[G.R. No. 117040. January 27, 2000.

RUBEN SERRANO, Petitioner, v. NATIONAL LABOR RELATIONS COMMISSION and

ISETANN DEPARTMENT STORE, Respondents.

DECISION

MENDOZA, J.:

This is a petition seeking review of the resolutions, dated March 30, 1994 and August 26,
1994, of the National Labor Relations Commission (NLRC) which reversed the decision of the
Labor Arbiter and dismissed petitioner Ruben Serrano’s complaint for illegal dismissal and
denied his motion for reconsideration. The facts are as follows:

Petitioner was hired by private respondent Isetann Department Store as a security checker
to apprehend shoplifters and prevent pilferage of merchandise. 1 Initially hired on October
4, 1984 on contractual basis, petitioner eventually became a regular employee on April 4,
1985. In 1988, he became head of the Security Checkers Section of private Respondent. 2

Sometime in 1991, as a cost-cutting measure, private respondent decided to phase out its
entire security section and engage the services of an independent security agency. The loss
of his employment prompted petitioner to file a complaint on December 3, 1991 for illegal
dismissal, illegal layoff, unfair labor practice, underpayment of wages, and nonpayment of
salary and overtime pay.

Thereafter, the case was heard. On April 30, 1993, the Labor Arbiter rendered a decision
finding petitioner to have been illegally dismissed. He ruled that private respondent failed to
establish that it had retrenched its security section to prevent or minimize losses to its
business; that private respondent failed to accord due process to petitioner; that private
respondent failed to use reasonable standards in selecting employees whose employment
would be terminated; that private respondent had not shown that petitioner and other
employees in the security section were so inefficient so as to justify their replacement by a
security agency, or that "cost-saving devices [such as] secret video cameras (to monitor
and prevent shoplifting) and secret code tags on the merchandise” could not have been
employed; instead, the day after petitioner’s dismissal, private respondent employed a
safety and security supervisor with duties and functions similar to those of
petitioner.chanrobles.com :

Accordingly, the Labor Arbiter ordered: 6

WHEREFORE, above premises considered, judgment is hereby decreed:chanrob1es virtual

1aw library

(a) Finding the dismissal of the complainant to be illegal and concomitantly, Respondent is
ordered to pay complainant full backwages without qualification or deduction in the amount
of P74,740.00 from the time of his dismissal until reinstatement (computed till promulgation
only) based on his monthly salary of P4,040.00/month at the time of his termination but
limited to (3) three years;

(b) Ordering the Respondent to immediately reinstate the complainant to his former position

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as security section head or to a reasonably equivalent supervisorial position in charges of
security without loss of seniority rights, privileges and benefits. This order is immediately
executory even pending appeal;

(c) Ordering the Respondent to pay complainant unpaid wages in the amount of P2,020.73
and proportionate 13th month pay in the amount of P3,198.30;

(d) Ordering the Respondent to pay complainant the amount of P7,995.91, representing
10% attorney’s fees based on the total judgment award of P79,959.12.

All other claims of the complainant whether monetary or otherwise is hereby dismissed for
lack of merit.

SO ORDERED.chanroblesvirtual|awlibrary

Private respondent appealed to the NLRC which, in its resolution of March 30, 1994,
reversed the decision of the Labor Arbiter and ordered petitioner to be given separation pay
equivalent to one month pay for every year of service, unpaid salary, and proportionate
13th month pay. Petitioner filed a motion for reconsideration, but his motion was denied.

The NLRC held that the phase-out of private respondent’s security section and the hiring of
an independent security agency constituted an exercise by private respondent of" [a]
legitimate business decision whose wisdom we do not intend to inquire into and for which
we cannot substitute our judgment" ; that the distinction made by the Labor Arbiter
between "retrenchment" and the employment of "cost-saving devices” under Art. 283 of the
Labor Code was insignificant because the company official who wrote the dismissal letter
apparently used the term "retrenchment” in its "plain and ordinary sense: to layoff or
remove from one’s job, regardless of the reason therefor”; that the rule of "reasonable
criteria” in the selection of the employees to be retrenched did not apply because all
positions in the security section had been abolished; and that the appointment of a safety
and security supervisor referred to by petitioner to prove bad faith on private respondent’s
part was of no moment because the position had long been in existence and was separate
from petitioner’s position as head of the Security Checkers Section.

Hence this petition. Petitioner raises the following issue:

IS THE HIRING OF AN INDEPENDENT SECURITY AGENCY BY THE PRIVATE RESPONDENT TO

REPLACE ITS CURRENT SECURITY SECTION A VALID GROUND FOR THE DISMISSAL OF THE
EMPLOYEES CLASSED UNDER THE LATTER? 7

Petitioner contends that abolition of private respondent’s Security Checkers Section and the
employment of an independent security agency do not fall under any of the authorized
causes for dismissal under Art. 283 of the Labor Code.

Petitioner Laid Off for Cause

Petitioner’s contention has no merit. Art. 283 provides:chanrob1es virtual 1aw library

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 operations of the
establishment or undertaking unless the closing is for the purpose of circumventing the

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provisions of this Title, by serving a written notice on the workers and the Department of
Labor and Employment at least one (1) month before the intended date thereof. In case of
termination due to the installation of labor-saving devices or redundancy, the worker
affected thereby shall be entitled to a separation pay equivalent to at least 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 closure or cessation of operations of
establishment or undertaking not due to serious business losses or financial reverses, the
separation pay shall be equivalent to at least 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 as one (1) whole year.chanroblesvirtual|awlibrary

In De Ocampo v. National Labor Relations Commission, 8 this Court upheld the termination
of employment of three mechanics in a transportation company and their replacement by a
company rendering maintenance and repair services. It held:chanrob1es virtual 1aw library

In contracting the services of Gemac Machineries, as part of the company’s cost-saving

program, the services rendered by the mechanics became redundant and superfluous, and
therefore properly terminable. The company merely exercised its business judgment or
management prerogative. And in the absence of any proof that the management abused its
discretion or acted in a malicious or arbitrary manner, the court will not interfere with the
exercise of such prerogative. 9

In Asian Alcohol Corporation v. National Labor Relations Commission, 10 the Court likewise
upheld the termination of employment of water pump tenders and their replacement by
independent contractors. It ruled that an employer’s good faith in implementing a
redundancy program is not necessarily put in doubt by the availment of the services of an
independent contractor to replace the services of the terminated employees to promote
economy and efficiency.

Indeed, as we pointed out in another case, the" [management of a company] cannot be

denied the faculty of promoting efficiency and attaining economy by a study of what units
are essential for its operation. To it belongs the ultimate determination of whether services
should be performed by its personnel or contracted to outside agencies . . . [While there]
should be mutual consultation, eventually deference is to be paid to what management
decides." 11 Consequently, absent proof that management acted in a malicious or arbitrary
manner, the Court will not interfere with the exercise of judgment by an employer. 12

In the case at bar, we have only the bare assertion of petitioner that, in abolishing the
security section, private respondent’s real purpose was to avoid payment to the security
checkers of the wage increases provided in the collective bargaining agreement approved in
1990. 13 Such an assertion is not a sufficient basis for concluding that the termination of
petitioner’s employment was not a bona fide decision of management to obtain reasonable
return from its investment, which is a right guaranteed to employers under the Constitution.
14 Indeed, that the phase-out of the security section constituted a "legitimate business
decision” is a factual finding of an administrative agency which must be accorded respect
and even finality by this Court since nothing can be found in the record which fairly detracts
from such finding. 15

Accordingly, we hold that the termination of petitioner’s services was for an authorized
cause, i.e., redundancy. Hence, pursuant to Art. 283 of the Labor Code, petitioner should be
given separation pay at the rate of one month pay for every year of service.

Sanctions for Violations of the Notice Requirement

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Art. 283 also provides that to terminate the employment of an employee for any of the
authorized causes the employer must serve "a written notice on the workers and the
Department of Labor and Employment at least one (1) month before the intended date
thereof.” In the case at bar, petitioner was given a notice of termination on October 11,
1991. On the same day, his services were terminated. He was thus denied his right to be
given written notice before the termination of his employment, and the question is the
appropriate sanction for the violation of petitioner’s right.

To be sure, this is not the first time this question has arisen. In Sebuguero v. NLRC, 16
workers in a garment factory were temporarily laid off due to the cancellation of orders and
a garment embargo. The Labor Arbiter found that the workers had been illegally dismissed
and ordered the company to pay separation pay and backwages. The NLRC, on the other
hand, found that this was a case of retrenchment due to business losses and ordered the
payment of separation pay without backwages. This Court sustained the NLRC’s finding.
However, as the company did not comply with the 30-day written notice in Art. 283 of the
Labor Code, the Court ordered the employer to pay the workers P2,000.00 each as
indemnity.

The decision followed the ruling in several cases involving dismissals which, although based
on any of the just causes under Art. 282, 17 were effected without notice and hearing to the
employee as required by the implementing rules. 18 As this Court said: "It is now settled
that where the dismissal of one employee is in fact for a just and valid cause and is so
proven to be but he is not accorded his right to due process, i.e., he was not furnished the
twin requirements of notice and opportunity to be heard, the dismissal shall be upheld but
the employer must be sanctioned for non-compliance with the requirements of, or for failure
to observe, due process."

Validity of Petitioner’s Layoff Not Affected by Lack of Notice

We agree with our esteemed colleagues, Justices Puno and Panganiban, that we should
rethink the sanction of fine for an employer’s disregard of the notice requirement. We do
not agree, however, that disregard of this requirement by an employer renders the
dismissal or termination of employment null and void. Such a stance is actually a reversion
to the discredited pre-Wenphil rule of ordering an employee to be reinstated and paid
backwages when it is shown that he has not been given notice and hearing although his
dismissal or layoff is later found to be for a just or authorized cause. Such rule was
abandoned in Wenphil because it is really unjust to require an employer to keep in his
service one who is guilty, for example, of an attempt on the life of the employer or the
latter’s family, or when the employer is precisely retrenching in order to prevent losses.

The need is for a rule which, while recognizing the employee’s right to notice before he is
dismissed or laid off, at the same time acknowledges the right of the employer to dismiss
for any of the just causes enumerated in Art. 282 or to terminate employment for any of the
authorized causes mentioned in Arts. 283-284. If the Wenphil rule imposing a fine on an
employer who is found to have dismissed an employee for cause without prior notice is
deemed ineffective in deterring employer violations of the notice requirement, the remedy is
not to declare the dismissal void if there are just or valid grounds for such dismissal or if the
termination is for an authorized cause. That would be to uphold the right of the employee
but deny the right of the employer to dismiss for cause. Rather, the remedy is to order the
payment to the employee of full backwages from the time of his dismissal until the court
finds that the dismissal was for a just cause. But, otherwise, his dismissal must be upheld
and he should not be reinstated. This is because his dismissal is ineffectual.

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For the same reason, if an employee is laid off for any of the causes in Arts. 283-284, i.e.,
installation of a labor-saving device, but the employer did not give him and the DOLE a 30-
day written notice of termination in advance, then the termination of his employment should
be considered ineffectual and he should be paid backwages. However, the termination of his
employment should not be considered void but he should simply be paid separation pay as
provided in Art. 283 in addition to backwages.

Violation of Notice Requirement, Not a Denial of Due Process

The cases cited by both Justices Puno and Panganiban refer, however, to the denial of due
process by the State, which is not the case here. There are three reasons why, on the other
hand, violation by the employer of the notice requirement cannot be considered a denial of
due process resulting in the nullity of the employee’s dismissal or layoff.

The first is that the Due Process Clause of the Constitution is a limitation on governmental
powers. It does not apply to the exercise of private power, such as the termination of
employment under the Labor Code. This is plain from the text of Art. III, §1 of the
Constitution, viz.: "No person shall be deprived of life, liberty, or property without due
process of law. . . .” The reason is simple: Only the State has authority to take the life,
liberty, or property of the individual. The purpose of the Due Process Clause is to ensure
that the exercise of this power is consistent with what are considered civilized methods.

The second reason is that notice and hearing are required under the Due Process Clause
before the power of organized society are brought to bear upon the individual. This is
obviously not the case of termination of employment under Art. 283. Here the employee is
not faced with an aspect of the adversary system. The purpose for requiring a 30-day
written notice before an employee is laid off is not to afford him an opportunity to be heard
on any charge against him, for there is none.The purpose rather is to give him time to
prepare for the eventual loss of his job and the DOLE an opportunity to determine whether
economic causes do exist justifying the termination of his employment.

The Termination Pay Law was held not to be a substantive law but a regulatory measure,
the purpose of which was to give the employer the opportunity to find a replacement or
substitute, and the employee the equal opportunity to look for another job or source of
employment.

(In Batangas Laguna Tayabas Bus Co. v. Court of Appeals, 31 which Justice Puno cites, it
was held that "Since the right of [an employee] to his labor is in itself a property and that
the labor agreement between him and [his employer] is the law between the parties, his
summary and arbitrary dismissal amounted to deprivation of his property without due
process of law.” )

Lack of Notice Only Makes Termination Ineffectual

Not all notice requirements are requirements of due process. Some are simply part of a
procedure to be followed before a right granted to a party can be exercised. Others are
simply an application of the Justinian precept, embodied in the Civil Code, 33 to act with
justice, give everyone his due, and observe honesty and good faith toward one’s fellowmen.
Such is the notice requirement in Arts. 282-283. The consequence of the failure
either of the employer or the employee to live up to this precept is to make him
liable in damages, not to render his act (dismissal or resignation, as the case may
be) void. The measure of damages is the amount of wages the employee should have
received were it not for the termination of his employment without prior notice. If

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warranted, nominal and moral damages may also be awarded. ELC

We hold, therefore, that, with respect to Art. 283 of the Labor Code, the
employer’s failure to comply with the notice requirement does not constitute a
denial of due process but a mere failure to observe a procedure for the termination
of employment which makes the termination of employment merely ineffectual. It
is similar to the failure to observe the provisions of Art. 1592, in relation to Art. 1191, of the
Civil Code 34 in rescinding a contract for the sale of immovable property. Under these
provisions, while the power of a party to rescind a contract is implied in reciprocal
obligations, nonetheless, in cases involving the sale of immovable property, the vendor
cannot exercise this power even though the vendee defaults in the payment of the price,
except by bringing an action in court or giving notice of rescission by means of a notarial
demand. 35 Consequently, a notice of rescission given in the letter of an attorney has no
legal effect, and the vendee can make payment even after the due date since no valid
notice of rescission has been given. 36

Indeed, under the Labor Code, only the absence of a just cause for the termination of
employment can make the dismissal of an employee illegal. This is clear from Art. 279
which provides:chanrob1es virtual 1aw library
Security of Tenure. — In cases of regular employment, the employer shall not terminate the
services of an employee except for a just cause or when authorized by this Title. An
employee who is unjustly dismissed from work shall be entitled to reinstatement without
loss of seniority rights and other privileges and to his full backwages, inclusive of
allowances, and to his other benefits or their monetary equivalent computed from the time
his compensation was withheld from him up to the time of his actual reinstatement. 37

Thus, only if the termination of employment is not for any of the causes provided by law is
it illegal and, therefore, the employee should be reinstated and paid backwages. Under Art.
285, if it is the employee who fails to give a written notice to the employer that he is leaving
the service of the latter, at least one month in advance, his failure to comply with the legal
requirement does not result in making his resignation void but only in making him liable for
damages.

Given the nature of the violation, therefore, the appropriate sanction for the
failure to give notice is the payment of backwages for the period when the
employee is considered not to have been effectively dismissed or his employment
terminated. The sanction is not the payment alone of nominal damages as Justice
Vitug contends.

Unjust Results of Considering Dismissals/Layoffs Without Prior Notice As Illegal

The refusal to look beyond the validity of the initial action taken by the employer to
terminate employment either for an authorized or just cause can result in an injustice to the
employer. For not giving notice and hearing before dismissing an employee, who is
otherwise guilty of, say, theft, or even of an attempt against the life of the employer, an
employer will be forced to keep in his employ such guilty employee. This is unjust.

It is true the Constitution regards labor as "a primary social economic force." 40 But so does
it declare that it "recognizes the indispensable role of the private sector, encourages private
enterprise, and provides incentives to needed investment." 41 The Constitution bids the
State to "afford full protection to labor." 42 But it is equally true that "the law, in protecting
the rights of the laborer, authorizes neither oppression nor self-destruction of the
employer." 43 And it is oppression to compel the employer to continue in employment one

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who is guilty or to force the employer to remain in operation when it is not economically in
his interest to do so.

In sum, we hold that if in proceedings for reinstatement under Art. 283, it is shown that the
termination of employment was due to an authorized cause, then the employee concerned
should not be ordered reinstated even though there is failure to comply with the 30-day
notice requirement. Instead, he must be granted separation pay in accordance with Art.
283, to wit:chanrob1es virtual 1aw library

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 month for every year of service, whichever is higher. In
case of retrenchment to prevent losses and in cases of closures or cessation of operations of
establishment or undertaking not due to serious business losses or financial reverses, the
separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month
pay for every year of service, whichever is higher. A fraction of at least six months shall be
considered one (1) whole year.

If the employee’s separation is without cause, instead of being given separation pay, he
should be reinstated. In either case, whether he is reinstated or only granted separation
pay, he should be paid full backwages if he has been laid off without written notice at least
30 days in advance.

On the other hand, with respect to dismissals for cause under Art. 282, if it is shown that
the employee was dismissed for any of the just causes mentioned in said Art 282, then, in
accordance with that article, he should not be reinstated. However, he must be paid
backwages from the time his employment was terminated until it is determined that the
termination of employment is for a just cause because the failure to hear him before he is
dismissed renders the termination of his employment without legal effect.

WHEREFORE, the petition is GRANTED and the resolution of the National Labor Relations
Commission is MODIFIED by ordering private respondent Isetann Department Store, Inc. to
pay petitioner separation pay equivalent to one (1) month pay for every year of service, his
unpaid salary, and his proportionate 13th month pay and, in addition, full backwages from
the time his employment was terminated on October 11, 1991 up to the time the decision
herein becomes final. For this purpose, this case is REMANDED to the Labor Arbiter for
computation of the separation pay, backwages, and other monetary awards to petitioner.
SO ORDERED.

[G.R. NO. 158693 : November 17, 2004]

JENNY M. AGABON and VIRGILIO C. AGABON,Petitioners, v. NATIONAL LABOR

RELATIONS COMMISSION (NLRC), RIVIERA HOME IMPROVEMENTS, INC. and
VICENTE ANGELES, Respondents.

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 DECISION

YNARES-SANTIAGO, J.:

This Petition for Review seeks to reverse the decision 1 of the Court of Appeals dated January
23, 2003, in CA-G.R. SP No. 63017, modifying the decision of National Labor Relations
Commission (NLRC) in NLRC-NCR Case No. 023442-00.

Private respondent Riviera Home Improvements, Inc. is engaged in the business of selling
and installing ornamental and construction materials. It employed petitioners Virgilio
Agabon and Jenny Agabon as gypsum board and cornice installers on January 2, 1992 2 until
February 23, 1999 when they were dismissed for abandonment of work.

Petitioners then filed a complaint for illegal dismissal and payment of money claims 3 and on
December 28, 1999, the Labor Arbiter rendered a decision declaring the dismissals illegal
and ordered private respondent to pay the monetary claims. The dispositive portion of the
decision states:

WHEREFORE, premises considered, We find the termination of the

complainants illegal. Accordingly, respondent is hereby ordered to pay them
their backwages up to November 29, 1999 in the sum of:

1. Jenny M. Agabon - P56, 231.93

2. Virgilio C. Agabon - 56, 231.93

and, in lieu of reinstatement to pay them their separation pay of one (1)
month for every year of service from date of hiring up to November 29, 1999.

Respondent is further ordered to pay the complainants their holiday pay and
service incentive leave pay for the years 1996, 1997 and 1998 as well as their
premium pay for holidays and rest days and Virgilio Agabon's 13th month pay
differential amounting to TWO THOUSAND ONE HUNDRED FIFTY (P2,150.00)
Pesos, or the aggregate amount of ONE HUNDRED TWENTY ONE THOUSAND
SIX HUNDRED SEVENTY EIGHT & 93/100 (P121,678.93) Pesos for Jenny
Agabon, and ONE HUNDRED TWENTY THREE THOUSAND EIGHT HUNDRED
TWENTY EIGHT & 93/100 (P123,828.93) Pesos for Virgilio Agabon, as per
attached computation of Julieta C. Nicolas, OIC, Research and Computation
Unit, NCR.

SO ORDERED.4

On appeal, the NLRC reversed the Labor Arbiter because it found that the petitioners had
abandoned their work, and were not entitled to backwages and separation pay. The other
money claims awarded by the Labor Arbiter were also denied for lack of evidence. 5

Upon denial of their motion for reconsideration, petitioners filed a petition for certiorari with
the Court of Appeals.

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The Court of Appeals in turn ruled that the dismissal of the petitioners was not illegal
because they had abandoned their employment but ordered the payment of money claims.
The dispositive portion of the decision reads:

WHEREFORE, the decision of the National Labor Relations Commission is

REVERSED only insofar as it dismissed petitioner's money claims. Private
respondents are ordered to pay petitioners holiday pay for four (4) regular
holidays in 1996, 1997, and 1998, as well as their service incentive leave pay
for said years, and to pay the balance of petitioner Virgilio Agabon's 13th
month pay for 1998 in the amount of P2,150.00.

SO ORDERED.6

Hence, this Petition for Review on the sole issue of whether petitioners were illegally
dismissed.7

Petitioners assert that they were dismissed because the private respondent refused to give
them assignments unless they agreed to work on a "pakyaw" basis when they reported for
duty on February 23, 1999. They did not agree on this arrangement because it would mean
losing benefits as Social Security System (SSS) members. Petitioners also claim that private
respondent did not comply with the twin requirements of notice and hearing. 8

Private respondent, on the other hand, maintained that petitioners were not dismissed but
had abandoned their work.9 In fact, private respondent sent two letters to the last known
addresses of the petitioners advising them to report for work. Private respondent's manager
even talked to petitioner Virgilio Agabon by telephone sometime in June 1999 to tell him
about the new assignment at Pacific Plaza Towers involving 40,000 square meters of cornice
installation work. However, petitioners did not report for work because they had
subcontracted to perform installation work for another company. Petitioners also demanded
for an increase in their wage to P280.00 per day. When this was not granted, petitioners
stopped reporting for work and filed the illegal dismissal case.10

It is well-settled that findings of fact of quasi-judicial agencies like the NLRC are accorded
not only respect but even finality if the findings are supported by substantial evidence. This
is especially so when such findings were affirmed by the Court of Appeals.11 However, if the
factual findings of the NLRC and the Labor Arbiter are conflicting, as in this case, the
reviewing court may delve into the records and examine for itself the questioned findings. 12

Accordingly, the Court of Appeals, after a careful review of the facts, ruled that petitioners'
dismissal was for a just cause. They had abandoned their employment and were already
working for another employer.

To dismiss an employee, the law requires not only the existence of a just and valid cause
but also enjoins the employer to give the employee the opportunity to be heard and to
defend himself.13 Article 282 of the Labor Code enumerates the just causes for termination
by the employer: (a) serious misconduct or willful disobedience by the employee of the
lawful orders of his employer or the latter's representative in connection with the
employee's 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 his duly
authorized representative; (d) commission of a crime or offense by the employee against
the person of his employer or any immediate member of his family or his duly authorized
representative; and (e) other causes analogous to the foregoing.

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Abandonment is the deliberate and unjustified refusal of an employee to resume his
employment.14 It is a form of neglect of duty, hence, a just cause for termination of
employment by the employer.15 For a valid finding of abandonment, these two factors
should be present: (1) the failure to report for work or absence without valid or justifiable
reason; and (2) a clear intention to sever employer-employee relationship, with the second
as the more determinative factor which is manifested by overt acts from which it may be
deduced that the employees has no more intention to work. The intent to discontinue the
employment must be shown by clear proof that it was deliberate and unjustified. 16

In February 1999, petitioners were frequently absent having subcontracted for an

installation work for another company. Subcontracting for another company clearly showed
the intention to sever the employer-employee relationship with private respondent. This was
not the first time they did this. In January 1996, they did not report for work because they
were working for another company. Private respondent at that time warned petitioners that
they would be dismissed if this happened again. Petitioners disregarded the warning and
exhibited a clear intention to sever their employer-employee relationship. The record of an
employee is a relevant consideration in determining the penalty that should be meted out to
him.17

In Sandoval Shipyard v. Clave,18 we held that an employee who deliberately absented from
work without leave or permission from his employer, for the purpose of looking for a job
elsewhere, is considered to have abandoned his job. We should apply that rule with more
reason here where petitioners were absent because they were already working in another
company.

The law imposes many obligations on the employer such as providing just compensation to
workers, observance of the procedural requirements of notice and hearing in the
termination of employment. On the other hand, the law also recognizes the right of the
employer to expect from its workers not only good performance, adequate work and
diligence, but also good conduct19 and loyalty. The employer may not be compelled to
continue to employ such persons whose continuance in the service will patently be inimical
to his interests.20

After establishing that the terminations were for a just and valid cause, we now determine if
the procedures for dismissal were observed.

The procedure for terminating an employee is found in Book VI, Rule I, Section 2(d) of
the Omnibus Rules Implementing the Labor Code:

Standards 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;

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 (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; andcralawlibrary

(c) 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.

In case of termination, the foregoing notices shall be served on the

employee's last known address.

Dismissals based on just causes contemplate acts or omissions attributable to the employee
while dismissals based on authorized causes involve grounds under the Labor Code which
allow the employer to terminate employees. A termination for an authorized cause requires
payment of separation pay. When the termination of employment is declared illegal,
reinstatement and full backwages are mandated under Article 279. If reinstatement is no
longer possible where the dismissal was unjust, separation pay may be granted.

Procedurally, (1) if the dismissal is based on a just cause under Article 282, the employer
must give the employee two written notices and a hearing or opportunity to be heard if
requested by the employee before terminating the employment: a notice specifying the
grounds for which dismissal is sought a hearing or an opportunity to be heard and after
hearing or opportunity to be heard, a notice of the decision to dismiss; and (2) if the
dismissal is based on authorized causes under Articles 283 and 284, the employer must give
the employee and the Department of Labor and Employment written notices 30 days prior
to the effectivity of his separation.

From the foregoing rules four possible situations may be derived: (1) the dismissal is for a
just cause under Article 282 of the Labor Code, for an authorized cause under Article 283,
or for health reasons under Article 284, and due process was observed; (2) the dismissal is
without just or authorized cause but due process was observed; (3) the dismissal is without
just or authorized cause and there was no due process; and (4) the dismissal is for just or
authorized cause but due process was not observed.

In the first situation, the dismissal is undoubtedly valid and the employer will not suffer any
liability.

In the second and third situations where the dismissals are illegal, Article 279 mandates
that the employee is entitled to reinstatement without loss of seniority rights and other
privileges and full backwages, inclusive of allowances, and other benefits or their monetary
equivalent computed from the time the compensation was not paid up to the time of actual
reinstatement.

In the fourth situation, the dismissal should be upheld. While the procedural infirmity cannot
be cured, it should not invalidate the dismissal. However, the employer should be held liable
for non-compliance with the procedural requirements of due process.

The present case squarely falls under the fourth situation. The dismissal should be upheld
because it was established that the petitioners abandoned their jobs to work for another
company. Private respondent, however, did not follow the notice requirements and instead

Page 11 of 74
argued that sending notices to the last known addresses would have been useless because
they did not reside there anymore. Unfortunately for the private respondent, this is not a
valid excuse because the law mandates the twin notice requirements to the employee's last
known address.21 Thus, it should be held liable for non-compliance with the procedural
requirements of due process.

A review and re-examination of the relevant legal principles is appropriate and timely to
clarify the various rulings on employment termination in the light of Serrano v. National
Labor Relations Commission.22

Prior to 1989, the rule was that a dismissal or termination is illegal if the employee was not
given any notice. In the 1989 case of Wenphil Corp. v. National Labor Relations
Commission,23 we reversed this long-standing rule and held that the dismissed employee,
although not given any notice and hearing, was not entitled to reinstatement and
backwages because the dismissal was for grave misconduct and insubordination, a just
ground for termination under Article 282. The employee had a violent temper and caused
trouble during office hours, defying superiors who tried to pacify him. We concluded that
reinstating the employee and awarding backwages "may encourage him to do even worse
and will render a mockery of the rules of discipline that employees are required to
observe."24 We further held that:

Under the circumstances, the dismissal of the private respondent for just
cause should be maintained. He has no right to return to his former
employment.

However, the petitioner must nevertheless be held to account for failure to

extend to private respondent his right to an investigation before causing his
dismissal. The rule is explicit as above discussed. The dismissal of an
employee must be for just or authorized cause and after due process.
Petitioner committed an infraction of the second requirement. Thus, it must
be imposed a sanction for its failure to give a formal notice and conduct an
investigation as required by law before dismissing petitioner from
employment. Considering the circumstances of this case petitioner must
indemnify the private respondent the amount of P1,000.00. The measure of
this award depends on the facts of each case and the gravity of the omission
committed by the employer.25

The rule thus evolved: where the employer had a valid reason to dismiss an employee but
did not follow the due process requirement, the dismissal may be upheld but the employer
will be penalized to pay an indemnity to the employee. This became known as
the Wenphil or Belated Due Process Rule.

On January 27, 2000, in Serrano, the rule on the extent of the sanction was changed. We
held that the violation by the employer of the notice requirement in termination for just or
authorized causes was not a denial of due process that will nullify the termination. However,
the dismissal is ineffectual and the employer must pay full backwages from the time of
termination until it is judicially declared that the dismissal was for a just or authorized
cause.

The rationale for the re-examination of the Wenphildoctrine in Serrano was the significant
number of cases involving dismissals without requisite notices. We concluded that the
imposition of penalty by way of damages for violation of the notice requirement was not

Page 12 of 74
serving as a deterrent. Hence, we now required payment of full backwages from the time of
dismissal until the time the Court finds the dismissal was for a just or authorized cause.

Serrano was confronting the practice of employers to "dismiss now and pay later" by
imposing full backwages.

We believe, however, that the ruling in Serrano did not consider the full meaning of Article
279 of the Labor Code which states:

ART. 279. Security of Tenure. - In cases of regular employment, the employer

shall not terminate the services of an employee except for a just cause or
when authorized by this Title. An employee who is unjustly dismissed from
work shall be entitled to reinstatement without loss of seniority rights and
other privileges and to his full backwages, inclusive of allowances, and to his
other benefits or their monetary equivalent computed from the time his
compensation was withheld from him up to the time of his actual
reinstatement.

This means that the termination is illegal only if it is not for any of the justified or
authorized causes provided by law. Payment of backwages and other benefits, including
reinstatement, is justified only if the employee was unjustly dismissed.

The fact that the Serrano ruling can cause unfairness and injustice which elicited strong
dissent has prompted us to revisit the doctrine.

To be sure, the Due Process Clause in Article III, Section 1 of the Constitution embodies a
system of rights based on moral principles so deeply imbedded in the traditions and feelings
of our people as to be deemed fundamental to a civilized society as conceived by our entire
history. Due process is that which comports with the deepest notions of what is fair and
right and just.26 It is a constitutional restraint on the legislative as well as on the executive
and judicial powers of the government provided by the Bill of Rights.

Due process under the Labor Code, like Constitutional due process, has two aspects:
substantive, i.e., the valid and authorized causes of employment termination under the
Labor Code; and procedural, i.e., the manner of dismissal. Procedural due process
requirements for dismissal are found in the Implementing Rules of P.D. 442, as amended,
otherwise known as the Labor Code of the Philippines in Book VI, Rule I, Sec. 2, as
amended by Department Order Nos. 9 and 10.27 Breaches of these due
process requirements violate the Labor Code. Therefore statutory due process should be
differentiated from failure to comply with constitutional due process.

Constitutional due process protects the individual from the government and assures him of
his rights in criminal, civil or administrative proceedings; while statutory due process found
in the Labor Code and Implementing Rules protects employees from being unjustly
terminated without just cause after notice and hearing.

In Sebuguero v. National Labor Relations Commission,28the dismissal was for a just and
valid cause but the employee was not accorded due process. The dismissal was upheld by
the Court but the employer was sanctioned. The sanction should be in the nature of
indemnification or penalty, and depends on the facts of each case and the gravity of the
omission committed by the employer.

Page 13 of 74
In Nath v. National Labor Relations Commission,29 it was ruled that even if the employee
was not given due process, the failure did not operate to eradicate the just causes for
dismissal. The dismissal being for just cause, albeit without due process, did not entitle the
employee to reinstatement, backwages, damages and attorney's fees.

Mr. Justice Jose C. Vitug, in his separate opinion in MGG Marine Services, Inc. v. National
Labor Relations Commission,30 which opinion he reiterated in Serrano, stated:

C. Where there is just cause for dismissal but due process has not been
properly observed by an employer, it would not be right to order either the
reinstatement of the dismissed employee or the payment of backwages to
him. In failing, however, to comply with the procedure prescribed by law in
terminating the services of the employee, the employer must be deemed to
have opted or, in any case, should be made liable, for the payment of
separation pay. It might be pointed out that the notice to be given and the
hearing to be conducted generally constitute the two-part due process
requirement of law to be accorded to the employee by the employer.
Nevertheless, peculiar circumstances might obtain in certain situations where
to undertake the above steps would be no more than a useless formality and
where, accordingly, it would not be imprudent to apply the res ipsa
loquitur rule and award, in lieu of separation pay, nominal damages to the
employee. x x x.31

After carefully analyzing the consequences of the divergent doctrines in the law on
employment termination, we believe that in cases involving dismissals for cause but without
observance of the twin requirements of notice and hearing, the better rule is to abandon the
Serrano doctrine and to follow Wenphil by holding that the dismissal was for just cause but
imposing sanctions on the employer. Such sanctions, however, must be stiffer than that
imposed in Wenphil. By doing so, this Court would be able to achieve a fair result by
dispensing justice not just to employees, but to employers as well.

The unfairness of declaring illegal or ineffectual dismissals for valid or authorized causes but
not complying with statutory due process may have far-reaching consequences.

This would encourage frivolous suits, where even the most notorious violators of company
policy are rewarded by invoking due process. This also creates absurd situations where
there is a just or authorized cause for dismissal but a procedural infirmity invalidates the
termination. Let us take for example a case where the employee is caught stealing or
threatens the lives of his co-employees or has become a criminal, who has fled and cannot
be found, or where serious business losses demand that operations be ceased in less than a
month. Invalidating the dismissal would not serve public interest. It could also discourage
investments that can generate employment in the local economy.

The constitutional policy to provide full protection to labor is not meant to be a sword to
oppress employers. The commitment of this Court to the cause of labor does not prevent us
from sustaining the employer when it is in the right, as in this case. 32 Certainly, an
employer should not be compelled to pay employees for work not actually performed and in
fact abandoned.

The employer should not be compelled to continue employing a person who is admittedly
guilty of misfeasance or malfeasance and whose continued employment is patently inimical

Page 14 of 74
to the employer. The law protecting the rights of the laborer authorizes neither oppression
nor self-destruction of the employer.33

It must be stressed that in the present case, the petitioners committed a grave offense, i.e.,
abandonment, which, if the requirements of due process were complied with, would
undoubtedly result in a valid dismissal.

An employee who is clearly guilty of conduct violative of Article 282 should not be protected
by the Social Justice Clause of the Constitution. Social justice, as the term suggests, should
be used only to correct an injustice. As the eminent Justice Jose P. Laurel observed, social
justice must be founded on the recognition of the necessity of interdependence among
diverse units of a society and of the protection that should be equally and evenly extended
to all groups as a combined force in our social and economic life, consistent with the
fundamental and paramount objective of the state of promoting the health, comfort, and
quiet of all persons, and of bringing about "the greatest good to the greatest number." 34

This is not to say that the Court was wrong when it ruled the way it did
in Wenphil, Serrano and related cases. Social justice is not based on rigid formulas set in
stone. It has to allow for changing times and circumstances.

Justice Isagani Cruz strongly asserts the need to apply a balanced approach to labor-
management relations and dispense justice with an even hand in every case:

We have repeatedly stressed that social justice - or any justice for that matter
- is for the deserving, whether he be a millionaire in his mansion or a pauper
in his hovel. It is true that, in case of reasonable doubt, we are to tilt the
balance in favor of the poor to whom the Constitution fittingly extends its
sympathy and compassion. But never is it justified to give preference to the
poor simply because they are poor, or reject the rich simply because they are
rich, for justice must always be served for the poor and the rich alike,
according to the mandate of the law.35

Justice in every case should only be for the deserving party. It should not be presumed that
every case of illegal dismissal would automatically be decided in favor of labor, as
management has rights that should be fully respected and enforced by this Court. As
interdependent and indispensable partners in nation-building, labor and management need
each other to foster productivity and economic growth; hence, the need to weigh and
balance the rights and welfare of both the employee and employer.

Where the dismissal is for a just cause, as in the instant case, the lack of statutory due
process should not nullify the dismissal, or render it illegal, or ineffectual. However, the
employer should indemnify the employee for the violation of his statutory rights, as ruled
in Reta v. National Labor Relations Commission.36 The indemnity to be imposed should be
stiffer to discourage the abhorrent practice of "dismiss now, pay later," which we sought to
deter in the Serrano ruling. The sanction should be in the nature of indemnification or
penalty and should depend on the facts of each case, taking into special consideration the
gravity of the due process violation of the employer.

Under the Civil Code, nominal damages is adjudicated in order that a right of the plaintiff,
which has been violated or invaded by the defendant, may be vindicated or recognized, and
not for the purpose of indemnifying the plaintiff for any loss suffered by him. 37

Page 15 of 74
As enunciated by this Court in Viernes v. National Labor Relations Commissions,38 an
employer is liable to pay indemnity in the form of nominal damages to an employee who
has been dismissed if, in effecting such dismissal, the employer fails to comply with the
requirements of due process. The Court, after considering the circumstances therein, fixed
the indemnity at P2,590.50, which was equivalent to the employee's one month salary. This
indemnity is intended not to penalize the employer but to vindicate or recognize the
employee's right to statutory due process which was violated by the employer. 39

The violation of the petitioners' right to statutory due process by the private respondent
warrants the payment of indemnity in the form of nominal damages. The amount of such
damages is addressed to the sound discretion of the court, taking into account the relevant
circumstances.40 Considering the prevailing circumstances in the case at bar, we deem it
proper to fix it at P30,000.00. We believe this form of damages would serve to deter
employers from future violations of the statutory due process rights of employees. At the
very least, it provides a vindication or recognition of this fundamental right granted to the
latter under the Labor Code and its Implementing Rules.

Private respondent claims that the Court of Appeals erred in holding that it failed to pay
petitioners' holiday pay, service incentive leave pay and 13th month pay.

We are not persuaded.

We affirm the ruling of the appellate court on petitioners' money claims. Private respondent
is liable for petitioners' holiday pay, service incentive leave pay and 13th month pay without
deductions.

As a general rule, one who pleads payment has the burden of proving it. Even where the
employee must allege non-payment, the general rule is that the burden rests on the
employer to prove payment, rather than on the employee to prove non-payment. The
reason for the rule is that the pertinent personnel files, payrolls, records, remittances and
other similar documents - which will show that overtime, differentials, service incentive
leave and other claims of workers have been paid - are not in the possession of the worker
but in the custody and absolute control of the employer.41

In the case at bar, if private respondent indeed paid petitioners' holiday pay and service
incentive leave pay, it could have easily presented documentary proofs of such monetary
benefits to disprove the claims of the petitioners. But it did not, except with respect to the
13th month pay wherein it presented cash vouchers showing payments of the benefit in the
years disputed.42Allegations by private respondent that it does not operate during holidays
and that it allows its employees 10 days leave with pay, other than being self-serving, do
not constitute proof of payment. Consequently, it failed to discharge the onus
probandi thereby making it liable for such claims to the petitioners.

Anent the deduction of SSS loan and the value of the shoes from petitioner Virgilio Agabon's
13th month pay, we find the same to be unauthorized. The evident intention of Presidential
Decree No. 851 is to grant an additional income in the form of the 13th month pay to
employees not already receiving the same43 so as "to further protect the level of real wages
from the ravages of world-wide inflation."44 Clearly, as additional income, the 13th month
pay is included in the definition of wage under Article 97(f) of the Labor Code, to wit:

(f) "Wage" paid to any employee shall mean the remuneration or earnings,
however designated, capable of being expressed in terms of money whether

Page 16 of 74
 fixed or ascertained on a time, task, piece, or commission basis, or other
method of calculating the same, which is payable by an employer to an
employee under a written or unwritten contract of employment for work done
or to be done, or for services rendered or to be rendered and includes the fair
and reasonable value, as determined by the Secretary of Labor, of board,
lodging, or other facilities customarily furnished by the employer to the
employee' "

from which an employer is prohibited under Article 11345of the same Code from making any
deductions without the employee's knowledge and consent. In the instant case, private
respondent failed to show that the deduction of the SSS loan and the value of the shoes
from petitioner Virgilio Agabon's 13th month pay was authorized by the latter. The lack of
authority to deduct is further bolstered by the fact that petitioner Virgilio Agabon included
the same as one of his money claims against private respondent.

The Court of Appeals properly reinstated the monetary claims awarded by the Labor Arbiter
ordering the private respondent to pay each of the petitioners holiday pay for four regular
holidays from 1996 to 1998, in the amount of P6,520.00, service incentive leave pay for the
same period in the amount of P3,255.00 and the balance of Virgilio Agabon's thirteenth
month pay for 1998 in the amount of P2,150.00.

WHEREFORE, in view of the foregoing, the petition is DENIED. The decision of the Court of
Appeals dated January 23, 2003, in CA-G.R. SP No. 63017, finding that petitioners' Jenny
and Virgilio Agabon abandoned their work, and ordering private respondent to pay each of
the petitioners holiday pay for four regular holidays from 1996 to 1998, in the amount of
P6,520.00, service incentive leave pay for the same period in the amount of P3,255.00 and
the balance of Virgilio Agabon's thirteenth month pay for 1998 in the amount of P2,150.00
is AFFIRMED with the MODIFICATION that private respondent Riviera Home
Improvements, Inc. is further ORDERED to pay each of the petitioners the amount of
P30,000.00 as nominal damages for non-compliance with statutory due process.

No costs.

SO ORDERED.

Davide, Jr., C.J., Puno, Panganiban, Quisumbing, Sandoval-Gutierrez, Carpio,

Austria-Martinez, Corona, Carpio-Morales, Callejo, Sr., Azcuna, TINGA, Chico-
Nazario, and Garcia, JJ., concur.

[G.R. NO. 159553 : December 10, 2007]

YOKOHAMA TIRE PHILIPPINES, INC. Petitioner, v. YOKOHAMA EMPLOYEES

UNIONRespondent.

DECISION

Page 17 of 74
 QUISUMBING, J.:

In this appeal, petitioner Yokohama Tire Philippines, Inc. (hereafter Yokohama, for brevity)
assails the Decision1 dated April 9, 2003 of the Court of Appeals in CA-G.R. SP No. 74273
and its Resolution2 dated August 15, 2003, denying the motion for reconsideration.

The antecedent facts are as follows:

On October 7, 1999, respondent Yokohama Employees Union (Union) filed a petition for
certification election among the rank-and-file employees of Yokohama. Upon appeal from
the Med-Arbiter's order dismissing the petition, the Secretary of the Department of Labor
and Employment (DOLE) ordered an election with (1) "Yokohama Employees' Union" and
(2) "No Union" as choices.3 The election held on November 23, 2001 yielded the following
result:

YOKOHAMA EMPLOYEES UNION - 131

NO UNION - 117
SPOILED -2
---------
250
VOTES CHALLENGED BY [YOKOHAMA] - 78
VOTES CHALLENGED BY [UNION] - 73
---------
-
TOTAL CHALLENGED VOTES - 151
TOTAL VOTES CAST - 401 4

Yokohama challenged 78 votes cast by dismissed employees. On the other hand, the Union
challenged 68 votes cast by newly regularized rank-and-file employees and another five (5)
votes by alleged supervisor-trainees. Yokohama formalized its protest and raised as an
issue the eligibility to vote of the 78 dismissed employees,5 while the Union submitted only
a handwritten manifestation during the election.

On January 21, 2002, the Med-Arbiter resolved the parties' protests, decreeing as follows:

WHEREFORE, PREMISES CONSIDERED, judgment is hereby rendered as follows:

xxx

2. The appreciation of the votes of the sixty-five (65) dismissed employees

who contested their dismissal before the National Labor Relations Commission
shall be suspended until the final disposition of their complaint for illegal
dismissal. . . .

3. The votes of the sixty-eight (68) so-called "newly-regularized" rank-and-

file employees shall be appreciated in the final tabulation.

xxx

Page 18 of 74
SO ORDERED.6 (Emphasis supplied.)

On May 22, 2002, the DOLE Acting Secretary disposed of the appeals as follows:

WHEREFORE, the partial appeal of [Yokohama] is DENIED and the appeal of [the union]
is PARTIALLY GRANTED. Thus, the Order of the Med-Arbiter dated 21 January 2002 is
hereby MODIFIED as follows:

xxx

2. The votes of dismissed employees who contested their dismissal

before the National Labor Relations Commission (NLRC) shall be
appreciated in the final tabulation of the certification election results.

3. The votes of the sixty-eight (68) newly regularized rank-and-file employees

shall be excluded.

xxx

SO RESOLVED.7 (Emphasis supplied.)

The Court of Appeals affirmed in toto the decision of the DOLE Acting Secretary. 8 The
appellate court held that the 78 employees who contested their dismissal were entitled to
vote under Article 212 (f)9 of the Labor Code and Section 2, Rule XII10 of the rules
implementing Book V of the Labor Code. However, it disallowed the votes of the 68 newly
regularized employees since they were not included in the voters' list submitted during the
July 12, 2001 pre-election conference. The appellate court also noted that Yokohama's
insistence on their inclusion lends suspicion that it wanted to create a company union, and
ruled that Yokohama had no right to intervene in the certification election. Finally, it ruled
that the union's handwritten manifestation during the election was substantial compliance
with the rule on protest.

Yokohama appealed.

On September 15, 2003, we issued a temporary restraining order against the

implementation of the May 22, 2002 Decision of the DOLE Acting Secretary and the October
15, 2002 Resolution of the DOLE Secretary, denying Yokohama's motion for
reconsideration.11

In a manifestation with motion to annul the DOLE Secretary's entry of judgment filed with
this Court on October 16, 2003, Yokohama attached a Resolution 12 dated April 25, 2003 of
the Med-Arbiter. The resolution denied Yokohama's motion to suspend proceedings and
cited the decision of the Court of Appeals. The resolution also certified that the Union
obtained a majority of 208 votes in the certification election while "No Union" obtained 121
votes. Yokohama also attached an entry of judgment13issued by the DOLE stating that the
April 25, 2003 Resolution of the Med-Arbiter was affirmed by the DOLE Secretary's Office on
July 29, 2003 and became final on September 29, 2003.

In a subsequent manifestation/motion with erratum filed on October 21, 2003, Yokohama

deleted an allegation in its October 16, 2003 manifestation which was included "through
inadvertence and clerical mishap." Said allegation reads:

Page 19 of 74
 xxx

. . . Notably, the Resolution dated 29 July 2003 which affirmed the Resolution
dated 25 April 2003 is still not final and executory considering the timely filing of a
motion for its reconsideration on 15 August 2003 which until now has yet to be
resolved.14

In this appeal, petitioner raises the following issues:

I.

WHETHER OR NOT THE COURT OF APPEALS SERIOUSLY ERRED IN

DISALLOWING THE APPRECIATION OF THE VOTES OF SIXTY-EIGHT REGULAR
RANK-AND-FILE.

II.

WHETHER OR NOT THE COURT OF APPEALS SERIOUSLY ERRED IN

UPHOLDING THE [DOLE SECRETARY'S] DECLARATION THAT [THE UNION'S]
MANIFESTATION ON THE DAY OF THE CERTIFICATION ELECTION WAS
SUFFICIENT COMPLIANCE WITH THE RULE ON FORMALIZATION OF
PROTESTS.

III.

WHETHER OR NOT THE COURT OF APPEALS SERIOUSLY ERRED IN ALLOWING

THE APPRECIATION OF VOTES OF ALL OF ITS EMPLOYEES WHO WERE
PREVIOUSLY DISMISSED FOR SERIOUS MISCONDUCT AND ABANDONMENT
OF WORK WHICH ARE CAUSES UNRELATED TO THE CERTIFICATION
ELECTION.15

We shall first resolve the last assigned issue: Was it proper to appreciate the votes of the
dismissed employees?cralaw library

Petitioner argues that "the Court of Appeals erred in ruling that the votes of the dismissed
employees should be appreciated." Petitioner posits that "employees who have quit or have
been dismissed for just cause prior to the date of the certification election are excluded from
participating in the certification election." Petitioner had questioned the eligibility to vote of
the 78 dismissed employees.

Respondent counters that Section 2, Rule XII16 of the rules implementing Book V of the
Labor Code allows a dismissed employee to vote in the certification election if the case
contesting the dismissal is still pending.

Section 2, Rule XII, the rule in force during the November 23, 2001 certification election
clearly, unequivocally and unambiguously allows dismissed employees to vote during the
certification election if the case they filed contesting their dismissal is still pending at the
time of the election.17

Here, the votes of employees with illegal dismissal cases were challenged by petitioner
although their cases were still pending at the time of the certification election on November

Page 20 of 74
23, 2001. These cases were filed on June 27, 200118 and the appeal of the Labor Arbiter's
February 28, 2003 Decision was resolved by the NLRC only on August 29, 2003. 19

Even the new rule20 has explicitly stated that without a final judgment declaring the legality
of dismissal, dismissed employees are eligible or qualified voters. Thus,

Rule IX
Conduct of Certification Election

Section 5. Qualification of voters; inclusion-exclusion. - . . . An employee who has been

dismissed from work but has contested the legality of the dismissal in a forum of
appropriate jurisdiction at the time of the issuance of the order for the conduct of a
certification election shall be considered a qualified voter, unless his/her dismissal was
declared valid in a final judgment at the time of the conduct of the certification
election.chanrobles virtual law library

xxx

Thus, we find no reversible error on the part of the DOLE Acting Secretary and the Court of
Appeals in ordering the appreciation of the votes of the dismissed employees.

Finally, we need not resolve the other issues for being moot. The 68 votes of the newly
regularized rank-and-file employees, even if counted in favor of "No Union," will not
materially alter the result. There would still be 208 votes in favor of respondent and
18921 votes in favor of "No Union."

We also note that the certification election is already a fait accompli, and clearly petitioner's
rank-and-file employees had chosen respondent as their bargaining representative.

WHEREFORE, the petition is DENIED for lack of merit. The assailed Decision dated April 9,
2003 of the Court of Appeals in CA-G.R. SP No. 74273 and the Resolution dated August 15,
2003 are AFFIRMED. The temporary restraining order issued on September 15, 2003 is
hereby DISSOLVED. No pronouncement as to costs.

SO ORDERED.

Page 21 of 74
 [G.R. NO. 157788. March 08, 2005]

SAINT MARY'S UNIVERSITY, represented by its President REV. JESSIE M.

HECHANOVA, CICM,Petitioners, v. COURT OF APPEALS (Former Special Twelfth
Division), NATIONAL LABOR RELATIONS COMMISSION (Second Division) and
MARCELO A. DONELO, Respondents.

DECISION

QUISUMBING, J.:

For review on certiorari are the Decision1 dated May 21, 2002 and the Resolution2 dated
February 12, 2003 of the Court of Appeals in CA-G.R. SP No. 63240 which dismissed the
Petition for Certiorari of St. Mary's University and its motion for reconsideration,
respectively.

Respondent Marcelo Donelo started teaching on a contractual basis at St. Mary's University
in 1992. In 1995, he was issued an appointment as an Assistant Professor I. Later on, he
was promoted to Assistant Professor III. He taught until the first semester of school year
1999-2000 when the school discontinued giving him teaching assignments. For this,
respondent filed a complaint for illegal dismissal against the university.

In its defense, petitioner St. Mary's University showed that respondent was merely a part-
time instructor and, except for three semesters, carried a load of less than eighteen units.
Petitioner argued that respondent never attained permanent or regular status for he was
not a full-time teacher. Further, petitioner showed that respondent was under investigation
by the university for giving grades to students who did not attend classes. Petitioner alleged
that respondent did not respond to inquiries relative to the investigation. Instead,
respondent filed the instant case against the university.

The Labor Arbiter ruled that respondent was lawfully dismissed because he had not attained
permanent or regular status pursuant to the Manual of Regulations for Private Schools. The
Labor Arbiter held that only full-time teachers with regular loads of at least 18 units, who
have satisfactorily completed three consecutive years of service qualify as permanent or
regular employees.3

On appeal by respondent, the National Labor Relations Commission (NLRC) reversed the
Decision of the Labor Arbiter and ordered the reinstatement of respondent without loss of
seniority rights and privileges with full backwages from the time his salaries were withheld
until actual reinstatement.4 It held that respondent was a full-time teacher as he did not
appear to have other regular remunerative employment and was paid on a regular monthly
basis regardless of the number of teaching hours. As a full-time teacher and having taught
for more than 3 years, respondent qualified as a permanent or regular employee of the
university.

Page 22 of 74
Petitioner sought for reconsideration and pointed out that respondent was also working for
the Provincial Government of Nueva Vizcaya from 1993 to 1996. Nevertheless, the NLRC
denied petitioner's Motion for Reconsideration. Aggrieved, petitioner elevated the matter to
the Court of Appeals, which affirmed the Decision of the NLRC.

Hence, this petition with a motion for temporary restraining order, alleging that the Court of
Appeals erred in:

'FINDING THAT THE RESPONDENT DONELO ATTAINED A PERMANENT

STATUS, THE SAID FINDING BEING CLEARLY CONTRARY TO THE EVIDENCE
AT HAND AND DEVOID OF BASIS IN LAW.

'HOLDING THAT THE TWIN-NOTICE REQUIREMENT IMPOSED BY LAW BEFORE

TERMINATION OF EMPLOYMENT CAN BE LEGALLY EFFECTED MUST BE
COMPLIED WITH BY THE PETITIONER.

'AFFIRMING THE DECISION OF THE NATIONAL LABOR RELATIONS

COMMISSION IN ORDERING THE PETITIONER TO REINSTATE RESPONDENT
DONELO TO HIS FORMER POSITION WITHOUT LOSS OF SENIORITY RIGHTS
AND PRIVILEGES WITH FULL BACKWAGES FROM THE TIME OF HIS
DISMISSAL UNTIL ACTUALLY REINSTATED.5

Plainly, the ultimate questions before us are:

1. Was respondent a full-time teacher?cralawlibrary

2. Had he attained permanent status?cralawlibrary

3. Was he illegally dismissed?

Petitioner contends that respondent did not attain permanent status since he did not carry a
load of at least 18 units for three consecutive years; and that only full-time teachers can
attain permanent status. Further, since respondent was not a permanent employee, the
twin-notice requirement in the termination of the latter's employment did not apply.

Respondent argues that, as early as 1995, he had a permanent appointment as Assistant

Professor, and he was a permanent employee regardless of the provisions of the Manual of
Regulations for Private Schools. He asserts that he should not be faulted for not carrying a
load of at least 18 units since the university unilaterally controls his load assignment in the
same manner that the university has the prerogative to shorten his probationary period. He
points out also that the present Manual allows full-time teachers to hold other remunerative
positions as long as these do not conflict with the regular school day. Since he is a
permanent employee, respondent insists that petitioner's failure to give him the required
notices constitutes illegal dismissal.

Section 93 of the 1992 Manual of Regulations for Private Schools, provides that full-time
teachers who have satisfactorily completed their probationary period shall be considered
regular or permanent.6 Furthermore, the probationary period shall not be more than six
consecutive regular semesters of satisfactory service for those in the tertiary level. 7 Thus,
the following requisites must concur before a private school teacher acquires permanent

Page 23 of 74
status: (1) the teacher is a full-time teacher; (2) the teacher must have rendered three
consecutive years of service; and (3) such service must have been satisfactory. 8

In the present case, petitioner claims that private respondent lacked the requisite years of
service with the university and also the appropriate quality of his service, i.e., it is less than
satisfactory. The basic question, however, is whether respondent is a full-time teacher.

Section 45 of the 1992 Manual of Regulations for Private Schools provides that full-time
academic personnel are those meeting all the following requirements:

a. Who possess at least the minimum academic qualifications prescribed by the Department
under this Manual for all academic personnel;

b. Who are paid monthly or hourly, based on the regular teaching loads as provided for in
the policies, rules and standards of the Department and the school;

c. Whose total working day of not more than eight hours a day is devoted to the school;

d. Who have no other remunerative occupation elsewhere requiring regular hours of work
that will conflict with the working hours in the school; andcralawlibrary

e. Who are not teaching full-time in any other educational institution.

All teaching personnel who do not meet the foregoing qualifications are considered part-
time.

A perusal of the various orders of the then Department of Education, Culture and Sports
prescribing teaching loads shows that the regular full-time load of a faculty member is in
the range of 15 units to 24 units a semester or term, depending on the courses taught.
Part-time instructors carry a load of not more than 12 units.9

The evidence on record reveals that, except for four non-consecutive terms, respondent
generally carried a load of twelve units or less from 1992 to 1999. There is also no evidence
that he performed other functions for the school when not teaching. These give the
impression that he was merely a part-time teacher.10 Although this is not conclusive since
there are full-time teachers who are allowed by the university to take fewer load, in this
case, respondent did not show that he belonged to the latter group, even after the
university presented his teaching record. With a teaching load of twelve units or less, he
could not claim he worked for the number of hours daily as prescribed by Section 45 of the
Manual. Furthermore, the records also indubitably show he was employed elsewhere from
1993 to 1996.

Since there is no showing that respondent worked on a full-time basis for at least three
years, he could not have acquired a permanent status.11 A part-time employee does not
attain permanent status no matter how long he has served the school.12 And as a part-
timer, his services could be terminated by the school without being held liable for illegal
dismissal. Moreover, the requirement of twin-notice applicable only to regular or permanent
employees could not be invoked by respondent.

Yet, this is not to say that part-time teachers may not have security of tenure. The school
could not lawfully terminate a part-timer before the end of the agreed period without just

Page 24 of 74
cause. But once the period, semester, or term ends, there is no obligation on the part of the
school to renew the contract of employment for the next period, semester, or term.

In this case, the contract of employment of the respondent was not presented. However,
judicial notice may be taken that contracts of employment of part-time teachers are
generally on a per semester or term basis. In the absence of a specific agreement on the
period of the contract of employment, it is presumed to be for a term or semester. After the
end of each term or semester, the school does not have any obligation to give teaching load
to each and every part-time teacher. That petitioner did not give any teaching assignment
to the respondent during a given term or semester, even if factually true, did not amount to
an actionable violation of respondent's rights. It did not amount to illegal dismissal of the
part-time teacher.

The law, while protecting the rights of the employees, authorizes neither the oppression nor
destruction of the employer.13 And when the law tilts the scale of justice in favor of labor,
the scale should never be so tilted if the result would be an injustice to the employer.14

WHEREFORE, the petition is GRANTED. The Decision dated May 21, 2002 and the
Resolution dated February 12, 2003 of the Court of Appeals in CA-G.R. SP No. 63240, which
sustained those of the NLRC, are NULLIFIED and SET ASIDE. The Decision of the Executive
Labor Arbiter of the Regional Arbitration Branch II, Tuguegarao City, Cagayan, is hereby
REINSTATED.

SO ORDERED.

SECOND DIVISION

G.R. No. 185058, November 09, 2015

Page 25 of 74
JOVITA S. MANALO, Petitioner, v. ATENEO DE NAGA UNIVERSITY, FR. JOEL TABORA
AND MR. EDWIN BERNAL, Respondent.

DECISION

LEONEN, J.:

At the core of the issue of constructive dismissal is the matter of whether an employer's
action is warranted. Not every inconvenience, disruption, difficulty, or disadvantage that an
employee must endure sustains a finding of constructive dismissal. When professionals and
educators violate the ethical standards of the profession to which they belong and for which
they train students, educational institutions employing them are justified in relieving them
of their teaching posts and in taking other appropriate precautionary or punitive measures.

This resolves a Petition for Review on Certiorari 1 praying that the assailed April 30, 2008
Decision2 and October 7, 2008 Resolution3 of the Court of Appeals Former Special First
Division in CA-G.R. No. 74899 be reversed and set aside, and that the December 13, 2000
Decision4 of Labor Arbiter Jesus Orlando M. Quiñones (Labor Arbiter Quiñones) be
reinstated.

In his December 13, 2000 Decision, Labor Arbiter Quiñones ruled that petitioner Jovita S.
Manalo (Manalo) was constructively dismissed. He ordered that Manalo be reinstated to her
former position, that the applicable increases to her salary and benefits be effected, and
that attorney's fees be paid to her. However, Labor Arbiter Quiñones denied Manalo's prayer
for moral and exemplary damages.5

Labor Arbiter Quiñones' Decision was sustained by the National Labor Relations Commission
Second Division in its March 26, 2002 Resolution.6 In its August 30, 2002 Resolution,7 the
National Labor Relations Commission denied the Motion for Reconsideration of respondents
Ateneo de Naga University, Fr. Joel Tabora, S.J. (Fr. Tabora) and Edwin P. Bernal (Bernal).

In its assailed April 30, 2008 Decision, the Court of Appeals reversed and set aside the
ruling of Labor Arbiter Quiñones and of the National Labor Relations Commission and
dismissed Manalo's Complaint.8 In its assailed October 7, 2008 Resolution, the Court of
Appeals denied Manalo's Motion for Reconsideration.9

Manalo was a regular and permanent full-time faculty member of the Accountancy
Department of Ateneo de Naga University's College of Commerce. She was employed on
June 3, 1993 and was granted permanent status in 1996. As recounted by Manalo in the
Position Paper she filed before the Labor Arbiter, she taught subjects such as "Auditing
Theory, Auditing Practice, Financial Accounting, [and] Elementary Accounting."10 In the
Reply to respondents' Position Paper which she, too, filed before the Labor Arbiter, Manalo
similarly acknowledged that in 1994, she taught subjects in Ateneo de Naga University's
Economics Department (i.e., International Trade and Philippine Economic Development),
albeit insisting that she did not have the required aptitude and competence. 11

Manalo was also a part-time Manager of the Ateneo de Naga Multi-Purpose Cooperative
(Cooperative) before it was evicted from holding office inside campus in 1999.12

In her Position Paper, Manalo recounted that during her stint as Cooperative Manager, she
came into conflict with Bernal, Dean of Ateneo de Naga University's College of Commerce.
Bernal supposedly charged Manalo with various offenses as regards the management of the

Page 26 of 74
Cooperative before the Cooperative's Board of Directors. The Board of Directors dismissed
Manalo on the basis of these charges. However, on November 30, 1999, Manalo's dismissal
was recalled by the Cooperative's General Assembly.13

Manalo further recounted that on December 14, 1999, Bernal wrote to Fr. Tabora, Ateneo
de Naga University President, recommending the termination of her employment on the
grounds of serious business malpractice, palpable dishonesty, and questionable integrity.14

Acting on the charges against Manalo, Fr. Tabora constituted a Grievance Committee. The
Grievance Committee later found Manalo guilty and recommended her dismissal. 15 As
recounted in the Comment filed by respondents before this court, Manalo's offenses were:
"fraud in issuance of official receipts, collection of cash without documented remittance to
the cooperative, use of inappropriate forms of documents cash receipts, 16 instances of
bouncing checks issued by the cooperative . . . fraud in the issuance of an official receipt,
unauthorized cash advances[.]"16

Acting on the Grievance Committee's recommendation as the University President had the
"final say on the matter,"17 Fr. Tabora instead opted to transfer Manalo to teach Economics
in the Department of Social Sciences of Ateneo de Naga University's College of Arts and
Science.18

Alleging that her transfer constituted constructive dismissal, Manalo filed a Complaint 19 on
April 3, 2000.

On December 13, 2000, Labor Arbiter Quiñones rendered the Decision20 finding that Manalo
was constructively dismissed. He faulted the action taken on Manalo's case for being
anchored on "private affairs . . . which clearly has [sic] no bearing on the employment
relationship between [Ateneo de Naga University] and [Manalo]."21 He similarly faulted a
Manalo's transfer to teach Economics—a subject that she was supposedly not qualified to
teach—as unduly burdensome, inconvenient, and even embarrassing, and construed it as a
badge of constructive dismissal.22

Labor Arbiter Quiñones ordered that Manalo be reinstated to her former position in the
Accountancy Department, that the increases in salaries and benefits effected during the
pendency of the case be applied to Manalo, and that Ateneo de Naga University pay her
attorney's fees. However, noting that Manalo failed to show that respondents acted out of
manifest bad faith, he denied Manalo's prayer for moral and exemplary damages. 23 The
dispositive portion of Labor Arbiter Quiñones' Decision reads:chanRoblesvirtualLawlibrary

WHEREFORE, in view of the foregoing, and finding complainant Jovita S.

Manalo to have been constructively dismissed, judgment is hereby rendered
against respondents Ateneo de Naga University, Fr. Joel Tabora, S.J., and Mr.
Edwin P. Bernal, as follows:

a. Respondent Ateneo de Naga University is

ordered, upon receipt of this decision, to
immediately reinstate complainant to her
former position as faculty member of the
Accountancy Department, College of
Commerce, without loss of seniority rights
and other privileges, or at the option of
respondent, effect payroll reinstatement;

Page 27 of 74
 b. Payment of complainant's salaries as part
of full backwages provided under Article
279 of the Labor Code, is deemed moot
and academic, it being admitted on record
that complainant's salaries have been
regularly deposited with complainant's
ATM account with Equitable PCIBank for
the period that complainant stopped
working with respondents, which as of the
date of this decision should amount to Php
108,869.40;

c. Additionally, respondent Ateneo de Naga

University is ordered to effect and pay
complainant's additional annual across the
board increase equivalent to six percent
(6%) of complainant's monthly salary,
allowances, and other benefits or their
monetary equivalent computed from the
time her compensation was withheld from
her up to the time of her actual
reinstatement or payroll reinstatement, as
the maybe [sic], as part of complainant's
full backwages provided under Article 279
of the Labor Code;

d. Respondent Ateneo de Naga University is

ordered to pay complainant ten percent
(10%) of the total amount awarded
representing attorney's fees.

All other claims and charges are dismissed for lack of merit.

SO ORDERED.24ChanRoblesVirtualawlibrary
cralawlawlibrary

Manalo and respondents appealed before the National Labor Relations

Commission.25cralawred

Labor Arbiter Quiñones' Decision was affirmed in toto by the National Labor Relations
Commission Second Division in its March 26, 2002 Resolution.26 In its August 30, 2002
Resolution,27 the National Labor Relations Commission denied respondents' Motion for
Reconsideration.

Respondents then filed a Petition for Certiorari before the Court of Appeals. 28

On April 30, 2008, the Court of Appeals rendered the assailed Decision.29 It reversed and
set aside the rulings of Labor Arbiter Quiñones and of the National Labor Relations
Commission and ordered Manalo's Complaint dismissed. The Court of Appeals noted that
there was ample factual basis for Manalo's transfer, and that such transfer was well within
the scope of Ateneo de Naga University's prerogatives as an employer and as an educational
institution.

Page 28 of 74
In its assailed October 7, 2008 Resolution,30 the Court of Appeals denied Manalo's Motion for
Reconsideration.

Aggrieved, Manalo filed the present Petition.31 She assails the supposed impropriety of the
Court of Appeals' ruling that set aside the findings of Labor Arbiter Quiñones and of the
National Labor Relations Commission. She insists that their findings are conclusive and
binding on the Court of Appeals and that alternative findings could not have been the basis
for reversing their rulings.32 She insists that she was constructively dismissed and anchors
this conclusion on how it was supposedly improper for the Ateneo de Naga University to
transfer her based on actions imputed to her in her capacity as Cooperative Manager and
not in her capacity as a member of the University's faculty.33

For resolution are the following issues:chanRoblesvirtualLawlibrary

First, whether the Court of Appeals was in error for entertaining alternative findings to those
made by Labor Arbiter Quiñones and the National Labor Relations Commission; and

Second, whether the shift in petitioner Jovita S. Manalo's teaching load from mainly
Accountancy subjects to Economics subjects constituted constructive dismissal.

Petitioner's argument that the findings of a Labor Arbiter and of the National Labor Relations
Commission are so binding on the Court of Appeals that they are practically immutable
require a Clarification of the procedural parameters of judicial review of decisions of the
National Labor Relations Commission. As this court's resolution of the present Petition itself
proceeds from actions taken by the Court of Appeals, the same procedural parameters
delineate what is permissible in this review.

As clarified in St. Martin Funeral Homes v. National Labor Relations Commission,34judicial

review of decisions of the National Labor Relations Commission is permitted. However, this
review is through a petition for certiorari (i.e., special civil action for certiorari) under Rule
65 of the Rules of Court, rather than through an appeal. Moreover, although this court has
concurrent jurisdiction with the Court of Appeals as regards petitions for certiorari, such
petitions are filed before the Court of Appeals (following, of course, the National Labor
Relations Commission's denial of the appropriate Motion for Reconsideration), rather than
directly before this court. This is consistent with the principle of hierarchy of courts. It is
only from an adverse ruling of the Court of Appeals that a party may come to this court,
which shall then be by way of a petition for reviewon certiorari (i.e., appeal by certiorari)
under Rule 45 of the Rules of Court.35

In Odango v. National Labor Relations Commission 36 this court explained that a special civil
action for certiorari is an extraordinary remedy that is allowed "only and restrictively in truly
exceptional cases."37 Consistent with this, the remedy of a writ of certiorari may be used
only when there is no appeal or any plain, speedy, and adequate remedy in the ordinary
course of law. Nevertheless, this requirement has been relaxed in cases where what is at
stake is public welfare and the advancement of public policy.38

So too, parties who avail themselves of such a remedy are not at liberty to assail an
adverse ruling on grounds of their own choosing. Rather, a petition for certiorari is "confined
to issues of jurisdiction or grave abuse of discretion."39 Its sole office is "the correction of
errors of jurisdiction including the commission of grave abuse of discretion amounting to
lack or excess of jurisdiction."40

Page 29 of 74
A petition for certiorari under Rule 65 is an original action. It is independent of the action
that gave rise to the assailed ruling. In contrast, a petition for review on certiorari under
Rule 45 is a mode of appeal. Thus, it is a continuation of the case subject of the appeal. It
follows then that it cannot go beyond the issues that were properly the subject of the
original action from which it arose.

The nature, parameters, and framework of judicial review of decisions of the National Labor
Relations Commission both by this court and by the Court of Appeals were exhaustively and
deftly discussed in this court's Decision in Brown Madonna Press v.
Casas:41chanroblesvirtuallawlibrary

Mode of review in illegal dismissal cases

The present petition involves mixed questions of fact and law, with the core
issue being one of fact. This issue — from which the other issues arise —
relates to the nature of Casas' termination of employment relationship with
BMPI. Did she voluntarily resign from, or abandon her work at, BMPI, or was
she summarily dismissed by Cabangon?

This question of fact is an issue that we cannot resolved [sic] in a Rule 45

petition, except in the course of determining whether the [Court of Appeals]
correctly ruled in determining that the [National Labor Relations Commission]
did not commit grave abuse of discretion. In other words, the question we ask
in resolving the present case is not whether Casas abandoned her work or
was illegally dismissed; instead, we ask whether the [Court of Appeals] erred
in not finding grave abuse of discretion in the [National Labor Relations
Commission's] decision finding that Casas was dismissed from work.

Should we find that Casas had indeed been summarily dismissed, the next
question involves the nature of her dismissal — did it comply with the
procedural and substantial requirements of the law, or was it an illegal
dismissal that should warrant the award to Casas of backwages and
separation pay?

Keen awareness of the lens used to review this question is critical, given the
jurisdiction of this Court and the nature of review employed in labor cases
appealed to the Court under Rule 45. The Court, save for exceptional cases, is
not a trier of facts; as a general rule, it resolves only questions of law.
Additionally, the [National Labor Relations Commission's] decision is final and
executory, and can be reviewed by the [Court of Appeals] only when the
[National Labor Relations Commission] committed a grave abuse of discretion
amounting to a lack or excess of jurisdiction.

Thus, the [Court of Appeals], in a Rule 65 petition assailing the [National

Labor Relations Commission's] decision, examines whether the [National
Labor Relations Commission] acted in such a "capricious and whimsical
exercise of judgment so patent and gross as to amount to an evasion of a
positive duty or a virtual refusal to perform a duty enjoined by law." This is in
contrast with appeals reaching the [Court of Appeals] . . . where it has more
leeway in reviewing both questions of fact and of law, and where the
appealed decision may be reversed because of an error in judgment.

Once the [Court of Appeals] decision reaches the Court through a Rule 45

Page 30 of 74
 petition, the question presented before us carries with it the mode of review
applied when the case has been appealed before the [Court of Appeals].
Although we are asked to determine whether the [Court of Appeals]
committed an error in judgment, we necessarily have to consider that the
judgment made by the [Court of Appeals] involves the question of
determining grave abuse of discretion. Unlike other petitions for review on
certiorari where we determine errors of law (and in exceptional cases, errors
of fact), our appellate jurisdiction in labor cases involves the determination of
whether there had been an error in finding grave abuse of discretion on the
part of the [National Labor Relations Commission].

With these considerations in mind, the onus probandi in assailing a question

of fact as determined by the [National Labor Relations Commission] and
upheld by the [Court of Appeals] becomes heavier. Not only must an
exceptional circumstance allowing the Court to review a question of fact exist;
it must also be shown that the [National Labor Relations Commission's]
resolution of the factual issue must have been tainted with grave abuse of
discretion, such that the [Court of Appeals] erred in affirming it.42 (Citations
omitted)cralawlawlibrary

From these, it is a clear error for petitioner to insist that the figurative hands of the Court of
Appeals were tied just because the findings of the Labor Arbiter and of the National Labor
Relations coincided with each other. Precisely because it was confronted with a Rule 65
Petition, it was the Court of Appeals' business to determine whether there had been grave
abuse of discretion amounting to lack or excess of jurisdiction. Had it found that there was
none, the proper course of action would have been to dismiss respondents' Rule 65 Petition
and to sustain the rulings of Labor Arbiter Quiñones and of the National Labor Relations
Commission. In the intervening period, however, when the Court of Appeals was going
about its task of arriving at a resolution, petitioner should not fault the Court of Appeals
both for examining the records and evidence at its disposal and for embarking on its own
analysis of whether Labor Arbiter Quiñones and the National Labor Relations Commission
properly performed their duties and were circumspect in concluding that petitioner was
constructively dismissed. A judicious resolution of the controversy confronting it called for
nothing less.

Going about its task, the Court of Appeals concluded that Labor Arbiter Quiñones' and the
National Labor Relations Commission's disposition of the case were attended with grave
abuse of discretion amounting to lack or excess of jurisdiction.

We sustain the conclusion of the Court of Appeals.

Labor Arbiter Quiñones and the National Labor Relations Commission concluded that
petitioner was constructively dismissed because the action—that is, her transfer—taken on
her designation was supposedly not warranted by matters that seemed to have been
extraneous to her having been a faculty member teaching Accountancy subjects. Labor
Arbiter Quiñones and the National Labor Relations Commission are grossly mistaken. They
divorced petitioner's manifest breach of the ethical standards binding accountancy
professionals from petitioner's role as an educator of prospective accounting professionals.
Petitioner's role as an educator made it imperative for her to impart her profession's values
and ideals to her students, not least of all by her own example. Because she had failed in
this, respondents were well in a position to seek to prevent one whom they considered to
have engaged in unethical and unprofessional behavior from pursuing her didactic

Page 31 of 74
engagement with their students. As such, Labor Arbiter Quiñones and the National Labor
Relations Commission committed such gross errors as amounting to an evasion of their
positive duty to render judgment after only a meticulous consideration of the circumstances
of a case.

II

Constructive dismissal arises "when continued employment is rendered impossible,

unreasonable or unlikely; when there is a demotion in rank and/or a diminution in pay; or
when a clear discrimination, insensibility or disdain by an employer becomes unbearable to
the employee."43 In such cases, the impossibility, unreasonableness, or unlikelihood of
continued employment leaves an employee with no other viable recourse but to terminate
his or her employment.

However, it is not necessary for an employee to actually resign or abandon his or her
employment in order for an employer to be adjudged as having constructively dismissed an
employee. In Hyatt Taxi Services v. Catinoy,44 this court frowned upon an overly strict
construction of what makes for constructive dismissal:chanRoblesvirtualLawlibrary

[T]he strict adherence by the NLRC to the definition of constructive dismissal

is erroneous. Apparently, the NLRC ruled out constructive dismissal in this
case mainly because according to it "constructive dismissal consists in the act
of quitting because continued employment is rendered impossible,
unreasonable or unlikely as in the case of an offer involving demotion in rank
and a diminution in pay." Based on this definition, the NLRC concluded that
since respondent neither resigned nor abandoned his job and the fact that
respondent pursued his reinstatement negate constructive dismissal. What
makes this conclusion tenuous is the fact that constructive dismissal does not
always involve forthright dismissal or diminution in rank, compensation,
benefit and privileges. There may be constructive dismissal if an act of clear
discrimination, insensibility, or disdain by an employer becomes so
unbearable on the part of the employee that it could foreclose any choice by
him except to forego his continued employment.45cralawlawlibrary

By definition, constructive dismissal can happen in any number of ways. At its core,
however, is the gratuitous, unjustified, or unwarranted nature of the employer's action. As it
is a question of whether an employer acted fairly, it is inexorable that any allegation of
constructive dismissal be contrasted with the validity of exercising management
prerogative.

Not every inconvenience, disruption, difficulty, or disadvantage that an employee must

endure results in a finding of constructive dismissal. Indeed, basic is the recognition that
even as our laws on labor and social justice impel a "preferential view in favor of
labor,"46chanroblesvirtuallawlibrary

[e]xcept as limited by special laws, an employer is free to regulate, according

to his own discretion and judgment, all aspects of employment, including
hiring, work assignments, working methods, time, place and manner of work,
tools to be used, processes to be followed, supervision of workers, working
regulations, transfer of employees, work supervision, lay-off of workers and
the discipline, dismissal and recall of work.47ChanRoblesVirtualawlibrary
cralawlawlibrary

Page 32 of 74
Jurisprudence has long recognized that transferring employees, to the extent that it is done
fairly and in good faith, is a valid exercise of management prerogative and will not, in and of
itself, sustain a charge of constructive dismissal:chanRoblesvirtualLawlibrary

[T]he transfer of an employee from one area of operation to another is a

management prerogative and is not constitutive of constructive dismissal,
when the transfer is based on sound business judgment, unattended by
demotion in rank or a diminution of pay or bad faith. Thus, in Philippine Japan
Active Carbon Corp. v. NLRC, the Court ruled:
"It is the employer's prerogative, based on its assessment and
perception of its employees' qualifications, aptitudes, and
competence, to move them around in the various areas of its
business operations in order to ascertain where they will
function with maximum benefit to the company. An employee's
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. When his transfer is not unreasonable, nor inconvenient,
nor prejudicial to him, and it does not involve a demotion in
rank or a diminution of his salaries, benefits, and other
privileges, the employee may not complain that it amounts to a
constructive dismissal."48ChanRoblesVirtualawlibrary
cralawlawlibrary

As with all allegations of constructive dismissal, the resolution of this case hinges on
whether, given the circumstances, the employer acted fairly in exercising a prerogative that
is indisputably vested in it. Specifically, with respect to the recognized badges of
constructive dismissal, we must look into whether the employer was motivated not by
sound judgment but by bad faith and unduly withheld or diminished status, benefits, or
privileges that otherwise should have been duly accruing to the employee.

Petitioner capitalizes on how the allegations of wrongdoing that prompted the conduct of
inquiries and dismissal proceedings against her pertained to her affiliation with the Ateneo
de Naga Multi-Purpose Cooperative, of which she was a part-time Manager, and not with her
employment with respondent Ateneo de Naga University. Asserting that the Cooperative and
the University are distinct entities, she argues that her supposed offenses are not work-
related and cannot be the bases of any prospective termination or of any other action taken
on her employment as a faculty member.49

We disagree.

Respondents aptly note that the offenses petitioner committed show "clear transgressions of
the Code of Ethics of Accountants, which rendered petitioner disqualified to teach
Accounting."50

III

"Every profession is defined by the knowledge, skills, attitude and ethics of those in the
profession."51 In purporting one's self as a professional, a person does more than merely
make a statement as to an activity that preoccupies him or her—an occupation—which may
serve as a means for earning a living, that is, a livelihood. Rather, he or she proclaims or

Page 33 of 74
professes to count himself or herself among a select class of learned, trained, competent,
and proficient individuals adhering to an established and commonly held set of
standards:chanRoblesvirtualLawlibrary

'Profession' derives from the Latin word 'profiteor,' to profess, which can also
have the connotation of making a formal commitment in the sense of taking a
monastic oath. This root might suggest that a professional is someone who
claims to possess knowledge of something and has a commitment to a
particular code or set of values, both of which are fairly well-accepted
characteristics of professions.52cralawlawlibrary

Persons claiming themselves to be professionals hold themselves out to others and to

society itself as being faithful to benchmarks of quality. Being a professional is, thus, a
matter of credibility and trustworthiness. Accordingly, ethics and values are as inherent to
professions as are training and technical competence. Standards of integrity can never be
divorced from standards of workmanship, technique, and operation.

It is precisely with the public interest in mind that professional regulation—whether by the
state or by members of the professions themselves, i.e., self-regulation—is an accepted
norm. In legal parlance and where the state apparatus is employed, professional regulation
is a matter of police power. Regardless, whether through the state apparatus or through
self-imposed mechanisms, all professions continually strive for the ideal of making
themselves and their members exemplary and beyond reproach. "Regulation of a profession
is a specific response to the need for certain standards to be met by the members of that
profession[;] [albeit] [t]he need for and nature of such regulation is dependent on the
specific profession and the market conditions in which it operates."53

As with all other professions, the accountancy profession finds its mooring in qualitative and
ethical norms. In a Position Paper prepared in 2007, the International Federation of
Accountants expounded on how integral regulations, as well as technical and ethical
standards, are to the accountancy profession:chanRoblesvirtualLawlibrary

11. Like other professions, the sustainability of the accountancy

profession depends upon the quality of the services provided by
its members and on the profession's capacity to respond
effectively and efficiently to the demands of the economy and
society. Regulation seeks to ensure the right quality and, where
appropriate, consistency in the quality of accountancy services.

12. There are a number of reasons why regulation might be

necessary to ensure that appropriate quality is provided in the
market for accounting services. These include enforcement of
ethical rules and technical standards and the need to represent
non-contracting users of accounting services, such as investors
and creditors. In recent years, for example, ethical failures on
the part of some members of the profession, and the resulting
lack of confidence in financial reporting resulted in changes in
the regulation of the profession in many parts of the world.54

cralawlawlibrary

The International Federation of Accountants cited "two general cases" that illustrate how the

Page 34 of 74
public, left with no recourse but to repose its trust in accounting professionals, can best be
protected by regulatory measures that ensure compliance with standards of proficiency and
integrity:chanRoblesvirtualLawlibrary

13. While the specific triggers for regulatory intervention will differ
over time, there are two general cases that provide useful
illustrations of why regulation may be an effective means of
ensuring quality and addressing issues in the operation of the
market for accounting services. The first general case arises
from the situation where there is a knowledge imbalance
between the client who is acquiring accounting services and the
provider of those services, who has professional expertise. The
second general case is where there are significant benefits or
costs from the provision of accounting services that accrue to
third parties, not to those acquiring and producing the services.

14. Regulation can address the knowledge imbalance between the

provider and purchaser of professional services by providing
assurance to the purchaser that the provider has the necessary
qualifications and will meet the appropriate professional
standards in his or her work. In this way, the purchaser is given
assurance that they are receiving services of the right quality.

15. The second generic issue that regulation can address is where
parties outside the contracting parties (the purchaser and
provider of services) either receive benefits or incur costs as a
result of the transaction. Regulation can ensure that those
benefits and costs to third parties are taken into account in
determining what service is to be produced, and at what
quality. Because financial statements have a much wider use
than by the company acquiring an audit, for example,
regulation of financial reporting and audit ensures that
investors or potential investors (the third parties) receive the
information they require. Regulation acts to ensure that the
benefits to these third parties are "built in," when a company
contracts for an audit.55

cralawlawlibrary

Relevant as it is, ethical behavior takes on even greater significance in the education and
training of individuals who are prospective members of the profession. Professionals who
concurrently take on the role of educators act as gatekeepers to the esteemed ranks of a
profession or as channels of skills and knowledge. Moreover, they manifest by example the
ideals of their profession. Often, it is with these educators that students have their first
authentic and personal encounters with the professionals they seek be counted amongst.
Professionals educate students and open their eyes to what it means to be lawyers,
teachers, doctors, nurses, or engineers, not only by theory, but even by the very examples
of their lives.

Regarding ethics and education in the accountancy profession, the International Federation
of Accountants states:chanRoblesvirtualLawlibrary

Page 35 of 74
 21. While regulation is important, it is not on its own enough to
achieve the objective of assuring quality and consistency of
quality in the provision of professional services. IFAC recognizes
that values also are critical in driving behavior. No regulation
can be truly effective unless it is accompanied by ethical
behavior.

22. It is the ethical behavior of the professional accountant that is

the ultimate guarantee of good service and quality. Education
in values, especially through example and the appropriate
use of experience and professional judgment, based on a solid
educational foundation, and reinforced through continuing
professional education, will be essential to the future of the
accountancy profession.56 (Emphasis supplied)

cralawlawlibrary

Values and ethics are paramount pedagogical concerns. It is for this reason that training in
various fields is considered a "discipline." Were it all a matter of operational deftness, mere
"how-to" instructional would perhaps suffice. This, however, is not the way of genuine
education. Educational institutions are founded on the fundamental notion of how students
grow as apprentices following the lived example of their mentors.

Here in the Philippines, professional regulation by the state finds basis in Article XII, Section
14 of the 1987 Constitution.57 More specifically, the accountancy profession is regulated by
Republic Act No. 9298, otherwise known as the Philippine Accountancy Act of 2004.

The centrality of ethics in the practice of accountancy is evident in the Philippine

Accountancy Act of 2004. Its declaration of policy states:chanRoblesvirtualLawlibrary

Section 2. Declaration of Policy. - The State recognizes the importance of

accountants in nation building and development. Hence, it shall develop and
nurture competent, virtuous, productive and well rounded professional
accountants whose standard of practice and service shall be excellent,
qualitative, world class and globally competitive though inviolable,
honest,effective, and credible licensure examinations and though regulatory
measures, programs and activities that foster their professional growth and
development. (Emphasis supplied)cralawlawlibrary

Conformably, the Philippine Accountancy Act of 2004 created the Professional Regulatory
Board of Accountancy,58 the powers and functions of which include the adoption of
measures to ensure ethical practice:chanRoblesvirtualLawlibrary

Section 9. Powers and Functions of the Board. - The Board shall exercise the
following specific powers, functions and
responsibilities:chanRoblesvirtualLawlibrary

To prescribe and/or adopt a Code of Ethics for the practice of accountancy;

To monitor the conditions affecting the practice of accountancy and adopt

such measures, including promulgation of accounting and auditing standards,
rules and regulations and best practices as may be deemed proper for the

Page 36 of 74
 enhancement and maintenance of high professional, ethical, accounting and
auditing standards: That domestic accounting and auditing standards rules
and regulations shall include the international accounting and auditing
standards, and generally accepted best practices[.]cralawlawlibrary

The Code of Ethics for Professional Accountants in the Philippines 59 spells out a "conceptual
framework ... on fundamental ethical principles."60 First of these is integrity, i.e., being
"straightforward and honest in all professional and business relationships."61 Second,
objectivity, or "not allowing] bias, conflict of interest or undue influence of others to
override professional or business judgments."62 Third, professional competence and due
care in "maintain[ing] professional knowledge and skill at the level required to ensure that a
client or employer receives competent professional service based on current developments
in practice, legislation and techniques."63 Fourth, confidentiality, or "respect[ing] the
confidentiality of information acquired as a result of professional and business relationships
and . . . not disclosing] any such information to third parties without proper and specific
authority unless there is a legal or professional right or duty to disclose." 64 Lastly,
professional behavior in one's "compl[iance] with relevant laws and regulations and . . .
avoiding] any action that discredits the profession."65

IV

Petitioner's indiscretions were noted to have been "fraud in issuance of official receipts,
collection of cash without documented remittance to the cooperative, use of inappropriate
forms of documents cash receipts, 16 instances of bouncing checks issued by the
cooperative . . . fraud in the issuance of an official receipt, unauthorized cash
advances[.]"66 Details regarding these are matters of record and are spelled out in the
Grounds for Dismissal of Mrs. Jo vita S. Manalo, which form part of Annex "E" of petitioner's
own Position Paper before the Labor Arbiter. To reiterate, petitioner capitalizes on all but
how these acts are supposedly not work-related, thereby failing to sustain any action taken
on her employment as a faculty member.

We fail to see how petitioner can avoid the conclusion that these indiscretions do not reflect
her fitness as an educator for the accountancy profession and her employment with
respondent Ateneo de Naga University. These acts run afoul of the first and most basic of
the fundamental ethical principles of the accountancy profession: integrity. Her having
sanctioned unauthorized advances demonstrates a violation of the second fundamental
ethical principle: objectivity. Even assuming that these acts do not evince a premeditated
scheme, they nevertheless manifest that petitioner failed to act diligently, that is,
competently and with due care. The totality of the indiscretions imputed to petitioner
reflects negatively on the accountancy profession and indicates anything but professional
behavior.

Worse, these acts indicate that petitioner failed to demonstrate to students and to live by
her own example the ideals of the accountancy profession. Even if we were to assume that
petitioner remained an exemplar of technical proficiency, she failed to educate in respect of
the values that are integral to the training that she was supposed to impart to future
professional accountants. We again emphasize that practicing a profession and educating a
profession are not only technical or operational matters; they are as much a matter of
ethics.

If at all, petitioner should be grateful to her employer that she was only transferred and her
employment was not completely terminated. At the heart of the issue of constructive

Page 37 of 74
dismissal is the matter of whether the employer's actions are warranted. Here, we find
ample basis not only for the precautionary measures actually taken on petitioner, but even
for other heavier penalties that could have been imposed on her. It is true that petitioner
may have been inconvenienced by the mandated transfer, but, to reiterate, not every
inconvenience, disruption, difficulty, or disadvantage that an employee must endure
sustains a finding of constructive dismissal. With the backdrop of petitioner's professional
indiscretions, respondent Ateneo de Naga University, through its President, respondent Fr.
Tabora, validly exercised a management prerogative.

In any case, we fail to appreciate petitioner's contention that her transfer to the Economics
Department entailed an assignment to something in which she was not competent or
qualified. As underscored by Labor Arbiter Quinones, "[petitioner] was both a major of
accounting and economics, and she was a magna cum laude to boot."67 Petitioner similarly
admits to having previously taught Economics subjects, even as she emphasizes that her
concentration and the bulk of her teaching load remained to be Accountancy subjects.

Neither does her lack of a Master's Degree in Economics automatically render her
unqualified. The 1992 Manual of Regulations for Private Schools, which was in effect during
the material incidents of this case, did not absolutely prevent non-holders of master's
degrees from teaching in undergraduate programs.68 The same is true of the present
Manual of Regulation for Private Higher Education.69

Ultimately, there were more than ample reasons for taking precautionary measures against
petitioner. Respondent Ateneo de Naga University could not be said to have acted in an
arbitrary, unjustified, or unwarranted manner in preventing petitioner from teaching
Accountancy subjects. Having failed to prove this crucial element of what amounts to
constructive dismissal, petitioner's Complaint against respondents was rightly dismissed by
the Court of Appeals.

WHEREFORE, the Petition for Review on Certiorari is DENIED. The assailed Decision dated
April 30, 2008 and Resolution dated October 7, 2008 of the Court of Appeals in CA-G.R. No.
74899 are AFFIRMED.

SO ORDERED.

Page 38 of 74
 G.R. No. 215568, August 03, 2015

RICHARD N. RIVERA, Petitioner, v. GENESIS TRANSPORT SERVICE, INC. AND RIZA

A. MOISES, Respondents.

DECISION

LEONEN, J.:

This resolves a Petition for Review on Certiorari under Rule 45 of the 1997 Rules of Civil
Procedure praying that the July 8, 2014 Decision1 and the November 20, 2014
Resolution2 of the Court of Appeals Fifth Division in CA-G.R. SP No. 130801 be reversed and
set aside, and that new judgment be entered finding petitioner Richard N. Rivera to have
been illegally dismissed and awarding to him his monetary claims.

The assailed July 8, 2014 Decision of the Court of Appeals dismissed the Petition
for Certiorari under Rule 65 of the 1997 Rules of Civil Procedure filed by Richard N. Rivera
(Rivera) and affirmed the February 28, 20133 and April 30, 20134 Resolutions of the
National Labor Relations Commission Second Division. These Resolutions sustained the
ruling of Labor Arbiter Gaudencio P. Demaisip, Jr. who, in his June 26, 2012
Decision,5 dismissed Rivera's Complaint6 for illegal dismissal.

The assailed November 20, 2014 Resolution of the Court of Appeals denied Rivera's Motion
for Reconsideration.

Rivera was employed by respondent Genesis Transport Service, Inc. (Genesis) beginning
June 2002 as a bus conductor, assigned to the Cubao-Baler, Aurora route. As part of the
requisites for his employment, he was required to post a cash bond of P6,000.00.
Respondent Riza A. Moises is Genesis' President and General Manager. 7

In his Position Paper before the Labor Arbiter, Rivera acknowledged that he was dismissed
by Genesis on account of a discrepancy in the amount he declared on bus ticket receipts. He
alleged that on June 10, 2010, he received a Memorandum8 giving him twenty-four (24)
hours to explain why he should not be sanctioned for reporting and remitting the amount of
P198.00 instead of the admittedly correct amount of P394.00 worth of bus ticket receipts.
He responded that it was an honest mistake, which he was unable to correct "because the
bus encountered mechanical problems."9

The discrepancy between the reported and remitted amount as against the correct amount
was detailed in the "Irregularity Report" prepared by Genesis' Inspector, Arnel Villaseran
(Villaseran).10

According to Villaseran, on May 25, 2010, he conducted a "man to man" inspection on the
tickets held by the passengers on board Bus No. 8286 who had transferred from Bus No.
1820 in San Fernando, Pampanga. (Bus No. 1820 broke down.) In the course of his
inspection, he noticed that Ticket No. 723374 VA had a written corrected amount of

Page 39 of 74
P394.00. However, the amount marked by perforations made on the ticket, which was the
amount originally indicated by the bus conductor, was only P198.00. Upon inquiring with the
passenger holding the ticket, Villaseran found out that the passenger paid P500.00 to
Rivera, who gave her change in the amount of P106.00.11

Subsequently, Villaseran conducted verification works with the Ticket Section of Genesis'
Cubao Main Office. Per his inquiries, the duplicate ticket surrendered by Rivera to Genesis
indicated only the unconnected amount of P198.00. It was also found that Rivera remitted
only P198.00.12

On July 20, 2010, Genesis served on Rivera a written notice13 informing him that a hearing
of his case was set on July 23, 2010. Despite his explanations, Rivera's services were
terminated through a written notice dated July 30, 2010.14 Contending that this termination
was arbitrary and not based on just causes for terminating employment, he filed the
Complaint15 for illegal dismissal, which is subject of this Petition.16

For their defense, Genesis and Riza A. Moises claimed that Rivera's misdeclaration of the
amount in the bus ticket receipts and failure to remit the correct amount clearly violated
Genesis' policies and amounted to serious misconduct, fraud, and willful breach of trust;
thereby justifying his dismissal.17

In a Decision18 dated June 26, 2012, Labor Arbiter Gaudencio P. Demaisip gave credence to
respondents' appreciation of the gravity of Rivera's acts of misdeclaring the amount of bus
ticket receipts and failing to remit the correct amount. Thus, he dismissed Rivera's
Complaint.

In a Resolution19 dated February 28, 2013, the National Labor Relations Commission Second
Division affirmed the Decision of Labor Arbiter Demaisip. In a Resolution20dated April 30,
2013, the National Labor Relations Commission denied Rivera's Motion for Reconsideration.

Thereafter, Rivera filed a Rule 65 Petition before the Court of Appeals. In the assailed July
8, 2014 Decision,21 the Court of Appeals Fifth Division sustained the rulings of Labor Arbiter
Demaisip and the National Labor Relations Commission. In the assailed November 20, 2014
Resolution,22 the Court of Appeals denied Rivera's Motion for Reconsideration.

Hence, this Petition was filed.

For resolution is the issue of whether petitioner Richard N. Rivera's employment was
terminated for just cause by respondent Genesis Transport, Inc.

As Riza A. Moises, Genesis' President and General Manager, has been impleaded, this court
must also rule on her personal liability, should the termination of petitioner's employment
be found invalid.chanrobleslaw

Our laws on labor, foremost of which is the Labor Code, are pieces of social legislation. They
have been adopted pursuant to the constitutional recognition of "labor as a primary social
economic force"23 and to the constitutional mandates for the state to "protect the rights of
workers and promote their welfare"24 and for Congress to "give highest priority to the
enactment of measures that protect and enhance the right of all the people to human
dignity, [and] reduce social, economic, and political inequalities." 25cralawred

Page 40 of 74
They are means for effecting social justice, i.e., the "humanization of laws and the
equalization of social and economic forces by the State so that justice in the rational and
objectively secular conception may at least be approximated." 26

Article XIII, Section 3 of the 1987 Constitution guarantees the right of workers to security of
tenure. "One's employment, profession, trade or calling is a 'property right,'"27of which a
worker may be deprived only upon compliance with due process
requirements:chanRoblesvirtualLawlibrary
It is the policy of the state to assure the right of workers to "security of
tenure" (Article XIII, Sec. 3 of the New Constitution, Section 9, Article II of
the 1973 Constitution). The guarantee is an act of social justice. When a
person has no property, his job may possibly be his only possession or means
of livelihood. Therefore, he should be protected against any arbitrary
deprivation of his job. Article 280 of the Labor Code has construed security of
tenure as meaning that "the employer shall not terminate the services of an
employee except for a just cause or when authorized by" the code. Dismissal
is not justified for being arbitrary where the workers were denied due process
and a clear denial of due process, or constitutional right must be safeguarded
against at all times.28 (Citations omitted)ChanRoblesVirtualawlibrary
Conformably, liberal construction of Labor Code provisions in favor of workers is stipulated
by Article 4 of the Labor Code:chanRoblesvirtualLawlibrary
Art. 4. Construction in favor of labor. All doubts in the implementation and
interpretation of the provisions of this Code, including its implementing rules
and regulations, shall be resolved in favor of labor.ChanRoblesVirtualawlibrary
This case is quintessentially paradigmatic of the need for the law to be applied in order to
ensure social justice. The resolution of this case should be guided by the constitutional
command for courts to take a preferential view in favor of labor in ambitious cases.

This case revolves around an alleged discrepancy between the amounts indicated on a
single ticket. For the paltry sum of P196.00 that petitioner failed to remit in his sole
documented instance of apparent misconduct, petitioner's employment was terminated. He
was deprived of his means of subsistence.chanrobleslaw

II

Misconduct and breach of trust are just causes for terminating employment only when
attended by such gravity as would leave the employer no other viable recourse but to cut
off an employee's livelihood.

The Labor Code recognizes serious misconduct, willful breach of trust or loss of confidence,
and other analogous causes as just causes for termination of
employment:chanRoblesvirtualLawlibrary
Article 282. Termination by employer. An employer may terminate an
employment for any of the following just 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;

Page 41 of 74
 (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.

Serious misconduct as a just cause for termination was discussed in Yabut v. Manila Electric
Co.:29
Misconduct is defined as 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." For serious
misconduct to justify dismissal, the following requisites must be present:
(a) it must be serious; (b) it must relate to the performance of the
employee's duties; and (c) it must show that the employee has become unfit
to continue working for the employer.30 (Emphasis supplied, citation
omitted)ChanRoblesVirtualawlibrary
Thus, it is not enough for an employee to be found to have engaged in improper or wrongful
conduct. To justify termination of employment, misconduct must be so severe as to make it
evident that no other penalty but the termination of the employee's livelihood is viable.

In Philippine Plaza Holdings v. Episcope,31 we discussed the requisites for valid dismissal on
account of willful breach of trust:chanRoblesvirtualLawlibrary
Among the just causes for termination is the employer's loss of trust and
confidence in its employee. Article 296 (c) (formerly Article 282 [c]) of the
Labor Code provides that an employer may terminate the services of an
employee for fraud or willful breach of the trust reposed in him. But in order
for the said cause to be properly invoked, certain requirements must be
complied with[,] namely[:] (1) the employee concerned must be holding a
position of trust and confidence and (2) there must be an act that would
justify the loss of trust and confidence.32ChanRoblesVirtualawlibrary
Relating to the first requisite, Philippine Plaza Holdings clarified that two (2) classes of
employees are considered to hold positions of trust:chanRoblesvirtualLawlibrary
It is noteworthy to mention that there are two classes of positions of trust: on
the one hand, there are managerial employees whose primary duty consists
of the management of the establishment in which they are employed or of a
department or a subdivision thereof, and to other officers or members of the
managerial staff; on the other hand, there are fiduciary rank-and-file
employees, such as cashiers, auditors, property custodians, or those who, in
the normal exercise of their functions, regularly handle significant amounts of
money or property. These employees, though rank-and-file, are routinely
charged with the care and custody of the employer's money or property, and
are thus classified as occupying positions of trust and confidence.33 (Emphasis
supplied)ChanRoblesVirtualawlibrary
The position an employee holds is not the sole criterion. More important than this formalistic
requirement is that loss of trust and confidence must be justified. As with misconduct as
basis for terminating employment, breach of trust demands that a degree of severity attend
the employee's breach of trust. In China City Restaurant Corporation v. National Labor

Page 42 of 74
Relations Commission,34 this court emphasized the need for
caution:chanRoblesvirtualLawlibrary
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.

Irregularities or malpractices should not be allowed to escape the scrutiny of

this Court. Solicitude for the protection of the rights of the working class [is]
of prime importance. Although this is not [al 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.35(Emphasis
supplied)ChanRoblesVirtualawlibrary
ChanRoblesVirtualawlibrary
III

The social justice suppositions underlying labor laws require that the statutory grounds
justifying termination of employment should not be read to justify the view that bus
conductors should, in all cases, be free from any kind of error. Not every improper act
should be taken to justify the termination of employment.

Concededly, bus conductors handle money. To this extent, their work may be analogous to
that of tellers, cashiers, and other similarly situated rank-and-file employees who occupy
positions of trust and confidence. However, even granting that the first requisite for
termination of employment on account of willful breach of trust has been satisfied, we find it
improper to sustain the validity of the termination of petitioner's employment.

We take judicial notice of bus conductors' everyday work. Bus conductors receive,
exchange, and keep money paid by passengers by way of transportation fare. They keep
track of payments and make computations down to the last centavo, literally on their feet
while a bus is in transit.

Regardless of whether a bus is driving through awkward spaces—through steep inclines,

rugged roads, or sharp turns—or of whether a bus is packed with standing passengers, the
lonesome task of keeping track of the passengers' payments falls upon a bus conductor.

Thus, while they do handle money, their circumstances are not at all the same as those of
regular cashiers. They have to think quickly, literally on their feet. Regular cashiers, on the
other hand, have the time and comfort to deliberately and carefully examine the
transactions of their employer.

However, handling passengers' fare payments is not their sole function. Bus conductors
assist drivers as they maneuver buses through tight spaces while they are in transit, depart,
or park. They often act as dispatchers in bus stops and other such places, assist passengers
as they embark and alight, and sometimes even help passengers load and unload goods and
cargo. They manage the available space in a bus and ensure that no space is wasted as the
bus accommodates more passengers. Along with drivers, bus conductors commit to memory
the destination of each passenger so that they can anticipate their stops.

There are several ways to manifest the severity that suffices to qualify petitioner's alleged
misconduct or breach of trust as so grave that terminating his employment is warranted. It
may be through the nature of the act itself: spanning an entire spectrum between, on one
end, an overlooked error, made entirely in good faith; and, on another end, outright

Page 43 of 74
larceny. It may be through the sheer amount mishandled. It may be through frequency of
acts. It may be through other attendant circumstances, such as attempts to destroy or
conceal records and other evidence, or evidence of a motive to undermine the business of
an employer.

We fail to appreciate any of these in this case.

To reiterate, what is involved is a paltry amount of P196.00. All that has been proven is the
existence of a discrepancy. No proof has been adduced of ill-motive or even
of gross negligence. From all indications, petitioner stood charged with a lone, isolated
instance of apparent wrongdoing.

The records are bereft of evidence showing a pattern of discrepancies chargeable against
petitioner. Seen in the context of his many years of service to his employer and in the
absence of clear proof showing otherwise, the presumption should be that he has performed
his functions faithfully and regularly. It can be assumed that he has issued the correct
tickets and given accurate amounts of change to the hundreds or even thousands of
passengers that he encountered throughout his tenure. It is more reasonable to assume
that—except for a single error costing a loss of only P196.00—the company would have
earned the correct expected margins per passenger, per trip, and per bus that it allowed to
travel.

Absent any other supporting evidence, the error in a single ticket issued by petitioner can
hardly be used to justify the inference that he has committed serious misconduct or has
acted in a manner that runs afoul of his employer's trust. More so, petitioner cannot be
taken to have engaged in a series of acts evincing a pattern or a design to defraud his
employer. Terminating his employment on these unfounded reasons is manifestly unjust.

To infer from a single error that petitioner committed serious misconduct or besmirched his
employer's trust is grave abuse of discretion. It is an inference that is arbitrary and
capricious. It is contrary to the high regard for labor and social justice enshrined in our
Constitution and our labor laws.

The Court of Appeals committed an error of law correctible by a petition for review under
Rule 45. It erred when it held that the National Labor Relations did not commit grave abuse
of discretion when the latter did not engage in the requisite scrutiny to review the inference
and its bases.chanrobleslaw

IV

As his employment was illegally and unjustly terminated, petitioner is entitled to full
backwages and benefits from the time of his termination until the finality of this Decision.
He is likewise entitled to separation pay in the amount of one (1) month's salary for every
year of service until the finality of this Decision, with a fraction of a year of at least six (6)
months being counted as one (1) whole year.

As he was compelled to litigate in order to seek relief for the illegal and unjust termination
of his employment, petitioner is likewise entitled to attorney's fees in the amount of 10% of
the total monetary award.36

"Moral damages are awarded in termination cases where the employee's dismissal was
attended by bad faith, malice or fraud, or where it constitutes an act oppressive to labor, or
where it was done in a manner contrary to morals, good customs or public policy." 37Also, to

Page 44 of 74
provide an "example or correction for the public good,"38 exemplary damages may be
awarded.

However, we find no need to award these damages in favor of petitioner. While the
termination of his employment was invalid, we nevertheless do not find respondent Genesis
to have acted with such a degree of malice as to act out of a design to oppress petitioner. It
remains that a discrepancy and shortage chargeable to petitioner was uncovered, although
this discrepancy and shortage does not justify a penalty as grave as termination of
employment.chanrobleslaw

Respondent Riza A. Moises may not be held personally liable for the illegal termination of
petitioner's employment.

As we explained in Saudi Arabian Airlines v. Rebesencio:39

A corporation has a personality separate and distinct from those of the
persons composing it. Thus, as a rule, corporate directors and officers are not
liable for the illegal termination of a corporation's employees. It is only when
they acted in bad faith or with malice that they become solidarity liable with
the corporation.

In Ever Electrical Manufacturing, Inc. (EEMI) v. Samahang Manggagawa ng

Ever Electrical, this court clarified that "[b]ad faith does not connote bad
judgment or negligence; it imports a dishonest purpose or some moral
obliquity and conscious doing of wrong; it means breach of a known duty
through some motive or interest or ill will; it partakes of the nature of
fraud."40ChanRoblesVirtualawlibrary
Petitioner has not produced proof to show that respondent Riza A. Moises acted in bad faith
or with malice as regards the termination of his employment. Thus, she did not incur any
personal liability.

WHEREFORE, the Petition for Review on Certiorari is PARTIALLY GRANTED. The assailed
Decision dated July 8, 2014 and the assailed Resolution dated November 20, 2014 of the
Court of Appeals Fifth Division in CA-G.R. SP No. 130801, which dismissed the Petition
for Certiorari filed by petitioner Richard N. Rivera and affirmed the February 28, 2013 and
April 30, 2013 Resolutions of the National Labor Relations Commission Second Division, as
well as the June 26, 2012 Decision of Labor Arbiter Gaudencio P. Demaisip, Jr.,
are REVERSED and SET ASIDE. Accordingly, respondent Genesis Transport Service, Inc. is
ordered to pay petitioner:

(1) Full backwages and other benefits computed from July 30, 2010, when petitioner's
employment was illegally terminated, until the finality of this Decision;

(2) Separation pay computed from June 2002, when petitioner commenced employment,
until the finality of this Decision, at the rate of one (1) month's salary for every year of
service, with a fraction of a year of at least six (6) months being counted as one (1)
whole year; and

(3) Attorney's fees equivalent to ten percent (10%) of the total award.

The case is REMANDED to the Labor Arbiter to make a detailed computation of the

Page 45 of 74
amounts due to petitioner, which respondents should pay without delay.

The case is DISMISSED with respect to respondent Riza A. Moises.

SO ORDERED.chanroblesvirtuallawlibrary

[G.R. NO. 148132 - January 28, 2008]

SMART COMMUNICATIONS, INC., Petitioner, v. REGINA M. ASTORGA, Respondent.

[G.R. NO. 151079 - January 28, 2008]

SMART COMMUNICATIONS, INC., Petitioner, v. REGINA M. ASTORGA, Respondent.

[G.R. NO. 151372 - January 28, 2008]

REGINA M. ASTORGA, Petitioner, v. SMART COMMUNICATIONS, INC. and ANN

MARGARET V. SANTIAGO, Respondents.

DECISION

NACHURA, J.:

For the resolution of the Court are three consolidated Petitions for Review
on Certiorari under Rule 45 of the Rules of Court. G.R. No. 148132 assails the February 28,
2000 Decision1 and the May 7, 2001 Resolution2 of the Court of Appeals (CA) in CA-G.R. SP.
No. 53831. G.R. NOS. 151079 and 151372 question the June 11, 2001 Decision 3and the
December 18, 2001 Resolution4 in CA-G.R. SP. No. 57065.

Regina M. Astorga (Astorga) was employed by respondent Smart Communications,

Incorporated (SMART) on May 8, 1997 as District Sales Manager of the Corporate Sales
Marketing Group/ Fixed Services Division (CSMG/FSD). She was receiving a monthly salary
of P33,650.00. As District Sales Manager, Astorga enjoyed additional benefits, namely,
annual performance incentive equivalent to 30% of her annual gross salary, a group life and
hospitalization insurance coverage, and a car plan in the amount of P455,000.00.5

Page 46 of 74
In February 1998, SMART launched an organizational realignment to achieve more efficient
operations. This was made known to the employees on February 27, 1998.6 Part of the
reorganization was the outsourcing of the marketing and sales force. Thus, SMART entered
into a joint venture agreement with NTT of Japan, and formed SMART-NTT Multimedia,
Incorporated (SNMI). Since SNMI was formed to do the sales and marketing work, SMART
abolished the CSMG/FSD, Astorga's division.

To soften the blow of the realignment, SNMI agreed to absorb the CSMG personnel who
would be recommended by SMART. SMART then conducted a performance evaluation of
CSMG personnel and those who garnered the highest ratings were favorably recommended
to SNMI. Astorga landed last in the performance evaluation, thus, she was not
recommended by SMART. SMART, nonetheless, offered her a supervisory position in the
Customer Care Department, but she refused the offer because the position carried lower
salary rank and rate.

Despite the abolition of the CSMG/FSD, Astorga continued reporting for work. But on March
3, 1998, SMART issued a memorandum advising Astorga of the termination of her
employment on ground of redundancy, effective April 3, 1998. Astorga received it on March
16, 1998.7

The termination of her employment prompted Astorga to file a Complaint8 for illegal
dismissal, non-payment of salaries and other benefits with prayer for moral and exemplary
damages against SMART and Ann Margaret V. Santiago (Santiago). She claimed that
abolishing CSMG and, consequently, terminating her employment was illegal for it violated
her right to security of tenure. She also posited that it was illegal for an employer, like
SMART, to contract out services which will displace the employees, especially if the
contractor is an in-house agency.9

SMART responded that there was valid termination. It argued that Astorga was dismissed by
reason of redundancy, which is an authorized cause for termination of employment, and the
dismissal was effected in accordance with the requirements of the Labor Code. The
redundancy of Astorga's position was the result of the abolition of CSMG and the creation of
a specialized and more technically equipped SNMI, which is a valid and legitimate exercise
of management prerogative.10

In the meantime, on May 18, 1998, SMART sent a letter to Astorga demanding that she pay
the current market value of the Honda Civic Sedan which was given to her under the
company's car plan program, or to surrender the same to the company for proper
disposition.11 Astorga, however, failed and refused to do either, thus prompting SMART to
file a suit for replevin with the Regional Trial Court of Makati (RTC) on August 10, 1998. The
case was docketed as Civil Case No. 98-1936 and was raffled to Branch 57.12

Astorga moved to dismiss the complaint on grounds of (i) lack of jurisdiction; (ii) failure to
state a cause of action; (iii) litis pendentia; and (iv) forum-shopping. Astorga posited that
the regular courts have no jurisdiction over the complaint because the subject thereof
pertains to a benefit arising from an employment contract; hence, jurisdiction over the
same is vested in the labor tribunal and not in regular courts.13

Pending resolution of Astorga's motion to dismiss the replevin case, the Labor Arbiter
rendered a Decision14dated August 20, 1998, declaring Astorga's dismissal from
employment illegal. While recognizing SMART's right to abolish any of its departments, the
Labor Arbiter held that such right should be exercised in good faith and for causes beyond

Page 47 of 74
its control. The Arbiter found the abolition of CSMG done neither in good faith nor for causes
beyond the control of SMART, but a ploy to terminate Astorga's employment. The Arbiter
also ruled that contracting out the functions performed by Astorga to an in-house agency
like SNMI was illegal, citing Section 7(e), Rule VIII-A of the Rules Implementing the Labor
Code.

Accordingly, the Labor Arbiter ordered:

WHEREFORE, judgment is hereby rendered declaring the dismissal of

[Astorga] to be illegal and unjust. [SMART and Santiago] are hereby ordered
to:

1. Reinstate [Astorga] to [her] former position or to a substantially equivalent

position, without loss of seniority rights and other privileges, with full
backwages, inclusive of allowances and other benefits from the time of [her]
dismissal to the date of reinstatement, which computed as of this date, are as
follows:

(a) Astorga
BACKWAGES; (P33,650.00 x 4 months) = P134,600.00
UNPAID SALARIES (February 15, 1998-April
3, 1998
February 15-28, 1998 = P 16,823.00
March 1-31, [1998] = P 33,650.00
April 1-3, 1998 = P 3,882.69
CAR MAINTENANCE ALLOWANCE = P 8,000.00
(P2,000.00 x 4)
FUEL ALLOWANCE = P 14,457.83
(300 liters/mo. x 4 mos. at P12.04/liter)
TOTAL = P211,415.52

xxx

3. Jointly and severally pay moral damages in the amount of P500,000.00 x x

x and exemplary damages in the amount of P300,000.00. x x x

4. Jointly and severally pay 10% of the amount due as attorney's fees.

SO ORDERED.15

Subsequently, on March 29, 1999, the RTC issued an Order16 denying Astorga's motion to
dismiss the replevin case. In so ruling, the RTC ratiocinated that:

Assessing the [submission] of the parties, the Court finds no merit in the
motion to dismiss.

As correctly pointed out, this case is to enforce a right of possession over a

company car assigned to the defendant under a car plan privilege
arrangement. The car is registered in the name of the plaintiff. Recovery
thereof via replevin suit is allowed by Rule 60 of the 1997 Rules of Civil

Page 48 of 74
 Procedure, which is undoubtedly within the jurisdiction of the Regional Trial
Court.

In the Complaint, plaintiff claims to be the owner of the company car and
despite demand, defendant refused to return said car. This is clearly sufficient
statement of plaintiff's cause of action.

Neither is there forum shopping. The element of litis penden[t]ia does not
appear to exist because the judgment in the labor dispute will not
constitute res judicata to bar the filing of this case.

WHEREFORE, the Motion to Dismiss is hereby denied for lack of merit.

SO ORDERED.17

Astorga filed a motion for reconsideration, but the RTC denied it on June 18, 1999. 18

Astorga elevated the denial of her motion via certiorari to the CA, which, in its February 28,
2000 Decision,19 reversed the RTC ruling. Granting the petition and, consequently,
dismissing the replevin case, the CA held that the case is intertwined with Astorga's
complaint for illegal dismissal; thus, it is the labor tribunal that has rightful jurisdiction over
the complaint. SMART's motion for reconsideration having been denied, 20 it elevated the
case to this Court, now docketed as G.R. No. 148132.

Meanwhile, SMART also appealed the unfavorable ruling of the Labor Arbiter in the illegal
dismissal case to the National Labor Relations Commission (NLRC). In its September 27,
1999 Decision,21 the NLRC sustained Astorga's dismissal. Reversing the Labor Arbiter, the
NLRC declared the abolition of CSMG and the creation of SNMI to do the sales and
marketing services for SMART a valid organizational action. It overruled the Labor Arbiter's
ruling that SNMI is an in-house agency, holding that it lacked legal basis. It also declared
that contracting, subcontracting and streamlining of operations for the purpose of increasing
efficiency are allowed under the law. The NLRC further found erroneous the Labor Arbiter's
disquisition that redundancy to be valid must be impelled by economic reasons, and upheld
the redundancy measures undertaken by SMART.

The NLRC disposed, thus:

WHEREFORE, the Decision of the Labor Arbiter is hereby reversed and set
aside. [Astorga] is further ordered to immediately return the company vehicle
assigned to her. [Smart and Santiago] are hereby ordered to pay the final
wages of [Astorga] after [she] had submitted the required supporting papers
therefor.

SO ORDERED.22

Astorga filed a motion for reconsideration, but the NLRC denied it on December 21, 1999. 23

Astorga then went to the CA via certiorari. On June 11, 2001, the CA rendered a
Decision24 affirming with modification the resolutions of the NLRC. In gist, the CA agreed
with the NLRC that the reorganization undertaken by SMART resulting in the abolition of
CSMG was a legitimate exercise of management prerogative. It rejected Astorga's posturing

Page 49 of 74
that her non-absorption into SNMI was tainted with bad faith. However, the CA found that
SMART failed to comply with the mandatory one-month notice prior to the intended
termination. Accordingly, the CA imposed a penalty equivalent to Astorga's one-month
salary for this non-compliance. The CA also set aside the NLRC's order for the return of the
company vehicle holding that this issue is not essentially a labor concern, but is civil in
nature, and thus, within the competence of the regular court to decide. It added that the
matter had not been fully ventilated before the NLRC, but in the regular court.

Astorga filed a motion for reconsideration, while SMART sought partial reconsideration, of
the Decision. On December 18, 2001, the CA resolved the motions, viz.:

WHEREFORE, [Astorga's] motion for reconsideration is hereby PARTIALLY

GRANTED. [Smart] is hereby ordered to pay [Astorga] her backwages from
15 February 1998 to 06 November 1998. [Smart's] motion for reconsideration
is outrightly DENIED.

SO ORDERED.25

Astorga and SMART came to us with their respective petitions for review assailing the CA
ruling, docketed as G.R Nos. 151079 and 151372. On February 27, 2002, this Court ordered
the consolidation of these petitions with G.R. No. 148132. 26

In her Memorandum, Astorga argues:

THE COURT OF APPEALS ERRED IN UPHOLDING THE VALIDITY OF ASTORGA'S

DISMISSAL DESPITE THE FACT THAT HER DISMISSAL WAS EFFECTED IN
CLEAR VIOLATION OF THE CONSTITUTIONAL RIGHT TO SECURITY OF
TENURE, CONSIDERING THAT THERE WAS NO GENUINE GROUND FOR HER
DISMISSAL.

II

SMART'S REFUSAL TO REINSTATE ASTORGA DURING THE PENDENCY OF THE

APPEAL AS REQUIRED BY ARTICLE 223 OF THE LABOR CODE, ENTITLES
ASTORGA TO HER SALARIES DURING THE PENDENCY OF THE APPEAL.

III

THE COURT OF APPEALS WAS CORRECT IN HOLDING THAT THE REGIONAL

TRIAL COURT HAS NO JURISDICTION OVER THE COMPLAINT FOR RECOVERY
OF A CAR WHICH ASTORGA ACQUIRED AS PART OF HER EMPLOYEE (sic)
BENEFIT.27

On the other hand, Smart in its Memoranda raises the following issues:

WHETHER THE HONORABLE COURT OF APPEALS HAS DECIDED A QUESTION

OF SUBSTANCE IN A WAY PROBABLY NOT IN ACCORD WITH LAW OR WITH

Page 50 of 74
 APPLICABLE DECISION OF THE HONORABLE SUPREME COURT AND HAS SO
FAR DEPARTED FROM THE ACCEPTED AND USUAL COURSE OF JUDICIAL
PROCEEDINGS AS TO CALL FOR AN EXERCISE OF THE POWER OF
SUPERVISION WHEN IT RULED THAT SMART DID NOT COMPLY WITH THE
NOTICE REQUIREMENTS PRIOR TO TERMINATING ASTORGA ON THE GROUND
OF REDUNDANCY.

II

WHETHER THE NOTICES GIVEN BY SMART TO ASTORGA AND THE

DEPARTMENT OF LABOR AND EMPLOYMENT ARE SUBSTANTIAL COMPLIANCE
WITH THE NOTICE REQUIREMENTS BEFORE TERMINATION.

III

WHETHER THE RULE ENUNCIATED IN SERRANO v. NATIONAL LABOR

RELATIONS COMMISSION FINDS APPLICATION IN THE CASE AT BAR
CONSIDERING THAT IN THE SERRANO CASE THERE WAS ABSOLUTELY NO
NOTICE AT ALL.28

IV

WHETHER THE HONORABLE COURT OF APPEALS HAS DECIDED A QUESTION

OF SUBSTANCE IN A WAY PROBABLY NOT IN ACCORD WITH LAW OR WITH
APPLICABLE DECISION[S] OF THE HONORABLE SUPREME COURT AND HAS
SO FAR DEPARTED FROM THE ACCEPTED AND USUAL COURSE OF JUDICIAL
PROCEEDINGS AS TO CALL FOR AN EXERCISE OF THE POWER OF
SUPERVISION WHEN IT RULED THAT THE REGIONAL TRIAL COURT DOES
NOT HAVE JURISDICTION OVER THE COMPLAINT FOR REPLEVIN FILED BY
SMART TO RECOVER ITS OWN COMPANY VEHICLE FROM A FORMER
EMPLOYEE WHO WAS LEGALLY DISMISSED.

WHETHER THE HONORABLE COURT OF APPEALS HAS FAILED TO APPRECIATE

THAT THE SUBJECT OF THE REPLEVIN CASE IS NOT THE ENFORCEMENT OF A
CAR PLAN PRIVILEGE BUT SIMPLY THE RECOVERY OF A COMPANY CAR.

VI

WHETHER THE HONORABLE COURT OF APPEALS HAS FAILED TO APPRECIATE

THAT ASTORGA CAN NO LONGER BE CONSIDERED AS AN EMPLOYEE OF
SMART UNDER THE LABOR CODE.29

The Court shall first deal with the propriety of dismissing the replevin case filed with the
RTC of Makati City allegedly for lack of jurisdiction, which is the issue raised in G.R. No.
148132.

Replevin is an action whereby the owner or person entitled to repossession of goods or

chattels may recover those goods or chattels from one who has wrongfully distrained or
taken, or who wrongfully detains such goods or chattels. It is designed to permit one having

Page 51 of 74
right to possession to recover property in specie from one who has wrongfully taken or
detained the property.30 The term may refer either to the action itself, for the recovery of
personalty, or to the provisional remedy traditionally associated with it, by which possession
of the property may be obtained by the plaintiff and retained during the pendency of the
action.31

That the action commenced by SMART against Astorga in the RTC of Makati City was one for
replevin hardly admits of doubt.

In reversing the RTC ruling and consequently dismissing the case for lack of jurisdiction, the
CA made the following disquisition, viz.:

[I]t is plain to see that the vehicle was issued to [Astorga] by [Smart] as part
of the employment package. We doubt that [SMART] would extend [to
Astorga] the same car plan privilege were it not for her employment as
district sales manager of the company. Furthermore, there is no civil contract
for a loan between [Astorga] and [Smart]. Consequently, We find that the car
plan privilege is a benefit arising out of employer-employee relationship.
Thus, the claim for such falls squarely within the original and exclusive
jurisdiction of the labor arbiters and the NLRC.32

We do not agree. Contrary to the CA's ratiocination, the RTC rightfully assumed jurisdiction
over the suit and acted well within its discretion in denying Astorga's motion to dismiss.
SMART's demand for payment of the market value of the car or, in the alternative, the
surrender of the car, is not a labor, but a civil, dispute. It involves the relationship of debtor
and creditor rather than employee-employer relations.33 As such, the dispute falls within the
jurisdiction of the regular courts.

In Basaya, Jr. v. Militante,34 this Court, in upholding the jurisdiction of the RTC over the
replevin suit, explained:

Replevin is a possessory action, the gist of which is the right of possession in

the plaintiff. The primary relief sought therein is the return of the property in
specie wrongfully detained by another person. It is an ordinary statutory
proceeding to adjudicate rights to the title or possession of personal property.
The question of whether or not a party has the right of possession over the
property involved and if so, whether or not the adverse party has wrongfully
taken and detained said property as to require its return to plaintiff, is outside
the pale of competence of a labor tribunal and beyond the field of
specialization of Labor Arbiters.

xxx

The labor dispute involved is not intertwined with the issue in the Replevin
Case. The respective issues raised in each forum can be resolved
independently on the other. In fact in 18 November 1986, the NLRC in the
case before it had issued an Injunctive Writ enjoining the petitioners from
blocking the free ingress and egress to the Vessel and ordering the petitioners
to disembark and vacate. That aspect of the controversy is properly settled
under the Labor Code. So also with petitioners' right to picket. But the
determination of the question of who has the better right to take possession
of the Vessel and whether petitioners can deprive the Charterer, as the legal

Page 52 of 74
 possessor of the Vessel, of that right to possess in addressed to the
competence of Civil Courts.

In thus ruling, this Court is not sanctioning split jurisdiction but defining
avenues of jurisdiction as laid down by pertinent laws.

The CA, therefore, committed reversible error when it overturned the RTC ruling and
ordered the dismissal of the replevin case for lack of jurisdiction.

Having resolved that issue, we proceed to rule on the validity of Astorga's dismissal.

Astorga was terminated due to redundancy, which is one of the authorized causes for the
dismissal of an employee. 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,35 viz:

x x x 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 termination of his services
does not show that his position had not become redundant. Indeed, in any
well organized business enterprise, it would be surprising to find duplication
of work and two (2) or more people doing the work of one person. We believe
that redundancy, for purposes of the Labor Code, exists where the services of
an employee are in excess of what is reasonably demanded by the actual
requirements of the enterprise. Succinctly put, a position is redundant where
it is superfluous, and superfluity of a position or positions may be the
outcome of a number of factors, such as overhiring of workers, decreased
volume of business, or dropping of a particular product line or service activity
previously manufactured or undertaken by the enterprise.

The characterization of an employee's 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.36

Astorga claims that the termination of her employment was illegal and tainted with bad
faith. She asserts that the reorganization was done in order to get rid of her. But except for
her barefaced allegation, no convincing evidence was offered to prove it. This Court finds it
extremely difficult to believe that SMART would enter into a joint venture agreement with
NTT, form SNMI and abolish CSMG/FSD simply for the sole purpose of easing out a
particular employee, such as Astorga. Moreover, Astorga never denied that SMART offered
her a supervisory position in the Customer Care Department, but she refused the offer
because the position carried a lower salary rank and rate. If indeed SMART simply wanted to
get rid of her, it would not have offered her a position in any department in the enterprise.

Astorga also states that the justification advanced by SMART is not true because there was
no compelling economic reason for redundancy. But contrary to her claim, an employer is
not precluded from adopting a new policy conducive to a more economical and effective
management even if it is not experiencing economic reverses. Neither does the law require
that the employer should suffer financial losses before he can terminate the services of the
employee on the ground of redundancy.37

Page 53 of 74
We agree with the CA that the organizational realignment introduced by SMART, which
culminated in the abolition of CSMG/FSD and termination of Astorga's employment was an
honest effort to make SMART's sales and marketing departments more efficient and
competitive. As the CA had taken pains to elucidate:

x x x a careful and assiduous review of the records will yield no other

conclusion than that the reorganization undertaken by SMART is for no
purpose other than its declared objective - as a labor and cost savings device.
Indeed, this Court finds no fault in SMART's decision to outsource the
corporate sales market to SNMI in order to attain greater productivity.
[Astorga] belonged to the Sales Marketing Group under the Fixed Services
Division (CSMG/FSD), a distinct sales force of SMART in charge of selling
SMART's telecommunications services to the corporate market. SMART, to
ensure it can respond quickly, efficiently and flexibly to its customer's
requirement, abolished CSMG/FSD and shortly thereafter assigned its
functions to newly-created SNMI Multimedia Incorporated, a joint venture
company of SMART and NTT of Japan, for the reason that CSMG/FSD does not
have the necessary technical expertise required for the value added services.
By transferring the duties of CSMG/FSD to SNMI, SMART has created a more
competent and specialized organization to perform the work required for
corporate accounts. It is also relieved SMART of all administrative costs -
management, time and money-needed in maintaining the CSMG/FSD. The
determination to outsource the duties of the CSMG/FSD to SNMI was, to Our
mind, a sound business judgment based on relevant criteria and is therefore a
legitimate exercise of management prerogative.

Indeed, out of our concern for those lesser circumstanced in life, this Court has inclined
towards the worker and upheld his cause in most of his conflicts with his employer. This
favored treatment is consonant with the social justice policy of the Constitution. But while
tilting the scales of justice in favor of workers, the fundamental law also guarantees the
right of the employer to reasonable returns for his investment. 38 In this light, we must
acknowledge the prerogative of the employer to adopt such measures as will promote
greater efficiency, reduce overhead costs and enhance prospects of economic gains, albeit
always within the framework of existing laws. Accordingly, we sustain the reorganization
and redundancy program undertaken by SMART.

However, as aptly found by the CA, SMART failed to comply with the mandated one (1)
month notice prior to termination. The record is clear that Astorga received the notice of
termination only on March 16, 199839 or less than a month prior to its effectivity on April 3,
1998. Likewise, the Department of Labor and Employment was notified of the redundancy
program only on March 6, 1998.40

Article 283 of the Labor Code clearly provides:

Art. 283. Closure of establishment and reduction of personnel. - The employer

may also terminate the employment of any employee due to the installation
of labor saving devices, redundancy, retrenchment to prevent losses or the
closing or cessation of operation of the establishment or undertaking unless
the closing is for the purpose of circumventing the provisions of this Title, by
serving a written notice on the workers and the Ministry of Labor and
Employment at least one (1) month before the intended date thereof x x x.

Page 54 of 74
SMART's assertion that Astorga cannot complain of lack of notice because the organizational
realignment was made known to all the employees as early as February 1998 fails to
persuade. Astorga's actual knowledge of the reorganization cannot replace the formal and
written notice required by the law. In the written notice, the employees are informed of the
specific date of the termination, at least a month prior to the effectivity of such termination,
to give them sufficient time to find other suitable employment or to make whatever
arrangements are needed to cushion the impact of termination. In this case,
notwithstanding Astorga's knowledge of the reorganization, she remained uncertain about
the status of her employment until SMART gave her formal notice of termination. But such
notice was received by Astorga barely two (2) weeks before the effective date of
termination, a period very much shorter than that required by law.

Be that as it may, this procedural infirmity would not render the termination of Astorga's
employment illegal. The validity of termination can exist independently of the procedural
infirmity of the dismissal.41 In DAP Corporation v. CA,42 we found the dismissal of the
employees therein valid and for authorized cause even if the employer failed to comply with
the notice requirement under Article 283 of the Labor Code. This Court upheld the dismissal,
but held the employer liable for non-compliance with the procedural requirements.

The CA, therefore, committed no reversible error in sustaining Astorga's dismissal and at
the same time, awarding indemnity for violation of Astorga's statutory rights.

However, we find the need to modify, by increasing, the indemnity awarded by the CA to
Astorga, as a sanction on SMART for non-compliance with the one-month mandatory notice
requirement, in light of our ruling in Jaka Food Processing Corporation v. Pacot, 43 viz.:

[I]f the dismissal is based on a just cause under Article 282 but the employer
failed to comply with the notice requirement, the sanction to be imposed upon
him should be tempered because the dismissal process was, in effect,
initiated by an act imputable to the employee, and (2) if the dismissal is
based on an authorized cause under Article 283 but the employer failed to
comply with the notice requirement, the sanction should be stiffer because
the dismissal process was initiated by the employer's exercise of his
management prerogative.

We deem it proper to increase the amount of the penalty on SMART to P50,000.00.

As provided in Article 283 of the Labor Code, Astorga is, likewise, entitled to separation pay
equivalent to at least one (1) month salary or to at least one (1) month's pay for every year
of service, whichever is higher. The records show that Astorga's length of service is less
than a year. She is, therefore, also entitled to separation pay equivalent to one (1) month
pay.

Finally, we note that Astorga claimed non-payment of wages from February 15, 1998. This
assertion was never rebutted by SMART in the proceedings a quo. No proof of payment was
presented by SMART to disprove the allegation. It is settled that in labor cases, the burden
of proving payment of monetary claims rests on the employer. 44 SMART failed to discharge
the onus probandi. Accordingly, it must be held liable for Astorga's salary from February 15,
1998 until the effective date of her termination, on April 3, 1998.

However, the award of backwages to Astorga by the CA should be deleted for lack of basis.
Backwages is a relief given to an illegally dismissed employee. Thus, before backwages may

Page 55 of 74
be granted, there must be a finding of unjust or illegal dismissal from work.45 The Labor
Arbiter ruled that Astorga was illegally dismissed. But on appeal, the NLRC reversed the
Labor Arbiter's ruling and categorically declared Astorga's dismissal valid. This ruling was
affirmed by the CA in its assailed Decision. Since Astorga's dismissal is for an authorized
cause, she is not entitled to backwages. The CA's award of backwages is totally inconsistent
with its finding of valid dismissal.

WHEREFORE, the petition of SMART docketed as G.R. No. 148132 is GRANTED. The
February 28, 2000 Decision and the May 7, 2001 Resolution of the Court of Appeals in CA-
G.R. SP. No. 53831 are SET ASIDE. The Regional Trial Court of Makati City, Branch 57
is DIRECTED to proceed with the trial of Civil Case No. 98-1936 and render its Decision
with reasonable dispatch.

On the other hand, the petitions of SMART and Astorga docketed as G.R. NOS. 151079 and
151372 are DENIED. The June 11, 2001 Decision and the December 18, 2001 Resolution in
CA-G.R. SP. No. 57065, are AFFIRMED withMODIFICATION. Astorga is declared validly
dismissed. However, SMART is ordered to pay Astorga P50,000.00 as indemnity for its non-
compliance with procedural due process, her separation pay equivalent to one (1) month
pay, and her salary from February 15, 1998 until the effective date of her termination on
April 3, 1998. The award of backwages is DELETED for lack of basis.

SO ORDERED.

G.R. No. 115395 February 12, 1998

FILFLEX INDUSTRIAL & MANUFACTURING CORPORATION and/or CELIA

BUENCONSEJO, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, NATIONAL FEDERATION OF LABOR UNIONS
(NAFLU) AND SALUD GALING, respondents.

PANGANIBAN, J.:

Page 56 of 74
Is an employee entitled to back wages during the pendency of her appeal before the NLRC, even if the
assailed labor arbiter's decision did not order her reinstatement? May the NLRC decree back wages
where the employee's dismissal was legal?

The Case

The Court answers these questions in the negative in granting this petition for certiorari under Rule 65 of
the Rules of Court assailing the October 29, 1993 Resolution1of the National Labor Relations
Commission2 (NLRC) which disposed as follows:3

WHEREFORE, the assailed Decision is hereby set aside and a new one is entered dismissing
the complaint for lack of merit.

However, respondents [petitioners herein] are ordered to pay complainant [private respondent
herein] her salaries from the date of the filing of the instant appeal on April 10, 1992 up to the
date of the promulgation of this Resolution, pursuant to Art. 223 of the Labor Code, as amended.

Petitioners also challenge the NLRC's Resolution dated February 7, 1994 which denied their subsequent
motion for reconsideration, for lack of merit.

The labor arbiter's decision, which the NLRC set aside, in NLRC NCR Case No. 00-02-01060-91 dated
March 10, 1992 disposed as follows:4

WHEREFORE, based on the foregoing considerations, judgment is hereby rendered declaring

the dismissal of complainant improper and unjust. Accordingly, respondent is hereby ordered to
pay the complainant limited backwages and other benefits for six (6) months in the amount of
P18,252.00.

Considering however the physical condition of the complainant that was the real cause of her
absences and tardiness, it would be to their mutual advantage and most importantly to the
physical and health welfare of complainant that she is separated from the service with separation
benefits equivalent to 1/2 month basic salary for every year of service, a fraction of six (6) months
equivalent to one year in the amount of P22,815.00.

The charge of unfair labor practice is hereby denied for lack of legal basis.

Individual respondent Celia Buenconsejo is hereby absolved of any liability for she acted only in
her official capacity.

Other claims are denied for lack of merit.

The Facts

Labor Arbiter Daniel C. Cueto recited the facts of this case as follows: 5

Complainant is a sewer who started working with respondent in November 1975. She was
dismissed for abandonment on February 11, 1991. At the time of her dismissal, she was receiving
a salary of P117.00 per day of work. She claimed that while it is true that she was absent from
November 30, 1990 up to December 11, 1990, her dismissal on ground of abandonment is not in
consonance with law considering that her absences was [sic] attributable to chronic ashmatic [sic]
bronchitis which she contacted since early 1990 yet. She presented as evidence the medical
certificate dated March 4, 1991 attesting for [sic] her medical treatment covering the period
January 1990 to May 28, 1990. She claims that her failure to report for work for 11 days was due

Page 57 of 74
 to sickness wherein respondents were notified by her through the telephone. Complainant argued
that she did not abandon her job and that is evidenced by her immediate filing of instant
complaint on February 8, 1991. Her 16 years of service, according to complainant, should have
been considered by respondent before she was dismissed. She prays for reinstatement plus
backwages and also for damages.

Respondents contended otherwise. It is their position that complainant was hired on February 5,
1978 and that since the early period of her employment, she committed various violations of
company rules and regulations ranging from habitual tardiness to frequent absences. Said
misdemeanor registered the highest number of tardiness in the second quarter of 1984
numbering 45 times from 37 times in the first quarter of 1984 whereas in terms of monthly
tardiness, complainant incurred 21 times in March and June, both in 1990 the said tardiness
covered by corresponding memoranda marked as Annexes "A" to "L" for respondents, that
despite the several warnings given, complainant persisted in her tardiness and frequent
absences. By way of evidence, respondent submitted the memorandum (Annex "O") giving
complainant the stern warning for frequent absenteeism incurred in 1988 numbering 49 absences
that affects her performance where the same became worse when she absented for ten (10) days
in August 1989, which was the subject of another memorandum warning that management shall
be constrained to take the necessary drastic action against her due to loss of productive
manhours caused by complainant's excessive absences. Finally, due to complainant's absences
from November 30, 1990 to December 11, 1990 the respondent issued another letter dated
December 11, 1990 to complainant (Annex "R" respondent position paper) requiring her to
explain in writing within 72 hours "why you should not be considered dismissed for having
abandoned your job considering that you have been earlier served warning memos for the similar
violations." Respondents stated that despite the said order, it was only on December 19, 1990
that complainant went to the office of respondent to explain. Respondents were forced to
terminate complainant's employment due to her failure to report for work and explain her absence
for the straight 20 days without any leave or permission for which reason they considered her
continued absence as an abandonment of work.

Declaring "the dismissal of complainant improper and unjust," the labor arbiter awarded her "limited
backwages and other benefits" plus separation pay equivalent to one half month for every year of service.
The labor arbiter did not order her reinstatement, holding that her separation from employment would be
to the parties' "mutual benefit and most importantly to the physical and health welfare of complainant."

Respondent NLRC's Ruling

On appeal, Respondent NLRC ruled that the dismissal of private respondent was justified. It held,
however, that Article 223 of the Labor Code required the reinstatement of private respondent during the
pendency of her appeal. Thus, it awarded back wages for the said period when the appeal was pending
before it, reasoning as follows:6

Verily, respondents-appellants could no longer be faulted when they decided to terminate the
services of complainant for her failure to improve her attendance despite repeated warnings.

However, pursuant to Art. 223 of the Labor Code, as amended, which provides for mandatory
reinstatement whether actual or on payroll, pending appeal, respondent should pay complainant
her salaries from the time the appeal was filed on April 10, 1992 up to the date of the
promulgation of this Resolution.

Dissatisfied, petitioners lodged this recourse before this Court. In the Resolution7 dated June 29, 1994,
this Court issued a temporary restraining order thus:8

Page 58 of 74
 NOW, THEREFORE, you (respondents), your officers, agents, representatives, and/or persons
acting upon your orders or in your place or stead, are hereby ENJOINED from enforcing or
executing the resolutions of public respondent National Labor Relations Commission dated
October 29, 1993 and February 8, 1994, and in any manner or purpose continuing with the
proceedings of the case in NLRC NCR Case No. 00-02-01060-91 entitled "National Federation of
Labor Unions (NAFLU) and Salud Galing vs. Filflex Industrial and Manufacturing Corporation
and/or Celia Buenconsejo" of the Department of Labor and Employment. 9

The Issue

Petitioners raise a single issue: 10

. . . Petitioners submit that the only issue is whether the public respondent NLRC
committed grave abuse of discretion, amounting to lack of jurisdiction, in awarding private
respondent Galing her salaries from the date of the filing of the appeal on April 10, 1992
up to the date of the promulgation of its Resolution on October 29, 1993, given the
undisputed fact of her persistent, repeated, prolonged and contumacious violations of
company rules and regulations.

The Court's Ruling

The petition is meritorious.

Sole Issue: Back wages During Pendency of Appeal

Petitioners argue that the "second paragraph of the dispositive portion of the Decision11 has no basis in
fact or in law." They assert that "the decision of Labor Arbiter Cueto did not call for the reinstatement of
[C]omplainant Galing [private respondent herein], [thus] it follows that there is no basis now for this
Honorable Commission to grant her backwages during the period of appeal. Clearly, Article 223 finds no
application to the instant case."12 They also contend that the assailed Resolution "became inconsistent
with itself. For while it declared the dismissal of the complainant legal, it ruled nevertheless that
[C]omplainant Galing should have been reinstated during the period of
appeal."13

Agreeing with the petition, the solicitor general clarifies that Article 223 of the Labor Code is inapplicable
to the instant case because Labor Arbiter Cueto "did not order the reinstatement of private respondent."
Likewise, the government lawyer agrees that the NLRC Resolution was inherently inconsistent for holding
that the dismissal of Complainant Galing was justified and, at the same time, ruling that she should have
been reinstated during the pendency of the appeal.14

On the other hand, the legal department of the NLRC15maintains that "reinstatement (pending appeal)
whether actual or in payroll is mandatory under Art. 223 of the Code."16

Private respondent adds that under paragraph one, second sentence of the Labor Arbiter's decision,
"there [was] a call for reinstatement of the complainant because of the backwages granted to her."17

We agree with the petitioners and the solicitor general.

No Order of Reinstatement

The relevant law is Article 22318 of the Labor Code, which reads:

Page 59 of 74
 Art. 223. Appeal. — Decisions, awards, or orders of the Labor Arbiter are final and
executory unless appealed to the Commission by any or both parties within ten (10)
calendar days from receipt of such decisions, awards, or orders. Such appeal may be
entertained only on any of the following grounds:

xxx xxx xxx

In any event, the 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.

xxx xxx xxx

(Emphasis supplied.)

In other words, reinstatement during appeal is warranted only when the labor arbiter (LA) himself rules
that the dismissed employee should be reinstated. In the present case, neither the dispositive portion nor
the text of the labor arbiter's decision ordered the reinstatement of private respondent. Further, the back
wages granted to private respondent were specifically limited to the periodprior to the filing of the appeal
with Respondent NLRC. In fact, the LA's decision ordered her separation from service for the parties'
"mutual advantage and most importantly to the physical and health welfare of complainant." Hence, it is
an error and an abuse of discretion for the NLRC to hold that the award of limited back wages, by
implication, included an order for private respondent's reinstatement.

An order for reinstatement must be specifically declared and cannot be presumed; like back wages, it is a
separate and distinct relief given to an illegally dismissed employee.19 There being no specific order for
reinstatement and the order being for complainant's separation, there can be no basis for the award of
salaries/back wages during the pendency of appeal.

NLRC Found Dismissal Justified

In addition to the foregoing discussion, there is an equally cogent reason to sustain the petition. Before
reinstatement or back wages may be granted, there must be unjust or illegal dismissal from work.20 The
labor arbiter ruled that private respondent's "absences and tardiness by itself are sufficient ground for the
complainant's dismissal were it not for reason of sickness which we believe is excusable." 21 On appeal,
however, the NLRC categorically declared that private respondent's dismissal was wholly justified
because her performance was characterized by inefficiency, infractions and absenteeism. 22 Indeed, the
records substantiate the following findings of the NLRC:

It was sufficiently established that complainant's absences from November 11, 1990 until
December 18, 1990 are unauthorized. She never informed the respondent of her whereabouts
which naturally worked to the prejudice to her work. Complainant's assertion that she called-up
the respondent by telephone, informing them of state of illness is a bare allegation, unsupported
by convincing evidence. This [sic] unauthorized absences left no alternative to the respondent but
to seek her explanation on the matter (Rollo, p. 48). Complainant, however did not bother to
explain within a reasonable period of time and she only showed-up in the respondent's office on
December 19, 1990.

xxx xxx xxx

Page 60 of 74
In this particular, complainant's attitude toward her work is characterized by infractions and
inefficiency. It is undisputed that besides her unauthorized absences from November 11, 1990 to
December 18, 1990, she previously incurred various offenses. She was frequently late in
reporting for work during the following period:

First Quarter — 37 times

of 1984

Second — 45 times

Quarter of

1984

First Quarter — 18 times

of 1985

January 1987 — 8 times

February 1987 — 8 times

March 1987 — 13 times

April 1987 — 6 times

May 1987 — 13 times

June 1987 — 19 times

July 1987 — 11 times

August 1987 — 7 times

October 1987 — 13 times

November 1987 — 17 times

December 1987 — 19 times

January 1988 — 13 times

February 1988 — 15 times

March 1988 — 9 times

April 1988 — 3 times

May 1988 — 10 times

Page 61 of 74
 January 1990 — 11 times

March 1990 — 21 times

April 1990 — 16 times

May 1990 — 19 times

June 1990 — 21 times

Evidence likewise disclosed that complainant was absent for 10 days during the month of August
1989 and incurred absences without leave on October 6 and 7, 1989, (Rollo, p. 46 to 47). The
foregoing infractions show the unsatisfactory work performance of complainant. In the case
of Mendoza vs. NLRC, 196 SCRA 606, the Supreme Court held that "the totality of the infractions
that petitioner had committed justifies the penalty of dismissal." Furthermore, complainant was
duly informed of the company rules on absences to the fact that a 7th absence within a calendar
year constitute habitual unexcused absence. (Rollo, p. 44). Instead however of improving her
attendance, complainant continuously ignored the warnings given her by the respondent. This
finds support in the findings of the Labor Arbiter when [sic] ruled that:

. . . All that we can see from the parties pleadings is the fact that complainant
have (sic) been incurring tardiness and absences and that despite numerous
warnings sent to her in fact numbering 16 all in all from 1989 to 1990, she still
persist in incurring absences and tardiness. She had not shown enough
improvement on her attendance the last of which was her absences incurred
from November 30, 1990 to December 19, 1990 without any justification
presented relative to the said absences except the reliance to the certification of
her attending physician which was dated March 4, 1991 that she was under
treatment of the said doctor from "chronic ashtmatic [sic] bronchitis", covering the
period January 19, 1990 to May 28, 1990. While it may be true that complainant
was suffering from the alleged sickness, her absences incurred during the period
November 30, 1990 up to the time when she reported to explain on December
19, 1990 was not supported by competent proof to rely on.

Since the dismissal of private respondent was deemed valid, she cannot be entitled to reinstatement and
back wages.23 An award of back wages by the NLRC during the period of appeal is totally inconsistent
with its finding of a valid dismissal.

Additionally, private respondent cannot now be granted separation pay or any other affirmative relief
previously awarded to her by the labor arbiter but reversed by the NLRC. Since she did not appeal from
the NLRC's Resolution, she is presumed to be satisfied with the adjudication therein. This is in accord
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.24

WHEREFORE, the petition is hereby GRANTED. The award of back wages in the assailed NLRC
Resolution dated October 29, 1993 is DELETED. The temporary restraining order issued on June 29,
1994 is MADE PERMANENT. No costs.

Page 62 of 74
 [G.R. NO. 169549 : September 3, 2008]

JOHN HANCOCK LIFE INSURANCE CORPORATION and/or MICHAEL

PLAXTON,Petitioners, v. JOANNA CANTRE DAVIS, Respondent.

DECISION

CORONA, J.:

Respondent Joanna Cantre Davis was agency administration officer of petitioner John
Hancock Life Insurance Corporation.1

On October 18, 2000, Patricia Yuseco, petitioner's corporate affairs manager, discovered
that her wallet was missing. She immediately reported the loss of her credit cards to AIG
and BPI Express. To her surprise, she was informed that "Patricia Yuseco" had just made
substantial purchases using her credit cards in various stores in the City of Manila. She was
also told that a proposed transaction in Abenson's-Robinsons Place was disapproved
because "she" gave the wrong information upon verification.

Because loss of personal property among its employees had become rampant in its office,
petitioner sought the assistance of the National Bureau of Investigation (NBI). The NBI, in
the course of its investigation, obtained a security video from Abenson's showing the person
who used Yuseco's credit cards. Yuseco and other witnesses positively identified the person
in the video as respondent.

Consequently, the NBI and Yuseco filed a complaint for qualified theft against respondent in
the office of the Manila city prosecutor. But because the affidavits presented by the NBI
(identifying respondent as the culprit) were not properly verified, the city prosecutor
dismissed the complaint due to insufficiency of evidence.

Meanwhile, petitioner placed respondent under preventive suspension and instructed her to
cooperate with its ongoing investigation. Instead of doing so, however, respondent filed a
complaint for illegal dismissal 2 alleging that petitioner terminated her employment without
cause.

The labor arbiter, in a decision dated May 21, 2002,3 found that respondent committed
serious misconduct (she was the principal suspect for qualified theft committed inside
petitioner's office during work hours). There was a valid cause for her dismissal. Thus, the
complaint was dismissed for lack of merit.

Page 63 of 74
Respondent appealed4 the labor arbiter's decision to the National Labor Relations
Commission (NLRC) which affirmed the assailed decision on July 31, 2003.5Respondent
moved for reconsideration but it was denied in a resolution dated October 30, 2003. 6

Aggrieved, respondent filed a petition for certiorari 7 in the Court of Appeals (CA) claiming
that the NLRC committed grave abuse of discretion in affirming the decision of the labor
arbiter. She claimed there was no valid cause for her termination because the city
prosecutor of Manila "did not find probable cause for qualified theft against her." The
dismissal of the complaint proved that the charges against her were based on suspicion.

The CA, in its July 4, 2005 decision,8 found that the labor arbiter and NLRC merely adopted
the findings of the NBI regarding respondent's culpability. Because the affidavits of the
witnesses were not verified, they did not constitute substantial evidence. The labor arbiter
and NLRC should have assessed evidence independently as "unsubstantiated suspicions,
accusations and conclusions of employers (did) not provide legal justification for dismissing
an employee." Thus, the CA granted the petition.

Petitioner moved for reconsideration but it was denied.9 Hence, this petition.

The issue in this case is whether or not petitioner substantially proved the presence of valid
cause for respondent's termination.

Petitioner essentially argues that the ground for an employee's dismissal need only be
proven by substantial evidence. Thus, the dropping of charges against an employee
(specially on a technicality such as lack of proper verification) or his subsequent acquittal
does not preclude an employer from dismissing him due to serious misconduct.

We grant the petition.

Article 282 of the Labor Code provides:

Article 282. Termination by Employer. - An employer may terminate an

employment for any of the following causes:

(a) Serious misconduct or willful disobendience by the

employee of the lawful orders of his employer or his
representatives in connection with his work;

xxx xxx xxx

(e) Other causes analogous to the foregoing.

Misconduct involves "the transgression of some established and definite rule of action,
forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not
mere error in judgment."10 For misconduct to be serious and therefore a valid ground for
dismissal, it must be:

1. of grave and aggravated character and not merely trivial or unimportant

and

2. connected with the work of the employee. 11

Page 64 of 74
In this case, petitioner dismissed respondent based on the NBI's finding that the latter stole
and used Yuseco's credit cards. But since the theft was not committed against petitioner
itself but against one of its employees,12 respondent's misconduct was not work-related and
therefore, she could not be dismissed for serious misconduct.

Nonetheless, Article 282(e) of the Labor Code talks of other analogous causes or those
which are susceptible of comparison to another in general or in specific detail. 13 For an
employee to be validly dismissed for a cause analogous to those enumerated in Article 282,
the cause must involve a voluntary and/or willful act or omission of the employee. 14

A cause analogous to serious misconduct is a voluntary and/or willful act or omission

attesting to an employee's moral depravity.15 Theft committed by an employee against a
person other than his employer, if proven by substantial evidence, is a cause analogous to
serious misconduct.16

Did petitioner substantially prove the existence of valid cause for respondent's separation?
Yes. The labor arbiter and the NLRC relied not only on the affidavits of the NBI's witnesses
but also on that of respondent. They likewise considered petitioner's own investigative
findings. Clearly, they did not merely adopt the findings of the NBI but independently
assessed evidence presented by the parties. Their conclusion (that there was valid cause for
respondent's separation from employment) was therefore supported by substantial
evidence.

All things considered, petitioner validly dismissed respondent for cause analogous to serious
misconduct.

WHEREFORE, the petition is hereby GRANTED. The July 4, 2005 decision and September
1, 2005 resolution of the Court of Appeals in CA-G.R. SP No. 81515
are REVERSED and SET ASIDE.

The July 31, 2003 decision and October 30, 2003 resolution of the National Labor Relations
Commission in NLRC CA No. 032865-02 affirming the May 21, 2002 decision of the labor
arbiter are REINSTATED.

SO ORDERED.

[G.R. NO. 195428 - August 29, 2012]

Page 65 of 74
 JOMAR S. VERDADERO, Petitioner, v. BARNEY AUTOLINES GROUP OF COMPANIES
TRANSPORT, INC., and/or BARNEY D. CHITO, ROSELA F. CHITO and GERARDO
GIMENEZ, Respondents.

DECISION

MENDOZA, J.:

This Petition for Review on Certiorari under Rule 45 assails the October 19, 2010
Decision1 and the January 13, 2011 Resolution2 of the Court of Appeals (CA), in CA-G.R. SP
No. 113270, which reversed and set aside the December 8, 2009 Decision 3 and the
February 26, 2010 Resolution4 of the National Labor Relations Commission (NLRC).

The Facts

The present case stemmed from the Complaint for Illegal Dismissal filed by petitioner Jomar
Verdadero (Verdadero). On September 10, 2004, respondent Barney Autolines Group of
Companies Transport, Inc. (BALGCO) hired Verdadero as bus conductor and paid him a
salary on commission basis at the rate of 12% of the gross ticket sales per day. 5ςrνll

On January 27, 2008, an altercation took place between Verdadero and respondent Atty.
Gerardo Gimenez (Gimenez), BALGCO s Disciplinary Officer. Gimenez was on board BALGCO
Bus. No. 55455, together with his wife and four other companions, travelling from Mulanay
to Macalelon, Quezon. Verdadero was then the assigned bus conductor. BALGCO has a
company policy of granting free rides to company employees and their wives. The story
started when Verdadero began issuing fare tickets to passengers, including the wife of
Gimenez. The wife informed Verdadero who she was6and the incidents thereafter took two
versions as both parties told a different story.

On January 28, 2008, Gimenez filed an unverified complaint for serious misconduct against
Verdadero before the BALGCO Management. He requested Barney D. Chito (Barney) and
Rosela F. Chito (Rosela), owners of BALGCO, to preside over the conciliation proceedings.
Verdadero, accompanied by his father, appeared at the BALGCO Office on February 8, 2008.
Verdadero was said to have shown willingness to be penalized for his misconduct provided
no record of the proceedings would be made. Gimenez, on the other hand, was willing to
waive the imposition of any penalty if Verdadero would give a simple letter of apology,
which the latter supposedly agreed with his father guaranteeing the same.7ςrνll

On February 16, 2008, Verdadero, instead, submitted his counter-affidavit refuting all
allegations in the written complaint against him. Rosela told Verdadero she was not
expecting that piece of paper, to which the latter was said to have replied, "Sabi mo papel,
yan papel yan!"8ςrνll

Thereafter, Verdadero furtively reported for work for fear of having another confrontation
with Gimenez. Rosela sent Verdadero a letter, dated February 25, 2008, requiring him to
immediately report for work and finish the pending disciplinary proceedings against him. On
March 28, 2008, Verdadero submitted his Letter-Reply, explaining that he had been
receiving threats. He likewise believed he was already illegally dismissed as he was not
given any work assignment since January 28, 2008. Rosela responded to Verdadero's letter
and reminded him of the letter of apology which he was yet to submit as compliance. On
April 15, 2008, however, Verdadero filed a complaint for illegal dismissal before the Labor

Page 66 of 74
Arbiter (LA), claiming, as well, non-payment of holiday pay, premium on holiday, 13th
month pay, separation pay, retirement benefits, moral and exemplary damages, and
reinstatement plus backwages.9ςrνll

Respondents' Version

Gimenez s wife related that when Verdadero was about to issue her a bus ticket, she
informed him that she was the wife of Gimenez, to which he replied,"Hindi ko kilala yon."
Upon reaching General Luna, Quezon, for a brief meal stop, she told Gimenez that "[h]indi
ka pala kilala ng konduktor." Thereafter, her husband confronted Verdadero as to the truth
of the matter, and Verdadero arrogantly replied, "Marami namang Gerry at disciplinary
officers." The arrogant comment and other loud words uttered by Verdadero, upon boarding
the bus for the onward trip, were heard by Rey Formaran (Formaran), another BALGCO bus
driver who was in Gimenez's group. As Gimenez and his group were getting off the bus in
Macalelon, Quezon, Verdadero allegedly pulled out a baggage compartment opener and
shouted, "Putang ina mo attorney, papatayin kita." Gimenez was not able to react as the
bus sped off.10ςrνll

Petitioner's Version

Verdadero claimed that when he started to collect fares, he approached Gimenez's wife to
issue her a bus ticket. She said, "Asawa ako ng officer." Because of the surrounding noises,
he did not clearly hear what the woman said, and so, he asked her again as to whom she
was referring. The woman replied, "Asawa ako ni Gerry na Disciplinary Officer." He then
turned away and did not issue a ticket anymore. When the bus took a meal stop in General
Luna, Verdadero was surprised when Gimenez shouted at him, "Hoy! Verdadero parito ka!"
He approached Gimenez and the latter scolded him, saying "Hindi mo ba ako kilala?"
Verdadero replied, "Kilala ko nga po kayo, ang problema lang po ay hindi kayo katabi ng
misis ninyo nang tinanong ko kaya pasensiya na po." He further claimed that he moved
away to avoid Gimenez as the latter continued to berate and threaten him. Upon
disembarking at Macalelon, Quezon, Gimenez shouted at him, "Verdadero! Hindi mo ako
ginagalang!" and grabbed his feet in an attempt to pull him down from the bus. He
struggled to hold tight until Gimenez lost grip of his foot. Formaran tried to return to the
bus to confront him, but was intercepted by the driver. Verdadero further denied having
agreed to write Gimenez a letter of apology and be penalized for his alleged
misconduct.11ςrνll

Labor Arbiter's Ruling

On November 6, 2008, the LA rendered a Decision dismissing Verdadero's complaint and

declaring that no dismissal took place but merely an administrative investigation. The LA
reasoned that Verdadero made it impossible for BALGCO to give him any trip assignment as
he reported for work only when the respondents were not around.

Further, the LA dismissed Verdadero's monetary claims such as holiday pay and overtime
pay, explaining that, being a bus conductor, Verdadero belonged to the category of field
personnel who were excepted from the enjoyment of the benefits claimed. The claim for
13th month pay was likewise denied because he was a field personnel and was paid on a
purely commission basis.12ςrνll

NLRC's Ruling

Page 67 of 74
Aggrieved, Verdadero filed an appeal before the NLRC. The sworn Statement 13 of BALGCO
Electrician Marvin Mascarina (Mascarina), who witnessed the incident, was given weight by
the NLRC. It apparently found Mascarina s sworn affidavit to be corroborative of Verdadero's
testimonies. For said reason, the NLRC partially granted the appeal. It ruled that Verdadero
was illegally dismissed, but affirmed the LA insofar as the holiday and overtime pays were
concerned. On December 8, 2009, the NLRC rendered its decision as
follows:ςηαñrοblεš νιr†υαl lαω lιbrαrÿ

WHEREFORE, the questioned Decision is hereby MODIFIED. Respondents

Barney Autolines Group of Companies Transport Inc., Barney A. Chito, Rosela
P. Chito and Atty. Gerardo Gimenez are hereby declared liable to pay
complainant his full backwages from January 28, 2008 until to date and his
separation pay equivalent to one month salary per year of service at the rate
of P 8,000.00 per month salary, computed as follows:ςrαlαω

I. BACKWAGES
01/28/08 06/13/08 = 4.15 mos. or 4.50
NCR# 13 P 362
P 362 x 26 days x 4.50 mos.
P 9,412.00 x 4.50 days = P 42,354.00

06/14/08 08/27/08 = 2.13 or 2.43 mos.

NCR# 14 P 377
P 377 x 26days x 2.43 mos.
P 9,802.00 x 2.43 days = P 23,818.86

08/28/08 10/15/09 = 13.57 mos.

P 382 x 26 days x 13.57 mos.
P 9,932.00 x 13.57 days = P 134,777.24

P 200,950.10

II. ECOLA
NCR# 10 P 5.00
06/14/08 10/15/09 = 16.03 mos.
P 5.00 x 26 days x 16.03 mos.

P 130 x 16.03 mos. = P 2,083.90

III. 13th MONTH PAY

P 200,950.10/12 = P 16,745.84

IV. SEPARATION PAY

09/10/2004 10/15/09 = 5 yrs and one month

P 8,000.00 x 5 yrs. = P 40,000.00

GRAND TOTAL P 259,779.84

Page 68 of 74
 Other dispositions are Affirmed.14ςrνll

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BALGCO moved for reconsideration, but its motion was denied. BALGCO then filed a Petition
for Certiorari before the CA.

The Ruling of the CA

The CA ruled that there was no constructive dismissal despite Mascarina's testimony. In so
ruling, the CA reiterated the definition of constructive dismissal, citing Peñaflor v. Outdoor
Clothing Manufacturing Corporation,15 as
follows:ςηαñrοblεš νιr†υαl lαω lιbrαrÿ

Constructive dismissal is an involuntary resignation by the employee due to

the harsh, hostile, and unfavorable conditions set by the employer and which
arises when a clear discrimination, insensibility, or disdain by an employer
exists and has become unbearable to the employee.16ςrνll

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Neither was there abandonment on the part of Verdadero, reiterating the well-settled rule
that the filing of a complaint for illegal dismissal is inconsistent with a charge of
abandonment. The CA, thus, wrote:ςηαñrοblεš νιr†υαl lαω lιbrαrÿ

xxx. The repulsive behavior of the disciplinary officer against another

employee cannot be imputed upon BALGCO in the absence of any evidence
that it promotes such ill-treatment of its lowly employees or has itself
committed an overt act of illegality. In the present case, petitioner BALGCO
may have failed to immediately resolve the pending disciplinary case after
private respondent filed his counter-affidavit and unfairly insisted that private
respondent apologize for a misconduct that the latter vehemently denies
having committed. But the meeting that was attended by his father was not
denied by private respondent and petitioners relied on Verdadero's
commitment to submit the letter-apology. Under that circumstance, what
petitioners BALGCO, Barney Chito and Rosela Chito may have shown was
indecisiveness, in the handling of the disciplinary case but there was clearly
no vicious and malicious intention on their part to force private respondent to
resign from his employment, which would amount to constructive dismissal. If
private respondent had felt that his continued employment with petitioner
BALGCO had been rendered "impossible, unreasonable or unlikely," this could
only have resulted from the hostile treatment by the disciplinary officer and
not by any action attributable to petitioner BALGCO nor to its owners Barney
Chito and Rosela Chito. Petitioners had not shown any manifest intention to
terminate the employment of private respondent. Based on the records,
instead of a notice of termination petitioners sent private respondent a letter-
directive to report for work and to immediately attend to the disciplinary
proceedings filed against him.

There is also no abandonment that can be inferred from the actuation of

private respondent. Notwithstanding the dreadfully hostile conditions that

Page 69 of 74
 faced him at work and the charge of serious misconduct filed against him,
private respondent dutifully showed up at the BALGCO office, albeit in a
furtive manner, in the hope that he would be given a work assignment while
he awaited the resolution of his case. His persistence in reporting for work
and, more so, in subsequently filing an illegal dismissal case belies any
intention on the part of private respondent to abandon his employment. It is
well-settled that the filing of a complaint for illegal dismissal is inconsistent
with a charge of abandonment.17ςrνll

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The CA stated that because there was neither dismissal nor abandonment, the status quo
between the parties should be maintained and their previous employment relations be
restored.18 The CA, thus, disposed:ςηαñrοblεš νιr†υαl lαω lιbrαrÿ

WHEREFORE, premises considered, the December 8, 2009 Decision and the

February 26, 2010 Resolution of the National Labor Relations Commission
are REVERSED and SET ASIDE. Private respondent is hereby
ordered REINSTATED. No payment of back salaries can be awarded,
following the no work/no pay
principle.ςηαñrοblεš νιr†υαl lαω lιbrαrÿ

SO ORDERED.19ςrνll

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Not in conformity, Verdadero raised before this Court, the following

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Issues

Verdadero raised the following errors in seeking the reversal of the assailed decision of the
CA, to wit:ςηαñrοblεš νιr†υαl lαω lιbrαrÿ

A. The Honorable Court of Appeals erred when it ruled that Petitioner was not
constructively terminated on January 27, 2008 as Bus Conductor;

b. The Honorable Court of Appeals erred when it ruled constructive dismissal

could not be attributed to respondents except Gimenez when they proceeded
to cure the illegal dismissal by conducting a bogus hearing;

c. The Honorable Court of Appeals failed to discern that the letter-directive to

report for work and the order to participate in the disciplinary proceedings are
indicative of further harassing petitioner; andcralawlibrary

d. The Honorable Court of Appeals failed to recognize that reinstatement is

impractical.20ςrνll

The Court s Ruling

Page 70 of 74
 The petition fails.

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The only issue in this case is whether or not petitioner Verdadero was constructively
dismissed.

On Constructive Dismissal

Verdadero alleges that he was employed as bus conductor of BALGCO from September 10,
2004 until January 28, 2008 when he was no longer allowed to report for work. He claims
that he was not given any trip assignment since the January 27, 2008 incident. He argues
that when Gimenez committed the verbal abuse against him in the presence of the bus
passengers and threatened him with physical harm, there was termination by the employee
of his employment under the doctrine of constructive dismissal.21ςrνll

BALGCO contends that Verdadero was not given any trip assignment because he was
surreptitiously reporting for work and would come to the office only when Gimenez was not
around. This was confirmed in the letter-reply22 by Rosela to Verdadero, dated April 18,
2008, stating that "Bukod pa dito, napansin ko mula sa logbook ng ating tanggapan na ikaw
ay may lagda doon at ang dahilan mo ay upang mag-report, subalit hindi ka naman
nagpapakita sa akin at sinadya mo na pumunta sa araw na wala ang ating Disciplinary
Officer."23ςrνll

In his Memorandum,24 Verdadero admitted not reporting for work after the incident
"because of his mortal fear of being harmed by the Disciplinary Officer and his
friends."25ςrνll

Constructive dismissal exists where there is cessation of work, because "continued

employment is rendered impossible, unreasonable or unlikely, as an offer involving a
demotion in rank or a diminution in pay" and other benefits. Aptly called a dismissal in
disguise or an act amounting to dismissal but made to appear as if it were not, constructive
dismissal may, likewise, exist if an act of clear discrimination, insensibility, or disdain by an
employer becomes so unbearable on the part of the employee that it could foreclose any
choice by him except to forego his continued employment.26ςrνll

In this case, Verdadero cannot be deemed constructively dismissed. Records do not show
any demotion in rank or a diminution in pay made against him. Neither was there any act of
clear discrimination, insensibility or disdain committed by BALGCO against Verdadero which
would justify or force him to terminate his employment from the company.

To support his contention of constructive dismissal, Verdadero considers the verbal abuse
by Gimenez against him as an act which rendered his continued employment impossible,
unreasonable or unlikely. The claimed abuse was corroborated by the sworn written
statement executed by Mascariña, which was given credence by the NLRC and the CA.
With the alleged threats of Gimenez, Verdadero believed that he could no longer stay and
work for BALGCO.

It is to be emphasized that the abovementioned acts should have been committed by the
employer against the employee. Unlawful acts committed by a co-employee will not bring
the matter within the ambit of constructive dismissal.

Page 71 of 74
Assuming arguendo that, Gimenez did commit the alleged unlawful acts, still, this fact will
not suffice to conclude that constructive dismissal was proper. Contrary to the arguments of
Verdadero, Gimenez is not the employer. He may be the "disciplinary officer," but his
functions as such, as can be gleaned from the BALGCO Rules and Regulations,27 do not
involve the power or authority to dismiss or even suspend an employee. Such power is
exclusively lodged in the BALGCO management. Gimenez remains to be a mere employee of
BALGCO and, thus, cannot cause the dismissal or even the constructive dismissal of
Verdadero. The employers are BALGCO and its owners, Barney and Rosela. As correctly put
by the CA:ςηαñrοblεš νιr†υαl lαω lιbrαrÿ

Petitioner BALGCO, however, cannot be blamed for the existing hostile

conditions that beset private respondent. The repulsive behavior of the
disciplinary officer against another employee cannot be imputed upon
petitioner BALGCO in the absence of any evidence that it promotes such ill-
treatment of its lowly employees or has itself committed an overt act of
illegality. x x x If private respondent had felt that his continued employment
with petitioner BALGCO had been rendered "impossible, unreasonable or
unlikely" this could only have resulted from the hostile treatment by the
disciplinary officer and not by any action attributable to petitioner BALGCO
nor to its owners Barney Chito and Rosela Chito.28 xxx.

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Moreover, it was not established that BALGCO itself or its owners had been, in any way,
forcing Verdadero to resign from his employment. In fact, records show that the
management had been urging him to report back to work, not only to face the
administrative charge against him, but also because of the scarcity and necessity of bus
conductors in the company. Verdadero, however, failed to present himself before the
management, more specifically, to Rosela. This situation provided no opportunity for
BALGCO to give him any trip assignment. The abovementioned act of BALGCO was even
misinterpreted by Verdadero as yet another means of harassment. The Court disagrees with
the petitioner and finds his charges of harassment as nothing but empty imputation of a fact
that could hardly be given any evidentiary weight.29ςrνll

Furthermore, records are bereft of any showing that Verdadero was no longer allowed to
report for work starting January 28, 2008,30 when Gimenez lodged a complaint for serious
misconduct against him before the BALGCO management. Records, in fact, show that after
the incident with Gimenez, Verdadero even signed in BALGCO s logbook during the days he
surreptitiously reported for work. There is no showing that BALGCO prohibited Verdadero
from reporting for work or claimed that he was dismissed. In their Memorandum, 31 the
respondents even categorically stated that Verdadero s employment was never terminated
and he "is still part of its workforce notwithstanding this case and it is willing to accept him
without any demotion should he report for work."32ςrνll

It was Verdadero himself who terminated his employment. It was, in fact, his position that
the January 27, 2008 bus incident gave rise to constructive dismissal. Verdadero, however,
clearly made inconsistencies in struggling to find a justification for his own mistaken belief,
and to prove constructive dismissal and, thus, be afforded the reliefs and other monetary
awards resulting therefrom.

Well-settled is the rule in illegal dismissal case that while the employer bears the burden of
proving that the termination was for a valid or authorized cause, the employee must first

Page 72 of 74
establish by substantial evidence the fact of his dismissal from service. 33 In this case,
however, the employer should not be belabored to prove a valid dismissal as BALGCO itself
has not terminated the employment of Verdadero.

On Reinstatement and Backwages ςηαñrοblεš νιr†υαl lαω lιbrαrÿ

Article 279 of the Labor Code, as amended, provides:ςrαlαω

Art. 279. Security of tenure. In cases of regular employment, the employer

shall not terminate the services of an employee except for a just cause or
when authorized by this Title. An employee who is unjustly dismissed from
work shall be entitled to reinstatement without loss of seniority rights and
other privileges and to his full backwages, inclusive of allowances, and to his
other benefits or their monetary equivalent computed from the time his
compensation was withheld from him up to the time of his actual
reinstatement. (As amended by Section 34, Republic Act No. 6715, March 21,
1989)

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Reinstatement and backwages are reliefs available to an illegally dismissed employee.

Reinstatement restores the employee who was unjustly dismissed to the position from
which he was removed, that is, to his status quo ante dismissal, while the grant of
backwages allows the same employee to recover from the employer that which he had lost
by way of wages as a result of his dismissal. These twin remedies - reinstatement and
payment of backwages - make the dismissed employee whole who can then look forward to
continued employment. Thus, do these two remedies give meaning and substance to the
constitutional right of labor to security of tenure.34ςrνll

In the case at bench, considering that there has been no dismissal at all, there can be no
reinstatement. One cannot be reinstated to a position he is still holding. As there is no
reinstatement to speak of, Verdadero cannot invoke the doctrine of strained relations. It is
only applied when there is an order for reinstatement that is no longer feasible. In the same
vein, no separation pay can be awarded as it is given only in lieu of reinstatement.
Consequently, there is likewise no justification for the award of backwages. The CA was
correct in ruling against the payment of backwages following the "no work, no pay"
principle.

WHEREFORE, the petition is DENIED.

SO ORDERED.

Page 73 of 74
Page 74 of 74