SECOND DIVISION

G.R. No. 188169 November 28, 2011

NIÑA JEWELRY MANUFACTURING OF METAL ARTS, INC. (otherwise known as NIÑA

MANUFACTURING AND METAL ARTS, INC.) and ELISEA B. ABELLA, Petitioners,
vs.
MADELINE C. MONTECILLO and LIZA M. TRINIDAD, Respondents.

D E C I S I O N

REYES, J.:

The Case

Before us is a Petition for Review on Certiorari1 under Rule 45 of the Rules of

Court assailing the January 9, 2009 Decision2 and the May 26, 2009 Resolution3 of
the Court of Appeals (CA) in CA-G.R. SP No. 01755. The dispositive portion of the
assailed Decision reads:

WHEREFORE, the Decision dated August 31, 2005 and Resolution dated October 28, 2005
of the National Labor Relations Commission (NLRC), Fourth Division, Cebu City, in
NLRC Case No. V-000363-2005 are REVERSED and SET ASIDE, and a new one rendered
ordering Niña Jewelry Manufacturing:

(1) to reinstate petitioners to their respective positions as goldsmiths without

loss of seniority rights and other privileges; and

(2) to pay petitioners their full backwages inclusive of allowances and other
benefits or their monetary equivalent computed from the time their compensation was
withheld up to their actual reinstatement.

The case is REMANDED to the Labor Arbiter for the RECOMPUTATION of the total
monetary award due to petitioners in accord with this decision. The Labor Arbiter
is ORDERED to submit his compliance within thirty (30) days from notice of this
decision, with copies furnished to the parties.4 (citations omitted)

The assailed Resolution denied the petitioners' Motion for Reconsideration.5

The Factual Antecedents

Madeline Montecillo (Madeline) and Liza Trinidad (Liza), hereinafter referred to

collectively as the respondents, were first employed as goldsmiths by the
petitioner Niña Jewelry Manufacturing of Metal Arts, Inc. (Niña Jewelry) in 1996
and 1994, respectively. Madeline's weekly rate was ₱1,500.00 while Liza's was
₱2,500.00. Petitioner Elisea Abella (Elisea) is Niña Jewelry's president and
general manager.

There were incidents of theft involving goldsmiths in Niña Jewelry's employ.

On August 13, 2004, Niña Jewelry imposed a policy for goldsmiths requiring them to
post cash bonds or deposits in varying amounts but in no case exceeding 15% of the
latter's salaries per week. The deposits were intended to answer for any loss or
damage which Niña Jewelry may sustain by reason of the goldsmiths' fault or
negligence in handling the gold entrusted to them. The deposits shall be returned
upon completion of the goldsmiths' work and after an accounting of the gold
received.

Niña Jewelry alleged that the goldsmiths were given the option not to post
deposits, but to sign authorizations allowing the former to deduct from the
latter's salaries amounts not exceeding 15% of their take home pay should it be
found that they lost the gold entrusted to them. The respondents claimed otherwise
insisting that Niña Jewelry left the goldsmiths with no option but to post the
deposits. The respondents alleged that they were constructively dismissed by Niña
Jewelry as their continued employments were made dependent on their readiness to
post the required deposits.

Niña Jewelry averred that on August 14, 2004, the respondents no longer reported
for work and signified their defiance against the new policy which at that point
had not even been implemented yet.

On September 7, 2004, the respondents filed against Niña Jewelry complaints6 for
illegal dismissal and for the award of separation pay.

On September 20, 2004, the respondents filed their amended complaints7 which
excluded their earlier prayer for separation pay but sought reinstatement and
payment of backwages, attorney's fees and 13th month pay.

Labor Arbiter Jose Gutierrez (LA Gutierrez) dismissed the respondents' complaints
for lack of merit but ordered Niña Jewelry to pay Madeline the sum of ₱3,750.00,
and Liza, ₱6,250.00, representing their proportionate entitlements to 13th month
pay for the year 2004. LA Gutierrez ratiocinated that:

Their [respondents] claim is self-serving. As evidence to (sic) their claims that

they were made to sign blank trust receipts, complainants presented Annexes 'A'[,]
'B' and 'C'. Our examination, however, shows that they are not blank trust receipts
but rather they are filled up trust receipts.

The undisputed facts show that complainants were piece workers of the respondent
who are engaged in the processing of gold into various jewelry pieces. Because of
the nature of its business, respondent was plagued with too many incidents of theft
from its piece workers. x x x This deposit [not exceeding 15% of the salary for the
week of the piece worker] is released back upon completion of work and after
accounting of the gold received by him or her. There is an alternative, however,
the piece worker may opt not to give a deposit, instead sign an authorization to
allow the respondent to deduct from the salary an amount not to exceed 15% of his
take home pay, should it be found out that he lost the gold [entrusted] to him or
her due to his or her fault or negligence. The complainants did not like to post a
deposit, or sign an authorization. They instead told their fellow goldsmiths that
they will bring the matter to the Labor Commission. Complainants did not anymore
report for work and did not anymore perform their tasks. The fact of complainants
not being dismissed from employment was duly attested to by his co-workers who
executed their Joint Affidavit under oath, Annex '4'.

As further evidence to prove that they were dismissed, complainants presented the
minutes of [the] Sept. 7, 2004 conference.

We examined the statements therein, we find that there is no admission on the part
of the respondents that they terminate[d] the complainants from employment.
Respondents only inform[ed] the complainants to put up the appropriate cash bond
before they could be allowed to return back to work which they previously refused
to perform, as a sign of their protest to the requirement to post cash bond or to
sign an authorization.

x x x x

x x x It is clearly shown that complainants were paid with their 13th month pay for
the year 2001, 2002 and 2003. However, for the year 2004, considering that
complainants have worked until the month of August, we rule to grant them the
proportionate 13th month pay as there is no showing that they were already paid.
The other money claims are denied for lack of merit. x x x.8

The respondents filed an appeal before the NLRC which affirmed LA Gutierrez's
dismissal of the amended complaints but deleted the award of 13th month pay based
on findings that the former had contracted unpaid individual loans from Niña
Jewelry. The NLRC found that:

x x x [I]t was complainants who refused to work with the respondents when they were
required to post cash bond or sign an authorization for deduction for the gold
material they received and to be manufactured into various jewelries. x x x We find
it logically sound for the latter [Niña Jewelry] to innovate certain policy or rule
to protect its own business. To deprive them of such prerogative [management
prerogative] will be likened to 'killing the goose that lays the golden eggs.'

x x x [C]omplainants failed to prove their affirmative allegations in the

respective complaints that they were indeed dismissed. On the contrary, respondents
have convincingly shown that if (sic) were complainants who voluntarily abandoned
from (sic) their work by refusing to abide with the newly adopted company policy of
putting up a cash bond or signing an authorization for deduction for the gold
materials entrusted to them in case of loss or pilferage.

x x x [B]oth complainants are still indebted with (sic) the respondents in the
amounts of ₱5,118.63 in the case of Madeline Montecillo and ₱7,963.11 in the case
of Liza Montecillo. Such being the case[,] Madeline Montecillo has still on account
payable of ₱1,368.63 while Liza Montecillo is still indebted of ₱1,713.71. This
principle of offsetting of credit should be allowed to preclude unjust enrichment
at the expense of the respondents.9

The respondents filed a Petition for Certiorari10 before the CA ascribing patent
errors in the appreciation of facts and application of jurisprudence on the part of
the NLRC when it ruled that what occurred was not a case of illegal dismissal but
of abandonment of work.

On January 9, 2009, the CA rendered the now assailed Decision11 reversing the
findings of the LA and the NLRC. The CA ruled:

According to [the] private respondents, they required a deposit or cash bond from
[the] petitioners in order to secure their interest against gold thefts committed
by some of their employees. If the employee fails to make the required deposit, he
will not be given gold to work on. Further, [the] private respondents admitted
during the conciliation proceedings before Executive Labor Arbiter Violeta Ortiz-
Bantug that [the] petitioners would only be allowed back to work after they had
posted the proportionate cash bond.

The Labor Code of the Philippines provides:

ART. 113. Wage Deduction. – No employer, in his own behalf or in behalf of any
person, shall make any deduction from the wages of his employees, except:

(a) In cases where the worker is insured with his consent by the employer, and the
deduction is to recompense the employer for the amount paid by him as premium on
the insurance;

(b) For union dues, in cases where the right of the worker or his union to check-
off has been recognized by the employer or authorized in writing by the individual
worker concerned; and
(c) In cases where the employer is authorized by law or regulations issued by the
Secretary of Labor.

Article 114. Deposits for loss or damage. – No employer shall require his worker to
make deposits from which deductions shall be made for the reimbursement of loss of
or damage to tools, materials, or equipment supplied by the employer, except when
the employer is engaged in such trades, occupations or business where the practice
of making deposits is a recognized one, or is necessary or desirable as determined
by the Secretary of Labor in appropriate rules and regulations.

Applying these provisions to the case at bar, before [the] petitioners may be
required to deposit cash or agree to a salary deduction proportionate to the value
of gold delivered to them, the employer must comply with the relevant conditions
imposed by law. Hence, the latter must prove that there is an existing law or
regulation authorizing it to impose such burden on its employees. And, in case of
deposit, that it is engaged in a trade, occupation or business where such
requirement is a recognized practice. Niña Jewelry obviously failed in this
respect.1âwphi1 Surely, mere invocation of management prerogative cannot exempt it
from compliance with the strict requirements of law. Accordingly, [w]e hold that
Niña Jewelry's unilateral imposition of cash deposit or salary deduction on [the]
petitioners is illegal. For that matter, when Ni[ñ]a Jewelry refused to give
assignment to [the] petitioners or to admit them back to work because they failed
to give cash deposit or agree to a salary deduction, it was deemed to have
constructively dismissed [the] petitioners. Obviously, such deposit or salary
deduction was imposed as a condition for [the] petitioners' continuing employment.
Non-compliance indubitably meant termination of [the] petitioners' employment.
Suldao vs. Cimech System Construction, Inc.12 enunciated:

Constructive dismissal or a constructive discharge has been defined as quitting

because continued employment is rendered impossible, unreasonable or unlikely, as
an offer involving a demotion in rank and a diminution in pay. There is
constructive dismissal when the continued employment is rendered impossible so as
to foreclose any choice on the employee's part except to resign from such
employment.

The fact that [the] petitioners lost no time in filing the complaint for illegal
dismissal lucidly negates [the] private respondents' claim that the former had
abandoned their work. A contrary notion would not only be illogical but also
absurd.13 Indeed, prompt filing of a case for illegal dismissal, on one hand, is
anathema to the concept of abandonment, on the other.

Finally, under Article 279 of the Labor Code, an illegally dismissed employee is
entitled to reinstatement without loss of seniority rights and other privileges;
full backwages, inclusive of allowances; and other benefits or their monetary
equivalent computed from the time his compensation was withheld from him up to the
time of his actual reinstatement.14 x x x.

As for damages, it is a rule that moral damages may be recovered where the
dismissal of the employee was attended by bad faith or fraud or constituted an act
oppressive to labor, or was done in a manner contrary to morals, good customs or
public policy. x x x [w]e find that private respondents did not act with
oppression, bad faith or fraud. They imposed a cash bond or deposit on herein
petitioners in the honest belief that it was the best way to protect their interest
against gold theft in the company. x x x.15 (some citations omitted)

The Issues

The following are to be resolved in the instant Petition for Review:16

I.

WHETHER OR NOT THE COURT OF APPEALS GROSSLY ERRED IN GIVING DUE COURSE TO THE
PETITION [under Rule 65 of the Rules of Court], IN EFFECT, FINDING GRAVE ABUSE OF
DISCRETION, AMOUNTING TO LACK OR EXCESS OF JURISDICTION ON THE PART OF THE NLRC,
DESPITE THE FACT THAT THE SUBJECT DECISION AND RESOLUTION THEREIN ARE IN PERFECT
ACCORD WITH THE EVIDENCE ON RECORD AND APPLICABLE LAWS.

II.

WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED IN FINDING THAT THERE WAS
CONSTRUCTIVE DISMISSAL IN THE PRESENT CASE AND ORDERING RESPONDENTS' REINSTATEMENT
AS WELL AS THE PAYMENT OF THEIR BACKWAGES AND OTHER MONETARY BENEFITS WITHOUT
FACTUAL OR LEGAL BASES.17

The petitioners now argue that the CA should have outrightly dismissed the petition
filed before it as the respondents had resorted to an erroneous mode of appeal. The
arguments raised in the petition were the same ones already passed upon by the LA
and the NLRC. What the respondents sought was the CA's re-evaluation of the facts
and evidence. The petition was thus based on purported errors of judgment which are
beyond the province of a petition for certiorari.

The petitioners likewise insist that the respondents abandoned their work without
due notice and to the prejudice of the former. The respondents' co-workers attested
to the foregoing circumstance.18 The respondents are goldsmiths whose skills are
indispensable to a jewelry manufacturing business, thus, it is not in accord with
both logic and experience for the petitioners to just fire them only to train new
workers. Moreover, in the complaints and amended complaints, the respondents did
not claim for reinstatement, hence, implying their admission that they were not
terminated.

Further, under Articles 114 and 11519 of the Labor Code, an employer may require a
worker to post a deposit even before a loss or damage has occurred, provided that
deductions from the deposit can be made only upon proof that the worker is liable
for the loss or damage. In case no loss or damage is incurred, the deposit shall be
returned to the worker after the conduct of an accounting which was what happened
in the case at bar. This is a valid exercise of management prerogative the scope of
which includes the setting of policies relative to working methods, procedures to
be followed and working regulations.20

The petitioners stress that they did not transgress the respondents' rights. The
respondents, who expressed to their co-workers their lack of fear to have their
employment severed, are motivated by their greed to extract money from the
petitioners.

The petitioners conclude that the CA should have accorded respect to the findings
of the LA and the NLRC especially since they were not arrived at arbitrarily or in
disregard of the evidence on record.

In the respondents' Comment,21 they reiterate the arguments they had presented in
the proceedings below. The respondents emphasize that when they pleaded for
reinstatement during the conference with the petitioners on September 7, 2004, the
latter openly admitted without reservation that the former will only be allowed to
return to work if they will post the required cash bond.

Further, the respondents claim that there was no plausible reason for them to
abandon their employment considering the length of their service and the fact that
they were being paid rates above the minimum wage. Citing Hantex Trading Co. Inc.
v. Court of Appeals,22 the respondents argue that no employee in his right mind
would recklessly abandon his job to join the ranks of the unemployed and choose to
unduly expose his family to hunger and untold hardship.

Besides, in Anflo Management & Investment Corp. v. Rodolfo Bolanio,23 this Court
had the occasion to state that the filing of a complaint for illegal dismissal is
inconsistent with a charge of abandonment, for an employee who takes steps to
protest his lay off cannot by any logic be said to have abandoned his work.

The respondents also claim that the petitioners misrepresented to this Court that
the former did not pray for reinstatement as the dorsal portions of the amended
complaints indicate otherwise.

Moreover, the petitioners failed to prove their authority granted by either the
law, or regulations issued by the Secretary of Labor, allowing them to require
their workers to post deposits. The petitioners also failed to establish that Niña
Jewelry is engaged in a trade, occupation or business where the practice of making
deposits is a recognized one or is considered as necessary or desirable by the
Secretary of Labor.

Citing Sections 12,24 1325 and 14,26 Book III, Rule VIII of the Omnibus Rules
Implementing the Labor Code (Omnibus Rules), the respondents posit that salary
deductions made prior to the occurrence of loss or damage are illegal and
constitute as undue interferences in the workers' disposal of their wages. Further,
the workers must first be given the opportunity to show cause why deductions should
not be made. If to be made, deductions should be fair, reasonable and should not
exceed the actual loss or damage. In the case at bar, the respondents were required
to post cash bonds even when there is no proof yet of their fault or negligence.

In the petitioners' Reply,27 they averred that the day after Niña Jewelry required
from its employees the posting of deposits and even before the policy was actually
implemented, the respondents promptly stopped reporting for work despite Elisea's
attempt to get in touch with them. The petitioners convened the employees to
discuss the propriety of imposing the new policy and to afford them ample
opportunity to air their concerns. The respondents' acts contravene Article 19 of
the New Civil Code (NCC) which requires every person to act with justice, give
everyone his due and observe honesty and good faith.

Further, it is clear in the Minutes of the Conciliation Proceedings28 before the LA

that the respondents were not willing to be reinstated and preferred instead the
payment of separation pay. Hence, no prayer for reinstatement was indicated in the
original complaints filed by them. As an afterthought, however, they amended their
complaints to reflect that they were likewise seeking for reinstatement.

The petitioners also point out that the doctrines in Hantex29 and Anflo
Management30 cited by the respondents find no application in the case at bar. In
Hantex, the employer presented mere cash vouchers to prove abandonment by the
employee. In the case before us, sufficient evidence show that the respondents
abandoned their work. In Anflo Management, the employer expressly uttered words
terminating the employee who in turn filed a complaint the day right after the
incident. In the case now under our consideration, the respondents merely made a
bare claim of illegal dismissal. Rightly so in Abad v. Roselle Cinema,31 it was
ruled that an employer's claim of not having terminated an employee, when supported
by substantial evidence, should not be outrightly overcome by the argument that an
employee would not have filed a complaint for illegal dismissal if he were not
really dismissed. The circumstances surrounding the separation from employment
should be taken into account.

Under Article 114 of the Labor Code, the Secretary of Labor is conferred the
authority to promulgate rules determining the circumstances when the making of
deposits is deemed recognized, necessary or desirable. However, Section 14,32 Book
III, Rule VIII of the Omnibus Rules does not define those circumstances. What is
defined is the circumstances when deductions can be made. It can thus be inferred
that the intention is for the courts to determine on a case to case basis what
should be considered as recognized, necessary or desirable especially in the light
of the existence of myriads of businesses which are practically impossible to
enumerate in modern society. The petitioners hence argue that the validity of
requiring cash deposits should be scrutinized with due consideration of its
reasonableness and necessity. Further, Article 1306 of the NCC allows contracting
parties to establish stipulations, clauses, terms and conditions which they may
deem convenient provided they do not contravene the law, morals, good customs,
public order or public policy. In the case at bar, the policy adopted by the
petitioners was neither unreasonable nor oppressive. It was intended to benefit all
the contracting parties.

Lastly, while the respondents raise the issue of the illegality of deductions, the
petitioners stress that it is academic because no deduction was actually made yet.

The Court's Ruling

The instant petition is partially meritorious.

The petitioners raise the procedural issue of whether or not the CA validly gave
due course to the petition for certiorari filed before it under Rule 65 of the
Rules of Court. As the substantive issue of whether or not the petitioners
constructively dismissed the respondents is closely-intertwined with the procedural
question raised, they will be resolved jointly.

Yolanda Mercado, et al. v. AMA Computer College-Parañaque City, Inc.33 is

instructive as to the nature of a petition for review on certiorari under Rule 45,
and a petition for certiorari under Rule 65, viz:

x x x [R]ule 45 limits us to the review of questions of law raised against the

assailed CA decision. In ruling for legal correctness, we have to view the CA
decision in the same context that the petition for certiorari it ruled upon was
presented to it; we have to examine the CA decision from the prism of whether it
correctly determined the presence or absence of grave abuse of discretion in the
NLRC decision before it, not on the basis of whether the NLRC decision on the
merits of the case was correct. In other words, we have to be keenly aware that the
CA undertook a Rule 65 review, not a review on appeal, of the NLRC decision
challenged before it. This is the approach that should be basic in a Rule 45 review
of a CA ruling in a labor case. In question form, the question to ask is: Did the
CA correctly determine whether the NLRC committed grave abuse of discretion in
ruling on the case?34

It is thus settled that this Court is bound by the CA's factual findings. The rule,
however, admits of exceptions, among which is when the CA's findings are contrary
to those of the trial court or administrative body exercising quasi-judicial
functions from which the action originated.35 The case before us falls under the
aforementioned exception.

The petitioners argue that the respondents resorted to an erroneous mode of appeal
as the issues raised in the petition lodged before the CA essentially sought a re-
evaluation of facts and evidence, hence, based on purported errors of judgment
which are outside the ambit of actions which can be aptly filed under Rule 65.

We agree.

Again in Mercado,36 we ruled that:

x x x [I]n certiorari proceedings under Rule 65 of the Rules of Court, the
appellate court does not assess and weigh the sufficiency of evidence upon which
the Labor Arbiter and the NLRC based their conclusion. The query in this proceeding
is limited to the determination of whether or not the NLRC acted without or in
excess of its jurisdiction or with grave abuse of discretion in rendering its
decision. However, as an exception, the appellate court may examine and measure the
factual findings of the NLRC if the same are not supported by substantial evidence.
x x x.37

In the case at bench, in the petition for certiorari under Rule 65 filed by the
respondents before the CA, the following issues were presented for resolution:

I.

WHETHER OR NOT PUBLIC RESPONDENT [NLRC] committed patent errors in the appreciation
of facts and application of pertinent jurisprudence amounting to grave abuse of
discretion or lack or in excess of jurisdiction WHEN IT HELD THAT PRIVATE
RESPONDENTS [herein petitioners] ARE NOT GUILTY OF ILLEGAL DISMISSAL BECAUSE IT WAS
THE PETITIONERS [herein private respondents] WHO ABANDONED THEIR JOB AND REFUSED TO
WORK WITH RESPONDENTS WHEN THEY WERE REQUIRED TO PUT UP CASH BOND OR SIGN AN
AUTHORIZATION FOR DEDUCTION.

II.

WHETHER OR NOT PUBLIC RESPONDENT committed patent errors in the appreciation of

facts and application of pertinent jurisprudence amounting to grave abuse of
discretion or lack or in excess of jurisdiction WHEN IT DID NOT ORDER THE
REINSTATEMENT OF HEREIN PETITIONERS AND DELETED THE AWARD OF 13th MONTH PAY AND
DENIED THE CLAIMS OF ATTORNEY'S FEES, DAMAGES AND FULL BACKWAGES.38

Essentially, the issues raised by the respondents for resolution by the CA were
anchored on an alleged misappreciation of facts and evidence by the NLRC and the LA
when they both ruled that abandonment of work and not constructive dismissal
occurred.

We agree with the petitioners that what the respondents sought was a re-evaluation
of evidence, which as a general rule cannot be properly done in a petition for
certiorari under Rule 65, save in cases where substantial evidence to support the
NLRC's findings are wanting.

In Honorable Ombudsman Simeon Marcelo v. Leopoldo Bungubung,39 the Court defined

substantial evidence and laid down guidelines relative to the conduct of judicial
review of decisions rendered by administrative agencies in the exercise of their
quasi-judicial power, viz:

x x x Substantial evidence is more than a mere scintilla of evidence. It means such

relevant evidence as a reasonable mind might accept as adequate to support a
conclusion, even if other minds equally reasonable might conceivably opine
otherwise. Second, in reviewing administrative decisions of the executive branch of
the government, the findings of facts made therein are to be respected so long as
they are supported by substantial evidence. Hence, it is not for the reviewing
court to weigh the conflicting evidence, determine the credibility of witnesses, or
otherwise substitute its judgment for that of the administrative agency with
respect to the sufficiency of evidence. Third, administrative decisions in matters
within the executive jurisdiction can only be set aside on proof of gross abuse of
discretion, fraud, or error of law. These principles negate the power of the
reviewing court to re-examine the sufficiency of the evidence in an administrative
case as if originally instituted therein, and do not authorize the court to receive
additional evidence that was not submitted to the administrative agency
concerned.40 (citations omitted)

We find the factual findings of the LA and the NLRC that the respondents were not
dismissed are supported by substantial evidence.

In the Joint Affidavit41 executed by Generoso Fortunaba, Erdie Pilares and Crisanto
Ignacio, all goldsmiths under Niña Jewelry's employ, they expressly stated that
they have personal knowledge of the fact that the respondents were not terminated
from employment. Crisanto Ignacio likewise expressed that after Elisea returned
from the United States in the first week of September of 2004, the latter even
called to inquire from him why the respondents were not reporting for work. We
observe that the respondents had neither ascribed any ill-motive on the part of
their fellow goldsmiths nor offered any explanation as to why the latter made
declarations adverse to their cause. Hence, the statements of the respondents'
fellow goldsmiths deserve credence. This is especially true in the light of the
respondents' failure to present any notice of termination issued by the
petitioners. It is settled that there can be dismissal even in the absence of a
termination notice.42 However, in the case at bench, we find that the acts of the
petitioners towards the respondents do not at all amount to constructive dismissal.

Constructive dismissal occurs when there is cessation of work because continued

employment is rendered impossible, unreasonable or unlikely; when there is a
demotion in rank or diminution in pay or both; or when a clear discrimination,
insensibility, or disdain by an employer becomes unbearable to the employee.43

In the case now under our consideration, the petitioners did not whimsically or
arbitrarily impose the policy to post cash bonds or make deductions from the
workers' salaries. As attested to by the respondents' fellow goldsmiths in their
Joint Affidavit, the workers were convened and informed of the reason behind the
implementation of the new policy. Instead of airing their concerns, the respondents
just promptly stopped reporting for work.

Although the propriety of requiring cash bonds seems doubtful for reasons to be
discussed hereunder, we find no grounds to hold that the respondents were dismissed
expressly or even constructively by the petitioners. It was the respondents who
merely stopped reporting for work. While it is conceded that the new policy will
impose an additional burden on the part of the respondents, it was not intended to
result in their demotion. Neither is a diminution in pay intended because as long
as the workers observe due diligence in the performance of their tasks, no loss or
damage shall result from their handling of the gold entrusted to them, hence, all
the amounts due to the goldsmiths shall still be paid in full. Further, the
imposition of the new policy cannot be viewed as an act tantamount to
discrimination, insensibility or disdain against the respondents. For one, the
policy was intended to be implemented upon all the goldsmiths in Niña Jewelry's
employ and not solely upon the respondents. Besides, as stressed by the
petitioners, the new policy was intended to merely curb the incidences of gold
theft in the work place. The new policy can hardly be said to be disdainful or
insensible to the workers as to render their continued employment unreasonable,
unlikely or impossible.

On September 7, 2004, or more or less three weeks after the imposition of the new
policy, the respondents filed their complaints for illegal dismissal which include
their prayer for the payment of separation pay. On September 20, 2004, they filed
amended complaints seeking for reinstatement instead.

The CA favored the respondents' argument that the latter could not have abandoned
their work as it can be presumed that they would not have filed complaints for
illegal dismissal had they not been really terminated and had they not intended
themselves to be reinstated. We find that the presumption relied upon by the CA
pales in comparison to the substantial evidence offered by the petitioners that it
was the respondents who stopped reporting for work and were not dismissed at all.

In sum, we agree with the petitioners that substantial evidence support the LA's
and the NLRC's findings that no dismissal occurred. Hence, the CA should not have
given due course to and granted the petition for certiorari under Rule 65 filed by
the respondents before it.

In view of our disquisition above that the findings of the LA and the NLRC that no
constructive dismissal occurred are supported by substantial evidence, the CA thus
erred in giving due course to and granting the petition filed before it. Hence, it
is not even necessary anymore to resolve the issue of whether or not the policy of
posting cash bonds or making deductions from the goldsmiths' salaries is proper.
However, considering that there are other goldsmiths in Niña Jewelry's employ upon
whom the policy challenged by the respondents remain to be enforced, in the
interest of justice and to put things to rest, we shall resolve the issue.

Article 113 of the Labor Code is clear that there are only three exceptions to the
general rule that no deductions from the employees' salaries can be made. The
exception which finds application in the instant petition is in cases where the
employer is authorized by law or regulations issued by the Secretary of Labor to
effect the deductions. On the other hand, Article 114 states that generally,
deposits for loss or damages are not allowed except in cases where the employer is
engaged in such trades, occupations or business where the practice of making
deposits is a recognized one, or is necessary or desirable as determined by the
Secretary of Labor in appropriate rules or regulations.

While employers should generally be given leeways in their exercise of management

prerogatives, we agree with the respondents and the CA that in the case at bar, the
petitioners had failed to prove that their imposition of the new policy upon the
goldsmiths under Niña Jewelry's employ falls under the exceptions specified in
Articles 113 and 114 of the Labor Code.

The petitioners point out that Section 14, Book III, Rule VIII of the Omnibus Rules
does not define the circumstances when the making of deposits is deemed recognized,
necessary or desirable. The petitioners then argue that the intention of the law is
for the courts to determine on a case to case basis what should be regarded as
recognized, necessary or desirable and to test an employer's policy of requiring
deposits on the bases of its reasonableness and necessity.

We are not persuaded.

Articles 113 and 114 of the Labor Code are clear as to what are the exceptions to
the general prohibition against requiring deposits and effecting deductions from
the employees' salaries. Hence, a statutory construction of the aforecited
provisions is not called for. Even if we were however called upon to interpret the
provisions, our inclination would still be to strictly construe the same against
the employer because evidently, the posting of cash bonds and the making of
deductions from the wages would inarguably impose an additional burden upon the
employees.

While the petitioners are not absolutely precluded from imposing the new policy,
they can only do so upon compliance with the requirements of the law.44 In other
words, the petitioners should first establish that the making of deductions from
the salaries is authorized by law, or regulations issued by the Secretary of Labor.
Further, the posting of cash bonds should be proven as a recognized practice in the
jewelry manufacturing business, or alternatively, the petitioners should seek for
the determination by the Secretary of Labor through the issuance of appropriate
rules and regulations that the policy the former seeks to implement is necessary or
desirable in the conduct of business. The petitioners failed in this respect. It
bears stressing that without proofs that requiring deposits and effecting
deductions are recognized practices, or without securing the Secretary of Labor's
determination of the necessity or desirability of the same, the imposition of new
policies relative to deductions and deposits can be made subject to abuse by the
employers. This is not what the law intends.

In view of the foregoing, we hold that no dismissal, constructive or otherwise,

occurred. The findings of the NLRC and the LA that it was the respondents who
stopped reporting for work are supported by substantial evidence. Hence, the CA
erred when it re-evaluated the parties' respective evidence and granted the
petition filed before it. However, we agree with the CA that it is baseless for
Niña Jewelry to impose its new policy upon the goldsmiths under its employ without
first complying with the strict requirements of the law.

WHEREFORE, the instant petition is PARTIALLY GRANTED. The assailed Decision and
Resolution of the CA dated January 9, 2009 and May 26, 2009, respectively, are
REVERSED only in so far as they declared that the respondents were constructively
dismissed and entitled to reinstatement and payment of backwages, allowances and
benefits. However, the CA's ruling that the petitioners' imposition of its new
policy upon the respondents lacks legal basis, stands.

SO ORDERED.

BIENVENIDO L. REYES
Associate Justice

WE CONCUR:

ANTONIO T. CARPIO
Associate Justice

ARTURO D. BRION
Associate Justice JOSE P. PEREZ
Associate Justice
MARIA LOURDES P. A. SERENO
Associate Justice

A T T E S T A T I O N

I attest that the conclusions in the above Decision had been reached in
consultation before the case was assigned to the writer of the opinion of the
Court’s Division.

ANTONIO T. CARPIO
Associate Justice
Chairperson, Second Division

C E R T I F I C A T I O N

Pursuant to Section 13, Article VIII of the Constitution and the Division
Chairperson's Attestation, I certify that the conclusions in the above Decision had
been reached in consultation before the case was assigned to the writer of the
opinion of the Court’s Division.

RENATO C. CORONA
Chief Justice
Footnotes

1 Rollo, pp. 26-52.

2 Penned by Associate Justice Amy C. Lazaro-Javier, with Associate Justices

Francisco P. Acosta and Rodil V. Zalameda, concurring; id. at 12-20.

3 Id. at 22-24.

4 Id. at 19-20.

5 Id. at 164-167.

6 Id. at 54 and 56.

7 Id. at 195-196.

8 Id. at 77-78.

9 Id. at 113-114.

10 Id. at 128-146.

11 Supra note 2.

12 G.R. No. 171392, October 30, 2006, 506 SCRA 256, 260-261.

13 Far East Agricultural Supply, Inc. v. Lebatique, G.R. No. 162813, February 12,
2007, 515 SCRA 491.

14 De Guzman v. NLRC, G.R. No. 167701, December 12, 2007, 540 SCRA 21, 34.

15 Rollo, pp. 16-18.

16 Supra note 1.

17 Id. at 34.

18 Please see the Joint Affidavit of Generoso Fortunoba, Erdie Pilares and Crisanto
Ignacio, id. at 161-162.

19 Art. 115. Limitations. – No deduction from the deposits of an employee for the
actual amount of the loss or damage shall be made unless the employee has been
heard thereon, and his responsibility has been clearly shown.

20 Citing San Miguel Corporation v. Ubaldo, G.R. No. 92859, February 1, 1993, 218
SCRA 293.

21 Rollo, pp. 182-188.

22 438 Phil 737 (2002).

23 439 Phil 309 (2002).

24 Sec. 12. Non-interference in disposal of wages. No employer shall limit or

otherwise interfere with the freedom of any employee to dispose of his wages and no
employer shall in any manner oblige any of his employees to patronize any store or
avail of the services offered by any person.
25 Sec. 13. Wage deduction. Deductions from the wages of the employees may be made
by the employer in any of the following cases:

(a) When the deductions are authorized by law, including deductions for the
insurance premiums advanced by the employer in behalf of the employee as well as
union dues where the right to check-off has been recognized by the employer or
authorized in writing by the individual employee himself;

(b) When the deductions are with the written authorization of the employees for
payment to a third person and the employer agrees to do so, provided that the
latter does not receive any pecuniary benefit, directly or indirectly, from the
transaction.

26 Sec. 14. Deductions for loss or damages. – Where the employer is engaged in a
trade, occupation or business where the practice of making deductions or requiring
deposits is recognized, to answer for the reimbursement of loss or damage to tools,
materials, or equipment supplied by the employer to the employee, the employer may
make wage deductions or require the employees to make deposits from which
deductions shall be made, subject to the following conditions:

(a) That the employee concerned is clearly shown to be responsible for the loss or
damage;

(b) That the employee is given reasonable opportunity to show cause why deduction
should not be made;

(c) That the amount of such deductions is fair and reasonable and shall not exceed
the actual loss or damage; and

(d) That the deduction from the wages of the employee does not exceed 20% of the
employee's wages in a week.

27 Rollo, pp. 210-220.

28 Id. at 194.

29 Supra note 22.

30 Supra note 23.

31 520 Phil 135, 146 (2006).

32 Supra note 26.

33 G.R. No. 183572, April 13, 2010, 618 SCRA 218, citing Montoya v. Transmed Manila
Corporation, G.R. No. 183329, August 27, 2009, 596 SCRA 334, 343.

34 Id. at 233.

35 AMA Computer College-East Rizal, et al. v. Allan Raymond Ignacio, G.R. No.
178520, June 23, 2009, 590 SCRA 633, 651.

36 Supra note 33, citing Protacio v. Laya Mananghaya & Co., G.R. No. 168654, March
25, 2009, 582 SCRA 417, 427.

37 Id. at 232.

38 Rollo, p. 134.
39 G.R. No. 175201, April 23, 2008, 552 SCRA 589, citing Montemayor v. Bundalian,
453 Phil 158, 167 (2003).

40 Id. at 598.

41 Supra note 18.

42 Odilon Martinez v. B&B Fish Broker, G.R. No. 179985, September 18, 2009, 600
SCRA 691.

43 Fe La Rosa, et al. v. Ambassador Hotel, G.R. No. 177059, March 13, 2009, 581
SCRA 340, 346-347.

44 Dentech Manufacturing Corporation, et al. v. NLRC, et al., 254 Phil 595 (1989).