dismissed without just cause;
and
4. in reversing the decision of the labor arbiter and ordering
Ricardo's reinstatement with payment of back wages and
separation pay.
The petition has merit.
The twin requirements of a valid termination: due process and just cause —
were met substantially for Ricardo was given ample opportunity to appear at
the two scheduled investigations in order to present his side, but he chose to
42
boycott the investigation. Even at the hearing before the Labor Arbiter, he
waived, through counsel, the presentation and cross-examination of witnesses.
Due process does not necessarily mean or require a hearing, but simply an
opportunity or right to be heard (Hian vs. CTA, 59 SCRA 110; Azul vs. Castro,
133 SCRA 271). The affidavits, testimonies and other documentary evidence
presented by the petitioner stand uncontroverted and are therefore entitled to
full credit. It is well-settled that this Court is not a trier of facts, so we defer to
the superior opportunity of the lower courts or administrative bodies to test the
credibility of the witnesses and to examine the authenticity of the documentary
evidence directly before them (Mapa vs. Arroyo, 175 SCRA 76; Dagupan Bus Co.,
Inc. vs. NLRC, 191 SCRA 328).
The security of tenure accorded to labor under the Constitution does not
embrace infractions of accepted company rules amounting to breach of trust
and loss of confidence (Rosello, Jr. vs. NLRC, 190 SCRA 779). The right of an
employer to dismiss a managerial employee for breach of trust and loss of
confidence, as in this case, cannot be doubted. As a measure of self-preservation
against acts inimical to its interests, an employer has the right to dismiss an
employee found committing acts of dishonesty and disloyalty. The employer
may not be compelled to continue to employ such a person whose continuance
in the service would patently be inimical to his employer's interest (Colgate
Palmolive Phils. Inc. vs. Ople, 163 SCRA 323). The dismissal of a dishonest
employee is in the best interest not only of management but also of labor for the
law never intended to impose an unjust situation on either labor or
management (Coca-Cola Bottlers Phils. Inc. vs. NLRC, 172 SCRA 751).
Reinstatement would be ill-advised and incompatible with the labor arbiter's
finding that "from those documentary evidences presented by respondent, it
can be safely conclude[d] that . . . there exist visible conflict of interest
amounting to willful breach of trust and confidence repose (sic) upon him by his
employer, . . . as well as (b) habitual neglect of his duties . . ." (pp. 216-
217, Rollo). The reinstatement of erring managers may not be ordered with the
same ease and liberality as rank and file workers (Pacific Cement Co., Inc. vs.
NLRC, 173 SCRA 192).
WHEREFORE, the assailed decision of the NLRC is hereby reversed and set
aside. As the complainant (herein private respondent), Edwin Ricardo, was
lawfully dismissed for dishonesty and serious misconduct, his complaint for
illegal dismissal is DISMISSED for lack of merit.
SO ORDERED.
G.R. No. 88268 June 2, 1992
SAN MIGUEL CORPORATION, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and FRANCISCO
DIVINAGRACIA, respondents.
NARVASA, C.J.:
The basic facts from which the controversy at bar has arisen are not in dispute.
They are summarized in the challenged decision of the respondent National
Labor Relations Commission (NLRC) of November 25, 1988 as follows.
1. Francisco Divinagracia "started working with . . . (San Miguel
Corporation) on November 16, 1977 as accounting clerk. On July 24,
1982 he held the position of Regional Cashier of Bacolod Beer Region
with basic monthly salary of P2,200. His job entailed the receiving of
cash remittances from route salesmen, preparing vouchers for
disbursement and keeping funds inside the vault."
2. On January 31, 1985 at 5:00 in the afternoon, complainant sought
and was granted permission by the Regional Accountant (Remus
Banogon) to leave the office to attend to personal matter (to buy some
milk for his infant child). When he returned to the office after an hour,
he proceeded to work and discovered a shortage of P10,004.56. He
relayed the matter to the security guard and to his supervisor, the
Regional Accountant, the following morning. Together with the
General Accounting Clerk, complainant and the Regional Accountant
counted and reviewed the transactions of the previous day but could
not account for the shortage. This matter was reported to the
Operations Manager.
3. Due to this incident complainant was grounded and an investigation
ensued. After the investigation, . . . (the employer, San Miguel
Corporation) demanded payment of the shortage from . . .
(Divinagracia). On May 31, 1985 . . . (the latter) was dismissed. . . . (He
later) instituted.
. . . an action on December 23, 1985 for illegal dismissal.
Divinagracia's action resulted in a judgment by the Labor Arbiter dated March
29, 1980. The Arbiter concluded that Divinagracia had indeed been illegally
dismissed and directed his reinstatement with full back wages. The Arbiter
believed Divinagracia's claim that "he formally turned over the funds to the
Regional Accountant (Remus Banogon) before he took a temporary leave of
43
absence on January 31, 1985;" that when he returned an hour or so later, " the
Accountant had (already) left the office;" and that since "the latter had duplicate
keys to the cashier's (Divinagracia's) booth and knew the combination of the
vault safe," Banogon was as likely a suspect as he (Divinagracia) himself was,
yet Banogon was never investigated, much less disciplined.
On appeal by San Miguel Corporation, the NLRC sustained the Arbiter's
conclusion that Divinagracia's employment had in truth been unlawfully
terminated. It however modified the Arbiter's judgment by directing that the
reinstatement of Divinagracia thereby decreed be "without backwages for he is
not totally blameless."
Nullification of this decision of the NLRC, rendered on November 25, 1988, is
what is sought in this special civil action initiated in this Court by San Miguel
Corporation (SMC). SMC contends that the following findings in that decision
were arrived at with grave abuse of discretion, to wit:
1) there had been a formal turn-over of funds from Divinagracia to his
immediate superior — Regional Accountant Remus Banogon — at the
time that, with the latter's permission, Divinagracia went out of his
office on a personal errand;
2) Banogon might have taken some of the money left by Divinagracia
in the vault inside his booth, since Banogon had duplicate keys to that
booth and knew the combination of the vault; and
3) the testimony of Accounting Clerk Jocelyn B. Longno is undeserving
of credit.
At the administrative investigation conducted by SMC respecting Divinagracia's
shortage, as well as in the proceedings before the Labor Arbiter, evidence was
given by the persons who were with Divinagracia at the time of the incident:
Remus Banogon and Jocelyn Longno.
Banogon pertinently deposed that —
1) although he really did have a key to the Cashier's office and
knew the combination of the vault lock, he never entered the
cashier's booth on January 31, 1985, when the shortage
supposedly happened; moreover, he did not have a key to the
drawer of the Cashier's table where some of the remittances
were supposedly placed; and
2) It is not true that there was a turn-over of the Cashier's
funds, booth or vault to him; such a turn-over not being "done
in absences of short duration like Divinagracia's absence from
5:30 p.m. to 6:45 p.m.
Jocelyn B. Longno testified that —
1) as shown in two (2) sketches of the Accounting Office in
which she was at the time working together with Remus
Banogon, Francisco Divinagracia and others, Divinagracia's
Cashier's booth "is situated in such a way that I would be able
to see if someone should enter it . . . (and) Remus Banogon's
table was just next to my table . . . (such that). I would surely
notice if he left his table;"
2) she did not leave her table inside the Accounting Office from
the time that Divinagracia left at about 5:30 P.M. until she went
home at about 6:45 P.M.; "(n)either Remus Banogon nor
anybody else entered the Cashier's Booth on that period that
Francisco Divinagracia III was out . . . (and in fact) Remus
Banogon did not leave his table until 6:30 P.M. when he was
already going home;" and
3) she herself left the Accounting Office at about 6:45 P.M. and
locked its door; and as she was going out of the gate, she met
Divinagracia coming back.
From the foregoing evidence, the NLRC drew the conclusion that Divinagracia's
"failure to account could not be solely attributable to him since other persons
have similar access to the company funds," and his complainant's function is
lodged, was likewise in the performance of his duty."
What in effect the NLRC is saying is that since both Divinagracia and Banogon
had no access to the former's office and the vault therein, it is not possible to
hold only Divinagracia liable for the shortage in his funds, since Banogon might
himself have surreptitiously gone inside Divinagracia's booth, opened the vault
and made off with some of the money lying there. The evidence, however, is that
while Banogon indeed had access to Divinagracia's office and its vault, Banogon
had not gone into that office at all at any time during the hour that Divinagracia
was away. What the NLRC has done is to make a selective acceptance of
Banogon's testimony, according credit to such part thereof as was consistent
with obscuration of Divinagracia's liability for the shortage, and conveniently
44
ignoring so much of it as was inconsistent. It accorded credit to Banogon's
statement that he had a key to Divinagracia's office and knew the combination
to the vault, but it rejected his declaration, forming part of the same testimony,
that he had never entered Divinagracia's booth on the day in question. That
rejection cannot in the circumstances be regarded as otherwise than whimsical,
capricious, even irrational. No reason whatsoever has been given by NLRC for
that rejection, or why Banogon is deemed a credible witness in part and
branded as undeserving of belief in another, specially when Banogon's
statements are corroborated in their entirety by the other evidence on record,
Jocelyn B. Longno's testimony and the unchallenged sketches of Divinagracia's
Cashier's Booth in relation to the adjacent or surrounding working areas.
Neither does the NLRC cite any cause to disbelieve the evidence given by
Longno, basically to the effect that Banogon had never entered the office of
Divinagracia while the latter was out on personal business. This lack of
justification is attempted to be cured by the NLRC's counsel by such arguments
as —
1) . . . (while it) may be true that she had no ill-motive as to
falsely testify against . . . (Divinagracia), (h)owever, she had to
protect her employment with petitioner (SMC); and
2) . . . while Longno was rendering overtime work, her concern
and attention were focused on her work. It was unnatural for
her to have noticed that Banogon never left his desk while she
was concentrating on her work. Longno then biased and
cannot be relied upon on this point.
The first argument is unintelligible. Its import is that while Longno had "no ill-
motive" to testify falsely against Divinagracia, she nevertheless did so "to
protect her employment with petitioner." Why her employment would be
imperilled by her testifying otherwise than she actually did (e.g., that
Divinagracia was faultless, or it was some other employee who had taken the
money, etc.) is not explained. The second argument is cut from the same bolt. It
insists that Longno could not have noticed what Banogon was doing at all since
she was concentrated on her work, despite Longno's positive declaration that
she would surely have noticed if Bagonon had entered the booth of Divinagracia
while the later was out for an hour and fifteen minutes because her desk was
right beside Bagonon's and she was so situated that Divinagracia's booth was
within her view at any given moment. Why stark speculation or plain guessing
should be preferred to affirmative testimony is also not explained.
In any event, it is clear that the NLRC's conclusions regarding the evidence have
nothing to support them and hence must be struck down, as already stated, for
being whimsical and capricious, arrived at with grave abuse of discretion.
WHEREFORE, the petition is GRANTED. The Decision of the respondent
National Labor Relations Commission of November 25, 1988 is NULLIFIED AND
SET ASIDE, and the complaint of illegal dismissal is DISMISSED, without
pronouncement as to costs.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. Nos. 76818-19 July 3, 1992
CDCP TOLLWAYS OPERATION EMPLOYEES AND WORKERS UNION IN
BEHALF OF REYNALDO MIRANDA and GUILLERMO CARIÑO, JR., petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, CONSTRUCTION AND
DEVELOPMENT CORPORATION OF THE PHILIPPINES (NOW PHILIPPINE
NATIONAL CONSTRUCTION CORPORATION) FLORANTE DE GUZMAN, JOSE
S. SANQUI and PABLO DIZON, respondents.
NOCON, J.:
This is a petition for certiorari seeking to annul and set aside the November 27,
1986 decision of the public respondent National Labor Relations Commission
(NLRC) in holding that Danilo Estanislao and Guillermo Cariño, Jr., whose
complicity in the pilferage of private respondent corporation's toll collection
was established beyond cavil, are not entitled to separation pay while Lily
Maglunog and Reynaldo Miranda are only entitled to separation pay equivalent
to one-half month's pay for every year of service, a fraction of at least six
months being considered as one whole year.
It appears from the records that petitioners Reynaldo Miranda and Guillermo
Cariño, Jr. were toll tellers of private respondent corporation Construction and
Development Corporation of the Philippines (now Philippine National
Construction Corporation) at its Balintawak Toll Gate, Caloocan City.
45
At around 1:45 P.M. of July 7, 1983, Victoria Robles, a field auditor of private
respondent Corporation saw Rosario Sanchez, a toll teller reliever of said
Corporation, come out of Booth No. 5 which was being manned by petitioner
Miranda and, thereafter, entered Booth No. 3 manned by petitioner Cariño
where she was seen folding a piece of paper into her pocket. Suspecting said
piece of paper to be a cash count sheet, Robles told her co-auditor Arnel
Sequitin to seek permission from the collection supervisor Leonardo Santos to
conduct a body search on Sanchez who was at that time inside Booth No. 12
which was being manned by Lily Maglunog.
Sanchez, initially refused to be searched but relented upon being informed that
the collection supervisor had already given his permission. However, as they
were passing the powerhouse on their way to the sub-office where the search
would be conducted, Sanchez suddenly stepped inside the powerhouse, pulled
out from her pocket the folded cash count sheet and threw it inside the
powerhouse. Danilo Estanislao, a technician of private respondent Corporation,
who was at that time inside the powerhouse, grabbed said piece of paper and
put it inside his pocket.
Upon Robles' demand to turn over to her said piece of paper, Estanislao refused
claiming that said piece of paper was a love letter for Sanchez' boyfriend. When
Robles insisted, Estanislao threw said piece of paper toward Rodolfo Palad, an
incoming security guard of private respondent Corporation, who was then
dressing up inside the powerhouse. Believing said piece of paper fell inside the
drawer of the security guard, Robles asked Palad to open said drawer. But the
security guard refused to follow Robles' order alleging that he shared said
drawer with two other security guards and he would only open it with the
permission of the Collector Supervisor.
When said drawer was eventually opened, petitioner Cariño, who was standing
beside the powerhouse, grabbed from Robles the folded cash count sheet found
inside the guard's drawer. The former crumpled said cash count sheet and put it
inside his pocket. When said cash count sheet was finally retrieved from
petitioner Cariño, Jr., it yielded P590.00 in paper bills.
Robles also found inside the guard's drawer a carton box which when placed on
the floor of the powerhouse was immediately picked up by Estanislao claiming
said box is trash which he is throwing out. When Estanislao brought said box
outside the powerhouse, auditor Sequitin followed the former and retrieved
said box. When said box was opened inside the powerhouse, 47 unvalidated
patron tickets amounting to P646.00 wrapped in a white plastic were found.
As a result of said incident, Estanislao and Cariño, Jr. were dismissed on August
8, 1983 and August 23, 1983, 1while Maglunog and Miranda were also
dismissed on October 8, 1983 on grounds of loss of trust and confidence. 2
Thereafter, Estanislao, Cariño. Jr., Maglunog and Miranda filed separate
complaints for illegal dismissal, damages and attorney's fees with the Regional
Office of the Ministry of Labor and Employment in San Fernando, Pampanga,
which were consolidated upon the agreements of the parties.
After the parties submitted their respective position papers and supporting
evidence, a decision was rendered on June 27, 1986 by the labor arbiter
sustaining the dismissal of the complainants but awarding them separation pay
equivalent to one month's salary for every year of service.
On November 27, 1986, respondent NLRC affirmed the order of dismissal of the
four employees with the modification that only Maglunog and Miranda may be
granted a separation pay of one-half month's pay for every year of service.
As a result, petitioners instituted this petition for certiorari.
Petitioners' contention that the decision of the public respondent NLRC finding
Cariño's attempt to cover up the alleged irregularity in private respondent
Corporation's toll collection is based on hearsay and not supported by
competent and substantial evidence since it gave weight and credence to the
investigation report of Amadeo San Antonio, Jr. who was not even an
eye-witness to the incident is without merit.
Under the Rules of the National Labor Relations Commission, proceedings
before a labor arbiter are summary and non-litigious in nature. The parties, by
agreement, may submit their case for decision on the basis of position papers
and their supporting evidence. In the case at bar, the investigation report of
Amadeo San Antonio, Jr. is one of the supporting evidence submitted by the
private respondent Corporation which is attached to its position paper.
Although Amadeo San Antonio, Jr. was not an eye-witness to the incident, said
fact should not in any way render his report based on mere hearsay and
conjecture since said report was based on the testimonies of witnesses who had
direct knowledge of the incident. Likewise, the affidavit of Atty. Arnulfo
Villanueva which was attached to private respondent Corporation's position
paper stated that the cash account sheet containing the amount of P590.00 was
handed by petitioner Cariño, Jr. to Sanchez which was corroborated by the field
auditor Robles who stated in her affidavit that she saw Sanchez pocket the cash
account sheet as she was leaving Booth No. 3 manned by petitioner Cariño, Jr. It
46
should be noted that an administrative proceeding requires only substantial
evidence and not proof beyond reasonable doubt as in a criminal proceeding.
Furthermore, well-entrenched is the rule that when the conclusions of the labor
arbiter are sufficiently corroborated by the evidence on record, the same should
be respected by appellate tribunals since he is in a better position to assess and
evaluate the credibility of the contending parties. 3
Petitioners' contention that they should be reinstated with backwages instead
of merely being awarded separation pay because of the findings of the public
respondent NLRC that the evidence against them are shaky and weak is also
unmeritorious.
Inasmuch as the respondent NLRC stated in its decision that:
On the issue of the sufficiency of evidence raised by the
complainants to firm up a finding of guilt on their part, we
would say that, except for Estanislao and Cariño, Jr. whose
complicity (attempt to cover-up) in the irregularity could
hardly be doubted, we share the impression that the evidence
linking the two other complainants (Maglunog and Miranda) to
the pilferage of the company's collection was rather weak and
shaky. But that does not make their termination less valid and
unjustified. For loss of confidence is a valid ground for
dismissing an employee. And proof beyond reasonable doubt
of the employee's misconduct is not required, it being sufficient
that there is some basis for the same or that the employer has
reasonable ground to believe that the employee is responsible
for the misconduct and his participation therein renders him
unworthy of the trust and confidence demanded of his position
(Villadolid vs. Inciong, G.R. Nos. L-52364 and 53349).
Reiterating this principle, the Supreme Court in the case of SMC
vs. Deputy Minister of Labor, et al., G.R. Nos. 61232-33, 29
December 1983, ruled:
Loss of confidence is a valid ground for dismissing an
employee, and proof beyond reasonable doubt of the
employee's misconduct — apparently demanded by the
Minister of Labor — is not required to dismiss him on this
charge. 4
Consequently, there is no doubt about the legality of petitioners' dismissals. In
the case of petitioner Miranda, although his participation in said irregularity
may not have been sufficiently established, yet there existed sufficient basis for
the private respondent Corporation to lose its confidence in him, which is a
valid ground for dismissing an employee and proof beyond reasonable doubt of
the employee's misconduct is not required. It is sufficient if there is some basis
for such loss of confidence or if 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
unworthy of the trust and confidence demanded by his position. 5
Finally, petitioners contend that they were deprived of due process since they
were not informed of the specific or particular cause of their dismissal nor
afforded ample opportunity to defend themselves.
The records show that petitioners were notified by the private respondent
Corporation of the specific charges against them. In fact, they were apprised of
the specific cause in their notices of suspension, that is, on their possible
involvement in the conspiracy to commit fraud against respondent Corporation
on July 7, 1983. Likewise, said Corporation informed them again in their notices
of dismissal of the cause of their dismissals which is their involvement in the
conspiracy to commit fraud against respondent Corporation and their willful
breach of the trust reposed upon them by the latter. Moreover, in the private
Corporation's notice of investigation regarding said incident, all those suspected
of complicity in said incident were instructed to appear before a panel of
investigation at 1:30 P.M. on July 22, 1983 to testify and present evidence. Since
petitioners were given all the opportunity to know the causes of their dismissals
and to defend themselves in connection with said incident, they cannot
anymore complain that they were deprived of due process of law.
The law in protecting the rights of the labor, authorizes neither
oppression nor self destruction of the employer. While the
Constitution is committed to the policy of social justice and the
protection of the working class, it should not be supposed that
every labor dispute will be automatically decided in favor of
labor. Management also has its own right, which, as such, are
entitled to respect and enforcement in the interest of simple
fair play. Out of its concern for those with less privileges in life,
the Supreme Court has inclined more often than not toward
the worker and upheld his cause in his conflicts with the
employer. Such favoritism, however, has not blinded the Court
to the rule that justice is in every case for the deserving, to be
47
 dispensed in the light of the established facts and applicable
law and doctrine. 6
WHEREFORE, the assailed decision of the National Labor Relations Commission
is affirmed and the petition for certiorari is hereby dismissed for lack of merit.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-66766 December 20, 1985
ZAMBOANGA CITY WATER DISTRICT, petitioner,
vs.
GENARO A. BARTOLOME, LABOR ARBITER PASTOR I. ALVAREZ and
COMMISSIONERS GUILLERMO C. MEDINA, GABRIEL M. GATCHALIAN and
MIGUEL B. VARELA of the National Labor Relations
Commission, respondent.
Virginia M. Ramos for petitioner.
Jesus F. Balicanta for respondents.
AQUINO, C.J.:
This is an illegal dismissal case. Genaro Bartolome was employed by the
Zamboanga City Water District as meter reader in July, 1976, In a sworn
statement dated February 9, 1981 before Agent Virgilio Mendez of the National
Bureau of Investigation, Bartolome admitted that in September, 1980 he opened
the water meter of Manuela Cahipe in order to enable his fellow-employee, Ulysis
Lunjas, to adjust the meter reading. After the adjustment, Cahipe offered them a
drink of beer (pp. 44-45, Rollo). Bartolome was supposed to read the water
meter, not to open it.
On the other hand, Lunjas in his sworn statement before Agent Mendez dated
February 3, 1981 pointed to Bartolome as the one who tampered with the water
meter by reversing the gear to get the desired meter reading (pp, 43-44, Rollo).
Angel Fernando, another fellow-employee of Bartolome, in his sworn statement
before Agent Mendez, declared that Bartolome confided to him that he was
tampering with the water meters of the establishments in the market site (No. 8,
Annex J, p. 54, Rollo).
Fiscal Pablo I. Murillo found that at one time Cahipe's water consumption of 60
cubic meters was reduced to 48 cubic meters because of meter tampering. He
recommended her prosecution under the Anti-Graft and Corrupt Practices Law
(pp. 39-41, Rollo).
In a later resolution dated September 16, 1982, Fiscal Murillo "apologized" for
his error in having overlooked Bartolome's participation in the theft of water.
He recommended that Bartolome be prosecuted for theft (p. 46, Rollo).
The fact that the theft case against Bartolome was dismissed (p. 33, Rollo)
would not preclude his removal. The conviction of an employee in a criminal
case is not a condition precedent to his dismissal by his employer. The dropping
by the city fiscal of the criminal complaint is not binding upon a labor tribunal
(Sea-Land Service, Inc. vs. National Labor Relations Commission, G.R. No. 68212,
May 24, 1985, 136 SCRA 544, 547-548).
Bartolome was dismissed by the petitioner in June, 1981. He filed a complaint
for illegal dismissal. We find that Bartolome was guilty of gross misconduct
which is a ground for dismissal under section 283 of the Labor Code.
The Labor Arbiter committed a grave abuse of discretion amounting to lack of
jurisdiction when he directed the reinstatement of Bartolome with backwages
from June, 1981 to June, 1982 at P630 a month and when he ordered the
payment to him of P4,560 as allowance for the same period plus P1,010 as 13th
month pay (p. 25, Rollo). The NLRC should not have dismissed petitioner's
appeal from that decision.
WHEREFORE, the NLRC resolution dismissing petitioner's appeal and the
decision of the Labor Arbiter are reversed and set aside. Bartolome's complaint
is dismissed. Costs against Bartolome.
SOORDERED.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-63191 April 30, 1984
PHILIPPINE LONG DISTANCE TELEPHONE COMPANY, petitioner,
vs.
THE NATIONAL LABOR RELATIONS COMMISSION, NOEL SEVILLA and
MELQUIADES ALFONSO, respondents.
48
 Benjamin I. Peñalosa for petitioner.
The Solicitor General and Rogelio B. de Guzman and Jose C. Espinas for
respondents.
GUTIERREZ, JR., J.:ñé+.£ªwph!1
This is a petition to set aside the decision of the respondent National Labor
Relations Commission dated December 29, 1982 in NLRC Case No. AB-6-7104-
80 which affirmed on appeal the decision of Labor Arbiter Porfirio E. Villanueva,
ordering the petitioner to reinstate private respondents Melquiades Alfonso
and Noel Sevilla with full backwages plus other benefits.
This petition involves two separate applications for clearance to terminate
employment.
The first, filed on January 22, 1980, is the application for clearance to terminate
the employment of private respondent Melquiades Alfonso on the ground of
misappropriation of company properties.
The second, filed on May 23, 1980, concerns the application for clearance to
terminate the services of private respondent Noel Sevilla on the ground of
commission of fraudulent acts.
Private respondents Noel Sevilla and Melquiades Alfonso were employed by
petitioner Philippine Long Distance Telephone Company as Cable Splicer
Headcrews (SJ-5). Their job involved principally fieldwork. They worked on
aerial platforms and in manholes or basements of large buildings connecting
lines within the cables to keep the circuit continuous. They changed lines,
wrapped insulations around wires, and sealed or closed joints. They were also
charged with the responsibility of securing from the warehouses of petitioner
company the necessary materials for the work which their team was assigned to
perform. They were authorized for this purpose to requisition whatever
materials were necessary for the work assigned to them. They also prepared the
Plant and Daily Work Reports which are submitted at the end of each working
day.
On August 8, 1983, we issued a resolution giving partial due course to the
petition as to respondent Noel Sevilla and dismissing the petition as to
respondent Melquiades Alfonso for lack of merit. The decision ordering
Alfonso's reinstatement with full backwages plus other benefits is final and
partial entry of judgment in his favor was made on October 7, 1983.
Private respondent Noel Sevilla was arrested and detained on March 8, 1980 by
virtue of the same Arrest, Search and Seizure Order No. 4764 which formed the
basis of Melquiades Alfonso's arrest. After the arrest the petitioner company
conducted its own investigation and found the following anomalies committed
by private respondent Sevilla — têñ.£îhqwâ£
1. Requisition Slip No. 93388 dated February 28, l980 —
Under this Requisition Slip, respondent Sevilla requisitioned
materials from the petitioner for a fictitious and non-existing
work order, a copy of the requisition slip is attached hereto as
Annex "O".
For the information of this Honorable Tribunal work
assignments of cable splicers are designated by the number
assigned to the particular telephone cables to be worked on.
For purposes of Identifying the telephone cables of the
petitioner, each cable has been assigned numbers and work on
any of them is Identified by designating the number of cable, In
the requisitioning of materials, the cable number representing
the work order to where the materials are to be used are
required to be stated at the right side of the requisition slip For
example, in the subject requisition slip the cable number is
written on the right side thereof as follows: "602-02-MTCE:
1038 A-R. To be used in closing (1) one 909 pairs (trouble
splice) along Lakandula near corner A. Luna". The figures "602-
02" represents the account number of the department to which
respondent Sevilla as cable splicer belongs. "MTCE-1038-A-R"
refers to the cable number to be worked on, otherwise referred
to as the work order. MTCE simply means that the materials
requisitioned shall be used cable no. 1038-A-R for purposes of
closing one 909 pairs splice along Lakandula Street near
corner A. Luna Street.
The number of the cable actually worked on is also required to
be indicated in the Plant and Daily Work Report (PDWR)
submitted by each headcrew at the closing of each work day.
The PDWRs serve as the basis of the time records of cable
splicers whenever they are on field work and as such it is
important that they indicate therein the work done for the day,
the description of materials used and the hours spent working.
All work to be done or performed by each team is pre-
49
determined and assigned by their respective foremen.
Accordingly, what should appear in the PDWR should be that
work assignment made by the respective foremen. Through the
PDWRs the respective foremen of each team are able to
determine if the work done pertains to the work order
properly assigned to them.
In the subject requisition slip, dated February 28, 1980, the
work order appearing is MTCE 1038-A-R which means that the
purpose of the requisition was to use the materials in the said
work order. However, in the PDWR submitted by respondent
Sevilla on February 27 and 28, 1980, it appears that no such
work was existing at the time, a copy of the PDWR dated
February 27, 1980, is attached hereto as Annex "P" while copy
of the PDWR dated February 28, 1980, is attached hereto as
Annex "Q". For February 27, 1980, the work performed as
indicated in the PDWR for the day was on cable no. 1040 and
the materials used therein were covered by Requisition Slip
No. 88131, a copy of which is attached hereto as Annex 'R',
while on February 28, 1980, the work performed as indicated
in the PDWR for the day was on cable No. 1030.
From the foregoing, it is evident that respondent Sevilla
requisitioned materials for a fictitious work order and which
offense can be properly described as a "fictitious requisition".
2. Requisition Slip Nos. 78130 and 88141 both dated February
29, 1980 —
Under these receipts, respondent Sevilla made a double
requisition of materials for the same work order: Cable No.
1030-A-L, a copy of the Requisition Slip No. 78130 is attached
hereto as Annex 'S' while a copy of Requisition Slip No. 88141
is attached hereto as Annex "T".
In the Plant and Daily Work Report (PDWR) of respondent
Sevilla for February 28, 1980, he indicated that the work on
cable no. 1030 was actually done on February 28, 1980 which
is one day previous to the date of requisition and that no
materials were used in the completion of the work. (Please
refer to Annex "Q").
Considering that the subject requisitions were made on
February 29, 1980, i.e., one day after the supposed work on
cable no. 1030 was completed on February 28, 1980, there was
deceit on the part of respondent Sevilla when he made such
requisitions inasmuch as no materials were used in the
completion of the work.
3. Requisition Slip Nos. 78143 and 88147 both dated March 3,
1980 —
There were two requisitions made by respondent Sevilla on
this date (March 3, 1980). Under Requisition Slip No. 78143,
the work order (cable no. 1034) from where the materials
requisitioned were indicated as to be used is fictitious, a copy
of the Requisition Slip is attached hereto as Annex "U". While
under Requisition Slip No. 88147, the materials requisitioned
were in excess of what was actually used but the excess was
never returned to the petitioner, a copy of the requisition slip
is attached hereto as Annex "V".
As indicated under Requisition Slip No. 78143, the work order
from where the materials were to be used was on Cable No.
1034. This work order (Cable No. 1034) is fictitious for the
reason that there was no such work assignment to respondent
Sevilla. Previous to the date of the subject requisition, that is,
on March 1 and 2, 1980, respondent Sevilla was off-duty and
therefore he could not have possibly worked on Cable No.
1034. On the date of requisition, that is, on March 3, 1980, the
work he performed was on Cable No. 1008 as shown in his
Plant and Daily Work Report (PDWR) for March 3, 1980, a copy
of the PDWR is attached hereto as Annex "W". Clearly,
Requisition Slip No. 78143 was again a fictitious requisition.
As to Requisition Slip No. 88147, while the work order from
where the materials were to be used tallies with the work
performed under the PDWR for March 3,1980 (Annex "W"
hereof), the materials requisitioned were more than what were
actually used. In the said requisition slip, the materials
withdrawn from the company bodega were, among others: C-
cement (1 can) and cable support (16" — 12 pieces). In the
report of the materials used, as stated in Annex "W", no
mention was made on the use of the items which means that
50
 the said items were not used. However, notwithstanding the
non-use thereof respondent Sevilla never returned the items to
the company.
The total value of the materials covered by Requisition Slips Nos. 93388, 78130,
88141, 78143 and 88147 which were allegedly withdrawn and
misappropriated by private respondent Sevilla is Three Thousand Two
Hundred and Twenty-One Pesos and Thirty Seven Centavos (P3,221.37).
On May 23, 1980, the petitioner company filed an application to terminate the
employment of private respondent Sevilla. On the same date, Sevilla was placed
under preventive suspension leading to his dismissal.
The applications for clearance to terminate Alfonso and Sevilla were
consolidated and designated as NCR-Case No. AB-7104-80. The two applications
were also heard jointly and submitted for resolution on the basis of the parties'
position papers.
On June 29, 1981, labor arbiter Porfirio E. Villanueva dismissed the applications
for clearance to terminate the employment of respondents Alfonso and Sevilla
and ordered the petitioner to reinstate them to their former positions with full
backwages plus other benefits from the time they were illegally dismissed. The
dispositive portion of the decision reads: têñ.£îhqwâ£
WHEREFORE, premises considered, judgment is hereby
rendered ordering the dismissal of applicant's clearance to
terminate oppositors' employment for devoid of merit.
Applicant is also ordered to reinstate oppositors Noel Sevilla
and Melquiades Alfonso to their former positions with full
backwages plus other benefits from the time they were illegally
dismissed on May 23, 1980 and January 22, 1980, respectively,
to be reckoned from their latest salaries up to actual
reinstatement.
The petitioner appealed to the respondent National Labor Relations
Commission. On December 29, 1982, the respondent commission affirmed the
decision of the Labor Arbiter. The dispositive portion of the decision
reads: têñ.£îhqwâ£
WHEREFORE, premises considered, the appeal is, as it is
hereby DISMISSED for lack of merit. Consequently, applicant-
appellant is, as it is hereby directed to show proof of
immediate compliance to the mandate of the AFFIRMED
DECISION after ten (10) days from receipt of this Decision.
On February 14, 1983, the petitioner filed the instant petition for certiorari.
The petitioner assigns the following errors in pleading for the grant of the
petition: têñ.£îhqwâ£
1. Respondent National Labor Relations Commission erred in
treating the two cases as one and the same, and applying only a
part of petitioner's evidence in the formulation of the decision.
By its failure to fully appreciate the distinct and separate
causes of action against the two respondents, the National
Labor Relations Commission miserably failed to properly
appreciate the evidence submitted in the case.
2. Respondent National Labor Relations Commission erred in
utilizing and using as the basis for the decision the alleged
testimony of a certain Ruben Reyes which was not even a part
of the records of the case and therefore non-existent.
3. Respondent National Labor Relations Commission erred in
completely ignoring the other evidence submitted by the
petitioner.
4. Respondent National Labor Relations Commission erred in
ordering the reinstatement of the individual respondents
notwithstanding clear and convincing evidence as to the
offense of both respondents; and
5. Respondent National Labor Relations Commission erred in
using as a basis for the denial of the application for clearance to
dismiss respondent- employees the dismissal by the Court of
First Instance of Rizal of the criminal case, for qualified theft
filed against respondent-employees by the Military Authorities
in connection with their arrest and detention by virtue of ASSO
No. 4764 dated December 13, 1979.
On February 18, 1983, we issued a restraining order enjoining the respondents
from enforcing the decision of the respondent Commission dated December 12,
1982.
51
As earlier stated, in giving only partial due course to the petition we dismissed
the case as to respondent Melquiades Alfonso and the decision of the
Commission as to him is now final and executory. We now deal with the case
against Noel Sevilla.
According to the petitioner, it is clear from the records that the respondent
Commission's decision actually covers two cases which are separate and
distinct from each other with different causes of action occurring on different
occasions.
We agree with the petitioner. A perusal of the records shows that the
application for clearance to terminate the services of respondent Alfonso was
for misappropriation of company properties. On the other hand, the case
against respondent Sevilla was for termination of employment on the ground
that he committed fraudulent acts resulting in the loss of the petitioner's trust
and confidence in him. Furthermore, the application for clearance to terminate
the services of Alfonso was filed on January 22, 1980 or less than two (2)
months before his arrest on March 8, 1980, while the application for clearance
to terminate the employment of respondent Sevilla was filed only on May 23,
1980 or more than two and a half (2-1/2) months after his arrest on March 8,
1980. Respondent Alfonso was placed under preventive suspension on January
24, 1980 by the petitioner company while respondent Sevilla was placed under
preventive suspension only on May 23, 1980 or four (4) months after
respondent Alfonso was placed under preventive suspension.
Petitioner contends that there is sufficient evidence to warrant the dismissal of
private respondent Sevilla.
The Solicitor General finds that just cause for the dismissal of Sevilla exists and
disagrees with the decision of the labor arbiter and the respondent commission
ordering his reinstatement with full backwages and benefits. The Solicitor
General states that the records convincingly show that respondent Sevilla is
guilty of acts inimical to the interests of his employer company.
Respondent commission on the other hand, through Atty. Linda P. Ilagan, its
Chief Legal and Research Services, argues that the company conducted its
investigation only after the arrest of respondent Sevilla, and that the military
had no evidence against him when he was suddenly arrested. Respondent
commission further submits that since the application for clearance to
terminate the services of Sevilla was filed only two (2) months after his arrest,
this indicates that petitioner company did not suspect Sevilla of any irregularity.
We agree with the petitioner that private respondent Sevilla is guilty of acts
inimical to the interests of his employer. The records show that Sevilla took
advantage of his position as Cable Splicer Headcrew (Sj-5) to withdraw
company properties which should never have been issued to him on the
strength of double and/or fictitious requisition slips. By means of Requisition
Slip No. 93388 dated February 28, 1980 respondent Sevilla was able to
withdraw company materials for a fictitious and non-existing work order.
Requisition Slips Nos. 78130 and 88141, both dated February 29, 1980 are
double requisitions for the same work order. Requisition Slip No. 78143 dated
March 3, 1980 was for a fictitious and non-existing work order while under
Requisition Slip No. 88147, also dated March 3, 1980, the materials
requisitioned exceeded what was actually needed, and despite non-use of the
excess materials, respondent Sevilla never returned the same to the petitioner
company.
These evidences of double or fictitious requisitions were not successfully
controverted by respondent Sevilla. The fact that evidence against him was
gathered only after his arrest does not mean that he was not guilty of
wrongdoing. The petitioner had valid and legitimate reasons to lose its
confidence in respondent Sevilla and to order his dismissal.
Relative to the fifth assignment of error, the -petitioner argues that the
dismissal of the criminal case filed against both respondents does not ipso facto
mean that the basis of their dismissal has similarly lost its meaning and effect. It
states that the applications for clearance to dismiss the respondents stand
separate and independent from the criminal case filed against them.
On the other hand, the respondent commission, represented by the Chief of its
Legal and Research Services, argues that if an employee is being terminated
from the service for acts constituting a crime, the evidence against him must not
only be substantial but should be evidence beyond reasonable doubt. It must be
positive and concrete.
The arguments of the public respondent have, in the past, been rejected by this
Court. Acquittal from criminal charges does not necessarily mean that loss of
confidence is automatically eliminated as a basis for administrative action.
Loss of confidence is a valid ground for dismissing an employee (Valladolid v.
Inciong, 121 SCRA 205). In San Miguel Corporation v. The Deputy Minister of
Labor and Employment, et al., G.R. Nos. 61232-33, December 29, 1983, which
quoted with approval the ruling in Reyes v. Zamora (90 SCRA 92), we held
that:têñ.£îhqwâ£
52
 Loss of confidence is a valid ground for dismissing an
employee, and proof beyond reasonable doubt of the
employee's misconduct-apparently demanded by the Minister
of Labor is not required to dismiss him on this charge. (See
National Organization of Laborers and Employees v. Roldan, 95
Phil. 727; Phil. Refining Co. v. Garcia, 18 SCRA 107; Gatmaitan
v. MRR 21 SCRA 191) It is sufficient if there is "some basis" for
such loss of confidence; (Galsim v. PNB, 29 SCRA 293) or if the
employer has reasonable grounds to believe, if not 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. (Nevans v. CIR,
23 SCRA 1321)
In cases where the acts of misconduct amount to a crime, a dismissal may still
be properly ordered notwithstanding that the employee is not criminally
prosecuted or is acquitted after a criminal prosecution.
The fiscal's dismissal of the charge of qualified theft against Sevilla does not
justify his reinstatement to his employment. We find from the records adequate
evidence that Sevilla committed fraud or breach of trust which is a statutory
ground for his dismissal.
We held in Philippine Geothermal, Inc. v. National Labor Relations
Commission (117 SCRA 692) that: têñ.£îhqwâ£
The conviction of an employee in a criminal case is not
indispensable to warrant his dismissal by his employer.' If
there is sufficient evidence to show that the employee has been
guilty of a breach of trust, or that his employer has ample
reason to distrust him, the labor tribunal 'cannot justly deny to
the employer the authority to dismiss such an employee.' The
fact that a criminal complaint for theft against an employee
was dropped by the fiscal is not binding and conclusive on the
labor tribunal (National Labor Union, Inc. v. Standard Vacuum
Oil Company, 73 Phil. 279).
Again in Dole Philippines, Inc. v. National Labor Relations Commission (123 SCRA
673) we held that' the acquittal of an employee in the criminal case filed against
him does not guarantee his reinstatement if the employer has validly lost
confidence in him.
WHEREFORE, the decision of the respondent Commission is hereby MODIFIED.
The petition is granted insofar as private respondent Noel Sevilla is concerned.
The termination of his employment is sustained. The restraining order issued
on February 18, 1983 enjoining the respondents from enforcing the Decision
dated December 29, 1982 is made permanent as to respondent Sevilla.
SO ORDERED.1äwphï1.ñët
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 97196 January 22, 1993
CHINA CITY RESTAURANT CORPORATION, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, MONICO DIETO and JUNILITO
CABLAY, respondents.
Federico C. Leynes for petitioner.
Corazon Agustin-Ongbueco for private respondent.
CAMPOS, JR., J.:
Petitioner seeks to annul the Resolutions ** of the National Labor Relations
Commission (NLRC) dated November 29, 1990 in NLRC NCR AC No. 00057
(NLRC NCR CASE No. 00-06-02857-69) entitled "Monico T. Dieto and Junilito
Cablay vs. China City Restaurant" which affirmed the decision rendered by
Labor Arbiter Eduardo Magno declaring the dismissal of private respondents
illegal, but with the modification that instead of reinstatement private
respondents be granted separation pay with full backwages.
The antecedent facts are as follows:
Petitioner China City Restaurant (petitioner, for brevity) employed private
respondents Monico Dieto and Julinito Cablay (private respondents, for brevity)
as chief steamer and roasting helper, respectively.
Sometime in 1988, the China City Employees Union, with Monico Dieto as
President, was organized and thereafter demanded recognition from petitioner.
On October 17, 1988, Abe Fuentes, a steamer helper at petitioner's restaurant,
was detained at the Makati Municipal Jail for allegedly stealing dried scallops
worth two thousand pesos (P2,000.00) belonging to the petitioner. On January
53
20, 1989, after posting bail paid by the petitioner, Abe Fuentes gave a statement
at the Intelligence and Special Operations Group, SPD, implicating the private
respondents.
Abe Fuentes alleged that as early as April 1988, he, in conspiracy with private
respondents, had been bringing out from the restaurant dried scallops wrapped
in plastic, by mixing them with leftovers thrown into the thrash can. They were
sold at Ongpin, Binondo, Manila. They would then divide the proceeds among
themselves, with the private respondents getting the lion's share. A criminal
charge for qualified theft was thereafter filed against the private respondents.
On March 27, 1989, an amended information was filed to include private
respondents as co-accused in the qualified theft case filed against Abe Fuentes.
Later, Abe Fuentes turned state witness.
On March 22, 1989, petitioner, through a memorandum, terminated the services
of the private respondents on the ground of loss of trust and confidence.
Thereafter a complaint for illegal dismissal was filed by the private respondents
against the petitioner with the Department of Labor and Employment.
Private respondents professed ignorance of the crime exposed by Abe Fuentes.
They claimed that when they visited Abe Fuentes at his detention cell, the latter
allegedly told them that Jose Polotan, the restaurant administrator, was forcing
him to name the private respondents as his co-conspirators but that he
allegedly refused. Later, however, private respondents were surprised to learn
that Abe Fuentes was released on bail at the instance of the petitioner. They
vigorously claimed that they were implicated in the theft incident because of
their being union members.
On January 17, 1990, after investigation and submission by the parties of their
respective evidence and position papers, the Labor Arbiter promulgated his
decision, the dispositive portion of which is quoted hereunder as follows:
Wherefore, judgment is hereby rendered declaring the
dismissal of the complainants as illegal. Respondent is hereby
ordered to immediately reinstate complainants to their former
positions without loss of seniority rights with full backwages
from May 20, 1989 until reinstatement plus attorney's fees
equivalent to 10% of the amount recoverable by the
complainants.
The claim for moral and exemplary damages are (sic) hereby
dismissed for lack of factual and legal basis.
SO ORDERED.1
Dissatisfied with the decision, petitioner appealed to the NLRC.
In its Resolution dated November 29, 1990, the NLRC affirmed the decision of
the Labor Arbiter with the modification of granting private respondents the
alternative relief of separation pay plus backwages instead of reinstatement.
Petitioner filed a motion for reconsideration of the NLRC resolution on January
4, 1991, but the same was denied on January 22, 1991.2
Hence, this petition.
The grounds relied upon by the petitioner for the issuance of the writ are the
following:
1
THE RESPONDENT COMMISSION ACTED WITH GRAVE ABUSE
OF DISCRETION AMOUNTING TO LACK OF JURISDICTION IN
HOLDING THAT THE PETITIONER FAILED TO OBSERVE DUE
PROCESS IN DISMISSING THE PRIVATE RESPONDENTS WHEN,
IN TRUTH AND IN FACT, AND AS ENUNCIATED IN BLTBCo vs.
NLRC, 166 SCRA 721, THEY WERE FULLY ACCORDED THEIR
RIGHT TO DUE PROCESS OF LAW BECAUSE THEIR DISMISSAL
WAS EFFECTED ON THE BASIS OF THE PRELIMINARY
INVESTIGATION FINDINGS OF THE CITY FISCAL WHICH
FOUND THEM TO BE
CO-CONSPIRATORS IN THE CRIME QUALIFIED THEFT.
2
THE RESPONDENT COMMISSION ACTED WITH GRAVE ABUSE
OF DISCRETION AMOUNTING TO LACK OF JURISDICTION IN
DECLARING THE DISMISSAL OF PRIVATE RESPONDENTS
ILLEGAL ON THE PREMISE THAT THEY WERE NOT
ACCORDED DUE PROCESS AND IN CONSEQUENTLY
AWARDING THE UNDULY HARSH RELIEF OF SEPARATION
54
 PAY WITH BACKWAGES IN COMPLETE DISREGARD OF THE
CASE OF WENPHIL CORPORATION vs. NLRC, 170 SCRA 69,
WHICH MERELY GRANTED A P1,000.00 SANCTION TO AN
EMPLOYEE DISMISSED WITHOUT DUE PROCESS. 3
Meanwhile, on March 25, 1991, private respondents were acquitted by the
Regional Trial Court of the charge of qualified theft on the ground of reasonable
doubt.4
The issue in this petition is whether or not public respondent committed grave
abuse of discretion in holding the dismissal of private respondents illegal for
lack of due process of the law, and in ordering petitioner to pay them separation
pay plus backwages.
It is the petitioner's contention that the preliminary investigation conducted by
the City Fiscal on the qualified theft charge against private respondents were
sufficient compliance with the due process requirement of the law.
Invoking Batangas Laguna Tayabas Bus Co. (BLTBCo.) vs. NLRC,5 it contends that
an employee can be dismissed on the basis of the findings of the City Fiscal
during the preliminary investigation of the criminal complaint. Petitioner claims
that in such case due process does not require the employer to conduct a
separate investigation as this would only be a duplication of the City Fiscal's
investigation upon which the employer has a right to rely on.6
The NLRC maintains otherwise, stating that they were not afforded the formal
investigation required and that the fiscal's investigation could not legally take
its place.7
Due process of law simply means giving opportunity to be heard before
judgment is rendered. "Due process of law is a law which hears before it
condemns, which proceeds upon inquiry and renders judgment only after
trial".8 In fact, this Court has held that there is no violation of due process even if
no hearing was conducted, where the party was given a chance to explain his
side of the controversy. What is frowned upon is the denial of the opportunity to
be heard.9 As a general rule, the preliminary investigation conducted by the City
Fiscal is sufficient compliance with procedural due process because the accused
is given ample opportunity to be heard.
As stated in the BLTBCo case:10
. . . the criminal charges initiated by the company against
private respondents and the finding after preliminary
investigation of prima facie guilt of the offense charged
constitute substantial evidence sufficient to warrant a finding
by the Labor Tribunal of the existence of a just cause for their
termination based on loss of trust and confidence. . . .
. . . For the company to conduct its own investigation would
only be a duplication of the JAGO's and later, the city fiscal's
investigation, . . . said officials being the persons charged with
this special function.
However, the petitioner cannot seek refuge in the BLTBCo case to support its
petition. As correctly observed by the Solicitor General, in that case there was a
mass fraud covering a period of ten months involving thirty-six (36) employees
and volumes of documentary evidence. The City Fiscal's finding of a prima
facie case of estafa against the employees was based on the affidavits of
witnesses and on the voluminous documentary evidence. There was, therefore,
basis for the company to dismiss the employees for loss of confidence without
necessarily conducting a formal investigation separate from the preliminary
investigation. 11
In the present case, however, the fiscal's finding of prima facie case of qualified
theft against private respondents was based solely on the affidavit executed by
the original accused-turned state witness, Abe Fuentes, to the effect that he
conspired with the private respondents in the theft of dried scallops. The only
connection of the private respondents to the charge is the implication made by
Abe Fuentes. It is therefore necessary to scrutinize this implication. The
Regional Trial Court which acquitted the private respondents of the crime of
qualified theft doubted the veracity of Abe Fuentes' testimony against them
because: (a) the implication was made more than three (3) months after Abe
Fuentes' arrest and after a series of talks with petitioner's representatives; (b)
the bond for his (Abe Fuentes') temporary release was put up by petitioner
upon his assurance that he would cooperate with petitioner; (c) the implicatory
testimony of Abe Fuentes was not substantiated by some other evidence, thus
rendering it of no provative value; (d) the private respondents are officers of
the union with whom petitioner is at odds. 12
Aside from Abe Fuentes' affidavit and the criminal complaint/information, there
is no other evidence shown by petitioner positively linking private respondents
to the alleged theft committed.
55
Due process in administrative proceedings requires that "evidence must be
substantial, and substantial evidence means evidence that a reasonable mind
might accept as adequate to support a conclusion".13
The information for qualified theft, based solely on the affidavit of Abe Fuentes,
implicating the private respondents is not the substantial evidence which a
reasonable mind would as sufficient to conclude that private respondents are
not trustworthy, and thus can be legally dismissed for loss of trust. Moreover,
the circumstances found by the trial court as leading to Abe Fuentes' implication
of the private respondents tend to show that the basis for the latter's dismissal
was not petitioner's loss of trust and confidence but rather its retaliation
against them for their union activities.
Furthermore, even the Labor Arbiter found that "A close scrutiny of the facts
and evidences attached to the record will reveal that the implication of the
complainants by Abe Fuentes in the commission of the crime of qualified theft is
not enough basis for the respondent to terminate them. . . . Since they failed to
establish sufficient basis for concluding that the complainants were really in
connivance with Abe Fuentes in the commission of the qualified theft, the
dismissal becomes illegal".14
The findings of the lower court in the theft case and the decision of the Labor
Arbiter that no sufficient basis exists to justify a dismissal on the ground of loss
of confidence deserves Our consideration. The factual findings of the lower
court and the Labor Arbiter with respect to this point are conclusive upon this
Court.
Although the BLTBCo. case held that the preliminary investigation is sufficient
compliance with due process without needing separate formal investigation to
be conducted by the company for dismissal of erring employees, We do not find
the ruling in said case as all embracing because as held in San Miguel
Corporation vs. NLRC, 15 the requirements for due process are two-fold: and We
quote:
Under the Labor Code, as amended, the requirements for the
lawful dismissal of an employee by his employer are two-fold:
the substantive and the procedural. Not only must the
dismissal be for a valid or authorized cause as provided by law
[Arts. 279, 281, 282-284], but the rudimentary requirements of
due process — notice and hearing — must also be observed
before an employee may be dismissed [Art. 277(b)]. One
cannot go without the other, for otherwise the termination
would, in the eyes of the law, be illegal.
In this case, there is no sufficient basis to support the belief that a just and
lawful cause exists. The just and lawful cause constitutes the substantive aspect
of due process. Lack of just causes render the dismissal illegal.
In a long line of cases, this Court stressed that the right of an employer to
dismiss employees on the ground that it has lost its trust and confidence in
them must not be exercised arbitrarily and without just cause; that although the
dropping of a criminal prosecution for an employee's alleged misconduct does
not bar his dismissal and proof beyond reasonable doubt is not necessary to
justify the same, still the basis thereof must be clearly and convincingly
established.16 Although the power to dismiss is a normal prerogative of the
employer, the same is not without limitations. The right of the employer must
not be exercised arbitrarily and without just cause. Otherwise, the
constitutional mandate of security of tenure of the workers would be rendered
nugatory.17
In General Bank and Trust Co. vs. Court of Appeals, 18 this Court set forth the
guidelines for the doctrine of loss of confidence to apply, to wit:
. . . However, loss of confidence should not be simulated. It
should not be used as a subterfuge for causes which are
improper, illegal, or unjustified. Loss of confidence may not be
arbitrarily asserted in the face of overwhelming evidence to
the contrary. It must be genuine, not a mere afterthought to
justify earlier action taken in bad faith.
In this case, the only basis for charging the private respondents with qualified
theft is the affidavit of Abe Fuentes implicating them. There is no evidence on
record to support or show any connection of the private respondents to the
charge of qualified theft. As found by the trial court, Abe Fuentes implicated the
private respondents only after a series of conferences with petitioner's
representatives, and after petitioner facilitated his release from jail through the
former's answering for his bail bond.
For loss of trust and confidence to be a valid ground for the dismissal of
employees, it must be substantial and not arbitrary, whimsical, capricious or
concocted.
56
Irregularities or malpractice should not be allowed to escape the scrunity of this
Court. Solicitude for the protection of the rights of the working class are of
prime importance. Although this is not license to disregard the rights of
management, still the Court must be wary of the ploys of management to get rid
of employees it considers as undesirable.
Petitioner goes on to contend that even if private respondents were dismissed
without due process the award of separation pay with backwages is unduly
harsh. It cites the case of Wenphil, 19 where an indemnity of only P1,000.00 was
awarded to the private respondent as compensation for the failure of petitioner
to give formal notice and to conduct investigation. We find the Wenphil case not
applicable to the case at bar because in the former case (Wenphil case) the
company was able to conclusively show that the dismissed employee was guilty
of grave misconduct and insubordination which We do not find in this case.
Employees who are illegally dismissed from work shall be entitled to
reinstatement without loss of seniority rights and other privileges and to their
full backwages.20
However, when reinstatement to their former positions is not possible under
the circumstances, an award equivalent to three years backwages plus
separation pay to compensate for their illegal separation is thus proper. 21
The circumstances prevailing in this case do not warrant the reinstatement of
the illegally dismissed private respondents. Antagonism and imputations of bad
faith caused a severe strain in the relationship between petitioner and private
respondents, that a more equitable disposition would be an award of separation
pay, in lieu of reinstatement, plus backwages for not more than three years
without qualification and deduction.
IN VIEW OF THE FOREGOING, the petition is DISMISSED. The Resolution of the
National Labor Relations Commission dated November 29, 1990 is hereby
AFFIRMED in toto with the modification that the amount of backwages be
reckoned from the actual date of dismissal up to the date of this decision which
in no case should exceed three (3) years. With costs.
SO ORDERED.
MIDAS TOUCH FOOD CORPORATION, WILSON CHU & RAMON T.
LUY,petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION
and IRIS FE ISAAC, respondents.
DECISION
HERMOSISIMA, JR., J.:
This is a petition seeking the reversal of the decision of the National Labor
Relations Commission which declared the dismissal of private respondent Iris
Fe B. Isaac illegal.
Petitioner Midas Touch Foods Corp. (Midas) is a company which owns and
operates the chain of West Villa Restaurants and other mini outlets in various
department stores throughout Metro Manila,[1] while petitioner Wilson Chu is
its Chairman of the Board of Directors and Ramon Luy its President and Chief
Executive Officer.
On September 16, 1986, private respondent Iris Fe B. Isaac was hired by
petitioner Midas as its Operations Manager, next in rank to the President. As
such, her task was to establish an efficient management scheme for the fast-food
chain of West Villa Dimsum and Noodles, and the formulation of company
policies on recruitment and training of personnel, planning and expansion of
business, purchasing of goods and other related activities. She was given a free
hand in all aspects of the operation and was allowed to bring in Alice Te to act
as the Commissary Manager, and part of the management team, since the
company has a centralized commissary.
Respondent Isaac continued her functions as Operations Manager until she
received a letter, dated June 15, 1987, terminating her services as decided by
the Executive Committee for alleged lack of confidence. On July 7, 1987, she was
informed by petitioner Luy that the Executive Committee had decided to recall
the termination letter. She was allowed thereby to continue to act as the
Operations Manager.
Sometime in October, 1987, Alice Te was investigated for allegedly stealing
food supplies which were supposedly delivered to another restaurant, named
Food Center, located at the Port Area.This led to the eventual resignation of
Alice Te on November 3, 1987. On the same day, petitioner Luy claims that
respondent Isaac admitted to him in one conversation they had that she owns
the Food Center. In view of this admission, petitioner Luy, through a letter,
dated November 6, 1987, terminated the services of respondent Isaac on the
ground of loss of confidence. A portion of the said letter reads:[2]
"Among other considerations, you have admitted last Tuesday (November 3, 1987)
in my presence, to owning the 'canteen' located near the Port Area and spending
two days operating it. Further, your commissary Manager, MS. ALICE TE, admitted
Wednesday (Nov. 4, 1987) in my presence and in the presence of other witnesses
57
that she uses company premises and facilities in purchasing and transporting for
your 'canteen' (Records, p. 34)."
On March 9, 1988, respondent Isaac filed a complaint with the Labor
Arbiter for illegal dismissal against petitioners.
On November 23, 1990, the Labor Arbiter rendered judgment, the
dispositive portion of which we quote hereinbelow:[3]
"WHEREFORE, finding the dismissal of complainant Iris Fe B. Isaac to be valid and
justified, this case, impugning the legality of the same, should be, as it is hereby
DISMISSED. However, respondent Midas Touch Foods Corporation and its
chairman of the Board, Wilson Chu and President Ramon T. Luy, for reason afore-
discussed, are hereby ordered to pay said complainant the total amount of
P52,682.10, comprising her one (1) month separation pay, proportionate 13th
month pay, unpaid wages from November 1 to 6, 1987 and her sick and vacation
leave."
Petitioners and respondent Isaac appealed the aforequoted decision to the
NLRC. Petitioners questioned the award of separation pay. Wilson Chu and
Ramon Luy asked that they be relieved of personal liabilities. Respondent Isaac,
on the other hand, argued that the Labor Arbiter committed an error in relying
on the undocumented, self-serving and hearsay evidence which were gathered
only after she was terminated. She further stressed that there was lack of
investigation prior to her termination. Petitioners failed to present their
witnesses during the hearing of the case.[4]
In its decision, rendered on July 20, 1993, the NLRC reversed the Labor
Arbiter and decided:[5]
"WHEREFORE, premises considered, the appealed decision is modified by
declaring the complainant as having been illegally dismissed. Consequently,
respondents are ordered to pay complainant the following amounts: 1) backwages
for three years from November 7, 1987; 2) separation pay in lieu of reinstatement
equivalent to one month pay for every year of service, which is to be computed as
to include the period of three years she was awarded backwages; 3) proportionate
13th month pay for 1987; and 4) unpaid wages from November 1 to 6, 1987. All
other claims of the complainant are dismissed for lack of merit."
Petitioners now come before us assailing the decision of the NLRC, without
filing any motion for reconsideration. While a motion for reconsideration under
the Rules of Court is required before a petition for certiorari is filed, the rules
admit of certain exceptions, among which is the finding that under the
circumstances of the case, a motion for reconsideration would be useless.[6]
In this case, the NLRC had reversed the decision of the Labor Arbiter and
no new issues were raised in this appeal. We find it quite impossible for the
NLRC to reverse itself under the foregoing facts and so, a motion for
reconsideration will be deemed useless. Hence, by reason of justice and equity,
we resolve to settle the issues on the merits in order to avoid further delay.
We believe that the contrariety of views between the Labor Arbiter and the
NLRC mandates us to consider the legality of the dismissal of respondent Isaac
as the primary issue to be resolved. In doing so, it is but appropriate that we lay
the legal basis for the conclusions we are to espouse in respect to the petition at
hand.
The requisites of a valid dismissal are (1) the dismissal must be for any of
the causes expressed in Article 282 of the Labor Code, and (2) the employee
must be given an opportunity to be heard and to defend himself.[7] Among the
valid causes specified in Article 282 of the Labor Code is loss of trust and
confidence of an employee, which is the basis of the termination of the
respondent. Nevertheless the substantive and procedural laws must be strictly
complied with before a worker can be dismissed from his
employment[8] because what is at stake is not only the employee's position but
his livelihood.[9]
The acts committed by respondent Isaac, which resulted in her employer's
loss of confidence were enumerated by petitioners as follows:[10]
(a) Respondent Isaac and her partner in crime, Alice Te, used their highly
confidential positions to occasionally convert the company's stockroom as their
personal supermarket to stuff their canteen, for free.
(b) Because of an apparent conflict in interest, Respondent Isaac who had a full
and free control of the company's operations, never expanded the company's
operations to the Ermita portion of Manila, as she even admitted spending two
days operating her canteen.
(c) Company properties were used by the partnership of respondent Isaac and
Alice Te, not for the company's use, but for their own Food Center:
(1) The company's service jeep, reported to have made deliveries to their Food
Center, was used for more than the time ordinarily consumed for official
company use, with the permission of Alice Te and concurrence of respondent
Isaac.
58
(2) Respondent Isaac, as the Operations Manager of petitioner company, signed
a contract for lighted signboard whose size and color specification (brown)
correspond with that of her Food Center, which is irreconciliably different from
respondent company's color specification of white and green, at the expense of
the company, who never benefited therefrom.
These accusations were not established by evidence in a fair and impartial
hearing.
Indeed, an employee cannot be separated from his employment without
according to him his constitutional right of due process, consisting of proper
notice and hearing, whether he be a rank and file or a managerial employee. Due
process is wanting in the case at bench. Respondent Isaac was not given notice
of her impending dismissal, not even the chance to explain her side. The essence
of due process is that a party be afforded a reasonable opportunity to be heard
and to submit any evidence he may have in support of his defense. [11] The notice
required actually consist of two parts to be separately served on the employee,
to wit; 1) notice to apprise the employee of the particular acts or omission for
which his dismissal is sought; and 2) subsequent notice to inform him of the
employer's decision to dismiss him.[12] The letter given by petitioner Luy, dated
November 6, 1987, terminating respondent Isaac's services was made effective
immediately. Even if no hearing is conducted, the requirement of due process
would have been met where a chance to explain a party's side of the
controversy had been accorded him.[13] Failure to observe this procedure is fatal
for this could raise doubt to the petitioner's claim that the termination was for
just cause. The want of due process may be clearly construed based on the
termination letter given to respondent Isaac, to quote:
"Acting in my capacity as President, I am hereby terminating your services as
Operations Manager effective immediately on the ground of loss of
confidence."[14] (Italics Supplied)
Considering the foregoing facts, we hold that respondent Isaac was denied
procedural due process.
The right of security of tenure cannot be eroded, let alone forfeited except
upon a clear and convincing showing of a just and lawful cause. [15] No less than
the Constitution itself has guaranteed the State's protection to labor and its
assurance to workers of security of tenure in their employment.[16] The
application of this rule encompasses both the rank and file as well as the
managerial employees. It is in this light that we are inclined to examine the
validity of respondent Isaac's dismissal from employment, loss of confidence
being the rationale therefor.
While Art. 282 of the Labor Code enumerates loss of confidence as one of
the just causes for termination of an employee, it must nonetheless rest on an
actual breach of duty committed by the employee and not on the employer's
caprices.[17] The guidelines for the doctrine of loss of confidence to apply are:[18]
"(1) loss of confidence should not be simulated;
(2) it should not be used as a subterfuge for causes which are improper,
illegal, or unjustified;
(3) it may not be arbitrarily asserted in the face of overwhelming
evidence to the contrary; and
(4) it must be genuine, not a mere afterthought to justify earlier action
taken in bad faith."
While proof beyond reasonable doubt is not required, still substantial
evidence is vital and the burden rests on the employer to establish it.
In reversing the decision of the Labor Arbiter, the NLRC ruled, thus:[19]
"In the instant case, respondent Ramon T. Luy allegedly personally confronted the
complainant about the ownership of a canteen and her use of company personnel
and facilities in operating the same. According to respondent Luy, complainant
admitted to him about her ownership of the canteen and the use of certain
employees, among them Alice Te, in the purchasing of supplies for the said
canteen.
But complainant denies this and explained that the truth of the matter is that the
canteen is owned by her cousin and her sister and that respondent Luy knew that
she was helping her sister operate. Had there been an investigation made, the
truth could have come out.
Assuming that complainant indeed owned the canteen, it has not been shown
however, that because of this, she neglected her work as Operations Manager of
the respondent corporation, the same has not been established. As to the fact that
complainant was engaged in a business in competition with that of the
respondents. We also noted that respondents' restaurants were located in Makati,
Quezon City and in San Juan, Metro Manila. The canteen being referred to as
owned by the complainant is located in Port Area, Manila. We can not see our way
clear how the canteen can compete with the business of the respondents,
considering their different locations. For this reason, we believe that there was no
sufficient basis for the respondents to lose their trust and confidence on the
complainant. As to the use of the corporation's personnel in delivering supplies to
the canteen, this has not been sufficiently established either."
59
 We agree with the NLRC.
The written statements of witnesses Tierry G. Jaymalin[20] and Marcial
Manacop[21] in support of all the allegations of the petitioners against
respondents Isaac were unverified. These witnesses were not presented before
the Labor Arbiter to testify in order to give respondent a chance to cross-
examine them. Those exhibits therefore, were hearsay and of no probative
value. At any rate, allegations in the affidavit[22] executed by petitioner Luy were
unsubstantiated. Neither was petitioner Luy presented before the Labor Arbiter
to testify on the truth of the allegations written therein. Furthermore, those so
called statements and affidavit were executed only after the termination of
respondent in an obvious attempt to circumvent the law, depriving her of the
opportunity to defend herself and present evidence in her defense. It has to be
emphasized that this Court has held in innumerable cases, the case of People's
Bank and Trust Company v.Leonidas[23] in particular, that, where the adverse
party is deprived of the opportunity to cross-examine the affiants, affidavits are
generally rejected for being hearsay, unless the affiant themselves are placed on
the witness stand to testify thereon.
With respect to the alleged involvement of respondent Isaac in the
purported pilferage of goods in the company, the same has not likewise been
established by petitioners. If, indeed, this be true, it is but proper for the
petitioners to conduct a thorough investigation in order to determine the
persons actually liable therefor, instead of wantonly dismissing employees out
of mere suspicion.
Anent the personal liabilities of petitioners Ramon Luy and Wilson Chu, it
is their contention that they cannot be held jointly or solidarily liable for the
simple reason that they are not respondent's employers.
Indeed, no less than the public respondent, NLRC, in its
Comment[24] admitted that petitioners are correct by stating that:
"The present petition disputes the fact that petitioners Chu and Luy were held
jointly and severally liable with petitioner corporation in the payment of the
monetary awards to private respondent on the ground that said individual
petitioners, being only the president (Luy) and chairman of the board of directors
(Chu) of petitioner corporation, are not the employers of the private respondent.
It is submitted that petitioners' contention is correct. The individual petitioners
cannot be held to be personally liable since they are not the employers of private
respondent."
As we have held in the case of Tramat Mercantile, Inc. vs. Court of
Appeals,[25] personal liability of a corporate director, trustee or officer along
(although not necessarily) with the corporation may so validly attach, as a rule,
only when 1. He assents (a) to a patently unlawful act of the corporation, or (b)
for bad faith or gross negligence in directing its affairs, or (c) for conflict of
interest, resulting in damages to the corporation, its stockholders or other
persons; x x x.
Moreover, Section 31 of the Corporation Code provides that:
"SEC. 31. Liability of directors, trustees or officers. Directors or trustees who
willfully and knowingly vote for or assent to patently unlawful acts of the
corporation or who are guilty of gross negligence or bad faith in directing the
affairs of the corporation or acquire any personal or pecuniary interest in
conflict with their duty as such directors, or trustees shall be liable jointly and
severally for all damages resulting therefrom suffered by the corporation, its
stockholders or members and other persons." (Italics supplied)
A corporate officer is not personally liable for the money claims of
discharged corporate employees unless he acted with evident malice and bad
faith in terminating their employment.[26]No bad faith can be attributed to both
petitioners Luy and Chu. Neither were they employers of respondent
Isaac. Hence, they should not be made liable for the payment of damages to
respondent.
WHEREFORE, the Decision of the National Labor Relations Commission is
AFFIRMED, BUT WITH THE MODIFICATION that only petitioner corporation
should be made solely liable for all the monetary awards considering that
petitioners Luy and Chu were not the employers but merely the President and
Chairman of the Board respectively.
Costs against petitioner corporation.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-56950-51 September 30, 1982
60
 M. F. VIOLAGO OILER TANK TRUCKS, petitioner,
vs.
THE NATIONAL LABOR RELATIONS COMMISSION and FELIPE CRUZ,
AMADO MARIANO, RICARDO PASCO, TEOFILO DE LEON and ZOSIMO
SACDALAN, respondents.
Abraham Pa. Gorospe for petitioner.
Solicitor General Estelito P. Mendoza, Asst. Solicitor General Ruben E. Agpalo
and Solicitor Florencio E. Jacinto for respondent NLRC.
Fortunato M. Borlongan for private respondent.
GUTIERREZ, Jr., J.:
On July 29, 1980, five drivers who used to work for the petitioner filed
complaints with the Regional Office of the National Labor Relations Commission
at San Fernando, Pampanga for illegal dismissal, reinstatement with backwages,
and such other benefits as they may be entitled to under the law.
According to the complainants, Mr. Miguel F. Violago, proprietor of an oil-tank
trucking business, withdrew the trucks driven by them for no just cause and
without prior clearance from the Ministry of Labor. They charged that their
employer did not give them any separation pay and that during
theiremployment, they were not given sick leave pay, vacation leave pay, and
overtime or holiday pay for work on Sundays and holidays. The drivers also
alleged that illegal deductions for payments of back premiums to the Social
Security System were levied against them and that their employer unilaterally
reduced their wages in 1979 without their consent and with no Ministry of
Labor's authority. Complainants Felipe Cruz and Zosimo Sacdalan added that
their deposits or cash bonds were not refunded when the employer illegally
dismissed them.
In its answer, M. F. Violago Oiler Tank Trucks alleged:
That all the charges filed by the complainant against herein
respondent are maliciously false and perjurious, the truth of
the matter being that said complainants Teofilo de Leon,
Ricardo Pasco, Amado Mariano were allegedly
suspected/caught by the Petrophil authorities of using device
to cheat in receiving and delivering fuel from the compound to
the points of delivery and by reason thereof, they were
prohibited or banned from entering the Petrophil compound at
Pandacan, Metro Manila, thus, as they were not allowed
anymore to enter the compound, they abandoned the trucks
they were respectively operating.
That complainant Felipe Cruz was not illegally dismissed as
falsely asserted in his complaint, the truth of the matter being
as gathered by herein respondent, said complainant being a
barrio official and active leader of a mayoral candidate in his
municipality, left his work and actively campaigned for the said
candidate and after the elections, as, he thought that the other
candidate is related to the respondent, he did not report
anymore to his work and instead, he filed this complaint.
That the unlawful and illegal abandonment made by the
complainants caused great and irreparable damage and
prejudice to the respondent.
That the acts of complainants as stated above, being illegal,
respondent most respectfully prays for the dismissal of the
complaint.
The Assistant Director for Arbitration of the regional office rendered a decision
on October 8, 1980 the dispositive portion of which reads:
WHEREFORE, IN VIEW OF ALL THE, FOREGOING, judgment is
hereby rendered:
1. Ordering respondent M.F. Violago Oiler-Tank Trucks to pay
backwages of complainants Felipe Cruz, Ricardo Pasco, Amado
Mariano, Teofilo de Leon and Zosimo Sacdalan from the date of
their respective dates of dismissal up to the date of this
decision, broken down as follows:
NAMES BACKWAGES
l Felipe P11,475.00
Cruz
61
 Article 95 of the New Labor Code from 1975 up to the date of
2.Ricardo 17,550.00
Pasco this decision, as follows:

3.Amado 28,290.00 NAMES SERVICE INCENTIVE LE

Mariano
1.Felipe Cruz P 660.00
4.Teofilo 27,060.00
de Leon 2.Ricardo Pasco 660.00
5.Zosimo 16,500.00 3.Amado Mariano 600.00
Sacdalan
4.Teofilo de Leon 600.00
T o t a l - P100,875.00
5.Zosimo Sacdalan 735.00
2. Ordering respondent, in lieu of reinstatement, to pay the T o t a l P3,255.00
separation pay of complainants herein at one (1) month for
every year of service broken down as follows:
All other claims of complainants are hereby DISMISSED for
lack of merit.
NAMES SEPARATION PAY

1Felipe Cruz P12,150.00 The respondent Commission rendered a decision on April 30, 1980 affirming
the arbiter's decision but deleting the awards of emergency living allowances to
2 Ricardo Pasco 10,800.00 Felipe Cruz and Zosimo Sacdalan and the award of service incentive leave pay to
all complainants. Instead of the award of separation pay, the petitioner was
3 Amado Mariano 9,840.00 ordered to reinstate the complainants with full backwages until actually
reinstated.
4 Teofilo de Leon 9,840.00
A careful consideration of the records before Us shows that insofar as
5 Zosimo Sacdalan 6,000.00 respondents Amado Mariano, Ricardo Pasco, Teofilo de Leon, and Zosimo
Sacdalan are concerned, the petitioner has been made accountable for a
T o t a l - P 48,630.00 predicament where it had no participation and to answer for circumstances
over which it had no control. Justice, fairness, and due process dictate that the
3. Ordering respondent to pay complainant Felipe Cruz the questioned decision be modified.
monthly allowance of ?60.00 under PD 1634 from 1 September
1979 to 20 January 1980 or the total amount of P280.00; We note that the respondent commission adopted the labor arbiter's findings
verbatim and merely added three short paragraphs in its decision which
4. Ordering respondent to pay the emergency allowance of modified the awards with one sentence justifications for each change.
complainant Zosimo Sacdalan from 1 September 1979 to 6
November 1979 or the total amount of P180.00; We agree with the petitioner that the conclusions of the arbiter are "patently
erroneous and devoid of logical and justifiable consideration." The arbiter called
5. Ordering respondent to pay the herein complainants the the petitioner's defense that it never dismissed the complainants from
monetary equivalent of their service incentive leave under
62
employment a mere "theory", inspite of the fact that this defense constituted the
crucial issue of the case before him.
According to the arbiter and the commission:
xxx xxx xxx
... As we see it, the fact that complainants herein were not
allowed to drive by respondent and more than this alternate
drivers were hired by it to take the place of complainants
herein, is more than enough justification for us to rule and
declare that there is a 'constructive dismissal' in this case. The
mere fact that the trucks they were originally driving were
taken from them and given to other drivers is mute but clear
evidence that they were virtually dismissed from their
employment.
The questioned decision states that the "constructive dismissal" may "perhaps"
be justified if the explanations of Violago were true.
We find no reason to find the allegations of the petitioner false or mere
concoctions. In addition to the affidavits of the three witness for the employer
and the sworn statements of the Violago manager, the respondent commission
wanted documentary evidences from Petrophil certifying that it has banned the
complainants from Petrophil premises, that a formal investigation of the
supposed pilferage should have been conducted, and that the complainants
should have been found guilty. The commission also ruled that Violago should
have applied for a clearance to terminate the complainants' employment from
the Ministry of Labor and Employment.
These findings ignore the realities of the factual situation. The petitioner has
always insisted up to the present that it has nothing against its drivers, it wants
them to continue working, it does not suspect them of any wrong doing and it is
ready to resume their services as long as they can do the work for which they
are employed. AU that the four complainants had to do was to show that they
could enter Petrophil, pick up the gasoline or other oil products contracted by
Violago for hauling, and deliver the same to the various dealers or gasoline
stations of Petrophil.
It was asking too much to have Violago produce the results of a formal
investigation by Petrophil that the private respondents were found guilty of
cheating in receiving oil products from Petrophil depots and delivering the
same to various delivery points. Petrophil had no interest in expending time,
money, and effort in conducting a fun-fledged investigation. It was wary of
certifications that resulted in suits against its officials. The complainants are not
its employees. Assuming that Violago and its four drivers could have demanded
a formal investigation under the arrangements with Petrophil and, if refused,
gone to court, Violago must have felt that it would be risking its entire hauling
contract with Petrophil if it went to that extent. Pressed for the kind of evidence
required by the respondent commission from Violago, Petrophil may have
cancelled the entire contract because of the formally proved dishonesty of a few.
Not only four drivers but all employees and the entire fleet would have been
Idled. As a matter of fact, an affidavit of three constables of the Constabulary
Highway Patrol Group (CHPG) and a report of investigation shows that
respondent Zosimo Sacdalan was apprehended on November 6, 1979 for
violation of BP Blg. 33, that Sacdalan admitted having diverted a portion of
9,000 liters of gasoline on one occasion and 2,000 liters out of 8,000 liters on
another occasion and that the persons who supposedly received the diverted
gasoline turned out to be fictitious. The statement of Sacdalan during the
investigation in Camp Crame was attached to the appeal. Instead of remanding
the case for the conduct of hearings or at least looking further into the factual
situation, the respondent commission chose to merely copy verbatim the
arbiter's findings of facts.
The fact that the four drivers went against their employer who had no
command or control over Petrophil when it would have been a simpler matter
to show that they were free to haul Petrophil products and that Violago
dismissed them for fancied or non-existent reasons shows that the evidence
presented by the petitioner was not only adequate but also credible.
The petitioner stresses a due process consideration. It points out that it had no
opportunity to present a witness from Petrophil to clarify that the drivers,
except Felipe Cruz, were banned from entering the Petrophil compound. It
argues that the labor arbiter decided the case, without giving the petitioner an
opportunity to present evidence.
The respondents deny that the petitioner was not accorded administrative due
process. They state that petitioner's counsel filed an ex parte urgent motion for
postponement of the July 15, 1980 hearing and failed to show up during the
July29, 1980 hearing. 'There were subsequent hearings, according to the
respondents, which the petitioner failed to attend. Instead, the petitioner filed
its answer to the complaint and its position paper with affidavits and a sworn
statement on August 11, 1980 and August 29. 1980 respectively. These formed
the basis of the arbiter's decision.
63
The contention that Violago waived its right to a hearing because of the above
absences has no merit. No witness from Petrophil could be presented during
those hearings in July, 1980 because the answer was filed only on August 11,
1980. And since the main basis of the labor arbiter's decision was the supposed
inadequacy of evidence, an opportunity for a hearing after the joining of issues
with the filing of an answer was necessary. More so, when the anomalies in
gasoline distribution were so serious that a law, Batas Pambansa Blg. 33 dated
June 6, 1979 had to be enacted to meet the situation.
There is another factor ignored by the arbiter and the commission. The private
respondents stopped driving the tanker trucks on the following dates:
1. Amado Mariano — November 8, 1978
2. Teofilo de Leon — November 26,1978
3. Ricardo Pasco — September 1, 1979
4. Zosimo Sacdalan — November 6, 1970
5. Felipe Cruz — January 20, 1980
The complaint was filed on July 29, 1980,
The fact that it took the first four drivers such a long time to complain about
their alleged dismissals dovetails with the petitioner's arguments that there was
no controversy between it and the private respondents and that they could
drive the tankers anytime that Petrophil allowed them to enter the oil depots.
The case of Mr. Felipe Cruz is a different matter. The petitioner claimed that
Cruz abandoned his job after the January, 1980 elections because he actively
campaigned against the brother of Miguel F. Violago and chose not to work
afterwards. On the other hand, Cruz maintained that he was dismissed because
he refused to heed the request of Mr. Violago to campaign for NUL candidates.
Cruz was a barangay captain and a KBL party member.
We sustain the respondent commission's ruling on this point:
The contention of complainant Cruz appears to be logical and
meritorious. We do not think that complainant Cruz with a
monthly income of around P1,350.00 will just abandon his
work without any positive proof that he has landed in another
job with a larger salary. Being the sole bread-winner in the
family, we doubt very much if complainant Cruz will ever
abandon his work because by so doing he will surely expose
his family to hunger and untold hardships. No man in his right
mind will do such thing. And more importantly if it is true that
complainant abandoned his work then why did not respondent
company file a Report of such abandonment with the Ministry
of Labor and Employment. The reason for this is obvious,
because there is no such abandonment. Abandonment being
absent, the dismissal of complainant to reinstatement to his
former position with full backwages.
The petitioner has never deviated from its stand that the private respondents
except Felipe Cruz may drive its tanker trucks at anytime they have clearances
from Petrophil. There is no basis for the labor arbiter's conclusion that while
the respondents are entitled to be reinstated, they should instead be given a
total of P153,220.00 in separation pay, backwages, and other benefits because
reinstatement would foment industrial unrest.
WHEREFORE, the decision dated April 30, 1981 of the respondent commission
is hereby modified. The petitioner is directed to reinstate Amado Mariano,
Ricardo Pasco, Teofilo de Leon, and Zosimo Sacdalan, without any payment of
backwages, upon their presenting clearances from Petrophil, Inc. that they are
allowed to haul Petrophil products and to reinstate Felipe Cruz with full
backwages until actually reinstated,
Teehankee (Chairman), Makasiar, Melencio-Herrera, Plana, Vasquez and Relova,
JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-2028 April 28, 1949
PHILIPPINE SHEET METAL WORKERS' UNION (CLO), petitioner,
vs.
THE COURT OF INDUSTRIAL RELATIONS, PHILIPPINE CAN COMPANY, and
LIBERAL LABOR UNION,respondents.
Lazatin & Caballero for petitioners.
Juan R. Maralit for respondent Court of Industrial Relations.
REYES, J.:
64
This is a petition for certiorari to review an order of the Court of Industrial
Relations on the ground that the same was rendered in excess of jurisdiction
and with grave abuse of discretion.
The said order was issued in case No. 37-V (2) of said court involving an
industrial dispute between the respondent company (a corporation engaged in
the manufacture of tin plates, aluminum sheets, etc.) and its laborers some of
whom belong to the Philippine Sheet Metal Workers' Union (CLO) and some to
the Liberal Labor Union. The dispute was over certain demands made upon the
company by the laborers, one of the demands (No. 13th in the list) being for the
recall of eleven workers who had been laid off. Temporarily taken back on
certain conditions pending final determination of the controversy, these eleven
workers were in the end ordered retained in the decision handed down by the
court on February 19, 1947, which disposed of this part of the case as follows:
The petitioner tried to prove that the 11 laborers were laid off by the
respondent company due to their union activities. As a matter of fact, of
the 11 workers laid off, there are included officers and members of the
petitioning union, namely, the president, Pablo Sicat; the vice-
president, Generoso Villanueva; and the secretary, Marcos Eugenio. The
respondent company proved that the laying off of these eleven workers
was due to lack of materials. With regard to this contention, the
examining division of this Court was ordered to investigate the
availability of materials used in connection with the work performed by
these eleven laborers, the volume of business and the work performed
by these workers during Sundays, legal holidays, and night shift.
After considering the evidence, both testimonial and documentary and
the response of the chief of the examining division of this Court, we are
of the opinion that there was really lack of materials at the time of the
laying off of these 11 laborers. However, there is also sufficient
evidence to the effect that the respondent company, in reducing the
number of its personnel, selected workers that belonged to the
petitioning union. This is discrimination and the same can not be
tolerated. The right to reduce personnel must not be abused and must
not be taken advantage of to dismiss laborers with whom the
management is displeased due to their union activities. In the present
case, it is the opinion of the Court that the management of the company
selected these 11 workers because they organized a labor union.
Although the company has the right to reduce its personnel, the said
company erred in abusing this right. It is, therefore, ordered that these
11 workers be retained in the respondent company until the
occurrence of facts that may give rise to a just cause of their laying off
or dismissal, or there is evidence of sufficient weight to convince the
Court that their conduct is not satisfactory. As a consequence, the
company is ordered to pay their corresponding wages from the date of
their lay-off to the date of their temporary read-mission in the
company.
As a separate incident from the above, the company, on February 10, 1947, that
is, nine days before the decision came down, filed a motion in the case, asking
for authority to lay off at least 15 workers in its can department on the ground
that the installation and operation of nine new labor-saving machines in said
department had rendered the services of the said workers unnecessary. The
Philippine Sheet Metal Workers' Union (CLO) opposed the motion, alleging that
there was more than sufficient work in the company to keep all its workers
busy, and, on the further allegation that the company had hired without the
authority of the courts some ten new laborers pending resolution of the
principal case, it in turn asked that the company be declared guilty of contempt
of court. About a year later, the court, after due hearing and investigation,
rendered an order, dated February 5, 1948, granting the company's motion to
lay off 15 workers and denied the petition to have the company declared in
contempt of court. This order is the one now before us for review.
The fifteen laborers slated for dismissal had each of them a bad record
according to the list submitted by the company, which reads as follows:
1. Pablo Sicat, coppersmith, por haber abandonado por mucho tiempo
su trabajo;
2. Manuel Pajarillo, making the handles of the cans, por frecuentes
ausencias;
3. Marcos Eugenio, solderer, por haber estado saliendo a menudo en
horas de trabajo y dejado el servicio sin causa razonable ni permiso;
4. Miguel Magcalin, solderer, por haber abandonado definitivamente el
trabajo;
5. Juanito Villanueva, solderer, por ineficiencia;
6. Melitona Basilio, solderer, por haber estado saliendo a menudo en
horas de trabajo sin causa razonable;
7. Felicidad Villanueva, painting rubber, por ineficiencia;
65
 8. Conchita Basilio, painting rubber, por ser perezosa y salidas a
menudo en horas de trabajo;
9. Soledad del Rosario, painting rubber, por no tener interes en el
trabajo y salidas a menudo en horas de labor;
10. Fortunata Angelo, painting rubber, por ser ineficiente y
desobediente;
11. Segundina San Juan, painting rubber, por ineficiencia e
inobediencia; todos miembros de la union recurrente;
12. Fermino Tiozon, can maker, por ser perezoso;
13. Genaro Galvez, general helper, por ser perezoso;
14. Leonardo Soliman, operator-messenger, por ineficiencia, por haber
estado llegando tarde a la fabrica y durmiendo en horas de trabajo;
miembros de la union terceristas; y
15. Ho Ching Sing, laborer, por haber abandonado el trabajo sin previa
notificacion; no unionista.
And the order complained of is based upon the following conclusions of fact of
the court below:
1. La compania tiene instalada y en operacion en su fabrica, ademas de
las maquinas antiguas, trece (13) nuevas unidades de 'labor saving
machines', entre similares y enteramente diferentes, que llegaron de los
Estados Unidos de America en distintas fechas, desde el agosto de 1946
hasta el junio de 1947.
2. Dichas nuevas maquinas ahorran obra de mano y tiempo, hacen mas
faciles y rapidos los trabajos y aumentan el volumen de la produccion.
3. En su fabrica la compania tiene ochenta y cinco (85) obreros, y el
propuesto despido de los quince (15) obreros, entre hombres y
mujeres, se debe principalmente a que sus servicios son ya innecesarios
porque sus trabajos han sido absorbidos por las nuevas maquinas.
4. En la seleccion de dichos quince (15) obreros la compania, mediante
un grupo o comite de tres (3) de sus funcionarios y empleados de
confianza, con el gerente de la misma a la cabeza, se baso en los
servicios y la conducta de cada obrero.
5. El comite de seleccion no se guio por la afiliacion de los obreros a
ninguna de las dos uniones obreras existentes en el seno de la fabrica, y
solamente tuvo en cuenta al verificar la seleccion estos (a) Abandono
del trabajo, sin aviso o justa causa; (b) Frecuentes ausencias
injustificadas en la (el) servicio; (c) Salidas a menudo durante las horas
de labor, sin causa razonable; y (d) ineficiencia, negligencia o falta de
interes en el cumplimiento del deber.
6. Lot obreros cuyo despido esta propuesto por la compania han
incurrido en las faltas que se atribuyen por la misma a cada uno de
ellos.
7. La compañia no ha aceptado nuevos obreros y si ha hecho trabajar
algunas veces a ciertos obreros o mecanicos suyos en exceso de las
ocho horas, ha sido en interes de la eficiencia o por exigencias del
servicio y no por haber tenido mucho volumen de trabajo en su fabrica.
Indudablemente, la compañia abrigando el deseo laudable de
desarrollar su negocio y aumentar su produccion, ha introducido
importantes cambios y mejoras en la elaboracion de sus productos,
recurriendo al empleo de maquinarias modernas para atender
debidamente y satisfacer mejor las demandas del publico consumidor.
El proposito de la compania merece aplausos, el medio de que se vale
para realizarlo es digno de encomio y su objetivo significa
desenvolvimiento progresivo en la solucion de los problemas
industriales para el beneficio de la comunidad. Todo paso o medida que
tienda a favorecer el interes publico y con miras a dar impulso a la
mecanizacion de las industrias, contribuye a la mejora de la economia y
la ansiada rehabilitacion del pais; y por lo tanto, no debe ser obstruido
sino, por el contrario, fomentado.
It appearing that there has been fair hearing and that there is ample evidence to
support the conclusions of fact of the lower court, we would have no grounds
for interfering with those conclusions. And these make it clear that there was
real justification for reducing the number of workers in respondent company's
factory, such a measure having been made necessary by the introduction of
machinery in the manufacture of its products, and that the company cannot be
66
charged with discrimination in recommendating the dismissal of the fifteen
laborers named in the above list since their selection was made by a committee
composed of both officers and employees who took no account of the laborers'
affiliation to the unions and only considered their proven record.
There can be no question as to the right of the manufacturer to use new labor-
saying devices with a view to effecting more economy and efficiency in its
method of production. As the lower court observes in its order,
No se puede detener el curso de los tiempos. Si se quiere sobrevivir y
prosperar, la unica alternativa es adaptarse a las exigencias del
presente mundo moderno. No se puede cerrar los ojos a la realidad. No
se puede depender de metodos antiguos, hay que recurrir a metodos
mas eficientes y avanzados. La produccion no solo debe ser de elevada
calidad sino ilimitada y su costo al alcance de todos. Debe seguirse el
ejemplo de otros paises.
The right to reduce personnel should, of course, not be abused. It should not be
made a pretext for easing out laborers on account of their union activities. But
neither should it be denied when it is shows that they are not discharging their
duties in a manner consistent with good discipline and the efficient operation of
an industrial enterprise. We, therefore, approve of the following
pronouncement of the court below:
La compañia tiene derecho de despedir a sus empleados u obreros. Si
bien este derecho esta sujeto a la regulacion del Estado, en su normal
ejercicio no se inmiscuye la ley. El patrono paga el jornal de sus obreros
por su trabajo, y es logico y justo que el mismo tenga derecho a esperar
de los mismos lealtad y fiel cumplimiento de sus obligaciones. No es el
proposito de la ley obligar al principal a retener en su servicio a un
obrero cuando no recibe de este trabajo adecuado, deligencia
(diligencia) y buen comportamiento, o cuando su continuacion en el
empleo es claramente opuesta a los intereses de su patrono, porque la
ley al proteger los derechos del obrero no autoriza la opresion ni la
destruccion del principal.
The petitioner contends that the order complained of was made with grave
abuse of discretion and in excess of jurisdiction in that it is contrary to the
pronouncement made by the lower court in its decision in the main case where
it disapproved of the dismissal of eleven workers "with whom the management
is displeased due to their union activities." It appears, however, that the
pronouncement was made upon a distinct set of facts, which are different from
those found by the court in connection with the present incident, and that very
decision, in ordering the reinstatement of the eleven laborers, qualifies the
order by saying that those laborers are to be retained only "until the occurrence
of facts that may give rise to a just cause of their laying off or dismissal, or there
is evidence of sufficient weight to convince the Court that their conduct is not
satisfactory."
After a careful review of the record, we find that the Court of Industrial
Relations has neither exceeded its jurisdiction nor committed grave abuse of
discretion in rendering the order complained of. The petition for certiorari is,
therefore, denied, but without costs against the petitioner for the reasons stated
in its motion to litigate as pauper.
Moran, C.J., Paras, Feria, Pablo, Perfecto, Bengzon, Briones, Tuason and
Montemayor, JJ., concur.
G.R. No. 82249 February 7, 1991
WILTSHIRE FILE CO., INC., petitioner,
vs.
THE NATIONAL LABOR RELATIONS COMMISSION and VICENTE T.
ONG, respondents.
FELICIANO, J.:
Private respondent Vicente T. Ong was the Sales Manager of petitioner Wiltshire
File Co., Inc. ("Wiltshire") from 16 March 1981 up to 18 June 1985. As such, he
received a monthly salary of P14,375.00 excluding commissions from sales
which averaged P5,000.00 a month. He also enjoyed vacation leave with pay
equivalent to P7,187,50 per year, as well as hospitalization privileges to the
extent of P10,000.00 per year.
On 13 June 1985, upon private respondent's return from a business and
pleasure trip abroad, he was informed by the President of petitioner Wiltshire
that his services were being terminated. Private respondent maintains that he
tried to get an explanation from management of his dismissal but to no avail. On
18 June 1985, when private respondent again tried to speak with the President
of Wiltshire, the company's security guard handed him a letter which formally
informed him that his services were being terminated upon the ground of
redundancy.
Private respondent filed, on 21 October 1985, a complaint before the Labor
Arbiter for illegal dismissal alleging that his position could not possibly be
redundant because nobody (save himself) in the company was then performing
the same duties. Private respondent further contended that retrenching him
67
could not prevent further losses because it was in fact through his remarkable
performance as Sales Manager that the Company had an unprecedented
increase in domestic market share the preceding year. For that accomplishment,
he continued, he was promoted to Marketing Manager and was authorized by
the President to hire four (4) Sales Executives five (5) months prior to his
termination.
In its answer, petitioner company alleged that the termination of respondent's
services was a cost-cutting measure: that in December 1984, the company had
experienced an unusually low volume of orders: and that it was in fact forced to
rotate its employees in order to save the company. Despite the rotation of
employees, petitioner alleged; it continued to experience financial losses and
private respondent's position, Sales Manager of the company, became
redundant.
On 2 December 1986, during the proceedings before the Labor Arbiter,
petitioner, in a letter1 addressed to the Regional Director of the then Ministry of
Labor and Employment, notified that official that effective 2 January 1987,
petitioner would close its doors permanently due to substantial business losses.
In a decision dated 11 March 1987, the Labor Arbiter declared the termination
of private respondent's services illegal and ordered petitioner to pay private
respondent backwages in the amount of P299,000.00, unpaid salaries in the
amount of P22,352.11, accumulated sick and vacation leaves in the amount of
P12,543.91, hospitalization benefit package in the amount of P10,000.00,
unpaid commission in the amount of P57,500,00, moral damages in the amount
of P100,000.00 and attorney's fees in the amount of P51,639.60.
On appeal by petitioner Wiltshire, the National Labor Relations Commission
("NLRC") affirmed in toto on 9 February 1988 the decision of the Labor Arbiter.
The NLRC held that:
The termination letter clearly spelled out that the main reason in
terminating the services of complainant is REDUNDANT and not
retrenchment.
The supposed duplication of work of herein complainant and Mr.
Deliva, the Vice-President is absent that would justify redundancy. . . .
On the claim for moral damages, the NLRC pointed out that the effective date of
private respondent's termination was 18 July 1985, although it was only 18
June 1985 that he received the letter of termination, and concluded that he was
not given any opportunity to explain his position on the matter. The NLRC held
that the termination was attended by malice and bad faith on the part of
petitioner, considering the manner of private respondent was ordered by the
President to pack up and remove his personal belongings from the office.
Private respondent was said to have been embarrassed before his immediate
family and other acquaintance due to his inability to explain the reasons behind
the termination of his services.
In this Petition for Certiorari, it is submitted that private respondent's dismissal
was justified and not illegal. Petitioner maintains that it had been incurring
business losses beginning 1984 and that it was compelled to reduce the size of
its personnel force. Petitioner also contends that redundancy as a cause for
termination does not necessarily mean duplication of work but a "situation
where the services of an employee are in excess of what is demanded by the
needs of an undertaking . . ."
Having reviewed the record of this case, the Court has satisfied itself that indeed
petitioner had serious financial difficulties before, during and after the
termination of the services of private respondent. For one thing, the audited
financial statements of the petitioner for its fiscal year ending on 31 July 1985
prepared by a firm of independent auditors, showed a net loss in the amount of
P4,431,321.00 and a total deficit or capital impairment at the end of year of
P6,776,493.00.2
In the preceding fiscal year (1983-1984), while the company showed a net after
tax income of P843,506.00, it actually suffered a deficit or capital impairment of
P2,345,172.00. Most importantly, petitioner Wiltshire finally closed its doors
and terminated all operations in the Philippines on January 1987, barely two (2)
years after the termination of private respondent's employment. We consider
that finally shutting down business operations constitutes strong confirmatory
evidence of petitioner's previous financial distress. The Court finds it very
difficult to suppose that petitioner Wiltshire would take the final and
irrevocable step of closing down its operations in the Philippines simply for the
sole purpose of easing out a particular officer or employee, such as the private
respondent.
Turning to the legality of the termination of private respondent's employment,
we find merit in petitioner's basic argument. We are unable to sustain public
respondent NLRC's holding that private respondent's dismissal was not justified
by redundancy and hence illegal. In the first place, we note that while the letter
informing private respondent of the termination of his services used the word
"redundant", that letter also referred to the company having "incur[red]
68
financial losses which [in] fact has compelled [it] to resort to retrenchment to
prevent further losses".3
Thus, what the letter was in effect saying was that because of financial losses,
retrenchment was necessary, which retrenchment in turn resulted in the
redundancy of private respondent's position.
In the second place, we do not believe that redundancy in an employer's
personnel force necessarily or even ordinarily refers to duplication of work.
That no other person was holding the same position that private respondent
held prior to the termination of his services, does not show that his position had
not become redundant. Indeed, in any well-organized business enterprise, it
would be surprising to find duplication of work and two (2) or more people
doing the work of one person. We believe that redundancy, for purposes of our
Labor Code, exists where the services of an employee are in excess of what is
reasonably demanded by the actual requirements of the enterprise. Succinctly
put, a position is redundant where it is superfluous, and superfluity of a position
or positions may be the outcome of a number of factors, such as overhiring of
workers, decreased volume of business, or dropping of a particular product line
or service activity previously manufactured or undertaken by the enterprise.4
The employer has no legal obligation to keep in its payroll more employees than
are necessarily for the operation of its business.
In the third place, in the case at bar, petitioner Wiltshire, in view of the
contraction of its volume of sales and in order to cut down its operating
expenses, effected some changes in its organization by abolishing some
positions and thereby effecting a reduction of its personnel. Thus, the position
of Sales Manager was abolished and the duties previously discharged by the
Sales Manager simply added to the duties of the General Manager, to whom the
Sales Manager used to report.
It is of no legal moment that the financial troubles of the company were not of
private respondent's making. Private respondent cannot insist on the retention
of his position upon the ground that he had not contributed to the financial
problems of Wiltshire. The characterization of private respondent's services as
no longer necessary or sustainable, and therefore properly terminable, was an
exercise of business judgment on the part of petitioner company. The wisdom
or soundness of such characterization or decision was not subject to
discretionary review on the part of the Labor Arbiter nor of the NLRC so long, of
course, as violation of law or merely arbitrary and malicious action is not
shown. It should also be noted that the position held by private respondent,
Sales Manager, was clearly managerial in character. In D.M. Consunji, Inc. v.
National Labor Relations Commission,5 the Court held:
An employer has a much wider discretion in terminating the
employment relationship of managerial personnel as compared to rank
and file employees. However, such prerogative of management to
dismiss or lay off an employee must be made without abuse of
discretion, for what is at stake is not only the private respondent's
position but also his means of livelihood . . . .6
The determination of the continuing necessity of a particular officer or position
in a business corporation is management's prerogative, and the courts will not
interfere with the exercise of such so long as no abuse of discretion or merely
arbitrary or malicious action on the part of management is shown.7
On the issue of moral damages, petitioner assails the finding of the NLRC that
the dismissal was done in bad faith. Petitioner argues that it had complied with
the one-month notice required by law; that there was no need for private
respondent to be heard in his own defense considering that the termination of
his services was for a statutory or authorized cause; and that whatever
humiliation might have been suffered by private respondent arose from a lawful
cause and hence could not be the basis of an award of moral damages.
Termination of an employee's services because of retrenchment to prevent
further losses or redundancy, is governed by Article 283 of the Labor Code
which provides as follows:
Art. 283. Closure of establishment and reduction of personnel. –– The
employer may also terminate the employment of any employee due to
the installation of labor saving devices, redundancy, retrenchment to
prevent losses or the closing or cessation of operation of the
establishment or undertaking unless the closing is for the purpose of
circumventing the provisions of this Title, by serving a written notice
on the workers and the Ministry of Labor and Employment at least one
(1) month before the intended date thereof. In case of termination due
to the installation of labor saving devices or redundancy, the worker
affected thereby shall be entitled to a separation pay equivalent to at
least his one (1) month pay or to at least one (1) month pay for every
year of service, whichever is higher. In case of retrenchment to prevent
losses and in cases of closures or cessation of operations of
establishment or undertaking not due to serious business losses or
financial reverses, the separation pay shall be equivalent to one (1)
69
 month pay or at least one-half (1/2) month pay for every of service,
whichever is higher. A fraction of at least six (6) months shall be
considered one (1) whole year.
Termination of services for any of the above described causes should be
distinguished from termination of employment by reason of some blameworthy
act or omission on the part of the employee, in which case the applicable
provision is Article 282 of the Labor Code which provides as follows:
Art. 282. Termination by employer. –– An employer may terminate an
employment for any of the following causes:
(a) Serious misconduct or willful disobedience by the
employee of the lawful orders of his employer or
representative in connection with his work;
(b) Gross and habitual neglect by the employee of his duties;
(c) Fraud or willful breach by the employee of the trust
reposed in him by his employer or duly authorized
representative;
(d) Commission of a crime or offense by the employee against
the person of his employer or any immediate member of his
family or his duly authorized representative; and
(e) Other causes analogous to the foregoing.
Sections 2 and 5 of Rule XIV entitled "Termination of Employment:" of the
"Rules to Implement the Labor Code" read as follows:
Sec. 2. Notice of dismissal. –– Any employer who seeks to dismiss a
worker shall furnish him a written notice stating the particular acts or
omission constituting the grounds for his dismissal. In cases of
abandonment of work, the notice shall be served at the worker's last
known address.
xxx xxx xxx
Sec. 5. Answer and hearing. –– The worker may answer the allegations
stated against him in the notice of dismissal within a reasonable period
from receipt of such notice. The employer shall afford the worker
ample opportunity to be heard and to defend himself with the
assistance of his representative if he so desires. (emphasis supplied)
We note that Section 2 of Rule XIV quoted above requires the notice to specify
"the particular acts or omissions constituting the ground for his dismissal", a
requirement which is obviously applicable where the ground for dismissal is the
commission of some act or omission falling within Article 282 of the Labor
Code. Again, Section 5 gives the employee the right to answer and to defend
himself against "the allegations stated against him in the notice of dismissal". It
is such allegations by the employer and any counter-allegations that the
employee may wish to make that need to be heard before dismissal is effected.
Thus, Section 5 may be seen to envisage charges against an employee
constituting one or more of the just causes for dismissal listed in Article 282 of
the Labor Code. Where, as in the instant case, the ground for dismissal or
termination of services does not relate to a blameworthy act or omission on the
part of the employee, there appears to us no need for an investigation and
hearing to be conducted by the employer who does not, to begin with, allege any
malfeasance or non-feasance on the part of the employee. In such case, there are
no allegations which the employee should refute and defend himself from. Thus,
to require petitioner Wiltshire to hold a hearing, at which private respondent
would have had the right to be present, on the business and financial
circumstances compelling retrenchment and resulting in redundancy, would be
to impose upon the employer an unnecessary and inutile hearing as a condition
for legality of termination.
This is not to say that the employee may not contest the reality or good faith
character of the retrenchment or redundancy asserted as grounds for
termination of services. The appropriate forum for such controversion would,
however, be the Department of Labor and Employment and not an investigation
or hearing to be held by the employer itself. It is precisely for this reason that an
employer seeking to terminate services of an employee or employees because of
"closure of establishment and reduction of personnel", is legally required to give
a written notice not only to the employee but also to the Department of Labor
and Employment at least one month before effectivity date of the termination.
In the instant case, private respondent did controvert before the appropriate
labor authorities the grounds for termination of services set out in petitioner's
letter to him dated 17 June 1985.
We hold, therefore, that the NLRC's finding that private respondent had not
been accorded due process, is bereft of factual and legal bases. The award of
moral damages that rests on such ground must accordingly fall.
70
While private respondent may well have suffered personal embarrassment by
reason of termination of his services, such fact alone cannot justify the award of
moral damages. Moral damages are simply a species of damages awarded to
compensate one for injuries brought about by a wrongful act.8 As discussed
above, the termination of private respondent's services was not a wrongful act.
There is in this case no clear and convincing evidence of record showing that
the termination of private respondent's services, while due to an authorized or
statutory cause, had been carried out in an arbitrary, capricious and malicious
manner, with evident personal ill-will. Embarrassment, even humiliation, that is
not proximately caused by a wrongful act does not constitute a basis for an
award of moral damages.
Private respondent is, of course, entitled to separation pay and other benefits
under Act 283 of the Labor Code and petitioner's letter dated 17 June 1985.
ACCORDINGLY, the Court Resolved to GRANT due course to the Petition
for Certiorari. The Resolutions of the National Labor Relations Commission
dated 9 February 1988 and 7 March 1988 are hereby SET ASIDE and
NULLIFIED. The Temporary Restraining Order issued by this Court on 21 March
1988 is hereby made PERMANENT. No pronouncement as to costs.
SO ORDERED.
G.R. No. 82249 February 7, 1991
WILTSHIRE FILE CO., INC., petitioner,
vs.
THE NATIONAL LABOR RELATIONS COMMISSION and VICENTE T.
ONG, respondents.
FELICIANO, J.:
Private respondent Vicente T. Ong was the Sales Manager of petitioner Wiltshire
File Co., Inc. ("Wiltshire") from 16 March 1981 up to 18 June 1985. As such, he
received a monthly salary of P14,375.00 excluding commissions from sales
which averaged P5,000.00 a month. He also enjoyed vacation leave with pay
equivalent to P7,187,50 per year, as well as hospitalization privileges to the
extent of P10,000.00 per year.
On 13 June 1985, upon private respondent's return from a business and
pleasure trip abroad, he was informed by the President of petitioner Wiltshire
that his services were being terminated. Private respondent maintains that he
tried to get an explanation from management of his dismissal but to no avail. On
18 June 1985, when private respondent again tried to speak with the President
of Wiltshire, the company's security guard handed him a letter which formally
informed him that his services were being terminated upon the ground of
redundancy.
Private respondent filed, on 21 October 1985, a complaint before the Labor
Arbiter for illegal dismissal alleging that his position could not possibly be
redundant because nobody (save himself) in the company was then performing
the same duties. Private respondent further contended that retrenching him
could not prevent further losses because it was in fact through his remarkable
performance as Sales Manager that the Company had an unprecedented
increase in domestic market share the preceding year. For that accomplishment,
he continued, he was promoted to Marketing Manager and was authorized by
the President to hire four (4) Sales Executives five (5) months prior to his
termination.
In its answer, petitioner company alleged that the termination of respondent's
services was a cost-cutting measure: that in December 1984, the company had
experienced an unusually low volume of orders: and that it was in fact forced to
rotate its employees in order to save the company. Despite the rotation of
employees, petitioner alleged; it continued to experience financial losses and
private respondent's position, Sales Manager of the company, became
redundant.
On 2 December 1986, during the proceedings before the Labor Arbiter,
petitioner, in a letter1 addressed to the Regional Director of the then Ministry of
Labor and Employment, notified that official that effective 2 January 1987,
petitioner would close its doors permanently due to substantial business losses.
In a decision dated 11 March 1987, the Labor Arbiter declared the termination
of private respondent's services illegal and ordered petitioner to pay private
respondent backwages in the amount of P299,000.00, unpaid salaries in the
amount of P22,352.11, accumulated sick and vacation leaves in the amount of
P12,543.91, hospitalization benefit package in the amount of P10,000.00,
unpaid commission in the amount of P57,500,00, moral damages in the amount
of P100,000.00 and attorney's fees in the amount of P51,639.60.
On appeal by petitioner Wiltshire, the National Labor Relations Commission
("NLRC") affirmed in toto on 9 February 1988 the decision of the Labor Arbiter.
The NLRC held that:
71
 The termination letter clearly spelled out that the main reason in
terminating the services of complainant is REDUNDANT and not
retrenchment.
The supposed duplication of work of herein complainant and Mr.
Deliva, the Vice-President is absent that would justify redundancy. . . .
On the claim for moral damages, the NLRC pointed out that the effective date of
private respondent's termination was 18 July 1985, although it was only 18
June 1985 that he received the letter of termination, and concluded that he was
not given any opportunity to explain his position on the matter. The NLRC held
that the termination was attended by malice and bad faith on the part of
petitioner, considering the manner of private respondent was ordered by the
President to pack up and remove his personal belongings from the office.
Private respondent was said to have been embarrassed before his immediate
family and other acquaintance due to his inability to explain the reasons behind
the termination of his services.
In this Petition for Certiorari, it is submitted that private respondent's dismissal
was justified and not illegal. Petitioner maintains that it had been incurring
business losses beginning 1984 and that it was compelled to reduce the size of
its personnel force. Petitioner also contends that redundancy as a cause for
termination does not necessarily mean duplication of work but a "situation
where the services of an employee are in excess of what is demanded by the
needs of an undertaking . . ."
Having reviewed the record of this case, the Court has satisfied itself that indeed
petitioner had serious financial difficulties before, during and after the
termination of the services of private respondent. For one thing, the audited
financial statements of the petitioner for its fiscal year ending on 31 July 1985
prepared by a firm of independent auditors, showed a net loss in the amount of
P4,431,321.00 and a total deficit or capital impairment at the end of year of
P6,776,493.00.2
In the preceding fiscal year (1983-1984), while the company showed a net after
tax income of P843,506.00, it actually suffered a deficit or capital impairment of
P2,345,172.00. Most importantly, petitioner Wiltshire finally closed its doors
and terminated all operations in the Philippines on January 1987, barely two (2)
years after the termination of private respondent's employment. We consider
that finally shutting down business operations constitutes strong confirmatory
evidence of petitioner's previous financial distress. The Court finds it very
difficult to suppose that petitioner Wiltshire would take the final and
irrevocable step of closing down its operations in the Philippines simply for the
sole purpose of easing out a particular officer or employee, such as the private
respondent.
Turning to the legality of the termination of private respondent's employment,
we find merit in petitioner's basic argument. We are unable to sustain public
respondent NLRC's holding that private respondent's dismissal was not justified
by redundancy and hence illegal. In the first place, we note that while the letter
informing private respondent of the termination of his services used the word
"redundant", that letter also referred to the company having "incur[red]
financial losses which [in] fact has compelled [it] to resort to retrenchment to
prevent further losses".3
Thus, what the letter was in effect saying was that because of financial losses,
retrenchment was necessary, which retrenchment in turn resulted in the
redundancy of private respondent's position.
In the second place, we do not believe that redundancy in an employer's
personnel force necessarily or even ordinarily refers to duplication of work.
That no other person was holding the same position that private respondent
held prior to the termination of his services, does not show that his position had
not become redundant. Indeed, in any well-organized business enterprise, it
would be surprising to find duplication of work and two (2) or more people
doing the work of one person. We believe that redundancy, for purposes of our
Labor Code, exists where the services of an employee are in excess of what is
reasonably demanded by the actual requirements of the enterprise. Succinctly
put, a position is redundant where it is superfluous, and superfluity of a position
or positions may be the outcome of a number of factors, such as overhiring of
workers, decreased volume of business, or dropping of a particular product line
or service activity previously manufactured or undertaken by the enterprise.4
The employer has no legal obligation to keep in its payroll more employees than
are necessarily for the operation of its business.
In the third place, in the case at bar, petitioner Wiltshire, in view of the
contraction of its volume of sales and in order to cut down its operating
expenses, effected some changes in its organization by abolishing some
positions and thereby effecting a reduction of its personnel. Thus, the position
of Sales Manager was abolished and the duties previously discharged by the
Sales Manager simply added to the duties of the General Manager, to whom the
Sales Manager used to report.
72
It is of no legal moment that the financial troubles of the company were not of
private respondent's making. Private respondent cannot insist on the retention
of his position upon the ground that he had not contributed to the financial
problems of Wiltshire. The characterization of private respondent's services as
no longer necessary or sustainable, and therefore properly terminable, was an
exercise of business judgment on the part of petitioner company. The wisdom
or soundness of such characterization or decision was not subject to
discretionary review on the part of the Labor Arbiter nor of the NLRC so long, of
course, as violation of law or merely arbitrary and malicious action is not
shown. It should also be noted that the position held by private respondent,
Sales Manager, was clearly managerial in character. In D.M. Consunji, Inc. v.
National Labor Relations Commission,5 the Court held:
An employer has a much wider discretion in terminating the
employment relationship of managerial personnel as compared to rank
and file employees. However, such prerogative of management to
dismiss or lay off an employee must be made without abuse of
discretion, for what is at stake is not only the private respondent's
position but also his means of livelihood . . . .6
The determination of the continuing necessity of a particular officer or position
in a business corporation is management's prerogative, and the courts will not
interfere with the exercise of such so long as no abuse of discretion or merely
arbitrary or malicious action on the part of management is shown. 7
On the issue of moral damages, petitioner assails the finding of the NLRC that
the dismissal was done in bad faith. Petitioner argues that it had complied with
the one-month notice required by law; that there was no need for private
respondent to be heard in his own defense considering that the termination of
his services was for a statutory or authorized cause; and that whatever
humiliation might have been suffered by private respondent arose from a lawful
cause and hence could not be the basis of an award of moral damages.
Termination of an employee's services because of retrenchment to prevent
further losses or redundancy, is governed by Article 283 of the Labor Code
which provides as follows:
Art. 283. Closure of establishment and reduction of personnel. –– The
employer may also terminate the employment of any employee due to
the installation of labor saving devices, redundancy, retrenchment to
prevent losses or the closing or cessation of operation of the
establishment or undertaking unless the closing is for the purpose of
circumventing the provisions of this Title, by serving a written notice
on the workers and the Ministry of Labor and Employment at least one
(1) month before the intended date thereof. In case of termination due
to the installation of labor saving devices or redundancy, the worker
affected thereby shall be entitled to a separation pay equivalent to at
least his one (1) month pay or to at least one (1) month pay for every
year of service, whichever is higher. In case of retrenchment to prevent
losses and in cases of closures or cessation of operations of
establishment or undertaking not due to serious business losses or
financial reverses, the separation pay shall be equivalent to one (1)
month pay or at least one-half (1/2) month pay for every of service,
whichever is higher. A fraction of at least six (6) months shall be
considered one (1) whole year.
Termination of services for any of the above described causes should be
distinguished from termination of employment by reason of some blameworthy
act or omission on the part of the employee, in which case the applicable
provision is Article 282 of the Labor Code which provides as follows:
Art. 282. Termination by employer. –– An employer may terminate an
employment for any of the following causes:
(a) Serious misconduct or willful disobedience by the
employee of the lawful orders of his employer or
representative in connection with his work;
(b) Gross and habitual neglect by the employee of his duties;
(c) Fraud or willful breach by the employee of the trust
reposed in him by his employer or duly authorized
representative;
(d) Commission of a crime or offense by the employee against
the person of his employer or any immediate member of his
family or his duly authorized representative; and
(e) Other causes analogous to the foregoing.
Sections 2 and 5 of Rule XIV entitled "Termination of Employment:" of the
"Rules to Implement the Labor Code" read as follows:
73
 Sec. 2. Notice of dismissal. –– Any employer who seeks to dismiss a
worker shall furnish him a written notice stating the particular acts or
omission constituting the grounds for his dismissal. In cases of
abandonment of work, the notice shall be served at the worker's last
known address.
xxx xxx xxx
Sec. 5. Answer and hearing. –– The worker may answer the allegations
stated against him in the notice of dismissal within a reasonable period
from receipt of such notice. The employer shall afford the worker
ample opportunity to be heard and to defend himself with the
assistance of his representative if he so desires. (emphasis supplied)
We note that Section 2 of Rule XIV quoted above requires the notice to specify
"the particular acts or omissions constituting the ground for his dismissal", a
requirement which is obviously applicable where the ground for dismissal is the
commission of some act or omission falling within Article 282 of the Labor
Code. Again, Section 5 gives the employee the right to answer and to defend
himself against "the allegations stated against him in the notice of dismissal". It
is such allegations by the employer and any counter-allegations that the
employee may wish to make that need to be heard before dismissal is effected.
Thus, Section 5 may be seen to envisage charges against an employee
constituting one or more of the just causes for dismissal listed in Article 282 of
the Labor Code. Where, as in the instant case, the ground for dismissal or
termination of services does not relate to a blameworthy act or omission on the
part of the employee, there appears to us no need for an investigation and
hearing to be conducted by the employer who does not, to begin with, allege any
malfeasance or non-feasance on the part of the employee. In such case, there are
no allegations which the employee should refute and defend himself from. Thus,
to require petitioner Wiltshire to hold a hearing, at which private respondent
would have had the right to be present, on the business and financial
circumstances compelling retrenchment and resulting in redundancy, would be
to impose upon the employer an unnecessary and inutile hearing as a condition
for legality of termination.
This is not to say that the employee may not contest the reality or good faith
character of the retrenchment or redundancy asserted as grounds for
termination of services. The appropriate forum for such controversion would,
however, be the Department of Labor and Employment and not an investigation
or hearing to be held by the employer itself. It is precisely for this reason that an
employer seeking to terminate services of an employee or employees because of
"closure of establishment and reduction of personnel", is legally required to give
a written notice not only to the employee but also to the Department of Labor
and Employment at least one month before effectivity date of the termination.
In the instant case, private respondent did controvert before the appropriate
labor authorities the grounds for termination of services set out in petitioner's
letter to him dated 17 June 1985.
We hold, therefore, that the NLRC's finding that private respondent had not
been accorded due process, is bereft of factual and legal bases. The award of
moral damages that rests on such ground must accordingly fall.
While private respondent may well have suffered personal embarrassment by
reason of termination of his services, such fact alone cannot justify the award of
moral damages. Moral damages are simply a species of damages awarded to
compensate one for injuries brought about by a wrongful act.8 As discussed
above, the termination of private respondent's services was not a wrongful act.
There is in this case no clear and convincing evidence of record showing that
the termination of private respondent's services, while due to an authorized or
statutory cause, had been carried out in an arbitrary, capricious and malicious
manner, with evident personal ill-will. Embarrassment, even humiliation, that is
not proximately caused by a wrongful act does not constitute a basis for an
award of moral damages.
Private respondent is, of course, entitled to separation pay and other benefits
under Act 283 of the Labor Code and petitioner's letter dated 17 June 1985.
ACCORDINGLY, the Court Resolved to GRANT due course to the Petition
for Certiorari. The Resolutions of the National Labor Relations Commission
dated 9 February 1988 and 7 March 1988 are hereby SET ASIDE and
NULLIFIED. The Temporary Restraining Order issued by this Court on 21 March
1988 is hereby made PERMANENT. No pronouncement as to costs.
SO ORDERED.
ASIAN ALCOHOL CORPORATION, petitioner, vs. NATIONAL LABOR
RELATIONS COMMISSION, FOURTH DIVISION, CEBU CITY and
ERNESTO A. CARIAS, ROBERTO C. MARTINEZ, RAFAEL H. SENDON,
CARLOS A. AMACIO, LEANDRO O. VERAYO and ERENEO S.
TORMO, respondents.
DECISION
74
PUNO, J.:
Contending that the dismissal of private respondents Ernesto A. Carias,
Roberto C. Martinez, Rafael H. Sendon, Carlos A. Amacio, Leandro O. Verayo and
Ereneo S. Tormo, was valid on the twin grounds of redundancy and
retrenchment to prevent business losses, petitioner Asian Alcohol Corporation
(hereinafter referred to as Asian Alcohol) filed this petition for certiorari. Asian
Alcohol ascribes grave abuse of discretion to public respondents National Labor
Relations Commission[1] (hereinafter referred to as NLRC) when, on May 30,
1997, it set aside[2] the decision[3] of the Executive Labor Arbiter dismissing the
illegal termination complaints filed by private respondents.
We first unfurl the facts.
In September, 1991, the Parsons family, who originally owned the
controlling stocks in Asian Alcohol, were driven by mounting business losses to
sell their majority rights to prior Holdings, Inc. (hereinafter referred to as Prior
Holdings). The next month, Prior Holdings took over its management and
operation.[4]
To thwart further losses, Prior Holdings implemented a reorganizational
plan and other cost-saving measures. Some one hundred seventeen (117)
employees out of a total workforce of three hundred sixty (360) were
separated. Seventy two (72) of them occupied redundant positions that were
abolished. Of these positions, twenty one (21) were held by union members and
fifty one (51) by non-union members.
The six (6) private respondents are among those union members[5] whose
positions were abolished due to redundancy. Private respondents Carias,
Martinez, and Sendon were water pump tenders; Amacio was a machine shop
mechanic; Verayo was a briquetting plant operator while Tormo was a plant
helper under him.They were all assigned at the Repair and Maintenance Section
of the Pulupandan plant.[6]
In October, 1992, they received individual notices of termination effective
November 30, 1992.[7] They were paid the equivalent of one month salary for
every year of service as separation pay, the money value of their unused sick,
vacation, emergency and seniority leave credits, thirteenth (13th) month pay for
the year 1992, medicine allowance, tax refunds, and goodwill cash bonuses for
those with at least ten (10) years of service.[8] All of them executed sworn
releases, waivers and quitclaims.[9] Except for Verayo and Tormo, they all signed
sworn statements of conformity to the company retrenchment program. [10] And
except for Martinez, they all tendered letters of resignation. [11]
On December 18, 1992, the six (6) private respondents files with the NLRC
Regional Arbitration Branch VI, Bacolod City, complaints for illegal dismissal
with a prayer for reinstatement with backwages, moral damages and attorneys
fees. They alleged that Asian Alcohol used the retrenchment program as a
subterfuge for the union busting. They claimed that they were singled out for
separation by reason for their active participation in the union. They also
asseverated that Asian Alcohol was not bankrupt as it has engaged in an
aggressive scheme of contractual hiring.
The Executive Labor Arbiter dismissed the complaints. He explained, thus:
The fact that respondents AAC incurred losses in its business operations was
not seriously challenged by the complainants. The fact that it incurred
substantial losses in its business operations prior to the implementation of its
retrenchment program is amply supported by the documents on records, (sic)
namely: (1) Balance Sheet of AAC as of December 31, 1991 x x x, (2) Statement
of Income and Deficit for the year ended December 31, 1991 x x x, (3) Income
Tax Return for Fiscal Year ending September 30, 1989 x x x, (4) Income Tax
Return for the Fiscal Year ending December 31, 1989 x x x, (5) Income Tax
Return for Fiscal Year ending December 31, 1990 x x x, and (6) Income Tax
Return for the Fiscal Year ending December 31, 1991 x x x, indicating an
accumulated deficit of P26,117,889.00.
It has to be emphasized that the law allows an employer to retrench some of its
employees to prevent losses.In the case of respondent AAC, it implemented its
retrenchment program not only to prevent losses but to prevent further losses
as it was then incurring huge losses in its operations.
Complainants would want us to believe that their positions were abolished
because they are union members, and that they were replaced by casual
employees. Complainants pretense is rather untenable. For one thing, the
retrenchment program of AAC affected not only union members but also the
non-union members. As earlier said, there were 117 employees of AAC who
were affected by the reorganization. Of the 117 positions, 72 positions were
abolished due to redundancy, 21 of which were occupied by union members,
while 51 were held by non-union members. Thus, the theory of complainants
that they were terminated from work on ground of their union membership is
far from the truth.
On the contrary, we find that complainants Ernesto Carias, Roberto Martinez
and Rafael Sendon who were all Water Pump Tenders assigned to AACs water
wells in Ubay, Pulupandan, Negros Occidental which were drilled and operated
before under the old management by virtue of right-of-way with the landowner,
75
were retrenched as an offshoot to the termination of the lease agreement as the
water thereunder had become salty due to extensive prawn farming nearby, so
that AAC could no longer use the water for its purpose. As a consequence, the
services of Ernesto Carias, Roberto Martinez and Rafael Sendon had become
unnecessary, redundant and superfluous.
As regards complainants Leandro Verayo and Ereneo Tormo, the grounds cited
by respondent AAC in support of its decision to retrench them are too
convincing to be ignored. Accordingly to respondent AAC, its boiler before was
100% coal fired. The boiler was manned by a briquetting plant operator in the
person of Leandro Verayo and three (3) briquetting helpers, namely, Ereneo
Tormo, Eriberto Songaling, Jr. and Rudy Javier, Jr.Since AAC had shifted to the
use of bunker fuel by about 70% to fire its boiler, its usage of coal had been
drastically reduced to only 30% of its total fuel usage in its production plant,
thereby saving on fuel cost. For this reason, there was no more need for the
position of briquetting plant operator and the services for only two briquetting
helpers were determined to be adequate for the job of briquetting coal. Of the
three (3) briquetting helpers, Ereneo Tormo was the oldest, being already 41
years old, the other two, Javier and Songaling, being only 28 and 35
respectively. Considering the manual nature of the work of coal briquetting,
younger workers are always preferred for reasons of efficiency [sic]. Hence the
abolition of the position of Ereneo Tormo. We have to stress that Eriberto
Songaling, Jr. and Rudy Javier, Jr. are also union members. x x x
With respect to Carlos Amacio, he was retrenched not because of his being a
union member but because of his poor health condition which greatly affect[ed]
his work efficiency. Records show that Carlos Amacio was among the ten
machine shop mechanics employed by respondent AAC. Under AACs
reorganization plan, it needs only nine mechanics.
xxx
On the whole, therefore, the dismissal of complainants on ground of
redundancy/retrenchment was perfectly valid or legal.[12]
Private respondents appealed to the NLRC.
On May 30, 1997, the NLRC rendered the challenged decision. It rejected
the evidence proffered by Asian Alcohol to prove its business reversals. It ruled
that the positions of private respondents were not redundant for the simple
reason that they were replaced by casuals. The NLRC essayed this explanation:
In this case, [that] the respondent terminated complainants to protect the
company from future losses, does not create an impression of imminent
loss. The company at the time of retrenchment was not then in the state of
business reverses. There is therefore no reason to retrench. x x x
The alleged deficits of the corporations did not prove anything for the
respondent. The financial status as shown in the Statement of Income and
Deficits and Income Tax Returns from 1989 to 1991, submitted by respondent
was before the respondent, new management of Prior Holdings, Inc., took over
the operation and management of the corporation in October, 199[1]. This is no
proof that on November 30, 1992 when the termination of complainant[s] took
effect the company was experiencing losses or at least imminent losses.Possible
future losses do not authorize retrenchment.
Secondly in the case of REDUNDANCY.
Redundancy exist where the service[s] of x x x employee[s] are in excess of
what is reasonably demanded by the actual requirements of the enterprise. The
evidence, however, proved that, in truth and in fact, the positions of the
complainants were not redundant for the simple reason that they were replaced
by casuals.
xxx
Admittedly, from the testimonies of Engr. Palmares, the wells of the respondent
were operated by contractors.Otherwise stated, complainant[s] who are regular
workers of the respondent, performing jobs necessary and desirable to the
business of the company, were eased out in the guise of retrenchment or
redundancy [so that] their jobs [will] be performed by workers belonging to a
contractor.
In summation, retrenchment and/or redundancy not having been proved,
complainants, therefore, were illegally dismissed.[13]
The dispositive portion of the decision of the NLRC provides as follows:
WHEREFORE, premises considered, the Decision appealed from is hereby
ordered SET ASIDE and VACATED and in lieu thereof, the respondent Asian
Alcohol Corporation is hereby ordered to reinstate complainants with full
backwages from the time they were dismissed on November 30, 1992 and up to
actual reinstatement. Plus 10% attorneys fees.
76
SO ORDERED.[14]
On July 2, 1997, Asian Alcohol moved for reconsideration of the foregoing
decision. On September 25, 1997, the NLRC denied the motion.[15]
On January 12, 1998, Asian Alcohol filed in this Court a petition for
certiorari assailing both the decision of the NLRC and the resolution denying its
reconsideration. It invoked the following grounds:
6. GROUNDS FOR THE PETITION
6.1 Public respondent has committed, as hereinafter shown, a manifest grave
abuse of discretion amounting to lack or excess of jurisdiction in declaring in its
assailed Decision x x x and Resolution x x x that the termination of the
employment of private respondents by the petitioner herein is illegal and
ordering their reinstatement with full backwages from the time they were
dismissed on November 30, 1992 up to their actual reinstatement, plus 10%
attorneys fees, said Decision and Resolution of the public respondents being
contrary to the established facts of the case, well-settled jurisprudence and the
law on the matter.
6.2 Public respondent has likewise committed, as hereinafter shown, a manifest
grave abuse of discretion amounting to lack or excess of jurisdiction by totally
disregarding and refusing to consider the factual findings of the Executive Labor
Arbiter with respect to the circumstances which rendered the positions of the
private respondents unnecessary, redundant and superfluous, thereby
justifying the termination of their employment.
6.3 Public respondents has furthermore committed, as hereinafter shown, a
manifest grave abuse of discretion amounting to lack or excess of jurisdiction in
giving full credit to the oral testimonies quoted in its assailed Decision x x x and
taking them as conclusive proof of the alleged replacement of the private
respondents with casual workers despite the fact that said quoted testimonies
clearly amount to nothing but speculations, surmises and conjectures. [16]
On March 25, 1998, we issued a Temporary Restraining Order [17]
enjoining
the NLRC from enforcing its Decision and Resolution dated May 30, 1997 and
September 25, 1997, respectively.
We find the petition meritorious.
Out of its concern for those with less privilege in life, this Court has
inclined towards the worker and upheld his cause in his conflicts with the
employer.[18] This favored treatment is directed by the social justice policy of
the Constitution.[19] But while tilting the scales of justice in favor of workers, the
fundamental law also guarantees the right of the employer to reasonable
returns from his investments.[20] Corollarily, the law allows an employer to
downsize his business to meet clear and continuing economic threats. [21] Thus,
this Court has upheld reductions in the work force to forestall business losses or
stop the hemorrhaging of capital.[22]
The right of management to dismiss workers during periods of business
recession and to install labor saving devices to prevent losses is governed by
Art. 283 of the Labor Code, as amended. It provides, viz.:
Art. 283. Closure of establishment and reduction of personnel.--The employer
may also terminate the employment of any employee due to the installation of
labor saving devices, redundancy, retrenchment to prevent losses or the
closing or cessation of operation of the establishment or undertaking unless
the closing is for the purpose of circumventing the provisions of this Title, by
serving a written notice on the workers and the Ministry of Labor and
Employment at least one (1) month before the intended date thereof. In case of
termination due to the installation of labor saving devices or redundancy, the
worker affected thereby shall be entitled to a separation pay equivalent to at
least his one (1) month pay or to at least one (1) month pay for every year of
service, whichever is higher. In case of retrenchment to prevent losses and in
case of closures or cessation of operations of establishment or undertaking not
due to serious business losses or financial reverses, the separation pay shall be
equivalent to one (1) month pay or at least one-half (1/2) month pay for every
year of service, whichever is higher. A fraction of at least six (6) months shall be
considered one (1) whole year.[emphasis ours]
Under the foregoing provisions, retrenchment and redundancy are just
causes for the employer to terminate the services of workers to preserve the
viability of the business. In exercising its right, however, management must
faithfully comply with the substantive and procedural requirements laid down
by law and jurisprudence.[23]
The requirements for valid retrenchment which must be proved by clear
and convincing evidence are: (1) that the retrenchment is reasonably necessary
and likely to prevent business losses which, if already incurred, are not
merely de minimis, but substantial, serious, actual and real, or if only expected,
are reasonably imminent as perceived objectively and in good faith by the
employer;[24] (2) that the employer served written notice both to the employees
and to the Department of Labor and Employment at least one month prior to the
intended date of retrenchment;[25] (3) that the employer pays the retrenched
employees separation pay equivalent to one month pay or at least month pay
77
for every year of service, whichever is higher;[26] (4) that the employer exercises
its prerogative to retrench employees in good faith for the advancement of its
interest and not to defeat or circumvent the employees right to security of
tenure;[27] and (5) that the employer used fair and reasonable criteria [28] in
ascertaining who would be dismissed and who would be retained among the
employees, such as status (i.e., whether they are temporary, casual, regular or
managerial employees), efficiency, seniority,[29] physical fitness, age, and
financial hardship for certain workers.[30]
The condition of business losses is normally shown by audited financial
documents like yearly balance sheets and profit and loss statements as well as
annual income tax returns.[31] It is our ruling that financial statements must be
prepared and signed by independent auditors.[32] Unless duly audited, they can
be assailed as self-serving documents.[33] But it is not enough that only the
financial statements for the year during which retrenchment was undertaken,
are presented in evidence. For it may happen that while the company has
indeed been losing, its losses may be on a downward trend, indicating that
business is picking up and retrenchment, being a drastic move, should no longer
be resorted to.[34] Thus, the failure of the employer to show its income or loss
for the immediately preceding year or to prove that it expected no abatement of
such losses in the coming years, may bespeak the weakness of its cause. [35] It is
necessary that the employer also show that its losses increased through a
period of time and that the condition of the company is not likely to improve in
the near future.[36]
In the instant case, private respondents never contested the veracity of the
audited financial documents proffered by Asian Alcohol before the Executive
Labor Arbiter. Neither did they object their admissibility.They show that
petitioner has accumulated losses amounting to P306,764,349.00 and showing
nary sign of abating in the near future. The allegation of union busting is bereft
of proof. Union and non-union members were treated alike. The records show
that the positions of fifty one (51) other non-union members were abolished
due to business losses.
In rejecting petitioners claim of business losses, the NLRC stated that the
alleged deficits of the corporation did not prove anything for the
[petitioners][37] since they were incurred before the take over of Prior
Holdings. Theorizing that proof of losses before the take over is no proof of
losses after the take over, it faulted Asian Alcohol for retrenching private
respondent on the ground of mere possible future losses [38].
We do not agree. It should be observed that Article 283 of the Labor Code
uses the phrase retrenchment to prevent losses. In its ordinary connotation, this
phrase means that retrenchment must be undertaken by the employer before
losses are actually sustained.[39] We have, however, interpreted the law to mean
that the employer need not keep all his employees until after his losses shall
have materialized.[40] Otherwise, the law could be vulnerable to attack as undue
taking of property for the benefit of another.[41]
In the case at bar, Prior Holdings took over the operations of Asian Alcohol
in October 1991. Plain to see, the last quarter losses in 1991 were already
incurred under the new management. There were no signs that these losses
would abate. Irrefutable was the fact that losses have bled Asian Alcohol
incessantly over a span of several years. They were incurred under the
management of the Parsons family and continued to be suffered under the new
management of Prior Holdings. Ultimately, it is Prior Holding that will absorb all
the losses, including those incurred under the former owners of the
company. The law gives the new management every right to undertake
measures to save the company from bankruptcy.
We find that the reorganizational plan and comprehensive cost-saving
program to turn the business around were nor designed to bust the union of the
private respondent. Retrenched were one hundred seventeen (117)
employees. Seventy two (72) of them including private respondent were
separated because their positions had become redundant. In this context, what
may technically be considered as redundancy may verily be considered as
retrenchment measures.[42] Their positions had to be declared redundant to cut
losses.
Redundancy exist when the service capability of the work is in excess of
what is reasonably needed to meet the demands on the enterprise. A redundant
position is one rendered superfluous by any number of factors, such as
overhiring of workers, decreased volume of business, dropping of a particular
product line previously manufactured by the company or phasing out of a
service activity priorly undertaken by the business.[43] Under these conditions,
the employer has no legal obligation to keep in its payroll more employees than
are necessary for the operation of its business.[44]
For the implementation of a redundancy program to be valid, the employer
must comply with the following requisites: (1) written notice served on both
the employees and the Department of Labor and Employment at least one moth
prior to the intended date of retrenchment;[45] (2) payment of separation pay
equivalent to at least one month pay or at least one month pay for every year of
service whichever is higher; (3) good faith in abolishing the redundant
positions;[46] and (4) fair and reasonable criteria in ascertaining what positions
are to be declared redundant and accordingly abolished.[47]
In the case at bar, private respondent Carias, Martinez and Sendon were
water pump tenders. They tended the water wells of Asian Alcohol located in
78
Ubay, Pulupandan, Negros Occidental. However, Asian Alcohol did not own the
land where the wells stood. It only leased them.
In 1992, the lease contract which also provided for a right of way leading
to the site of the wells, was terminated. Also, the water from the wells had
become salty due to extensive prawn farming nearby and could no longer be
used by Asian Alcohol for its purpose. The wells had to be closed and needless
to say, the services of Carias, Martinez and Sendon had to be terminated on the
twin grounds of redundancy and retrenchment.
Private respondent Verayo was the briquetting plant operator in charge of
the coal-fired boiler. Private respondent Tormo was one of the three briquetting
helpers. To enhance production efficiency, the new management team shifted to
the use of bunker fuel by about seventy percent (70%) to fire its boiler. The
shift meant substantial fuel cost savings. In the process, however the need for a
briquetting plant operator ceased as the services of only two (2) helpers were
all that was necessary to attend to the much lesser amount of coal required to
run the boiler. Thus, the positions of private respondent Verayo had to be
abolished. Of the three (3) briquetting helpers, Tormo, was the oldest, being
already 41 years old. The other two, Rudy Javier Jr. and Eriberto Songaling, Jr.,
were younger, being only 28 and 35, respectively. Age, with the physical
strength that comes with it, was particularly taken into consideration by the
management team in deciding whom to separate. Hence, it was private
respondent Tormo who was separated from service. The management choice
rested on a rational basis.
Private respondent Amacio was among the ten (10) mechanics who
manned the machine shop at the plant site. At their current production level, the
new management found that it was more cost efficient to maintain only nine (9)
mechanics. In choosing whom to separate among the ten (10) mechanics, the
management examined employment records and reports to determine the least
efficient among them. It was private respondent Amacio who appeared the least
efficient because of his poor health conditions.
Not one of the private respondents refuted the foregoing facts. They only
contend that the new management should have followed the policy of first in,
last out in choosing which positions to declare as redundant or whom to
retrench to prevent further business losses. No law mandates such a policy. And
the reason is simple enough. A host of relevant factors come into play in
determining cost efficient measures and in choosing the employees who will be
retained or separated to save the company from closing shop. In determining
these issues, management has to enjoy a pre-eminent role. The characterization
of positions as redundant is an exercise of business judgment on the part of the
employer.[48] It will be upheld as long as it passes the test of arbitrariness.[49]
Private respondents call our attention to their allegation that casuals were
hired to replace Carias, Martinez and Sendon as water pump tenders at the
Ubay wells. They rely on the testimony of Engr. Federico Palmares, Jr., the head
of the Mechanical Engineering Department who admitted the engagement of
independent contractors to operate the wells. A reading of the testimony of
Engr. Palmares, however, will reveal that he referred not to the Ubay wells
which were tended by private respondents Carias, Martinez and Sendon, but to
the Laura wells. Thus, he declared in cross examinations:
ATTY. YMBALLA: (cross-examination of respondent witness, Federico
Palmares)
Q But in the Laura well?
WITNESS:
A Mansteel was hired as contractor.
ATTY. YMBALLA:
Q In other words, the persons mentioned are all workers of independent
contractors?
WITNESS:
A I am not sure, maybe.[50]
In any event, we have held that an employers good faith in implementing a
redundancy program is not necessarily destroyed by availment of the services
of an independent contractor to replace the services of the terminated
employees. We have previously ruled that the reduction of the number of
workers in a company made necessary by the introduction of the services of an
independent contractor is justified when the latter is undertaken in order to
effectuate more economic and efficient methods of production.[51] In the case at
bar, private respondent failed to proffer any proof that the management acted
in a malicious or arbitrary manner in engaging the services of an independent
contractor to operate the Laura wells. Absent such proof, the Court has no basis
to interfere with the bona fide decision of management to effect more economic
and efficient methods of production.
Finally, private respondents now claim that they signed the quitclaims,
waivers and voluntary resignation letters only to get their separation
package. They maintain that in principle, they did not believe that their
dismissal was valid.
It is true that this court has generally held that quitclaims and releases are
contrary to public policy and therefore, void. Nonetheless, voluntary
agreements that represents a reasonable settlement are binding on the parties
79
and should not later be disowned. It is only where there is clear proof that the
waiver was wangled from an unsuspecting or gullible person, or the terms of
settlement are unconscionable, that the law will step in to bail out the
employees. While it is our duty to prevent the exploitation of employees, it is
also behooves us to protect the sanctity of contracts that do not contravene our
laws.
In the case at bar, there is no showing that the quitclaims, waivers and
voluntary resignation letters were executed by the private respondents under
force or duress. In truth, the documents embodied separation benefits that were
well beyond what the company was legally required to give private
respondents. We note that out of more than one hundred workers that were
retrenched by Asian Alcohol, only these six (6) private respondents were not
impressed by the generosity of their employer. Their late complaints have no
basis and deserve our scant consideration.
IN VIEW WHEREOF, the petition is GRANTED. The Decision of the
National Labor Relations Commission dated May 30, 1997 and its Resolution
dated September 25, 1997 are ANNULED AND SET ASIDE. The Decision of the
Executive Labor Arbiter dated January 10, 1996 in RAB Case No. 06-12-10893-
92 is ORDERED REINSTATED. The complaints for illegal dismissal filed by
private respondents against Asian Alcohol Corporation are hereby ORDERED
DISMISSED FOR LACK OF MERIT. No cost.
SO ORDERED.
GENERAL MILLING CORPORATION, Petitioner, v. VIOLETA L.
VIAJAR, Respondent.
DECISION
REYES, J.:
This is a Petition1 for Review on Certiorari under Rule 45 of the Rules of Court
filed by petitioner General Milling Corporation (GMC), asking the Court to set
aside the Decision2 dated September 21, 2007 and the Resolution3 dated
January 30, 2008 of the Court of Appeals (CA) in CA-G.R. SP No. 01734; and to
reinstate the Decision4 dated October 28, 2005 and Resolution5 dated January
31, 2006 of the National Labor Relations Commission (NLRC) in NLRC Case No.
V-000416-05.
The antecedent facts are as follows:cralawlibrary
GMC is a domestic corporation with principal office in Makati City and a
manufacturing plant in Lapu-Lapu City.
In October 2003, GMC terminated the services of thirteen (13) employees for
redundancy, including herein respondent, Violeta Viajar (Viajar). GMC alleged
that it has been gradually downsizing its Vismin (Visayas-Mindanao) Operations
in Cebu where a sizeable number of positions became redundant over a period
of time.6?r?l1
On December 2, 2003, Viajar filed a Complaint7 for Illegal Dismissal with
damages against GMC, its Human Resource Department (HRD) Manager, Johnny
T. Almocera (Almocera), and Purchasing Manager, Joel Paulino before the
Regional Arbitration Branch (RAB) No. VII, NLRC, Cebu City.
In her Position Paper,8 Viajar alleged that she was employed by GMC on August
6, 1979 as Invoicing Clerk. Through the years, the respondent held various
positions in the company until she became Purchasing Staff.
On October 30, 2003, Viajar received a Letter-Memorandum dated October 27,
2003 from GMC, through Almocera, informing her that her services were no
longer needed, effective November 30, 2003 because her position as Purchasing
Staff at the Purchasing Group, Cebu Operations was deemed redundant.
Immediately thereafter, the respondent consulted her immediate superior at
that time, Thaddeus Oyas, who told her that he too was shocked upon learning
about it.9?r?l1
When Viajar reported for work on October 31, 2003, almost a month before the
effectivity of her severance from the company, the guard on duty barred her
from entering GMCs premises. She was also denied access to her office
computer and was restricted from punching her daily time record in the bundy
clock.10?r?l1
On November 7, 2003, Viajar was invited to the HRD Cebu Office where she was
asked to sign certain documents, which turned out to be an "Application for
Retirement and Benefits." The respondent refused to sign and sought
clarification because she did not apply for retirement and instead asserted that
her services were terminated for alleged redundancy. Almocera told her that
her signature on the Application for Retirement and Benefits was needed to
process her separation pay. The respondent also claimed that between the
period of July 4, 2003 and October 13, 2003, GMC hired fifteen (15) new
employees which aroused her suspicion that her dismissal was not
necessary.11 At the time of her termination, the respondent was receiving the
salary rate of P19,651.41 per month.12?r?l1
80
For its part, the petitioner insisted that Viajars dismissal was due to the
redundancy of her position. GMC reasoned out that it was forced to terminate
the services of the respondent because of the economic setbacks the company
was suffering which affected the companys profitability, and the continuing rise
of its operating and interest expenditures. Redundancy was part of the
petitioners concrete and actual cost reduction measures. GMC also presented
the required "Establishment Termination Report" which it filed before the
Department of Labor and Employment (DOLE) on October 28, 2003, involving
thirteen (13) of its employees, including Viajar. Subsequently, GMC issued to the
respondent two (2) checks respectively amounting to P440,253.02
and P21,211.35 as her separation pay.13?r?l1
On April 18, 2005, the Labor Arbiter (LA) of the NLRC RAB No. VII, Cebu City,
rendered a Decision, the decretal portion of which reads:cralawlibrary
WHEREFORE, foregoing considered, judgment is hereby rendered declaring
that respondents acted in good faith in terminating the complainant from the
service due to redundancy of works, thus, complainants refusal to accept the
payment of her allowed separation pay and other benefits under the law is NOT
JUSTIFIED both in fact and law, and so, therefore complainants case for illegal
dismissal against the herein respondents and so are complainants monetary
claims are hereby ordered DISMISSED for lack of merit.
SO ORDERED.14?r?l1 ???ñr?bl?š ??r†??l l?? l?br?rÿ
The LA found that the respondent was properly notified on October 30, 2003
through a Letter-Memorandum dated October 27, 2003, signed by GMCs HRD
Manager Almocera, that her position as Purchasing Staff had been declared
redundant. It also found that the petitioner submitted to the DOLE on October
28, 2003 the "Establishment Termination Report." The LA even faulted the
respondent for not questioning the companys action before the DOLE Regional
Office, Region VII, Cebu City so as to compel the petitioner to prove that Viajars
position was indeed redundant. It ruled that the petitioner complied with the
requirements under Article 283 of the Labor Code, considering that the nation
was then experiencing an economic downturn and that GMC must adopt
measures for its survival.15?r?l1
Viajar appealed the aforesaid decision to the NLRC. On October 28, 2005, the
NLRC promulgated its decision, the dispositive portion of which
reads:cralawlibrary
WHEREFORE, premises considered, the Decision of the Labor Arbiter declaring
the validity of complainants termination due to redundancy is hereby
AFFIRMED. Respondent General Milling Corporation is hereby ordered to pay
complainants separation pay in the amount of P461,464.37.
SO ORDERED.16?r?l1 ???ñr?bl?š ??r†??l l?? l?br?rÿ
The NLRC, however, stated that it did not agree with the LA that Viajar should
be faulted for failing to question the petitioners declaration of redundancy
before the DOLE Regional Office, Region VII, Cebu City. It was not imperative for
Viajar to challenge the validity of her termination due to
redundancy.17Notwithstanding, the NLRC affirmed the findings of the LA that
Viajars dismissal was legal considering that GMC complied with the
requirements provided for under Article 283 of the Labor Code and existing
jurisprudence, particularly citing Asian Alcohol Corporation v. NLRC. 18 The
NLRC further stated that Viajar was aware of GMCs "reduction mode," as shown
in the GMC Vismin Manpower Complement, as follows:cralawlibrary
No. of Employees
Year Manpower Profile
Terminated (Redundancy)
2000 795
2001 782
2002 736 41
2003 721 24
2004 697 16
2005 696 (As of June 2005) 0619
The NLRC stated that the characterization of positions as redundant is an
exercise of the employers business judgment and prerogative. It also ruled that
the petitioner did not exercise this prerogative in bad faith and that the
payment of separation pay in the amount of P461,464.37 was in compliance
with Article 283 of the Labor Code.20?r?l1
Respondent Viajar filed a Motion for Reconsideration which was denied by the
NLRC in its Resolution dated January 31, 2006.
81
Undaunted, Viajar filed a petition for certiorari before the CA. In the now
assailed Decision dated September 21, 2007, the CA granted the petition,
reversing the decision of the NLRC in the following manner:cralawlibrary
WHEREFORE, premises considered, this Petition for Certiorari is GRANTED. The
Decision, dated 28 October 2005, and Resolution, dated 31 January 2006
respectively, of public respondent National Labor Relations Commission-Fourth
Division, Cebu City, in NLRC Case No. V-000416-05 (RAB VII-12-2495-03) are
SET ASIDE. A new judgment is entered DECLARING the dismissal ILLEGAL and
ordering respondent to reinstate petitioner without loss of seniority rights and
other privileges with full backwages inclusive of allowances and other benefits
computed from the time she was dismissed on 30 November 2003 up to the
date of actual reinstatement. Further, moral and exemplary damages, in the
amount of Fifty Thousand Pesos ([P]50,000.00) each; and attorneys fees
equivalent to ten percent (10%) of the total monetary award, are awarded.
Costs against respondent.
SO ORDERED.21?r?l1
Aggrieved by the reversal of the NLRC decision, GMC filed a motion for
reconsideration. However, in its Resolution dated January 30, 2008, the CA
denied the same; hence, this petition.
The petitioner raises the following issues, to wit:cralawlibrary
I. THE DECISION OF SEPTEMBER 21, 2007 AND THE RESOLUTION OF JANUARY
30, 2008 OF THE COURT OF APPEALS ARE CONTRARY TO LAW AND
ESTABLISHED JURISPRUDENCE.
II. THE DECISION OF SEPTEMBER 21, 2007 AND THE RESOLUTION OF
JANUARY 30, 2008 OF THE COURT OF APPEALS VIOLATE THE LAW AND
ESTABLISHED JURISPRUDENCE ON THE OBSERVANCE OF RESPECT AND
FINALITY TO FACTUAL FINDINGS OF THE NATIONAL LABOR RELATIONS
COMMISSION.
III. THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION IN
ITS DECISION OF SEPTEMBER 21, 2007 AND RESOLUTION OF JANUARY 30,
2008 AS THE SAME ARE CONTRARY TO THE EVIDENCE ON
RECORD.22?r?l1 ???ñr?bl?š ??r†??l l?? l?br?rÿ
The petition is denied.
The petitioner argues that the factual findings of the NLRC, affirming that of the
LA must be accorded respect and finality as it is supported by evidence on
record. Both the LA and the NLRC found the petitioners evidence sufficient to
terminate the employment of respondent on the ground of redundancy. The
evidence also shows that GMC has complied with the procedural and
substantive requirements for a valid termination. There was, therefore, no
reason for the CA to disturb the factual findings of the NLRC. 23?r?l1
The rule is that factual findings of quasi-judicial agencies such as the NLRC are
generally accorded not only respect, but at times, even finality because of the
special knowledge and expertise gained by these agencies from handling
matters falling under their specialized jurisdiction. 24 It is also settled that this
Court is not a trier of facts and does not normally embark in the evaluation of
evidence adduced during trial.25 This rule, however, allows for exceptions. One
of these exceptions covers instances when the findings of fact of the trial court,
or of the quasi-judicial agencies concerned, are conflicting or contradictory with
those of the CA. When there is a variance in the factual findings, it is incumbent
upon the Court to re-examine the facts once again.26?r?l1
Furthermore, another exception to the general rule is when the said findings are
not supported by substantial evidence or if on the basis of the available facts,
the inference or conclusion arrived at is manifestly erroneous.27 Factual findings
of administrative agencies are not infallible and will be set aside when they fail
the test of arbitrariness.28 In the instant case, the Court agrees with the CA that
the conclusions arrived at by the LA and the NLRC are manifestly erroneous.
GMC claims that Viajar was validly dismissed on the ground of redundancy
which is one of the authorized causes for termination of employment. The
petitioner asserts that it has observed the procedure provided by law and that
the same was done in good faith. To justify the respondents dismissal, the
petitioner presented: (i) the notification Letter-Memorandum dated October 27,
2003 addressed to the respondent which was received on October 30,
2003;29 (ii) the "Establishment Termination Report" as prescribed by the
DOLE;30 (iii) the two (2) checks issued in the respondents name amounting
to P440,253.02 and P21,211.35 as separation pay;31 and (iv) the list of
dismissed employees as of June 6, 2006 to show that GMC was in a "reduction
mode."32 Both the LA and the NLRC found these sufficient to prove that the
dismissal on the ground of redundancy was done in good faith.
The Court does not agree.
82
Article 283 of the Labor Code provides that redundancy is one of the authorized
causes for dismissal. It reads:cralawlibrary
Article 283. Closure of establishment and reduction of personnel. The employer
may also terminate the employment of any employee due to the installment of
labor-saving devices, redundancy, retrenchment to prevent losses or the closing
or cessation of operation of the establishment or undertaking unless the closing
is for the purpose of circumventing the provisions of this Title, by serving a
written notice on the worker and the Ministry of Labor and Employment at least
one (1) month before the intended date thereof. In case of termination due to
the installation of labor-saving devices or redundancy, the worker affected
thereby shall be entitled to a separation pay equivalent to at least his one (1)
month pay or to at least one (1) month pay for every year of service, whichever
is higher. In case of retrenchment to prevent losses and in cases of closures or
cessation of operations of establishment or undertaking not due to serious
business losses or reverses, the separation pay shall be equivalent to one (1)
month pay or at least one-half (1/2) month pay for every year of service,
whichever is higher. A fraction of at least six (6) months shall be considered one
(1) whole year. (Emphasis supplied)
From the above provision, it is imperative that the employer must comply with
the requirements for a valid implementation of the companys redundancy
program, to wit: (a) the employer must serve a written notice to the affected
employees and the DOLE at least one (1) month before the intended date of
retrenchment; (b) the employer must pay the employees a separation pay
equivalent to at least one month pay or at least one month pay for every year of
service, whichever is higher; (c) the employer must abolish the redundant
positions in good faith; and (d) the employer must set fair and reasonable
criteria in ascertaining which positions are redundant and may be
abolished.33?r?l1
In Smart Communications, Inc., v. Astorga, 34 the Court held that:cralawlibrary
The nature of redundancy as an authorized cause for dismissal is explained in
the leading case of Wiltshire File Co., Inc. v. National Labor Relations
Commission, viz:cralawlibrary
"x x x redundancy in an employers personnel force necessarily or even
ordinarily refers to duplication of work. That no other person was holding the
same position that private respondent held prior to termination of his services
does not show that his position had not become redundant. Indeed, in any well
organized business enterprise, it would be surprising to find duplication of
work and two (2) or more people doing the work of one person. We believe that
redundancy, for purposes of the Labor Code, exists where the services of an
employee are in excess of what is reasonably demanded by the actual
requirements of the enterprise. Succinctly put, a position is redundant where it
is superfluous, and superfluity of a position or positions may be the outcome of
a number of factors, such as overhiring of workers, decreased volume of
business, or dropping of a particular product line or service activity previously
manufactured or undertaken by the enterprise."???ñr?bl?š ??r†??l l?? l?br?rÿ
The characterization of an employees services as superfluous or no longer
necessary and, therefore, properly terminable, is an exercise of business
judgment on the part of the employer. The wisdom and soundness of such
characterization or decision is not subject to discretionary review provided, of
course, that a violation of law or arbitrary or malicious action is not
shown.35 (Emphasis supplied and citations omitted)
While it is true that the "characterization of an employees services as
superfluous or no longer necessary and, therefore, properly terminable, is an
exercise of business judgment on the part of the employer," 36the exercise of
such judgment, however, must not be in violation of the law, and must not be
arbitrary or malicious. The Court has always stressed that a company cannot
simply declare redundancy without basis. To exhibit its good faith and that
there was a fair and reasonable criteria in ascertaining redundant positions, a
company claiming to be over manned must produce adequate proof of the same.
We reiterate what was held in Caltex (Phils.), Inc. v. NLRC:37?r?l1
In Asufrin, Jr. v. San Miguel Corporation, we ruled that it is not enough for a
company to merely declare that it has become overmanned (sic). It must
produce adequate proof of such redundancy to justify the dismissal of the
affected employees.
In Panlilio v. National Labor Relations Commission, we held that evidence must
be presented to substantiate redundancy such as but not limited to the new
staffing pattern, feasibility studies/proposal, on the viability of the newly
created positions, job description and the approval by the management of the
restructuring.38 (Emphasis supplied and citations omitted)
In the instant case, the Court agrees with the CA when it held that the petitioner
failed to present substantial proof to support GMCs general allegations of
redundancy. As shown from the records, the petitioner simply presented as its
evidence of good faith and compliance with the law the notification letter to
83
respondent Viajar;39 the "Establishment Termination Report" it submitted to
the DOLE Office;40 the two (2) checks issued in the respondents name
amounting to P440,253.02 and P21,211.35;41 and the list of terminated
employees as of June 6, 2006.42 We agree with the CA that these are not enough
proof for the valid termination of Viajars employment on the ground of
redundancy.
The letter-memorandum which contains general allegations is not enough to
convince this Court that Viajars termination of employment due to redundancy
was warranted under the circumstances. There is no showing that GMC made an
evaluation of the existing positions and their effect to the company. Neither did
GMC exert efforts to present tangible proof that it was experiencing business
slow down or over hiring. The "Establishment Termination Report" it submitted
to the DOLE Office did not account for anything to justify declaring the positions
redundant. The Court notes that the list of terminated employees presented by
GMC was a list taken as of June 6, 2006 or almost three years after the
respondent was illegally dismissed and almost a year after the LA promulgated
its decision. While the petitioner had been harping that it was on a "reduction
mode" of its employees, it has not presented any evidence (such as new staffing
pattern, feasibility studies or proposal, viability of newly created positions, job
description and the approval of the management of the restructuring, 43 audited
financial documents like balance sheets, annual income tax returns and
others)44 which could readily show that the companys declaration of redundant
positions was justified. Such proofs, if presented, would suffice to show the good
faith on the part of the employer or that this business prerogative was not
whimsically exercised in terminating respondents employment on the ground
of redundancy. Unfortunately, these are wanting in the instant case. The
petitioner only advanced a self-serving general claim that it was experiencing
business reverses and that there was a need to reduce its manpower
complement.
On the other hand, the respondent presented proof that the petitioner had been
hiring new employees while it was firing the old ones,45 negating the claim of
redundancy. It must, however, be pointed out that in termination cases, like the
one before us, the burden of proving that the dismissal of the employees was for
a valid and authorized cause rests on the employer. It was incumbent upon the
petitioner to show by substantial evidence that the termination of the
employment of the respondent was validly made and failure to discharge that
duty would mean that the dismissal is not justified and therefore illegal. 46?r?l1
Furthermore, the Court cannot overlook the fact that Viajar was prohibited from
entering the company premises even before the effectivity date of termination;
and was compelled to sign an "Application for Retirement and Benefits." These
acts exhibit the petitioners bad faith since it cannot be denied that the
respondent was still entitled to report for work until November 30, 2003. The
demand for her to sign the "Application for Retirement and Benefits" also
contravenes the fact that she was terminated due to redundancy. Indeed, there
is a difference between voluntary retirement of an employee and forced
termination due to authorized causes.
In Quevedo v. Benguet Electric Cooperative, Incorporated, 47 this Court
explained the difference between retirement and termination due to
redundancy, to wit:cralawlibrary
While termination of employment and retirement from service are common
modes of ending employment, they are mutually exclusive, with varying
juridical bases and resulting benefits. Retirement from service is contractual
(i.e. based on the bilateral agreement of the employer and employee), while
termination of employment is statutory (i.e. governed by the Labor Code and
other related laws as to its grounds, benefits and procedure). The benefits
resulting from termination vary, depending on the cause. For retirement, Article
287 of the Labor Code gives leeway to the parties to stipulate above a floor of
benefits.
xxx
The line between voluntary and involuntary retirement is thin but it is one
which this Court has drawn. Voluntary retirement cuts employment ties leaving
no residual employer liability; involuntary retirement amounts to a discharge,
rendering the employer liable for termination without cause. The employees
intent is the focal point of analysis. In determining such intent, the fairness of
the process governing the retirement decision, the payment of stipulated
benefits, and the absence of badges of intimidation or coercion are relevant
parameters.48 (Emphasis supplied and citations omitted)
Clearly, the instant case is not about retirement since the term has its peculiar
meaning and is governed by Article 287 of the Labor Code. Rather, this is a case
of termination due to redundancy under Article 283 of the Labor Code. Thus,
the demand of GMC for the respondent to sign an "Application for Retirement
and Benefits" is really suspect.
Finally, the Court agrees with the CA that the award of moral and exemplary
damages is proper. The Court has awarded moral damages in termination cases
when bad faith, malice or fraud attend the employees dismissal or where the act
oppresses labor, or where it was done in a manner contrary to morals, good
84
customs or public policy.49 We quote with favor the findings of the
CA:cralawlibrary
We also award moral and exemplary damages to petitioner. While it is true that
good faith is presumed, the circumstances surrounding the dismissal of
petitioner negate its existence. Moral damages may be recovered only where
the dismissal of the employee was tainted by bad faith or fraud, or where it
constituted an act oppressive to labor, and done in a manner contrary to morals,
good customs or public policy while exemplary damages are recoverable only if
the dismissal was done in a wanton, oppressive, or malevolent manner. To
reiterate, immediately after receipt of her termination letter which was effective
on 30 November 2003, petitioner was no longer treated as an employee of
respondent as early as the 31st of October 2003; she was already barred from
entering the company premises; she was deprived access to her office
computer; and she was excluded from the bandy [sic] clock. She was also made
to sign documents, including an "APPLICATION FOR RETIREMENT AND
BENEFITS" in the guise of payment of her separation pay. When petitioner
confronted her immediate superior regarding her termination, the latters shock
aggravated her confusion and suffering. She also learned about the employment
of a number of new employees, several of whom were even employed in her
former department. Petitioner likewise suffered mental torture brought about
by her termination even though its cause was not clear and
substantiated.50 (Citations omitted)
WHEREFORE, the petition is DENIED. The Decision dated September 21, 2007
of the Court of Appeals, as well as its Resolution dated January 30, 2008 in CA-
G.R. SP No. 01734, are hereby AFFIRMED.
SO ORDERED.
SAN MIGUEL CORPORATION, petitioner, vs. NATIONAL LABOR RELATIONS
COMMISSION, SECOND DIVISION, AND SAN MIGUEL CORPORATION
EMPLOYEES UNION (SMCEU) - PTGWO, respondents.
DECISION
PURISIMA, J.:
At bar is a Petition for Certiorari under Rule 65 of the Revised Rules of
Court, assailing the Resolution[1]of the National Labor Relations Commission in
NLRC NCR CASE NO. 00094-90, which dismissed the complaint of San Miguel
Corporation (SMC), seeking to dismiss the notice of strike given by the private
respondent union and to compel the latter to comply with the provisions of the
Collective Bargaining Agreement (CBA)[2] on grievance machinery, arbitration,
and the no-strike clause, with prayer for the issuance of a temporary restraining
order.
The antecedent facts are as follows:
In July 1990, San Miguel Corporation, alleging the need to streamline its
operations due to financial losses, shut down some of its plants and declared 55
positions as redundant, listed as follows: seventeen (17)employees in the
Business Logistics Division (BLD), seventeen (17) in the Ayala Operations
Center (AOC), and eighteen (18) in the Magnolia-Manila Buying
Station (Magnolia-MBS).[3] Consequently, the private respondent union filed
several grievance cases for the said retrenched employees, praying for
theredeployment of the said employees to the other divisions of the company.
The grievance proceedings were conducted pursuant to Sections 5 and 8,
Article VIII of the parties 1990 Collective Bargaining Agreement providing for
the following procedures, to wit:
Sec.5. Processing of Grievance. - Should a grievance arise, an earnest effort shall
be made to settle the grievance expeditiously in accordance with the following
procedures:
Step 1. - The individual employee concerned and the Union Directors, or the Union
Steward shall, first take up the employees grievance orally with his immediate
superior. If no satisfactory agreement or adjustment of the grievance is reached,
the grievance shall, within twenty (20) working days from the occurrence of the
cause or event which gave rise to the grievance, be filed in writing with the
Department Manager or the next level superior who shall render his decision
within ten (10) working days from the receipt of the written grievance. A copy of
the decision shall be furnished the Plant Personnel Officer.
Step 2. - If the decision in Step 1 is rejected, the employee concerned may elevate
or appeal this in writing to the Plant Manager/Director or his duly authorized
representative within twenty (20) working days from the receipt of the Decision of
the Department Manager. Otherwise, the decision in Step 1 shall be deemed
accepted by the employee.
The Plant Manager/Director assisted by the Plant Personnel Officer shall
determine the necessity of conducting grievance meetings. If necessary, the Plant
Manager/Director and the Plant Personnel Officer shall meet the employee
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concerned and the Union Director/Steward on such date(s) as may be designated
by the Plant Manager. In every plant/office, Grievance Meetings shall be scheduled
at least twice a month.
The Plant Manager shall give his written comments and decision within ten (10)
working days after his receipt of such grievance or the date of submission of the
grievance for resolution, as the case may be. A copy of his Decision shall be
furnished the Employee Relations Directorate.
Step 3. - If no satisfactory adjustment is arrived at Step 2, the employee may
appeal the Decision to the Conciliation Board as provided under Section 6 hereof,
within fifteen (15) working days from the date of receipt of the decision of the
Plant Manager/Director or his designate. Otherwise, the decision in Step 2 shall be
deemed accepted by the employee.
The Conciliation Board shall meet on the grievance in such dates as shall be
designated by the Division/Business Unit Manager or his representative. In every
Division/Business Unit, Grievance Meetings of the Conciliation Board shall be
scheduled at least once a month.
The Conciliation Board shall have fifteen (15) working days from the date of
submission of the grievance for resolution within which to decide on the grievance.
SEC. 6. Conciliation Board. - There shall be a conciliation Board per Business
Unit or Division. Every Conciliation Board shall be composed of not more than five
(5) representatives each from the Company and the Union. Management and the
Union may be assisted by their respective legal counsels.
In every Division/Business Unit, the names of the Company and Union
representatives to the Conciliation Board shall be submitted to the
Division/Business Unit Manager not later than January of every year. The
Conciliation Board members shall act as such for one (1) year until removed by
the Company or the Union, as the case may be.
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Sec. 8. Submission to Arbitration. - If the employee or Union is not satisfied with
the Decision of the Conciliation Board and desires to submit the grievance to
arbitration, the employee or the Union shall serve notice of such intention to the
Company within fifteen (15) working days after receipt of the Boards decision. If
no such written notice is received by the Company within fifteen (15) working
days, the grievance shall be considered settled on the basis of the companys
position and shall no longer be available for arbitration.[4]
During the grievance proceedings, however, most of the employees were
redeployed, while others accepted early retirement. As a result only 17
employees remained when the parties proceeded to the third level (Step 3) of
the grievance procedure. In a meeting on October 26, 1990, petitioner informed
private respondent union that if by October 30, 1990, the remaining 17
employees could not yet be redeployed, their services would be terminated on
November 2, 1990. The said meeting adjourned when Mr. Daniel S. L. Borbon II,
a representative of the union, declared that there was nothing more to discuss
in view of thedeadlock.[5]
On November 7, 1990, the private respondent filed with the National
Conciliation and Mediation Board (NCMB) of the Department of Labor and
Employment (DOLE) a notice of strike on the following grounds: a)bargaining
deadlock; b) union busting; c) gross violation of the Collective Bargaining
Agreement (CBA), such as non-compliance with the grievance
procedure; d) failure to provide private respondent with a list of vacant
positions pursuant to the parties side agreement that was appended to the 1990
CBA; and e) defiance of voluntary arbitration award. Petitioner on the other
hand, moved to dismiss the notice of strike but the NCMB failed to act on the
motion.
On December 21, 1990, petitioner SMC filed a complaint[6] with the
respondent NLRC, praying for: (1)the dismissal the notice of strike; (2) an order
compelling the respondent union to submit to grievance and arbitration the
issue listed in the notice of strike; (3) the recovery of the expenses of litigation.
On April 16, 1991, respondent NLRC came out with a minute resolution
dismissing the complaint; holding, thus:
NLRC NCR IC NO. 000094-90, entitled San Miguel Corporation, Complainant -
versus- San Miguel Corporation Employees Union-PTWO (SMCEU), Respondent. -
Considering the allegations in the complaint to restrain Respondent Union from
declaring a strike and to enforce mutual compliance with the provisions of the
collective bargaining agreement on grievance machinery, and the no-strike clause,
with prayer for issuance of temporary restraining order, and the evidence
adduced therein, the Answer filed by the respondent and the memorandum filed by
the complainant in support of its application for the issuance of an injunction, the
Second Division, after due deliberation, Resolved to dismiss the complaint for lack
of merit.[7]
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 Aggrieved by the said resolution, petitioner found its way to this court via
the present petition, contending that:
I to exhaust all the steps in the grievance machinery and arbitration proceedings
IT IS THE POSITIVE LEGAL DUTY OF RESPONDENT NLRC TO COMPEL
ARBITRATION AND TO ENJOIN A STRIKE IN VIOLATION OF A NO STRIKE
CLAUSE.
II
INJUNCTION IS THE ONLY IMMEDIATE, EFFECTIVE SUBSTITUTE FOR
THE DISASTROUS ECONOMIC WARFARE THAT ARBITRATION IS
DESIGNED TO AVOID.[8]
On June 3, 1991, to preserve the status quo, the Court issued a
Resolution[9] granting petitioners prayer for the issuance of a Temporary
Restraining Order.
The Petition is impressed with merit.
Rule XXII, Section I, of the Rules and Regulations Implementing Book V the
Labor Code[10], reads:
Section 1. Grounds for strike and lockout. -- A strike or lockout may be declared in
cases of bargaining deadlocks and unfair labor practices. Violations of the
collective bargaining agreements, except flagrant and/or malicious refusal to
comply with its economic provisions, shall not be considered unfair labor practice
and shall not be strikeable. No strike or lockout may be declared on grounds
involving inter-union and intra-union disputes or on issues brought to voluntary
or compulsory arbitration.
In the case under consideration, the grounds relied upon by the private
respondent union are non-strikeable. The issues which may lend substance to
the notice of strike filed by the private respondent union are: collective
bargaining deadlock and petitioners alleged violation of the collective
bargaining agreement. These grounds, however, appear more illusory than real.
Collective Bargaining Deadlock is defined as the situation between the
labor and the management of the company where there is failure in the
collective bargaining negotiations resulting in a stalemate[11] This situation, is
non-existent in the present case since there is a Board assigned on the third
level (Step 3) of the grievance machinery to resolve the conflicting views of the
parties. Instead of asking the Conciliation Board composed of five
representatives each from the company and the union, to decide the conflict,
petitioner declared a deadlock, and thereafter, filed a notice of strike. For failing
provided in the Collective Bargaining Agreement, the notice of strike should
have been dismissed by the NLRC and private respondent union ordered to
proceed with the grievance and arbitration proceedings. In the case of Liberal
Labor Union vs. Phil. Can Co.,[12] the court declared as illegal the strike staged by
the union for not complying with the grievance procedure provided in the
collective bargaining agreement, ruling that:
x x x the main purpose of the parties in adopting a procedure in the
settlement of their disputes is to prevent a strike. This procedure must be
followed in its entirety if it is to achieve its objective. x x x strikes held in
violation of the terms contained in the collective bargaining agreement are
illegal, specially when they provide for conclusive arbitration clauses. These
agreements must be strictly adhered to and respected if their ends have to be
achieved. x x x[13]
As regards the alleged violation of the CBA, we hold that such a violation is
chargeable against the private respondent union. In abandoning the grievance
proceedings and stubbornly refusing to avail of the remedies under the CBA,
private respondent violated the mandatory provisions of the collective
bargaining agreement.
Abolition of departments or positions in the company is one of the recognized
management prerogatives.[14]Noteworthy is the fact that the private respondent
does not question the validity of the business move of petitioner. In the absence
of proof that the act of petitioner was ill-motivated, it is presumed that
petitioner San Miguel Corporation acted in good faith. In fact, petitioner acceded
to the demands of the private respondent union by redeploying most of the
employees involved; such that from an original 17 excess employees in BLD, 15
were successfully redeployed. In AOC, out of the 17 original excess, 15 were
redeployed. In the Magnolia - Manila Buying Station, out of 18 employees, 6
were redeployed and only 12 were terminated.[15]
So also, in filing complaint with the NLRC, petitioner prayed that the
private respondent union be compelled to proceed with the grievance and
arbitration proceedings. Petitioner having evinced its willingness to negotiate
the fate of the remaining employees affected, there is no ground to sustain the
notice of strike of the private respondent union.
All things studiedly considered, we are of the ineluctable conclusion, and
so hold, that the NLRC gravely abused its discretion in dismissing the complaint
87
of petitioner SMC for the dismissal of the notice of strike, issuance of a
temporary restraining order, and an order compelling the respondent union to
settle the dispute under the grievance machinery of their CBA.
WHEREFORE, the instant petition is hereby GRANTED. Petitioner San
Miguel Corporation and private respondent San Miguel Corporation Employees
Union - PTGWO are hereby directed to complete the third level (Step 3) of the
Grievance Procedure and proceed with the Arbitration proceedings if
necessary. No pronouncement as to costs.
SO ORDERED.

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