Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION

G.R. No. 101619 July 8, 1992
SANYO PHILIPPINES WORKERS UNION-PSSLU LOCAL CHAPTER NO. 109 AND/OR ANTONIO
DIAZ, PSSLU NATIONAL PRESIDENT, petitioners,
vs.
HON. POTENCIANO S. CANIZARES, in his capacity as Labor Arbiter, BERNARDO YAP, RENATO
BAYBON, SALVADOR SOLIBEL, ALLAN MISTERIO, EDGARDO TANGKAY, LEONARDO DIONISIO,
ARNEL SALVO, REYNALDO RICOHERMOSO, BENITO VALENCIA, GERARDO LASALA AND
ALEXANDER ATANASIO, respondents.

MEDIALDEA, J.:
This petition seeks to nullify: 1) the order of respondent Labor Arbiter Potenciano Caizares dated
August 6, 1991 deferring the resolution of the motion to dismiss the complaint of private respondents
filed by petitioner Sanyo Philippines Workers Union-PSSLU Local Chapter No. 109 (PSSLU, for brevity) on
the ground that the labor arbiter had no jurisdiction over said complaint and 2) the order of the same
respondent clarifying its previous order and ruling that it had jurisdiction over the case.
The facts of the case are as follows:
PSSLU had an existing CBA with Sanyo Philippines Inc. (Sanyo, for short) effective July 1, 1989 to June
30, 1994. The same CBA contained a union security clause which provided:
Sec. 2. All members of the union covered by this agreement must retain their
membership in good standing in the union as condition of his/her continued
employment with the company. The union shall have the right to demand from the
company the dismissal of the members of the union by reason of their voluntary
resignation from membership or willful refusal to pay the Union Dues or by reasons of
their having formed, organized, joined, affiliated, supported and/or aided directly or
indirectly another labor organization, and the union thus hereby guarantees and holds
the company free and harmless from any liability whatsoever that may arise
consequent to the implementation of the provision of this article. (pp. 5-6, Rollo)
In a letter dated February 7, 1990, PSSLU, through its national president, informed the management of
Sanyo that the following employees were notified that their membership with PSSLU were cancelled for
anti-union, activities, economic sabotage, threats, coercion and intimidation, disloyalty and for joining
another union: Benito Valencia, Bernardo Yap, Arnel Salvo, Renato Baybon, Eduardo Porlaje, Salvador
Solibel, Conrado Sarol, Angelito Manzano, Allan Misterio, Reynaldo Ricohermoso, Mario Ensay and
Froilan Plamenco. The same letter informed Sanyo that the same employees refused to submit
themselves to the union's grievance investigation committee (p. 53, Rollo). It appears that many of
these employees were not members of PSSLU but of another union, KAMAO.
On February 14, 1990, some officers of KAMAO, which included Yap, Salvo, Baybon, Solibel, Valencia,
Misterio and Ricohermoso, executed a pledged of cooperation with PSSLU promising cooperation with
the latter union and among others, respecting, accepting and honoring the CBA between Sanyo and
specifically:
1. That we shall remain officers and members of KAMAO until we finally decide to
rejoin Sanyo Phil. Workers Union-PSSLU;
2. That henceforth, we support and cooperate with the duly elected union officers of
Sanyo Phil. Workers Union-PSSLU in any and all its activities and programs to insure
industrial peace and harmony;
3. That we collectively accept, honor, and respect the Collective Bargaining Agreement
entered into between Sanyo Phil. Inc. and Sanyo Phil. Workers Union-PSSLU dated
February 7, 1990;
4 That we collectively promise not to engage in any activities inside company premises
contrary to law, the CBA and existing policies;
5 That we are willing to pay our individual agency fee in accordance with the provision
of the Labor Code, as amended;
6 That we collectively promise not to violate this pledge of cooperation. (p. 55, Rollo)
On March 4, 1991, PSSLU through its national and local presidents, wrote another letter to Sanyo
recommending the dismissal of the following non-union workers: Bernardo Yap, Arnel Salvo, Renato
Baybon, Reynaldo Ricohermoso, Salvador Solibel, Benito Valencia, and Allan Misterio, allegedly because:
1) they were engaged and were still engaging in anti-union activities; 2) they willfully violated the
pledge of cooperation with PSSLU which they signed and executed on February 14, 1990; and 3) they
threatened and were still threatening with bodily harm and even death the officers of the union (pp. 37-
38, Rollo).
Also recommended for dismissal were the following union members who allegedly joined, supported and
sympathized with a minority union, KAMAO: Gerardo Lasala, Legardo Tangkay, Alexander Atanacio, and
Leonardo Dionisio.
The last part of the said letter provided:
The dismissal of the above-named union members is without prejudice to receive (sic)
their termination pay if management decide (sic) to grant them benefits in accordance
with law. The union hereby holds the company free and harmless from any liability
that may arise consequent to the implementation by the company of our
recommendations for the dismissal of the above-mentioned workers.
It is however suggested that the Grievance Machinery be convened pursuant to
Section 3, Article XV of the Collective Bargaining Agreement (CBA) before their actual
dismissal from the company. (p. 38, Rollo)
Pursuant to the above letter of the union, the company sent a memorandum to the same workers
advising them that:
As per the attached letter from the local union President SPWU and the federation
President, PSSLU, requesting management to put the herein mentioned employees on
preventive suspension, effective immediately, preliminary to their subsequent
dismissal, please be informed that the following employees are under preventive
suspension effective March 13, 1991 to wit:
1. Bernardo Yap
2. Renato Baybon
3. Salvador Solibel
4. Allan Misterio
5. Edgardo Tangkay
6. Leonardo Dionisio
7. Arnel Salvo
8. Reynaldo Ricohermoso
9. Benito Valencia
10. Gerardo Lasala
11. Alexander Atanacio
The above listed employees shall not be allowed within company premises without the
permission of management.
As per request of the union's letter to management, should the listed employees fail to
appeal the decision of the union for dismissal, then effective March 23, 1991, said
listed employees shall be considered dismissed from the company. (p 39, Rollo)
The company received no information on whether or not said employees appealed to PSSLU. Hence, it
considered them dismissed as of March 23, 1991 (p. 40, Rollo).
On May 20, 1991, the dismissed employees filed a complaint (pp. 32-35, Rollo) with the NLRC for illegal
dismissal. Named respondent were PSSLU and Sanyo.
On June 20, 1991, PSSLU filed a motion to dismiss the complaint alleging that the Labor Arbiter was
without jurisdiction over the case, relying on Article 217 (c) of P.D. 442, as amended by Section 9 of
Republic Act No. 6715 which provides that cases arising from the interpretation or implementation of the
collective bargaining agreements shall be disposed of by the labor arbiter by referring the same to the
grievance machinery and voluntary arbitration.
The complainants opposed the motion to dismiss complaint on these grounds: 1) the series of
conferences before the National Conciliation and Mediation Board had been terminated; 2) the NLRC
Labor Arbiter had jurisdiction over the case which was a termination dispute pursuant to Article 217 (2)
of the Labor Code; and 3) there was nothing in the CBA which needs interpretation or implementation
(pp. 44-46, Rollo).
On August 7, 1991, the respondent Labor Arbiter issued the first questioned order. It held that:
xxx xxx xxx
While there are seemingly contradictory provisions in the aforecited article of the Labor
Code, the better interpretation will be to give effect to both, and termination dispute
being clearly spelled as falling under the jurisdiction of the Labor Arbiter, the same
shall be respected. The jurisdiction of the grievance machinery and voluntary
arbitration shall cover other controversies.
However, the resolution of the instant issue shall be suspended until both parties have
fully presented their respective positions and the said issue shall be included in the
final determination of the above-captioned case.
WHEREFORE, the instant Motions to Dismiss are hereby held pending.
Consequently, the parties are hereby directed to submit their position papers and
supporting documents pursuant to Section 2, Rule VII of the Rules of the Commission
on or before the hearing on the merit of this case scheduled on August 29, 1991 at
11:00 a.m. (p. 23, Rollo)
On August 27, 1991, PSSLU filed another motion to resolve motion to dismiss complaint with a prayer
that the Labor Arbiter resolve the issue of jurisdiction.
On September 4, 1991, the respondent Labor Arbiter issued the second questioned order which held
that it was assuming jurisdiction over the complaint of private respondents, in effect, holding that it had
jurisdiction over the case.
On September 19, 1991, PSSLU filed this petition alleging that public respondent Labor Arbiter cannot
assume jurisdiction over the complaint of public respondents because it had no jurisdiction over the
dispute subject of said complaint. It is their submission that under Article 217 (c) of the Labor Code, in
relation to Article 261 thereof, as well as Policy Instruction No. 6 of the Secretary of Labor, respondent
Arbiter has no jurisdiction and authority to take cognizance of the complaint brought by private
respondents which involves the implementation of the union security clause of the CBA. The function of
the Labor Arbiter under the same law and rule is to refer this case to the grievance machinery and
voluntary arbitration.
In its comment, private respondents argue that Article 217(a) 2 and 4 of the Labor Code is explicit, to
wit:
Art. 217. Jurisdiction of the Labor Arbiters and the Commission.
a) Except as otherwise provided under this Code, the Labor Arbiters shall have original
and exclusive jurisdiction to hear and decide . . . the following cases involving all
workers, . . . :
xxx xxx xxx
2) Termination disputes,
xxx xxx xxx
4) Claims for actual, moral, exemplary and other forms of damages arising from the
employer-employee relations.
The private respondents also claimed that insofar as Salvo, Baybon, Ricohermoso, Solibel, Valencia,
Misterio and Lasala were concerned, they joined another union, KAMAO during the freedom period which
commenced on May 1, 1989 up to June 30, 1989 or before the effectivity of the July 1, 1989 CBA.
Hence, they are not covered by the provisions of the CBA between Sanyo and PSSLU. Private
respondents Tangkay, Atanacio and Dionisio admit that in September 1989, they resigned from KAMAO
and rejoined PSSLU (pp.
66(a)-68, Rollo).
For its part, public respondent, through the Office of the Solicitor General, is of the view that a
distinction should be made between a case involving "interpretation or implementation of collective
bargaining agreement or "interpretation" or "enforcement" of company personnel policies, on the one
hand and a case involving termination, on the other hand. It argued that the case at bar does not
involve an "interpretation or implementation" of a collective bargaining agreement or "interpretation or
enforcement" of company policies but involves a "termination." Where the dispute is just in the
interpretation, implementation or enforcement stage, it may be referred to the grievance machinery set
up in the CBA or by voluntary arbitration. Where there was already actual termination, i.e., violation of
rights, it is already cognizable by the Labor Arbiter.
Article 217 of the Labor Code defines the jurisdiction of the Labor Arbiter.
Art. 217. Jurisdiction of Labor Arbiters and the Commission. a) Except as otherwise
provided under this Code the Labor Arbiters shall have original and exclusive
jurisdiction to hear and decide within thirty (30) calendar days after the submission of
the case by the parties for decision without extension even in the absence of
stenographic notes, the following cases involving all workers, whether agricultural or
non-agricultural:
1. Unfair labor practice cases;
2. Termination disputes;
3. If accompanied with a claim for reinstatement, those cases that workers may file
involving wages, rates of pay, hours of work and other terms and conditions of
employment;
4. Claims for actual, moral, exemplary and other forms of damages arising from the
employer-employee relations;
5. Cases arising from any violation of Article 264 of this Code, including questions
involving the legality of strikes and lockouts;
6. Except claims for Employees Compensation, Social Security, Medicare and maternity
benefits, all other claims, arising from employer-employee relations, including those of
persons in domestic or household service, involving an amount exceeding five
thousand pesos (P5,000.00) regardless of whether accompanied with a claim for
reinstatement.
(b) The Commission shall have exclusive appellate jurisdiction over all cases decided
by Labor Arbiters.
(c) Cases arising from the interpretation or implementation of collective bargaining
agreements and those arising from the interpretation or enforcement of company
personnel policies shall be disposed of by the Labor Arbiter by referring the same to
the grievance machinery and voluntary arbitration as may be provided in said
agreements.
It is clear from the above article that termination cases fall under the jurisdiction of the Labor Arbiter. It
should be noted however that said article at the outset excepted from the said provision cases otherwise
provided for in other provisions of the same Code, thus the phrase "Except as otherwise provided under
this Code . . . ." Under paragraph (c) of the same article, it is expressly provided that "cases arising
from the interpretation or implementation of collective bargaining agreements and those arising from
the interpretation and enforcement of company personnel policies shall be disposed of by the Labor
Arbiter by referring the same to the grievance machinery and voluntary arbitration as may be provided
in said agreements.
It was provided in the CBA executed between PSSLU and Sanyo that a member's voluntary resignation
from membership, willful refusal to pay union dues and his/her forming, organizing, joining, supporting,
affiliating or aiding directly or indirectly another labor union shall be a cause for it to demand his/her
dismissal from the company. The demand for the dismissal and the actual dismissal by the company on
any of these grounds is an enforcement of the union security clause in the CBA. This act is authorized by
law provided that enforcement should not be characterized by arbitrariness (Manila Mandarin Employee
Union v. NLRC, G.R. No. 76989, 29 Sept. 1987, 154 SCRA 368) and always with due process (Tropical
Hut Employees Union v. Tropical Food Market, Inc., L-43495-99, Jan. 20, 1990).
The reference to a Grievance Machinery and Voluntary Arbitrators for the adjustment or resolution of
grievances arising from the interpretation or implementation of their CBA and those arising from the
interpretation or enforcement of company personnel policies is mandatory. The law grants to voluntary
arbitrators original and exclusive jurisdiction to hear and decide all unresolved grievances arising from
the interpretation or implementation of the Collective Bargaining Agreement and those arising from the
interpretation or enforcement of company personnel policies (Art. 261, Labor Code).
In its order of September 4, 1991, respondent Labor Arbiter explained its decision to assume jurisdiction
over the complaint, thus:
The movants failed to show (1) the provisions of the CBA to be implemented, and (2)
the grievance machinery and voluntary arbitrator already formed and properly named.
What self-respecting judge would refer a case from his responsibility to a shadow? To
whom really and specifically shall the case be indorsed or referred? In brief, they could
have shown the (1) existence of the grievance machinery and (2) its being effective.
Furthermore, the aforecited law merely directs the "referral" cases. It does not
expressly confer jurisdiction on the grievance machinery or voluntary arbitration panel,
created or to be created. Article 260 of the Labor Code describes the formation of the
grievance and voluntary arbitration. All this of course shall be on voluntary basis. Is
there another meaning of voluntary arbitration? (The herein complainant have strongly
opposed the motion to dismiss. Would they go willingly to the grievance machinery
and voluntary arbitration which are installed by their opponents if directed to do so?)
(p. 26, Rollo)
The failure of the parties to the CBA to establish the grievance machinery and its unavailability is not an
excuse for the Labor Arbiter to assume jurisdiction over disputes arising from the implementation and
enforcement of a provision in the CBA. In the existing CBA between PSSLU and Sanyo, the procedure
and mechanics of its establishment had been clearly laid out as follows:
ARTICLE XV GRIEVANCE MACHINERY
Sec. 1. Whenever any controversy should arise between the company and the union as
to the interpretation or application of the provision of this agreement, or whenever any
difference shall exist between said parties relative to the terms and conditions of
employment, an earnest effort shall be made to settle such controversy in
substantially the following manner:
First step. (Thru Grievance) The dispute shall initially be resolved by conference
between the management to be represented by the Management's authorized
representatives on the one hand, and the Union to be represented by a committee
composed of the local union president and one of the local union officer appointed by
the local union president, on the other hand within three days from date of
concurrence of grievance action. In the absence of the local union president, he (shall)
appoint another local union officer to take over in his behalf. Where a controversy
personally affects an employee, he shall not be allowed to be a member of the
committee represented by the union.
Second step. (Thru Arbitrator mutually chosen) Should such dispute remain unsettled
after twenty (20) days from the first conference or after such period as the parties
may agree upon in specified cases, it shall be referred to an arbitrator chosen by the
consent of the company and the union. In the event of failure to agree on the choice of
voluntary arbitrator, the National Conciliation and Mediation Board, Department of
Labor and Employment shall be requested to choose an Arbitrator in accordance with
voluntary arbitration procedures.
Sec. 2. The voluntary Arbitrator shall have thirty (30) days to decide the issue
presented to him and his decision shall be final, binding and executory upon the
parties. He shall have no authority to add or subtract from and alter any provision of
this agreement. The expenses of voluntary arbitration including the fee of the
arbitrator shall be shared equally by the company and the union. In the event the
arbitrator chosen either by the mutual agreement of the company and the union by
(the) way of voluntary arbitration or by the National Conciliation and Mediation Board
(NCMB) failed to assume his position, died, become disabled or any other manner
failed to function and or reach a decision, the company and the union shall by mutual
agreement choose another arbitrator; in the event of failure to agree on the choice of
a new voluntary arbitrator, the matter shall again be referred back to the NCMB who
shall be requested again to choose a new arbitrator as above provided. Any grievance
not elevated or processed as above provided within the stipulated period shall be
deemed settled and terminated.
Sec. 3. It is hereby agreed that decisions of the union relative to their members, for
implementation by the COMPANY, should be resolved for review thru the Grievance
Machinery; and management be invited to participate in the Grievance procedure to be
undertaken by the union relative to (the) case of the union against members. (pp.
134-135, Rollo)
All that needs to be done to set the machinery into motion is to call for the convening thereof. If the
parties to the CBA had not designated their representatives yet, they should be ordered to do so.
The procedure introduced in RA 6715 of referring certain grievances originally and exclusively to the
grievance machinery and when not settled at this level, to a panel of voluntary arbitrators outlined in
CBA's does not only include grievances arising from the interpretation or implementation of the CBA but
applies as well to those arising from the implementation of company personnel policies. No other body
shall take cognizance of these cases. The last paragraph of Article 261 enjoins other bodies from
assuming jurisdiction thereof:
The commission, its Regional Offices and the Regional Directors of the Department of
Labor and Employment shall not entertain disputes, grievances or matters under the
exclusive and original jurisdiction of the Voluntary Arbitrator or panel of voluntary
arbitrators and shall immediately dispose and refer the same to the grievance
machinery or voluntary arbitration provided in the Collective Bargaining Agreement.
In the instant case, however, We hold that the Labor Arbiter and not the Grievance Machinery provided
for in the CBA has the jurisdiction to hear and decide the complaints of the private respondents. While it
appears that the dismissal of the private respondents was made upon the recommendation of PSSLU
pursuant to the union security clause provided in the CBA, We are of the opinion that these facts do not
come within the phrase "grievances arising from the interpretation or implementation of (their)
Collective Bargaining Agreement and those arising from the interpretation or enforcement of company
personnel policies," the jurisdiction of which pertains to the Grievance Machinery or thereafter, to a
voluntary arbitrator or panel of voluntary arbitrators. Article 260 of the Labor Code on grievance
machinery and voluntary arbitrator states that "(t)he parties to a Collective Bargaining Agreement shall
include therein provisions that will ensure the mutual observance of its terms and conditions. They shall
establish a machinery for the adjustment and resolution of grievances arising from the interpretation or
implementation of their Collective Bargaining Agreement and those arising from the interpretation or
enforcement of company personnel policies." It is further provided in said article that the parties to a
CBA shall name or designate their respective representatives to the grievance machinery and if the
grievance is not settled in that level, it shall automatically be referred to voluntary arbitrators (or panel
of voluntary arbitrators) designated in advance by the parties. It need not be mentioned that the parties
to a CBA are the union and the company. Hence, only disputes involving the union and the company
shall be referred to the grievance machinery or voluntary arbitrators.
In the instant case, both the union and the company are united or have come to an agreement
regarding the dismissal of private respondents. No grievance between them exists which could be
brought to a grievance machinery. The problem or dispute in the present case is between the union and
the company on the one hand and some union and non-union members who were dismissed, on the
other hand. The dispute has to be settled before an impartial body. The grievance machinery with
members designated by the union and the company cannot be expected to be impartial against the
dismissed employees. Due process demands that the dismissed workers grievances be ventilated before
an impartial body. Since there has already been an actual termination, the matter falls within the
jurisdiction of the Labor Arbiter.
ACCORDINGLY, the petition is DISMISSED. Public respondent Labor Arbiter is directed to resolve the
complaints of private respondents immediately.
SO ORDERED.


Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-19247 May 31, 1963
INSULAR SUGAR REFINING CORPORATION, petitioner,
vs.
COURT OF INDUSTRIAL RELATIONS and INSUREFCO & PAPER PULP PROJECT WORKERS
UNION, respondents.
Nicolas Belmonte for petitioner.
Vicente T. Ocampo for respondent INSUREFCO & Paper Pulp Project Workers Union.
Vidal C. Magbanua for respondent Court of Industrial Relations.
REYES, J.B.L., J.:
Petition on certiorari impugning the jurisdiction of the Court of Industrial Relations.
On 14 June 1952, the respondent union staged a strike against the old Insular Refining Corporation
(hereinafter referred to as the old INSUREFCO), owned and controlled by the Philippine Sugar Institute
(PHILSUGIN). In 1953, the Court of Industrial Relations, in its Case No. 707-V(3), found and declared
the strike illegal, and authorized the management to dismiss of its discretion those responsible for the
strike. This order was subsequently affirmed by the Supreme Court. Accordingly, in September, 1954,
the management dismissed several employees.
On 18 November 1955, the union moved to reopen the case on the ground that the 39 workers named
in their petition were dismissed even though they were not responsible for the illegal strike, and
therewith prayed for their reinstatement, and in the event that they cannot be reinstated, they be paid
gratuity equivalent to one (1) month pay for every year of continuous service. Then, in a motion dated
28 April 1961, the union moved for the inclusion, as additional parties of the Philippine Sugar Institute
(hereinafter referred to as PHILSUGIN) and the present petitioner, the new Insular Sugar Refining
Corporation (hereinafter referred to as the new INSUREFCO).
Other relevant facts are that the new INSUREFCO is a private corporation registered with the Securities
and Exchange Commission on 6 February 1961; that the PHILSUGIN and the National Development
Company sold the assets of the old Insular Refining Company to the new INSUREFCO on 7 February
1961 over the protest of the Union, based on the pending case; and that the new INSUREFCO knew of
the pending case involving the 39 workers at the time it bought the properties.
In the contract of sale to the new INSUREFCO, Clause XI provides:
VENDEE-MORTGAGOR (the petitioner) shall retain such present personnel of the Refinery as
may be determined VENDEE-MORTGAGOR to be necessary for the efficient a economical
operation thereof.
The PHILSUGIN shall on its account pay to the employ and laborers the existing gratuities
under its Bargaining Agreement with its employees and laborers; and VENDEE-MORTGAGOR on
its part shall pay to each of the Refinery personnel who may not be retained, and those who
may be laid-off by VENDEE-MORTGAGOR within a period of one (1) year from turn-over of the
Refinery, a separation pay equivalent to on (1) month basic pay. VENDEE-MORTGAGOR shall
not answer for any claim which employees and laborers have or may have arising from
employer-employee relationship between the PHILSUGIN and such employees and laborers
prior and up to the turn over of the properties hereby sold to VENDEE-MORTGAGOR and the
latter shall not be bound by any contract or bargaining agreement that may have been entered
into between the PHILSUGIN and such employees and laborers.
The PHILSUGIN interposed no objection to its inclusion as an additional party; but the new INSUREFCO
entered a special appearance for the purpose of contesting the jurisdiction of the industrial court.
Ruling upon the issue presented, the Industrial Court overruled the contentions of the new INSUREFCO
by order of 10 October 1961; whereupon, the latter filed the present petition.
At the time the union filed a petition to reopen Case 707-V(3), the Court of Industrial Relations had
jurisdiction over the original parties and the subject-matter because in determining jurisdiction the truth
of the allegations in the petition is theoretically admitted. Among the allegations is that the employees
were illegally dismissed because they were not responsible for the strike. Consequently, it is also
theoretically admitted that there existed an employer-employee relationship between the 39 workers
and the old INSUREFCO, since the relationship is not terminated by illegal dismissal (Fernando vs. Angat
Labor Union, L-l7896, May 30, 1962).
However, the Court of Industrial Relations has no jurisdiction over the new INSUREFCO because it
cannot, primordially, compel the reinstatement of employees upon an employer that had no previous
employer-employee relationship with the former. The two INSUREFCOs, although carrying the same
corporate name, are admittedly distinct from each other, and no charge is made that the sale was
fictitious or made in order to enable the old INSUREFCO to escape its liability to the discharged
employees.
Even if the petitioner (new INSUREFCO corporation) knew at the time of the purchase that a pending
labor case existed between its vendor and the Union, that knowledge alone would not make it an
accomplice in any unfair labor practice. Wherefore, petitioner can not be required to keep the 39
discharged laborers in its, employ if it does not choose to do so, since the contract of sale of the refinery
reserved it the discretion to retain only such personnel as it (new INSUREFCO) might determine.
Assuming, therefore, that the Industrial Court later finds that these 39 laborers were improperly
discharged by the old corporation, their claim against the petitioner, new INSUREFCO, would, at most,
be the right to be considered as regular employees at the time of the transfer, and entitled to the one
month separation pay for nonretained personnel stipulated in the second paragraph of Clause XI of the
contract of sale (previously quoted). Being purely for money, such a claim will not come under the
jurisdiction of the Industrial Court; consequently, the impleading therein of the petitioner (new
INSUREFCO) against the latter's objection would be to no purpose. This Court has repeatedly held that
pure money claims not connected with any unfair labor practice, or with the apposite violation of the
Eight-Hour Labor Law or of the Minimum Wage Act, must be prosecuted in the proper courts of first
instance.
WHEREFORE, the writ of certiorari prayed for is granted, and the order of 10 October 1961 of the Court
of Industrial Relations is set aside. Costs against respondent INSUREFCO & Paper Pulp Project Workers'
Union.
Bengzon, C.J., Padilla, Bautista Angelo, Concepcion, Paredes, Dizon, Regala and Makalintal, JJ., concur.
Labrador and Barrera, JJ., took no part.

Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-4423 March 31, 1952
UNION OF THE PHILIPPINES EDUCATION EMPLOYEES (NLU), petitioner,
vs.
PHILIPPINE EDUCATION CO., respondent.
Eulogio Lerum for petitioner.
Marcial Esposo for respondent.
TUASON, J.:
This is an appeal from the order of the Court of Industrial Relations in Case No. 489-V (1), entitled Union
of Philippine Education Employees vs. Philippine Education C., in so far as it is denied the payment of the
wages of two reinstated officials of the petitioning Union during separation from their employment and
the wages of the rest of the Union members during a strike.
Jacinto Fabroa and Juanito Carandang, president and the secretary, respectively, of the above Union
having been discharged for alleged defiance of their employer's authority and subversive acts against
the company's interest, and for allegedly having indulged in Union activities during office hours, and the
rest of the members of the Union having called a strike by reason of that dismissal, the Court of
Industrial Relations, to which the disputes were submitted, found the said dismissal unwarranted and
the strike legal. Fabroa and Carandang were accordingly ordered reinstated, and the other members of
the Union returned to work.
But the court refused to decree the payment of the salary of any of the dismissed or striking employees,
and it was from this portion of the order that this appeal was taken.
Paragraph 2, Section 19 of Commonwealth Act No. 103, as amended by Commonwealth Act No. 355 and
Section 5 of Commonwealth Act No. 559, provides in part that, "If it is proved that during the said
period an employee or laborer, tenant, or farm-laborer has been suspended or dismissed without just
cause, the court may direct his reinstatement and the payment of his salary or wage during the time of
suspension or dismissal, or of any sum which he should have received had he not been suspended or
dismissed, without prejudice to any criminal liability of the employer or landlord as prescribed by section
24 of this Act."
This provision, upon which the petitioners and the appellants rely, does not entitle as a matter of course
the suspended or discharged employees to salary during suspension or separation without just cause.
The matter of payment of wages in such cases is left to the sound discretion of the court. Note that the
law employs the word "may" and not "shall" or equivalent expression, and there is nothing in the
context to indicate that the first-mentioned word may was not used in its usual, ordinary sense.
The discretionary character of the power of the Court of Industrial Relations receives a bolstering from
Section 20 of the same Act, as amended, which enjoins the court to proceed in the investigation,
determination and decision of controversies according to justice and equity without regard to
technicalities or legal formalities. This section applies to procedure and appreciation of evidence as well
as to the merits of the case, as this Court impliedly ruled in Antamok Gold Fields Mining Co. vs. Court of
Industrial Relations, et al., 70 Phil., 340, 361, 362, cited by the appellants.
On the nature of the power of the Court with regard to the payment of the salary, Antamok Goldfields
Mining Co. vs. Court of Industrial Relations, et al., supra, is authority to the view that the power is
discretionary rather than that of payment of salary is a matter of absolute right. The Supreme Court in
that case sustained the order directing the payment of salary, not because payment is obligatory but
because it is allowed by Commonwealth Act No. 103.
Did the court abuse its discretion thus conferred upon it? The answer to this question depends upon the
evidence and the circumstances surrounding the separation and the resultant strike under consideration.
It appears from the records of this appeal that on July 29, 1950, the manager of the respondent
company issued a mimeographed circular, Exhibit "A", to all its employees, informing them that a result
of the various Government economic controls, especially controls of foreign exchange and imports, the
company stood to loose nearly half of its business and, for this reason, would be forced to reduce its
personnel correspondingly. "To meet this unfortunate situation" the circular stated "that all positions will
terminate September 30, 1950," but it was the "aim of the company to take back as many of the
employees as possible, to give the utmost protection to the faithful and loyal in so far as it is within our
to do so."
This circular was met by the Union with a 17-point point demand, a demand which was mailed on July
31, at 10:30 and received by the management on August 1, although the letter was dated July 28 to
make it appear, it would seem, that the proposed cut in personal was just a counter move on the part of
the company.
This turn of an affairs prompted the management to issue a memorandum circular on August 8, inviting
the employees to a meeting to be held that afternoon in the accounting office but making it understood
that the attendance was not compulsory although everybody was requested to be present if he could
possibly come, none heeded the invitation because Carandang, signing Fabroa's name, on the same date
and before the scheduled hour, had circularized the employees telling them not to attend. They were
reminded that the Union of the Philippine Education Employees was an affiliate of the National Labor
Union; that the management had no business to deal directly with the union members individually; that
all negotiations must of necessity be conducted with National Labor Union or the Board of Directors; that
a petition was then pending in the Court of Industrial Relations and the proposed meeting would be
highly improper. As a matter of fact, however, no case had yet been filed with the Court of Industrial
Relations; the record shows that such case was docketed only the next day, August 9, 1950, the day the
employees struck.
Let us take up the matters of Fabroa's and Carandang's separation and the legality of the strike
separately for clearness sake; they involve different sets of facts and evidence..
Explaining the reason for Fabroa's and Carandang's discharge, David G. Gunnell, general manager of the
Philippine Education Co., testified, according to the appealed decision, that he received the employee's
17 demands on August 8, 1950; that a week before that, he had heared of the union activities of the
employees and the election of their officers; that on August 8, 1950, he had memorandum Exhibit "C"
circulated, wherein he requested the employees to meet with him on the company's premises; that
considering Fabroa's and Carandang's circular, which countermanded the manager's, a defiance of
Gunnell's authority and an act of insubordination, he, Gunnell, dismissed Fabroa and Carandang
effective at the close of business of August 9 with up to that date plus one month salary.
Francis B. Freeman, education department head, related an incident with Fabroa on the morning of July
29, 1950. On that occasion, according to Freeman, Fabroa in a loud and arrogant tone of voice told him
not to compel the employees in Freeman's department to sign the manager's circular as he, Fabroa, had
told them not to.
Jose Marbella, manager of the order department, testified that during the month of July he saw Fabroa
leave his desk four or five times a day, sometimes going to the toilet room and conversing there with
other employees, presumably about union affairs, and at other times talking with one of the Perez
brothers although he, the witness, did not know the subjects of the latter conversations. Marbella further
declared that he having distributed the manager's circular on July 29, Fabroa came to see him on July
31 with a batch of copies thereof and in formed him that there was no use having the boys sign them.
Judge V. Jimenez Yanzon whose decision, upon motion for reconsideration, was ratified by a majority of
the court, said, referring to Fabroa's conduct toward Freeman, that "it cannot then be concluded that
Fabroa intentionally and arrogantly defied his superior's authority in the absence of definite proof that
his attitude caused any commotion or disorder in the department at the time." This conclusion, it will be
noted, is of negative character in that there is no positive finding that Fabroa did not commit that acts
imputed to him. Yet, the judge did find that in a discussion with Freeman, "Fabroa might have been
excited and his voice perhaps went a pitch high."
Regarding the charge that Fabroa and Carandang used the company's time in union activities, these two
employees were also exonerated, but this exoneration, like their exoneration from the charge of
misbehavior, was based not on a clear conviction but on alleged lack of clear proof. Judge Yanzon
merely thought that "from the testimony of the above witnesses, Fabroa's union activities during office
hours had not been duly established." Here, again, there is manifested a feeling of uncertainty.
From the tone of the order with reference to these two charges it is gathered that the court had doubts
and gave the employees the benefit thereof. On the other hand there lurked the distinct probability that
the facts were as stated by the company's witnesses, and this probability might well have made the
court reluctant to go more than half way, awarding the reinstatement of the accused employees but not
back salary. In other words, the court struck a compromise.
Under the circumstances, we are not prepared to say that the court committed an error in stopping
where it did. Indeed if we were forced to express our own opinion, we might say that Fabroa's and
Carandang's dismissal was not entirely devoid of jurisdiction and that with their reinstatement they had
reason enough to be satisfied. Certainly the management had not been guilty of unfair labor practices. It
was Fabroa and Carandang who committed acts bordering on unfair labor practice.
It was insinuated that the company's decision to lay off some of its employees was a retaliation to the
Union's demands. It so happened that it was the other way around for, as has been, the demands were
submitted after the proposed cut in personnel was announced. There was obviously an attempt here to
mislead; and there is no doubt that Fabroa and Carandang also mislead their co-employees into
believing that a petition had already been lodged with the Court of Industrial Relations.
The court made no comment on these misstatements and we are not precluded from making our own
finding. Our belief is that such misstatements as an obvious case of bad faith should not be lightly
regarded.
Bearing on these misstatements is one charge on which the court failed to make a finding and which
does not put Fabroa and Carandang in good light. It is that these employees blocked the company's
entirely legitimate efforts to explain to its personnel the precarious state of its business. Fabroa's and
Carandang's actions were all the more unwarranted, in our opinion, because Gunnell's memorandum
sounded reasonable and was couched in sympathetic and conciliatory language, and the projected
meeting did not in any way tend to prejudice or compromise the employee's interest. On the contrary. it
was to have been a good occasion for them to air their grievances, if they had any, and to state their
reasons why the contemplated layoff should not be carried out. If the Union must have spokesmen
Fabroa and Carandang were there and there was nothing to prevent representatives of the national
organization from being summoned.
Coming down to the question of the legality of the strike, the ground for the court's denial of the
employees' claim the compensation during the period of strike, although the strike was adjudged legal,
was that the said employees "quit work voluntarily as a manifestation of protest in the action of the
management."
Since the walkout was launched for the sole reason that Fabroa and Carandang had been dismissed, the
right of the striking employees to backpay can be no greater that the right of to remuneration during
their separation. A stream can not run higher than its source.
There was no justifiable cause for the employees to stop working immediately following or
simultaneously with Fabroa's and Carandang's dismissal. Having been paid or promised a month's
salary, Fabroa and Carandang have the wherewithal to tide over their unemployment for at least one
month, and the matter of their suspension was to have been taken up with the Court of Industrial
Relations or, as the employees had been led to believe, was already in the hands of the court. There was
therefore no urgent need for a strike and if the employees struck they did so at their risk. Until all the
remedies and negotiations looking toward the adjustment or settlement of labor disputes having been
exhausted, the law does not look with favor upon resorts to radical measures, the pernicious
consequences of which transcend the rights of the immediate parties.
For another thing, witnesses testified that during the strike a saleslady on her way to the company's
store had been grabbed by the arm by one of the strikers and chided for going to work again, and that
on August 10, 1950, three strikers made a motion to lay hands on a clerk though they did not succeed
in their attempts, thanks to the intervention of one Leoncio Baluyot who pushed the would-be assault
victim inside a store to separate him from his assailants.
In refusing to give credence to the company's evidence on these occurence the court was swayed
entirely by the fact that "no incident of whatever nature had been reported to the police." It was from
this fact alone that the court concluded that "the strikers had not committed acts of violence or caused
injuries to persons or damages to properties."
Findings on the weight of evidence by the Court of Industrial Relations are conclusive, but findings
unsupported by substantial or credible proof are not binding on the reviewing court. Now, the mere
circumstance that the police was not called had no rational probative force to discredit the testimony of
otherwise credible witnesses, testimony which had all the ring of truth. The Court overlooked the fact
that the untoward incidents did not produce results serious enough to warrant police intervention or
criminal prosecution, and the more important fact that under the existing state of passions the
frustrated violence was better forgotten than kept alive for the good for all concerned.
All things considered, we are of the opinion that the court committed no error in holding that the strike
was voluntarily as it was unnecessary and in denying the employee's claim to renumeration for the
period they did not report to work.
The appealed order is affirmed without costs.

SECOND DIVISION
[G.R. No. 150166. July 26, 2004]
FILCON MANUFACTURING CORPORATION, petitioner, vs. LAKAS MANGGAGAWA SA FILCON-LAKAS
MANGGAGAWA LABOR CENTER (LMF-LMLC), respondent.
D E C I S I O N
CALLEJO, SR., J.:
This is a petition for review of the Decision1[1] and Resolution2[2] of the Court of Appeals in CAG.R.
SP No. 54803 filed by petitioner Filcon Manufacturing Corporation.
The Antecedents
The petitioner is a domestic corporation engaged in the manufacture of Converse rubber shoes.3[3] Its
factory was located at General Molina St., Parang, Marikina. In 1989, it employed 1,000 workers to
meet its work commitments.4[4]






Respondent Lakas Manggagawa sa Filcon-Lakas Manggagawa Labor Center was one of the legitimate
labor organizations of the rank-and-file employees of the petitioner, while the Shoe Workers Association
and Technology (SWAT) was the exclusive bargaining agent of such rank-and-file employees. It had an
existing collective bargaining agreement (CBA) with the petitioner effective up to January 15, 1990.
The employees of the petitioner worked in two shifts: from 8:00 a.m. to 2:00 p.m. and from 2:00 p.m.
to 10:00 p.m. At around 8:00 p.m. on October 13, 1989, the power supply at the factory was
interrupted, resulting in the stoppage of work. The employees who worked the second shift were
directed to go home. Some of them acceded, but the others chose to wait for the resumption of the
power supply. When the power supply remained unrestored, the employees went home at about 10:00
p.m.
The next day, the second shift employees who had waited for the resumption of the power supply
discovered that their bundy cards reflected that they had logged out at 7:30 p.m. Enraged, they
demanded an explanation and staged a strike. The employees did not receive any explanation from the
management.5[5] Instead, preventive suspension orders were issued the next day, October 15, 1989, to
the following employees:
1. William Inocencio
2. Luis Villa
3. Noel Liwag
4. Lourdes Martin
5. Joel Floria
6. Joselito Cortez
7. Asuncion Dolot
8. Ronilo Mayordomo
9. Edwin de Guzman
10. Maximiano (sic) Bathan
11. Rene Noel Ciego6[6]
After determining that the aforementioned employees spearheaded the strike, the petitioner terminated
their employment. The employees thereafter filed complaints for illegal dismissal with the National
Arbitration Branch of the National Labor Relations Commission (NLRC). The petitioner, in turn, filed a
complaint against the said employees to declare the strike illegal. The complaints were docketed as
NLRC NCR Case Nos. 00-10-04910-89, 00-10-04921-89, 00-11-05361-89 and 00-11-05564-89, raffled
to Labor Arbiter Nieves Vivar-de Castro.7[7]









Pending the resolution of the complaints, the respondent union, Bisig Manggagawa and Kampil
Katipunan, filed separate petitions for certification election before the Bureau of Labor Relations (BLR) in
November 1989, within the freedom period. On June 18, 1990,8[8] the respondent union filed a Notice
of Strike before the National Conciliation and Mediation Board (NCMB), in which it alleged that the
petitioner committed an unfair labor practice (ULP) by harassing, illegally suspending its members and
illegally dismissing two union officers. The case was docketed as NCMB-NLRC-06-501-90. On June 25,
1990, a strike vote was conducted. Of the 641 votes cast, 623 voted to stage a strike while 17 voted
NO.9[9]
On June 27, 1990, the respondent union received information that a truckload of raw materials was
about to be transferred outside the company premises. Suspecting that the petitioner was attempting a
runaway shop,10[10] the respondent gathered a group of employees outside the factory gate to verify
the report.11[11] They put up barricades consisting of big stones, pieces of wood, benches, tables, tents
and other means of obstruction, to prevent ingress and egress to and from the factory.12[12]
At 3:00 p.m. on June 29, 1990, the petitioner attempted to make deliveries to its customers using a
truck bearing plate number PLY-907 driven by Edgardo Iballa. However, some members of the
respondent union intercepted the delivery truck. To prevent the truck from going any further, Nicolas
Chavez, a member of the respondent union, laid down in front of the vehicle.13[13] The other members
of the respondent demanded to see what was inside the truck. Iballa stepped down and reported the
incident to their warehouse manager, and both of them returned to where the truck was. When the door
of the truck was opened, the members of the respondent saw boxes of converse shoes for delivery to














customers. The picketing employees then unloaded and opened the boxes.14[14] The warehouse
manager recalled the delivery order and directed Iballa to return the truck to the garage. When he
reached the place, Iballa noticed that the trucks front tires were flat.15[15] A closer examination
revealed that they were punctured.16[16]
To prevent the attempts to transfer its raw materials, members of the LMF-LMLC who were off duty
formed picket lines at the factorys side gate.17[17]
The already tense situation worsened when the respondent union staged a strike on July 3, 1990.18[18]
Placards, pieces of wood and stones and benches were placed at the factorys front and side
gates.19[19] On July 4, 1990, the petitioner filed a Petition for Injunction with Prayer for an Ex Parte
Temporary Restraining Order with the NLRC against the respondent union, SWAT, Noel Mayordomo,
John F. Almazan and Domingo Bonagua, praying that the respondent unions members be enjoined from
picketing its premises, and desist from threatening the management personnel and non-strikers with
bodily harm.20[20] The case was docketed as NLRC-NCR QC No. 000035.
After failed negotiations, the petitioner filed on August 21, 1990 a complaint to declare the strike illegal,
for violations of CBA provisions, and ULP with damages before the Arbitration Branch of the NLRC
against the respondent union, SWAT, Filcon Employees Union-SWAT, Noel Mayordomo, John F. Almazan,
Domingo Bonagua, Nicolas Chavez, Alfredo Jungco, Pablito Nava, Florentino Alejandro, Jonathan Josef,















Emmanuel Fabiola, Rogelio dela Cruz, Pedro Ege, Restituto de Leon, Orsie Renales, Joel Bautista,
Ferdinand Santo, Maria Teresita Notado, Ricardo Templo, Florendo Sereno, Maria Elena Presno, Renato
Hermoso, Rodrigo Renales, Luis Villa, William Inocencio, Lourdes Martin, Josefina de Leon, Ranilo
Mayordomo, Maximo Bathan, Joselito Cortez, Joel Floria, Edwin de Guzman, Noel Liwag, Natividad
Taquic, Rene Ciego, Asuncion Dolot, Gemma Barcelon, Andres Namoro, Nicolas Leonardo, et al. The
case was docketed as NLRC-NCR Case No. 00-08-04521-90.21[21]
On August 30, 1990, the petitioner and the respondent entered into a Compromise Agreement to
maintain the status quo ante litem. The agreement was attested to by the NCMB.
On the merits of the cases, the Labor Arbiter directed the parties to submit their respective position
papers and other pleadings. The petitioner alleged the following in its position paper: (a) the
respondent union had no legal personality to file a notice of strike because the SWAT was the exclusive
bargaining agent of the rank-and-file employees; (b) that the pending certification election barred the
filing of notice of strike; and, (c) that the filing of the notice of strike was violative of the existing CBA
provisions, particularly the no-strike-no-lockout clause. The respondent, for its part, asserted that its
agreement with the petitioner contained a non-retaliatory clause and thereby admitted, without any
reservation, all the striking employees; as such, the petitioner condoned the effects of the illegality of
the strike. Contending that it had acquired majority status by reason of the disaffiliation of the
members of the SWAT, the respondent union insisted that it had legal personality to file a notice of
strike. It further alleged that the strike was conducted peacefully and lawfully.
On the other hand, the SWAT asserted that since it was the exclusive bargaining agent of the rank-and-
file employees of the petitioner, the respondent union did not have a personality to file a notice of strike
before the NCMB. The SWAT, likewise, denied any participation in the wild cat strike, and claimed that
its members and officers were coerced and intimidated by the respondent unions members. The parties
then adduced testimonial and documentary evidence.
Pending the resolution of the complaint in NLRC-NCR No. 00-08-4521-90, Labor Arbiter Vivar-de Castro
rendered a decision in NLRC NCR Case Nos. 00-10-04910-89, 00-10-04921-89, 00-11-05361-89 and
00-11-05564-89, declaring the following to have lost their employment status because of their
participation in the October 1989 strike and the commission of prohibited acts during the same:
1. Noel Mayordomo
2. Lourdes Martin
3. Ronilo Mayordomo
4. Erwin de Guzman
5. Joel Floria
6. Asuncion Dolot
7. Rene Noel Ciego
8. Andres Namoro
9. William Inocencio
10. Luis Villa
11. Natividad Taquic
12. Nicolas Leonardo
13. Joselito Cortez
14. Maximiano (sic) Bathan22[22]





Dissatisfied, the petitioner and the dismissed employees appealed the decision before the NLRC,
docketed as NLRC NCR No. 000936-90.23[23]
On October 28, 1993, Labor Arbiter Jovencio Ll. Mayor, Jr. rendered a decision in NLRC NCR Case No.
00-08-04521-90, finding the strike staged by the respondent union illegal and declared those who
participated in the said strike to have lost their employment. The dispositive portion reads:
WHEREFORE, premises considered, the strike staged by respondent LMF-LMLC is hereby declared illegal
and as a consequence of which its Officers and members are hereby declared, to have legally lost their
employment status, namely:
1. Nicolas Chavez
2. Alfredo Jungco
3. Pablito Nava
4. Florentino Alejandro
5. Jonathan Josef
6. Emmanuel Fabiola
7. Rogelio dela Cruz
8. Pedro Ege
9. Restituto de Leon
10. Orsie Renales
11. Joel Bautista
12. Ferdinand Santo
13. Maria Teresa Notado
14. Ricardo Templo
15. Florendo Sereno
16. Maria Elena Presno
17. Renato Hermoso
18. Rodrigo Renales
19. Luis Villa*
20. William Inocencio*
21. Lourdes Martin*
22. Josefina de Leon*
23. Ranilo Mayordomo*
24. Maximo Bathan*
25. Joselito Cortez*
26. Joel Floria*
27. Edwin de Guzman*
28. Noel Liwag*
29. Natividad Taquic*
30. Asuncion Dolot*
31. Andres Namoro*
32. Rene Ciego*
33. Gemma Barcelon
34. Nicolas Leonardo*24[24]





The Labor Arbiter ruled that based on the records, the SWAT was the certified exclusive bargaining
agent of the rank-and-file employees of the petitioner. Furthermore, the CBA expired on January 15,
1990 and was not renewed due to the filing by three unions, including the LMF-LMLC, of their respective
petitions for certification election. However, since the CBA provided that it would continue to be in effect
until a new one had been entered into, the no-strike-no-lockout clause was still in effect; as such, the
contract bar rule was still applicable, and, consequently, the strike was illegal.25[25] The Labor Arbiter,
likewise, pointed out that the strike was based on a non-strikable ground, more specifically, an intra-
union and inter-union conflict.
It was, likewise, held that the evidence submitted by the petitioner showed that the respondent union
blocked the ingress and egress of the company in the course of their strike. Such actuations constituted
prohibited acts under Article 264 of the Labor Code of the Philippines, as amended; hence, the strike
staged by the respondent union was illegal. The Labor Arbiter also declared that the officers of the
respondent, as well as the members who participated in the commission of the illegal acts, were deemed
to have lost their employment status.26[26] He further ruled that the compromise agreement entered
into by the parties on the maintenance of the status quo ante litem did not amount to a condonation or
waiver by the petitioner of its right to ventilate and litigate the charge of illegal strike against the
respondent union and its members.
Dissatisfied, the respondent union appealed the decision to the NLRC where it alleged that:
I.
THE HONORABLE LABOR ARBITER JOVENCIO Ll. MAYOR, JR., COMMITTED GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OF JURISDICTION WHEN HE RULED THAT THE SHOE WORKERS
ASSOCIATION AND TECHNOLOGY (SWAT) IS THE SOLE AND EXCLUSIVE BARGAINING AGENT OF ALL
THE RANK-AND-FILE EMPLOYEES OF APPELLEE FILCON MANUFACTURING CORPORATION.
II.
THE HONORABLE ARBITER JOVENCIO Ll. MAYOR, JR. COMMITTED GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OF JURISDICTION WHEN HE RULED THAT THE NO-STRIKE PROVISION OF THE
COLLECTIVE BARGAINING AGREEMENT APPLIES TO THE RESPONDENT-APPELLANT LMF-LMLC.
III.
THE HONORABLE LABOR ARBITER JOVENCIO Ll. MAYOR, JR. COMMITTED GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OF JURISDICTION WHEN HE RULED THAT THE STRIKE WAS ILLEGAL
FOR BEING BASED ON AN INTER-UNION AND/OR INTRA-UNION CONFLICT.
IV.
THE HONORABLE LABOR ARBITER JOVENCIO Ll. MAYOR, JR. COMMITTED GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OF JURISDICTION WHEN HE RULED THAT THE STRIKE WAS ILLEGAL
FOR BLOCKING THE FREE INGRESS TO AND EGRESS FROM THE COMPANY PREMISES.
V.
THE HONORABLE LABOR ARBITER JOVENCIO Ll. MAYOR, JR. COMMITTED GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OF JURISDICTION WHEN HE RULED THAT THERE WAS NO
CONDONATION OR WAIVER OF THE STRIKERS PARTICIPATION IN THE STRIKE.
VI.





THE HONORABLE LABOR ARBITER JOVENCIO Ll. MAYOR, JR. COMMITTED GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OF JURISDICTION WHEN HE RULED THAT THE STRIKERS LOST
THEIR EMPLOYMENT STATUS.27[27]
In the meantime, on December 15, 1994, the NLRC affirmed the decision of the Labor Arbiter in NLRC
NCR No. 0000936-90.28[28]
On December 29, 1997, the NLRC rendered a decision in NLRC NCR Case No. 006088-94 affirming the
decision of the Labor Arbiter on November 14, 1997.29[29] It declared that the strike staged on June
27, 1990 was illegal because respondent union failed to observe the fifteen (15)-day cooling-off period
and the seven (7)-day strike ban. It emphasized that nine days after the filing of the notice of strike
and two days after the filing of the strike-vote report to the Department of Labor and Employment
(DOLE), the members of the respondent had already engaged in concerted activities, such as picketing,
in clear violation of Article 263(e) and (f) of the Labor Code.
The NLRC also stressed that the respondent did not have any personality to file a notice of strike
because its petition for certification election before the BLR was still unresolved. It declared that
pursuant to Article 253 of the Labor Code, the SWAT remained to be the exclusive bargaining agent of
the rank-and-file employees of the petitioner until the resolution of the petition for certification election.
Finally, the NLRC ruled that the illegality of the strike was further heightened when the officers and
members of the respondent union joined efforts in blockading the ingress to and egress from the
petitioners factory.
The respondent union filed a motion for reconsideration of the decision,30[30] but the NLRC issued a
Resolution dated June 23, 1999 denying the same.31[31]
The Case Before the Court of Appeals
Undaunted, respondent union filed a petition for certiorari with the Court of Appeals (CA) under Rule
65,32[32] asserting as follows:












I.
RESPONDENT NLRC COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF
JURISDICTION WHEN IT RULED THAT SWAT FILCON EMPLOYEES UNION REMAINED THE SOLE AND
EXCLUSIVE BARGAINING AGENT OF ALL THE RANK-AND-FILE EMPLOYEES OF THE COMPANY.
II.
RESPONDENT NLRC COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF
JURISDICTION WHEN IT RULED THAT ONLY SWAT-FILCON EMPLOYEES UNION COULD VALIDLY
DECLARE A STRIKE TO THE EXCLUSION OF ALL OTHER UNIONS AT THE COMPANY.
III.
RESPONDENT NLRC COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF
JURISDICTION WHEN IT RULED THAT PETITIONER LMF-LMLC DID NOT COMPLY WITH THE PROCEDURAL
REQUIREMENTS OF A STRIKE.
IV.
RESPONDENT NLRC COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF
JURISDICTION WHEN IT UPHELD THE FINDING OF THE LABOR ARBITER THAT ILLEGAL ACTS WERE
COMMITTED DURING THE STRIKE.
V.
RESPONDENT NLRC COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF
JURISDICTION WHEN IT UPHELD THE RULING OF THE LABOR ARBITER DECLARING THAT THE MEMBERS
OF PETITIONER LMF-LMLC HAD LOST THEIR EMPLOYMENT STATUS AS A RESULT OF THE ILLEGALITY OF
THE STRIKE.33[33]
In its comment on the petition, the petitioner insisted that the decision of the Labor Arbiter was fully and
substantially supported by the established facts and record based on applicable laws and jurisprudence.
It reiterated that the respondent union lacked the legal personality to file a notice of strike, considering
that the sole and exclusive bargaining agent of its rank-and-file employees was the SWAT. Moreover, by
engaging in concerted activities without observing the cooling-off period, the respondent union thereby
conducted an illegal strike. The petitioner also reiterated that the officers and members of the
respondent union participated in the prohibited activities, particularly the blockage of the ingress to and
egress from the factory.
On June 8, 2001, the CA promulgated a decision reversing the decision of the NLRC. The dispositive
portion reads:
WHEREFORE, finding merit in the Petition, this Court issues the writ of certiorari and sets aside the
Decision of the respondent Commission dated December 29, 1997 and orders the dismissal of NLRC-NCR
Case No. 00-0804521-90 and the reinstatement of the dismissed employees with full backwages and
other benefits from the time they were dismissed up to the time of actual reinstatement.34[34]
While it agreed with the NLRC that the strike staged by the respondent union was illegal, the CA ruled
that by reason of the compromise agreement entered into by the parties on August 30, 1990, the
petitioner had, in effect, condoned the misconduct of the striking employees. The CA emphasized that,
under the agreement, the petitioner agreed to accept all workers without reservation, as evidenced by
the non-retaliatory clause contained therein. Citing Article 2036, in tandem with Article 2028 of the New
Civil Code, the CA emphasized that a compromise agreement comprises not only those objects which are






definitely stated, but also those that are, by necessary implication, included therein. It stressed that the
dismissal of the complaint for illegal strike was necessarily included in the compromise agreement
entered into by the parties.
The petitioner filed a motion for reconsideration, alleging that the CA erred when it gave due course to
the petition, considering that the assailed decision had become final and executory by reason of the
respondent unions failure to include in its petition an explanation for resorting to service via registered
mail in serving a copy of the petition on it, in violation of Section 11, Rule 13 of the Rules of Court. The
petitioner further asserted that the CA erred in ruling that the ultimate intention of the parties in their
compromise agreement was the condonation of the misconduct of its employees.
The CA denied the petitioners motion in its October 11, 2001 Resolution.35[35] Emphasizing the
Christian Dogma of preferential option for the poor,36[36] the CA ruled that, in the interest of justice,
equity and fair play, it had to decide the case on the merits, prescinding from the respondents
procedural lapse.
The Present Petition
The petitioner filed the instant petition, alleging as follows:
A. THE COURT OF APPEALS COMMITTED GRAVE AND REVERSIBLE ERROR IN REOPENING AND
TAKING COGNIZANCE OF THE ISSUE ON THE EXISTENCE OF CONDONATION WHICH WAS NOT RAISED
IN THE PETITION FOR CERTIORARI AND HAD ALREADY BEEN RESOLVED IN THE NEGATIVE. ASSUMING
THAT SAID ISSUE COULD STILL BE REOPENED, THERE IS ABSOLUTELY NO SHOWING THAT THE LABOR
ARBITER AND NLRC GRAVELY ABUSED THEIR DISCRETION IN HOLDING THAT THE COMPROMISE
AGREEMENT DID NOT CONSTITUTE A CONDONATION OF THE ILLEGAL ACTS COMMITTED DURING THE
STRIKE OR RENDERED MOOT THE PENDING COMPLAINT FOR ILLEGAL STRIKE.
B. THE COURT OF APPEALS COMMITTED GRAVE AND REVERSIBLE ERROR IN GIVING DUE
COURSE TO THE PETITION FOR CERTIORARI DESPITE LMF-LMLCS FAILURE TO COMPLY WITH THE
MANDATORY REQUIREMENTS OF SECTION 11, RULE 13 OF THE 1997 RULES OF CIVIL PROCEDURE.
C. THE COURT OF APPEALS COMMITTED GRAVE AND REVERSIBLE ERROR IN ENTERTAINING THE
PETITION FOR CERTIORARI WHICH WAS FILED OUT OF TIME.37[37]
For its part, the respondent union asserts that by virtue of the compromise agreement, the petitioner
had condoned the misconduct of its officers and members: staging a strike and engaging in prohibited
activities in the course of such strike. Citing the case of Cebu International Finance Corporation v. Court
of Appeals38[38] and Armed Forces of the Philippines Mutual Benefit Association, Inc. v. Court of
Appeals,39[39] the respondent asserts that a compromise agreement has the effect of res judicata upon









the parties. It stresses that the CA did not gravely abuse its discretion when it gave due course to its
petition for certiorari.
The procedural issues for resolution are the following: (a) whether or not the decision of the NLRC had
become final and executory when the respondent union filed its petition with the CA; and (b) whether or
not the respondent union raised the issue of the petitioners condonation therein of its right to assail the
illegality of strike under the compromise agreement; and, if in the negative, whether the CA erred in
resolving such issue of condonation.
On the other hand, the substantive issues to be resolved are the following: (a) whether or not the strike
staged by the respondent union on July 27, 1990 was illegal; (b) whether or not the unions officers and
members lost their employment status as a consequence of the said strike; and, (c) whether or not the
petitioner had condoned the misconduct of the strikers.
The Ruling of the Court
The petitioner contends that under Section 11, Rule 13 of the Rules of Court, the filing and service of
pleadings and other papers shall be effected personally.40[40] A resort to other modes of service of
pleadings must be accompanied by a written explanation; otherwise, such pleading shall be considered
as not filed. The petitioner notes that the respondents petition for certiorari under Rule 65 of the Rules
of Court in the CA was served on it only by registered mail without, however, a written explanation why
resort thereto was made. Citing the case of Solar Team Entertainment, Inc. v. Ricafort,41[41] the
petitioner argues that the petition for certiorari of the respondent is deemed not to have been filed and,
consequently, the decision of the NLRC became final and executory.
We agree with the petitioner.
Indeed, the records show that although the petition was filed personally with the CA, service of a copy
thereof on the respondent was effected by registered mail without any explanation as to why resort to
such mode was made. In its motion for reconsideration of the CA decision, the petitioner sought the
dismissal of the petition because of the respondents failure to comply with Section 11, Rule 13 of the
Rules of Court. The respondent was directed by the CA to comment on the motion, but the respondent
failed to do so. The respondent even failed to comment on the petitioners allegation that the decision of
the NLRC had become final and executory on such ground; neither did the respondent offer any
explanation in its memorandum in the present case. Evidently then, the CA erred when it resolved to
deny the motion for reconsideration of its decision and gave due course to the petition for certiorari.
Even on the substantial issues, we find the petition meritorious.
On the issue of whether or not the petitioner condoned the strike of the members of the respondent
union and waived its right to assail the illegality of the said strike under the compromise agreement, the
CA ruled:
A careful reading of the Compromise Agreement in the context of the factual milieu convinces this Court
that it was, indeed, a compact between the parties to end their dispute and restore their cordial and
mutually beneficial relationship. The Agreement explicitly stipulated that the strikers would stop their
strike, lift their picket lines and resume work and the company would accept them back. The parties







most significantly agreed to maintain and promote industrial piece, and shall not commit any act which
might be construed as acts of harassment and retaliation. Accordingly, the strikers returned to work
and the company accepted them back. It is difficult to see how an amicable resolution of the dispute
between the petitioner and the private respondents could be effected without the dismissal of the case
for illegal strike when that case was precisely the sword of Democles which hang over the latters heads
and consequently caused the instability and discord in the work place.
The Labor Arbiter and respondent Commission held that the dismissal of the said cases was not
mentioned in the Agreement. True, but it should be remembered that the Agreement which was
handwritten was made by the parties who are non-lawyers and cannot therefore be expected to be very
precise in their terminology. Important to remember is the rule in Art. 2036 of the Civil Code which
states that to be deemed included in the compromise agreement are not only those expressly stated
therein but also those necessarily implied therefrom. This Court has no doubt that the parties intended
to terminate the illegal strike case as implied from the expressly stipulated terms mentioned above.
That subsequently, the respondent company pursued said case was nothing but a change of mind which
cannot denigrate much less suppress the juridical effect of said Compromise Agreement.
The respondent Commission totally ignored the text and tenor of the Compromise Agreement and
eskewed the clear intention of the parties resulting in severe prejudice to the petitioner and its
members. Considering the seriousness of the mistake and gravity of the resulting injury, this Court
holds that, indeed, the respondent Commission gravely abused its discretion.
We do not agree with the CA. The compromise agreement executed by the parties attested by the
NCMB reads:
A G R E E M E N T
1) The parties agree to maintain status quo prevailing immediately on the date of strike as
follows:
a) The parties agree to immediately resume operations based upon the work schedules to be
prepared by the Company and in the said work schedule. The 17 suspended workers shall be included.
In the preparation of work schedules, no discrimination shall be committed and, if possible, all returning
workers or employees be admitted to work within one (1) week from reliance of the schedules which will
be released on the first week of September 1990;
(b) The parties shall maintain and promote industrial peace, and shall not commit any acts which
might be construed as acts of harassment and retaliation.
2) The cases of Messrs. Renato Hermosa, Marcelino Sabado and Noel Celestial shall be submitted
to voluntary arbitration and Mr. Alvin Villamor has been mutually chosen as the voluntary arbitrator.
3) The parties shall endeavor to facilitate the resolution for the certification election.
4) The Union shall lift its picket on August 31, 1990 and return to work in accordance therewith.
However, consideration shall be given to employees who are unable to report to work immediately due
to distance, illness and other similar consideration.
UNION MANAGEMENT
Sgd. Sgd.
083090 8/30/90
Attested by: Sgd.
for NCMB42[42]
Under Article 2028 of the New Civil Code, a compromise is a contract whereby the parties, by making
reciprocal concessions, avoid litigation or put an end to one already commenced. A compromise under
the said provision contemplates mutual concessions and mutual gains to avoid the expense and
expenses of litigation or, when litigation has already begun, to end it because of the uncertainty of the
result thereof.43[43] The caption of an agreement is not determinative of the true nature thereof. An




agreement although captioned a compromise agreement may not, in fact and in law, be a compromise
agreement.44[44]
It must be stressed that when the terms of a contract are clear and leave no doubt upon the intention of
the parties, the literal meaning of such terms shall be controlling. The contemporaneous and
subsequent acts of the parties shall also be principally considered.45[45] In construing a written
contract, the reason behind and the circumstance surrounding its execution are of paramount
importance to place the interpreter in the situation occupied by the parties concerned at the time the
contract was executed.46[46]
Even a cursory reading of the agreement of the parties will readily show that they did not thereby intend
to write finis or put an end to the cases filed against each other in the Department of Labor and
Employment (DOLE) and the NLRC. They merely agreed to maintain their status quo before the
commencement of the complaints filed by them, without prejudice to the resolution by the Labor Arbiter
of the factual and legal issues raised after the presentation of their respective evidence. The parties
merely agreed that the respondent would stop its strike against the petitioner and lift its picket within
the latters premises, and, that the petitioner, in turn, would allow the members of the respondent
union to return back to work to enable the petitioner to resume its business operations. The parties did
not intend to put an end to the cases pending against each other. In point of fact, after the execution of
the said agreement, the parties adduced their respective testimonial and documentary evidences on the
factual and legal issues, instead of asking the Labor Arbiter and the DOLE to dismiss the complaints filed
by the parties against each other. The parties presentation of their respective evidence after the
execution of their compromise agreement is conclusive proof that the said agreement is not the
compromise agreement envisaged in Article 2028 of the New Civil Code. The contemporaneous and
subsequent acts of the parties belie the ruling of the Court of Appeals that the petitioner waived its right
to assail the illegality of the strike.
Considering the terms of the compromise agreement, it cannot thereby be concluded that the petitioner
waived its right to assail the illegality of the strike staged by the respondent and defend the validity of
its termination of the employment of the members of the respondent who staged a strike. It must be
underscored that a waiver to be valid and effective must be couched in clear and unequivocal terms
which leave no doubt as to the intention of a party to give up a right or benefit which legally pertains to
him.47[47]










In this case, the Labor Arbiter, the NLRC and the CA are one that the strike staged by the respondent
was illegal. We agree with the ruling of the Labor Arbiter, viz:
The right to strike is not absolute. It comes into being and is safeguarded by law only if the acts
intended to render material aid or protection to a labor union arise from a lawful ground, reason or
motive. But if the motive which had impelled, prompted, moved or led members of a labor union or
organization to stage a strike, even if they had acted in good faith in staging it, be unlawful, illegitimate,
unjust, unreasonable or trivial, the strike may be declared illegal. (Interwood Employees Association vs.
Interwood Hardwood and Veneer Company of the Philippines, 52 O.G. 3936) (underscoring supplied)
For the law, in protecting the rights of the laborer, authorizes neither oppression nor self-destruction of
the employer. (Elizalde Intl. vs. C.A., 108 SCRA 247). Thus, a company has the right to dismiss its
erring employees if only as a measure of self-protection against acts inimical to its interest. (Manila
Trading and Supply Co. vs. Zulueta, 69 Phil. 403).
As borne out by the record, respondent SWAT was certified as the sole and (sic) bargaining agent of all
the rank-and-file employees of complainant Filcon Manufacturing Corporation whose Collective
Bargaining Agreement expired last 15 January 1990 and was not renewed due to the filing of Petition for
Certification Election by three (3) unions, namely: 1) Lakas Manggagawa sa Filcon-Lakas Manggagawa
Labor Center; 2) Bisig ng Manggagawa; and 3) Kampli-Katipunan, which up to present is still pending
before the Bureau of Labor Relations. In its Collective Bargaining Agreement, it provides that the
provisions contained therein shall be in full force and effect until a new one has been entered into and
one of the provisions therein reads that there shall be no strike nor lock-out. This provision must be
given due respect by all the parties concerned. Thus, it is evident, therefore, that the contract bar rule
applies, thereby, rendering the strike staged by respondent LMF-LMLC illegal. This is supported by
evidence that respondent LMF-LMLC blocked the free ingress and egress of company premises during
the course of their strike. (Exhs. B, C, D, E, F, G, H, I, and J), in violation of paragraph
e, Article 264 of the Labor Code, as amended, to wit:
Art. 264. PROHIBITED ACTIVITIES.
xxx xxx xxx
(e) No person engaged in picketing shall commit any act of violence, coercion or intimidation or
obstruct the free ingress or egress from the employers premises for the lawful purposes or obstruct
public thoroughfares. (underscoring supplied)
Well-settled is the rule that strikes may only be allowed on grounds of CBA deadlock and unfair labor
practices. Neither of this exist in the case at bar, as respondent LMF-LMLC failed to adduce evidence to
the contrary except the sweeping allegation of its only witness who was dismissed from employment in
1989 or almost a year before the staging of the strike. Clearly, therefore, this Office is of the opinion
and so holds that the strike was declared more on the ground of inter-union and intra-union conflict
which is a non-strikeable issue pursuant to paragraph (b) of Article 263 of the Labor Code, as amended,
to wit:
Art. 263. Strikes, Picketing and Lock-outs.
xxx xxx xxx
(b) Workers shall have the right to engage in concerted activities for purposes of collective
bargaining or for their mutual benefit and protection. The right of legitimate labor organizations to
strike and picket and of employers to lockout, consistent with the national interest shall continue to be
recognized and protected. However, no labor union may strike and no employer may declare a lockout
on grounds involving inter-union and intra-union disputes. (underscoring supplied)
Thus, it cannot be gainsaid that respondent LMF-LMLC before it staged the strike, had complied with all
the legal requisites, namely: 1) Notice of Strike; 2) Strike Vote, thus rendering the same legal.48[48]
The NLRC affirmed the finding of the Labor Arbiter, viz:



There is no justification to disturb the factual findings and conclusions of the Labor Arbiter since these
are amply supported by the evidence on record.
Thus, only nine (9) days after the respondent union filed its notice of strike, and two (2) days after the
strike vote, the said respondent union engaged in concerted activities such as picketing and other acts
which are clear indications of a strike. Quite evidently, the respondent failed to observe the cooling-off
period as provided in Article 263, paragraphs (e) and (f) of the Labor Code, which ordains that a strike
may only be conducted after fifteen (15) days from date of filing of the notice of strike, if the issue
stated therein is one involving unfair labor practice, and after seven (7) days from strike voting. Even
granting that one of the strikeable issues raised in the notice of strike was union busting allegedly
committed through the dismissal of three (3) union officers and member, nonetheless, there is no proof
that the very existence of the union was threatened due to the alleged acts of dismissals such that it
was not justified of the respondent union to stage the questioned strike immediately even before the
mandatory cooling-off period expired.
What appears insurmountable as a clear proof of the illegality of the strike is that while it has yet to
prove its majority status through a certification election, and worse during the pendency of a petition to
that effect, the respondent union already assumed the role of a sole and exclusive bargaining agent.
True enough, not one of the petitioners including the respondent union are in the certification election as
they failed to garner the required majority of the total votes cast.
As correctly found by the Labor Arbiter, the incumbent union, FEU-SWAT, remained to be the sole and
exclusive bargaining agent of the companys rank-and-file employees. This finds support in Article 253
of the Labor Code which, in part, states:
ART. 253. Duty to bargain collectively when there exists a collective bargaining agreement. xxx. It
shall be the duty of both parties (FILCON & SWAT) to keep the status quo and to continue in full force
and effect the terms and conditions of the existing agreement during the 60-day period and/or until a
new agreement is reached by the parties.
Thus, the respondent falsely assumed its rule when it filed a notice of strike during the 60-day freedom
period, and while a petition for certification election was pending. As a matter of fact, a strike during
the pendency of such petition is patently illegal.49[49]
The findings of facts of the quasi-judicial tribunals, in this case the NLRC which affirmed the findings of
the Labor Arbiter, when based on substantial evidence, have conclusive effect on this Court absent proof
that the said findings are capricious or arbitrary.50[50]
IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED. The assailed Decision and Resolution of
the Court of Appeals in CA-G.R. SP No. 54803 are REVERSED AND SET ASIDE. The decision of the NLRC
is hereby REINSTATED. No costs.
SO ORDERED.

[G.R. Nos. 88710-13 : December 19, 1990.]
192 SCRA 396
UNION OF FILIPRO EMPLOYEES (UFE), MANUEL L. SARMIENTO, BENJAMIN M. ALTAREJOS,
RODOLFO D. PAGLINAWAN, CARMELITA G. NUQUI, CORAZON Y SAZON, RODRIGO P. LUCAS,
RUDOLPH C. ARMAS, EDUARDO A. ABELLA, ANGEL A. CANETE, JUANITO T. CAPILI, ADOLFO S.
CASTILLO, JR., PONCIANO A. CARINGAL, ERIBERTO S. LEONARDO, ADELAIDA B. MIRA,
EUGENIA C. NUEZ, PAZ B. SAN JOSE, VENUSITO S. SOLIS, EMMANUEL S. VILLENA, ALFONSO





R. RICAFRENTE, MELANIO C. LANTIN, AMADOR M. MONTOJO, RODOLFO M. MUNSOD, RENATO
P. DIAZ, RODRIGO M. URGELLES, CARLOS B. SAN JOSE, EUSTAQUIO E. BUNYI, NELSON P.
CENTENO, SOTERO A. GACUTAN, GUILLERMO G. DE BORJA, DIONISIO H. NIPALES, EUGENIO
S. SAN PEDRO, MANUEL DELA FUENTE, CARLO MEDINA, CESAR B. PONCE, JORGE B. CASTRO,
JR., RICARDO AREVALO, REY M. BEO, FELIX ESGUERRA, REYNALDO ALMENANZA, MELITON C.
ROXAS (as represented by his surviving spouse, MA. CORAZON ROXAS), ROMEO A.
ARANDELA, ISIDRO A. NATIVIDAD, EMILIANO M. SAYAO, CELSO J. CENIDO, PAUL C.
MEJARES, SILVERIO C. PAMPANG, DIONISIO S. CANLOBO, GILBERT C. NOBLE, RODOLFO D.
CALONG-CALONG, SR., PEPITO Q. QUITLONG, DIONISIO C. COMPLETO, ANTONIO T. AVELINO,
ANGELITO PAYABYAB, ISAIAS A. RIEZA, DEODITO M. BELARMINO, QUEZON G. MATEO,
CARLITO PRE, CIPRIANO P. LUPEBA, EFREN P. DINSAY, WILDON C. BARROS, SUSAN A.
BERRO, MANUEL A. LAVIN, ROY U. BACONGUIS, JEROME T. FIEL, ANASTACIO G. CABALLERO,
JR., ROGELIO E. RAIZ, JOSE T. ISIDTO, ANGELITO M. ANICIETE, RAUL ROBERTO C. NANQUIL,
LIZA T. VILLANUEVA, CESAR S. CRUZ, REYNALDO L. CALIGUIA, ERNESTO M. SOLOMON, OSCAR
G. AGUINALDO, DIEGO P. OLIVA, JAIME D. NILLAS, ELPIDIO A. HERMOCILLA, DANTE L.
ESCOSURA, FEDERICO P. CONTEMPRATO, LAURO C. MAKILING, RENATO O. MINDANAO,
RAFAEL C. TURA AND QUINTIN J. PEDRIDO, JR., Petitioners, vs. NESTL PHILIPPINES, INC.,
NATIONAL LABOR RELATIONS COMMISSION, HON. EDUARDO G. MAGNO, HON. ZOSIMO T.
VASALLO and HON. EVANGELINE S. LUBATON, Respondents.

D E C I S I O N

MEDIALDEA, J.:

This petition assails the decision of the NLRC, dated November 2, 1988 on the consolidated appeals of
petitioners, the dispositive portion of which provides as follows:
"1. In NLRC Case No. NCR-12-4007-85 and NLRC Case No. NCR-1-295-86
a. Declaring the strike illegal;
b. Declaring the following respondent union officers, namely; M.L. Sarmiento, B.M. Altarejos, R.D.
Paglinawan, C.G. Nuqui, C.Y. Sazon, R. Armas, E. Abella, A.A. Caete, A.B. Mira, P.C. Caringal, E.
Leonardo E.C. Nuez, P.D. San Jose, E. Villena A. Ricafrente, M. Lantin, A. Montojo, R. Monsud, R. Diaz,
R. Urgelles, C. San Jose, E. Bunyi, N. Centeno, R. Gacutan, G. de Borja, N. Nipales, E. San Pedro, C.
Ponce, J. Castro, R. Beo, E. Quino, M. Roxas, R. Arandela, W. Ramirez, I. Natividad, S. Pampang, D.
Canlobo, R. Calong-Calong, G. Noble, E. Sayao, C. Cenido, P. Mijares, P. Quitlong, A. Avelino, L.
Payabyab, I. Rieza, C. Pre, D. Belarmino, to have lost their employment status;
c. Ordering the reinstatement of the following respondents-appellants: Juanito Capili, Carlo Medina,
Rodrigo Lucas, Adoho Castillo, Jr., Venusito Solis, Ricardo Arevalo, Quezon G. Mateo, Jr., Dionisio
Completo, Felix Esguerra, Manuel dela Fuente and Reymundo Almenanza, to their former or equivalent
positions without loss of seniority rights but without backwages;
d. Declaring the union (UFE) guilty of unfair labor practice; and
e. Dismissing the union complaint for unfair labor practice.- nad
2. In RAB-X-2-0047-86, the decision sought to be set aside is AFFIRMED and the individual respondents-
appellants namely: Roy Baconguis, Jerome T. Fiel, Efren P. Dinsay, Anastacio G. Caballero, Susan E.
Berro, Jose T. Isidto, Wilson C. Barros, Rogelio E. Raiz, Manuel A. Lavin, Cipriano P. Lupeba are hereby
declared to have lost their employment status;.
3. In NLRC-00-09-0385-87, the challenged decision is likewise AFFIRMED, except as it affects Cesar S.
Cruz, who is ordered reinstated to his former or equivalent position without backwages." (pp. 417-418,
Rollo)
and the resolution dated March 7, 1989, quoted as follows:
"NLRC CASE NO. NCR-12-4007-85 entitled Union of Filipro Employees (UFE), Petitioner-Appellants,
versus, Filipro, Inc., et al., Respondents-Appellees, NLRC CASE NO. NCR-1-295-86 entitled Nestle Phils.,
Inc., Petitioner-Appellee, versus, Union of Filipro Employees, et al., Respondents-Appellants, NLRC CASE
NO. RAB-X-2-0047-86 entitled Nestle Phils., Inc., Petitioner-Appellee, versus, Cagayan de Oro Filipro
Workers Union-WATU, et al., Respondents-Appellants, NCR-00-09-0385-87 entitled Union of Filipro
Employees (UFE) and its officers, Complainants-Appellants, versus, Nestle Phils., et al., Respondents-
Appellees. The Commission sitting en banc, after deliberation, resolved to rectify par. 3 of the dispositive
portion of our November 2, 1988 resolution by ordering the reinstatement of Quezon G. Mateo, Jr. and
Dionisio Completo to their former or equivalent position without backwages and to deny the motion for
reconsideration filed by appellants UFE and its Officials adversely affected by said resolution." (p. 429,
Rollo)
In a lengthy and voluminous petition, dwelling largely on facts, petitioner Union of Filipro Employees and
70 union officers and a member (henceforth "UFE") maintain that public respondent NLRC had acted
with grave abuse of discretion in its affirmance of the decisions of the Labor Arbiters a quo, declaring
illegal the strikes staged by UFE.
Respondent NLRC premised its decision on the following sets of facts:
1. In NCR 12-4007-85 and NCR 1-295-86:
UFE filed a notice of strike on November 14, 1985, (BLR-NS-11-344-85) with the Bureau of Labor
Relations against Filipro (now Nestle Philippines, Inc., ["Nestle"]). On December 4, 1988, UFE filed a
complaint for Unfair Labor Practice (ULP) against Nestle and its officials for violation of the Labor Code
(Art. 94) on Holiday Pay, non-implementation of the CBA provisions (Labor Management Corporation
scheme), Financial Assistance and other unfair labor practice (p. 381, Rollo).:- nad
Acting on Nestle's petition seeking assumption of jurisdiction over the labor dispute or its certification to
the NLRC for compulsory arbitration, then Minister of Labor and Employment Blas F. Ople assumed
jurisdiction over the dispute and issued the following order on December 11, 1985:
"WHEREFORE, this Office hereby assumes jurisdiction over the labor dispute at Filipino, Inc. pursuant to
Article 264(g) of the Labor Code of the Philippines, as amended. In lime with this assumption a strike,
lockout, or any other form of concerted action such as slowdowns, sitdowns, noise barrages during office
hours, which tend to disrupt company operations, are strictly enjoined.
Let a copy of this Order be published in three (3) conspicuous places inside company premises for strict
compliance of all concerned." (p. 381-382, Rollo)
On December 20, 1985, UFE filed a petition for Certiorari with prayer for issuance of temporary
restraining order, with this Court (G.R. No. 73129) assailing the assumption of jurisdiction by the
Minister. Notwithstanding the automatic injunction against any concerted activity, and an absence of a
restraining order, the union members, at the instigation of its leaders, and in clear defiance of Minister
Ople's Order of December 11, 1986, staged a strike and continued to man picket lines at the Makati
Administrative Office and all of Nestle's factories and warehouses at Alabang, Muntinlupa, Cabuyao,
Laguna, and Cagayan de Oro City. Likewise, the union officers and members distributed leaflets to
employees and passersby advocating a boycott of company products (p. 383, Rollo).
On January 23, 1986, Nestle filed a petition to declare the strike illegal (NCR-1-295-86) premised on
violation of the CBA provisions on "no strike/no lockout" clause and the grievance machinery provisions
on settlement of disputes.
On January 30, 1986, then Labor Minister Ople issued another Order, with this disposition:
"WHEREFORE, in line with the Order of December 11, 1985, this Office hereby orders all the striking
workers to report for work and the company to accept them under the same terms and conditions
prevailing before the work stoppage within forty eight (48) hours from notice of this Order.
The Director of Labor Relations is designated to immediately conduct appropriate hearings and meetings
and submit his recommendations to enable this Office to decide the issues within thirty (30) days." (p.
383, Rollo)
Despite receipt of the second order dated January 30, 1986, and knowledge of a notice caused to be
published by Nestle in the Bulletin on February 1, 1986, advising all workers to report to work not later
than February 3, 1986, the officers and members of UFE continued with the strike.
On February 4, 1986, the Minister B. Ople denied their motion for reconsideration of the return-to-work
order portion as follows:
"WHEREFORE, the motion for reconsideration is hereby denied and no further motion of similar nature
shall be entertained.: nad
"The parties are further enjoined from committing acts that will disrupt the peaceful and productive
relations between the parties while the dispute is under arbitration as well as acts considered illegal by
law for the orderly implementation of this Order like acts of coercion, harassment, blocking of public
thoroughfares, ingress and egress to company premises for lawful purposes or those undertaken without
regard to the rights of the other party.
"Police and military authorities are requested to assist in the proper and effective implementation of this
Order." (p. 384, Rollo)
UFE defied the Minister and continued with their strike. Nestle filed criminal charges against those
involved.
On March 13, 1986, the new Minister of Labor and Employment, Augusto B. Sanchez, issued a
Resolution, the relevant portions of which stated thus:
"This Office hereby enjoins all striking workers to return-to-work immediately and management to
accept them under the same terms and conditions prevailing previous to the work stoppage except as
qualified in this resolution. The management of Nestle Philippines is further directed to grant a special
assistance as suggested by this Ministry in an order dated 30 January 1986 to all striking employees
covered by the bargaining units at Makati, Alabang, Cabuyao and Cagayan de Oro City in an amount
equivalent to their weighted average monthly basic salary, plus the cash conversion value of the
vacation leave credits for the year 1986, payable not later than five (5) days from the date of the actual
return to work by the striking workers." (p. 385, Rollo)
On March 17, 1986, the strikers returned to work.
On March 31, 1986, We granted UFE's Motion to Withdraw its Petition for Certiorari (G.R. No. 73129) (p.
385, Rollo)
On April 23, 1986, Minister Sanchez rendered a Decision, the dispositive portion of which reads:
WHEREFORE, the Union charge for unfair labor practices is hereby dismissed for want of merit. Nestle
Philippines is hereby directed to make good its promise to grant an additional benefit in the form of
bonus equivalent to one (1) month's gross compensation to all employees entitled to the same in
addition to the one-month weighted average pay granted by this office in the return-to-work Order." (p.
786, Rollo)
On June 6, 1986, Minister Sanchez modified the foregoing decision as follows:
"WHEREFORE, our 23 April 1986 Decision is hereby modified as follows:
"1. Nestle Philippines is directed to pay the Anniversary bonus equivalent to one month basic salary to
all its employees in lieu of the one month gross compensation previously ordered by this office." (p. 787,
Rollo)
On November 13, 1987, after trial on the merits, Labor Arbiter Eduardo G. Magno issued his decision,
disposing as follows:
"WHEREFORE, judgment is hereby rendered:
"1. Declaring the strike illegal.: nad
"2. Declaring all the respondent union officers, namely: M.L. Sarmiento, R.M. Alterejos, R.D. Paglinawan,
C.G. Nuqui, C.Y. Sazon, R. Lucas, R. Armas, E. Abella, A.A. Caete, J.T. Capili, A.S. Castillo, Jr., P.C.
Caringal, E. Leonardo, E.B. Mira, E.C. Nuez, P.D. San Jose, V. Solis, E. Villena, A. Ricafrente, M. Lantin,
A. Mortojo, R. Munsod, R. Diaz, R. Urgelles, C. San Jose, E. Bunyi, N. Centeno, R. Gacutan, G. de Borja,
N. Nipales, E. San Pedro, M. de la Fuente, C. Medina, C. Ponce, J. Castro Jr., R. Arevalo, R. Beo, F.
Esguerra, R. Almenanza, E. Quino, M. Roxas, R. Arandela, W. Ramirez, I. Natividad, S. Pampang, D.
Canlobo, G. Noble, E. Sayao, C. Cenido, F. Mijares, R. Calong-Calong, P. Quitlong, D. Completo, A.
Avelino, L. Payabyab, I. Rieza, D. Belarmino, Q. Mateo, and C. Pre to have lost their employment status.
"3. Declaring the union guilty of unfair labor practice; and
"4. Dismissing the Union complaint for unfair labor practice." (pp. 380-381, Rollo)
2. In RAB-X-2-0047-86:
Filipro (Nestle) and the Cagayan de Oro Filipro Workers Union-WATU, renewed a 3-year contract, made
effective from December 1, 1984 up to June 30, 1987. Petitioners signed the CBA as the duly-elected
officers of the Union.
On January 19, 1985, the union officers, together with other members of the union sent a letter to
Workers Alliance Trade Unions (WATU), advising them "that henceforth we shall administer the CBA by
ourselves and with the help of the Union of Filipro Employees (UFE) to where we have allied ourselves."
WATU disregarded the unions's advice, claiming to be the contracting party of the CBA. UFE filed a
petition (Case No. CRD-M-88-326-85) for administration of the existing CBAs at Cebu, Davao and
Cagayan de Oro bargaining units against TUPAS and WATU.
From January 22, 1986 to March 14, 1986, the rank and file employees of the company staged a strike
at the instigation of the UFE officers, who had represented themselves as officers.
Nestle filed a petition to declare the strike illegal. The strikers countered that their strike was legal
because the same was staged pursuant to the notice of strike filed by UFE on November 14, 1985 (BLR-
NS-11-344-85), of which they claim to be members, having disaffiliated themselves from CDO-FWU-
WATU.
On November 24, 1987, Executive Labor Arbiter Zosimo Vasallo issued his decision, disposing as follows:
"WHEREFORE, in view of the foregoing, judgment is hereby rendered:
"1. Declaring the strike illegal;
"2. Declaring respondent union guilty of unfair labor practice; and
"3. Declaring the following individual respondent Union officers namely: Roy Y. Baconguis, Jerome T.
Fiel, Efren P. Dinsay, Anastacio G. Caballero, Susan E. Berro, Jose T. Isidto, Wilson C. Barros, Rogelio E.
Raiz, Manuel A. Lavin and Cipriano P. Lupeba to have lost their employment status." (p. 388, Rollo)
3. In NCR-00-09-03285-87.
(a) On August 13, 1986, UFE, its officers and members staged a walkout from their jobs, and
participated in the Welga ng Bayan. Nestl filed a petition to declare the walkout illegal (NLRC Case No.
SRB-IV-1831-87) (p. 392, Rollo);
(b) On September 21, 1986, complainants (UFE) again did not proceed to their work, but joined the
picket line in sympathy with the striking workers of Southern Textile Mills, which became the subject of
an Illegal Strike Petition (NLRC Case SRB-IV-I 1831-87) (p. 392, Rollo);
(c) On November 12, 1986, UFE its officers and members just left their work premises and marched
towards Calamba in a demonstration over the slaying of a labor leader, . . . hence a complaint for Illegal
Walkout (NLRC Case No. SRB-IV-1833-87) was filed by Nestle (p. 392, Rollo);
(d) On December 4, 1986, UFE filed a Notice of Strike with the Bureau of Labor Relations (BLR-NS-12-
531-86) (to protest the unfair labor practices of Nestle, such as hiring of contractual workers to perform
regular jobs and wage discrimination) (p. 392, Rollo);
(e) On December 23, 1986, then Minister Augusto S. Sanchez certified the labor dispute to the
Commission for compulsory arbitration, strictly enjoining any intended or actual strike or lockout (p.
392, Rollo);
(f) On August 18, 1987, UFE union officers and members at the Cabuyao factory again abandoned their
jobs and just walked out, leaving unfinished products on line and raw materials leading to their spoilage.
The walk-out resulted in economic losses to the company. Nestle filed a Petition to Declare the Walkout
Illegal. (NLRC Case No. SRB-IV-3-1898-87) (p. 407, Rollo);
(g) On August 21, 1987, UFE union officers and members at the Alabang factory also left their jobs in
sympathy with the walkout staged by their Cabuyao counterparts. Nestle filed again a Petition to Declare
the Strike Illegal (NLRC-NCR-Case No. 00-08-03003-87) (p. 407, Rollo);
(h) On August 27, 1987, UFE union members at the Alabang and Cabuyao factories, in disregard of the
Memorandum of Agreement entered into by the Union and Management on August 21, 1987, (to exert
their best efforts for the normalization of production targets and standards and to consult each other on
any matter that may tend to disrupt production to attain industrial peace) participated in an indignation
rally in Cabuyao because of the death of two (2) members of PAMANTIC, and in Alabang because one of
their members was allegedly mauled by a policeman during the nationwide strike on August 26, 1987
(p. 408, Rollo);
(i) On September 4, 1987, around 6:00 P.M. all sections at the Alabang factory went on a 20-minute
mealbreak simultaneously, contrary to the agreement and despite admonition of supervisors, resulting in
complete stoppage of their production lines. Responsible officials namely: Eugenio San Pedro, Carlos
Jose, and Cesar Ponce, were suspended from work for six (6) days without pay (p. 408, Rollo);
(j) From September 5 to 8, 1987, at the instigation of UFE union officers, all workers staged a sitdown
strike; and
(k) On September 7, 1987, Cabuyao's culinary section's union members sympathized with the sitdown
strike at Alabang, followed at 12:30 P.M. by the whole personnel of the production line and certain areas
in the Engineering Department. These sitdown strikes at the Alabang and Cabuyao factories became the
subject of two separate petitions to declare the strike illegal (NCR-Case No. 00-09-03168-87 and SRB-
IB-9-1903-87, respectively) (p. 408, Rollo);
(l) On September 8, 1987, Hon. F. Drilon issued the following order:
"All the workers are hereby directed to return to work immediately, refrain from resorting to any further
slowdown, sitdown strike, walkout and any other kind of activities that may tend to disrupt the normal
operations of the company. The company is directed to accept all employees and to resume normal
operations.: nad
Parties are likewise directed to cease and desist from committing any and all acts that would aggravate
the situation." (p. 394, Rollo)
(m) Despite the order, UFE staged a strike on September 11, 1987, without notice of strike, strike vote
and in blatant defiance of then Labor Minister Sanchez's certification order dated November 23, 1986
and Secretary Drilon's return-to-work order dated September 8, 1987." (p. 409, Rollo);
(n) Nestle sent individual letter of termination dated September 14, 1987 dismissing them from the
service effective immediately for knowingly instigating and participating in an illegal strike, defying the
order of the Secretary of Labor, dated September 8, 1987, and other illegal acts (pp. 394-395, Rollo).
On September 22, 1987, UFE filed a complaint for Illegal Dismissal, ULP and damages (NLRC NCR-00-
03285-87). Labor Arbiter Evangeline Lubaton ruled on both issues of dismissal and strike legality, upon
the premise that the issue on validity of the dismissal of the individual complainants from employment
"depends on the resolution of the issue on whether or not the strike declared by complainants was
illegal."
The decision dated January 12, 1988, disposed as follows:
"WHEREFORE, in view of the foregoing, judgment is hereby rendered:
1. Dismissing the instant complaint for lack of merit; and
2. Confirming the dismissal of all individual complainants herein as valid and legally justified." (p. 376,
Rollo)
UFE appealed, assailing the three decisions, except that rendered in Case No. NLRC-NCR-12-4007-85
(Complaint for Unfair Labor Practice Against UFE) "because it was already rendered moot and academic
by the return to work agreement and order dated March 10 and 13, 1986, respectively." (p. 49, Rollo).
Upon UFE's subsequent motion, the three appeals were ordered consolidated and elevated to the NLRC
en banc (p, 95, Rollo)
The NLRC affirmed the unanimous decisions of the three labor arbiters which declared the strikes illegal,
premised on the view that "the core of the controversy rests upon the legality of the strikes."
In the petition before Us, UFE assigns several errors (pp. 63-321, Rollo), which We have summarized as
follows:
1. that Articles 263 and 264 are no longer good laws, since compulsory arbitration has been curtailed
under the present Constitution.
2. that the question on the legality of the strike was rendered moot and academic when Nestle
management accepted the striking workers in compliance with the return-to-work order of then Minister
of Labor Augusto Sanchez dated March 13, 1986, (citing the case of Bisayan Land Transportation Co. v.
CIR (102 Phil. 439) and affirmed in the case of Feati University Faculty Club (PAFLU) v. Feati University,
G.R. No. L-31503, August 15, 1974, 58 SCRA 395).chanrobles virtual law library
3. that the union did not violate the no-strike/no lock-out clause, considering that the prohibition applies
to economic strikes, pursuant to Philippine Metal Foundries v. CIR, G.R. No. L-34948-49, May 15, 1979,
90 SCRA 135. UFE, it is claimed, premised their strike on a violation of the labor standard laws or non-
payment of holiday pay, which is, in effect, a violation of the CBA.
4. on the commission of illegal and prohibited acts which automatically rendered the strike illegal, UFE
claimed that there were no findings of specific acts and identifies of those participating as to render
them liable (ESSO Phils. v. Malayang Manggagawa sa ESSO, G.R. No. L-36545, January 26, 1977, 75
SCRA 72; Shell Oil Workers Union v. CIR, G.R. No. L-28607, February 12, 1972, 43 SCRA 224). By
holding the officers liable for the illegal acts of coercion, or denial of free ingress and egress, without
specifying and finding out their specific participation therein, the Labor Arbiter resorted to the principle
of vicarious liability which has since been discarded in the case of Benguet Consolidated v. CIR, G.R. No.
L-24711, April 30, 1968, 23 SCRA 465.
We agree with the Solicitor General that the petition failed to show that the NLRC committed grave
abuse of discretion in its affirmance of the decisions of the Labor Arbiters a quo.
At the outset, UFE questions the power of the Secretary of Labor under Art. 263(g) of the Labor Code to
assume jurisdiction over a labor dispute tainted with national interests, or to certify the same for
compulsory arbitration. UFE contends that Arts. 263 and 264 are based on the 1973 Constitution,
specifically Sec. 9 of Art. II thereof, the pertinent portion of which reads:
"Sec. 9. . . . The State may provide for compulsory arbitration." (p. 801, Rollo)
UFE argues that since the aforecited provision of Sec. 9 is no longer found in the 1987 Constitution, Arts.
263(g) and 264 of the Labor Code are now "unconstitutional and must be ignored."
We are not persuaded. We agree with the Solicitor General that on the contrary, both provisions are still
applicable.
We quote:
"Article 7 of the New Civil Code declares that:
'Article 7. Laws are repealed only by subsequent ones, and their violation or non-observance shall not be
excused by disuse or custom or practice to the contrary.
x x x'
"In the case at bar, no law has ever been passed by Congress expressly repealing Articles 263 and 264
of the Labor Code. Neither may the 1987 Constitution be considered to have impliedly repealed the said
Articles considering that there is no showing that said articles are inconsistent with the said Constitution.
Moreover, no court has ever declared that the said articles are inconsistent with the 1987 Constitution.
"On the contrary, the continued validity and operation of Articles 263 and 264 of the Labor Code has
been recognized by no less than the Congress of the Philippines when the latter enacted into law R.A.
6715, otherwise known as Herrera Law, Section 27 of which amended paragraphs (g) and (i) of Article
263 of the Labor Code.
"At any rate, it must be noted that Articles 263 (g) and 264 of the Labor Code have been enacted
pursuant to the police power of the State, which has been defined as the power inherent in a
Government to enact laws, within constitutional limits, to promote the order, safety, health, morals and
general welfare of society (People vs. Vera Reyes, 67 Phil. 190). The police power, together with the
power of eminent domain and the power of taxation, is an inherent power of government and does not
need to be expressly conferred by the Constitution. Thus, it is submitted that the argument of
petitioners that Articles 263 (g) and 264 of the Labor Code do not have any constitutional foundation is
legally inconsequential." (pp. 801-803, Rollo)
On the issue of the legality of the strike committed, UFE seeks to absolve itself by pointing out qualifying
factors such as motives, good faith, absence of findings on specific participation and/or liability, and
limiting the no-strike provision to economic strikes.
UFE completely misses the underlying principle embodied in Art. 264(g) on the settlement of labor
disputes and this is, that assumption and certification orders are executory in character and are to be
strictly complied with by the parties even during the pendency of any petition questioning their validity.
This extraordinary authority given to the Secretary of Labor is aimed at arriving at a peaceful and
speedy solution to labor disputes, without jeopardizing national interests.
Regardless therefore of their motives, or the validity of their claims, the striking workers must cease
and/or desist from any and all acts that tend to, or undermine this authority of the Secretary of Labor,
once an assumption and/or certification order is issued. They cannot, for instance, ignore return-to-work
orders, citing unfair labor practices on the part of the company, to justify their actions. Thus, the NLRC
in its decision, re-emphasized the nature of a return-to-work order within the context of Art. 264(g) as
amended by BP Nos. 130 and 227:
"x x x
"One other point that must be underscored is that the return-to-work order is issued pending the
determination of the legality or illegality of the strike. It is not correct to say that it may be enforced
only if the strike is legal and may be disregarded if the strike is illegal, for the purpose precisely is to
maintain the status quo while the determination is being made. Otherwise, the workers who contend
that their strike is legal can refuse to return to work to their work and cause a standstill on the company
operations while retaining the positions they refuse to discharge or allow the management to fill. Worse,
they will also claim payment for work not done, on the ground that they are still legally employed
although actually engaged in the activities inimical to their employer's interest. (Emphasis supplied)
"This is like eating one's cake and having it too, and at the expense of the management. Such an unfair
situation surely was not contemplated by our labor laws and cannot be justified under the social justice
policy, which is a policy of fairness to both labor and management. Neither can this unseemly
arrangement be sustained under the due process clause as the order, if thus interpreted, would be
plainly oppressive and arbitrary.
". . ." (p. 415, Rollo)
Also, in the cases of Sarmiento v. Judge Tuico, (G.R. No. 75271-73; Asian Transmission Corporation v.
National Labor Relations Commission, G.R. 77567, 27 June 88, 162 SCRA 676). We stated:
"The return to work order does not so much confer a right as it imposes a duty; and while as a right it
may be waived, it must be discharged as a duty even against the worker's will. Returning to work in this
situation is not a matter of option or voluntariness but of obligation. The worker must return to his job
together with his co-workers so the operations of the company can be resumed and it can continue
serving the public and promoting its interest.": nad
We also wish to point out that an assumption and/or certification order of the Secretary of Labor
automatically results in a return-to-work of all striking workers, whether or not a corresponding order
has been issued by the Secretary of Labor. Thus, the striking workers erred when they continued with
their strike alleging absence of a return-to-work order. Article 264(g) is clear. Once an
assumption/certification order is issued, strikes are enjoined, or if one has already taken place, all
strikers shall immediately return to work.
A strike that is undertaken despite the issuance by the Secretary of Labor of an assumption or
certification order becomes a prohibited activity and thus illegal, pursuant to the second paragraph of
Art. 264 of the Labor Code as amended (Zamboanga Wood Products, Inc. v. NLRC, G.R. 82088, October
13, 1989; 178 SCRA 482). The Union officers and members, as a result, are deemed to have lost their
employment status for having knowingly participated in an illegal act.
The NLRC also gave the following reasons:
1. The strike was staged in violation of the existing CBA provisions on "No Strike/No Lockout Clause"
stating that a strike, which is in violation of the terms of the collective bargaining statement, is illegal,
especially when such terms provide for conclusive arbitration clause (Liberal Labor Union vs. Phil. Can
Co., 91 Phil. 72; Phil. Airlines vs. PAL Employees Association, L-8197, October 31, 1958). The main
purpose of such an agreement is to prevent a strike and it must, therefore, be adhered to strictly and
respected if their ends are to be achieved (pp. 397-398, Rollo)
2. Instead of exhausting all the steps provided for in the grievance machinery provided for in the
collective bargaining agreement to resolve the dispute amicably and harmoniously within the plant level,
UFE went on strike (p. 398, Rollo)
3. The prescribed mandatory cooling-off period and then 7-day strike and after submission of the report
of strike vote at Nestle's Makati Offices and Muntinlupa and Cabuyao Plants were not complied with
(NLRC-NCR-124007-85 & NCR-1-295-86), while no notice of strike was filed by respondents when they
staged the strike at Nestle's Cagayan de Oro Plant (RABX-2-0047-86) contrary to the pertinent provision
of Articles 263 and 264 of the Labor Code, emphasizing that "the mandatory character of these cooling-
off periods has already been categorically ruled upon by the Supreme Court" (National Federation of
Sugar Workers (NFSW) vs. Ovejera, et al., 114 SCRA 354) (p. 402, Rollo)- nad
4. In carrying out the strike, coercion, force, intimidation, violence with physical injuries, sabotage, and
the use of unnecessary and obscene language or epithets were committed by the respondent officials
and members of either UFE or WATU. It is well-settled that a strike conducted in this manner is illegal
(United Seamen's Union vs. Davao Shipowners Association, 20 SCRA 1226). In fact, criminal cases were
filed with the Makati Fiscal's Office (p. 402, Rollo).
Thus, the NLRC correctly upheld the illegality of the strikes and the corresponding dismissal of the
individual complainants because of their "brazen disregard of successive lawful orders of then Labor
Ministers Blas F. Ople, Augusto Sanchez and Labor Secretary Franklin Drilon dated December 11, 1985,
January 30, 1986 and February 4, 1986, respectively, and the cavalier treatment of the provisions of the
Labor Code and the return-to-work orders of the Minister (now Secretary) of Labor and Employment, or
Articles 264 and 265 (now renumbered Arts. 263 and 264), providing in part as follows:
"ART. 263. Strikes, picketing and lockouts.
x x x
"(g) When in his opinion there exists a labor dispute causing or likely to cause strikes or lockouts
adversely affecting the national interest, such as may occur in but not limited to public utilities,
companies engaged in the generation or distribution of energy, banks, hospitals, and export-oriented
industries including those within export processing zones, the Minister of Labor and Employment shall
assume jurisdiction over the dispute and decide it or certify the same to the Commission for compulsory
arbitration. Such assumption or certification shall have the effect of automatically enjoining the intended
or impending strike or lockout as specified in the assumption or certification order. If one has already
taken place at the time of assumption or certification, all striking or locked out employees shall
immediately return to work and the employer shall immediately resume operations and readmit all
workers under the same terms and conditions prevailing before the strike or lockout. The Minister may
seek the assistance of law enforcement agencies to ensure compliance with this provision as well as with
such orders as he may issue to enforce the same. (Italics supplied)- nad
"The foregoing notwithstanding, the President of the Philippines shall not be precluded from determining
the industries wherein (sic) his opinion labor disputes may adversely affect the national interest, and
from intervening at any time and assuming jurisdiction over any labor dispute adversely affecting the
national interest in order to settle or terminate the same.
x x x
ART. 264. Prohibited activities.
(a) No labor organization or employer shall declare a strike or lockout without first having bargained
collectively in accordance with Title VII of this Book or without first having filed the notice required in the
preceding Article or without the necessary strike or lockout vote first having been obtained and reported
to the Ministry.
No strike or lockout shall be declared after assumption of jurisdiction by the President or the Minister or
after certification or submission of the dispute to compulsory or voluntary arbitration or during the
pendency o f cases involving the same grounds for the strike or lockout." ([pp. 399-401, Rollo])
(Emphasis supplied)
On the alleged lack of jurisdiction of Labor Arbiter Lubaton, NLRC has clarified that the question on the
legality of strike was properly resolved by the Labor Arbiter, not only because the question is perfectly
within the original and exclusive jurisdiction of the Labor Arbiter to adjudicate, but also because the
issue was not subsumed by the Order of Labor Minister Sanchez, dated December 23, 1986, certifying
the Notice of Strike dated December 4, 1986 for compulsory arbitration, further clarifying that the issue
of whether or not the strike staged on September 11, 1987 by UFE and its officials and members was
illegal is a prejudicial question to the issue of whether or not the complainants were illegally dismissed.
We shall not belabor the issue any further.: nad
ACCORDINGLY, the petition is DISMISSED, and the decision of public respondent NLRC, dated November
2, 1988, and its Resolution, dated March 7, 1989, are both AFFIRMED in their entirety. No costs.
SO ORDERED.


Republic of the Philippines
Supreme Court
Manila

FIRST DIVISION

EXODUS INTERNATIONAL G.R. No. 166109

CONSTRUCTION CORPORATION

and ANTONIO P. JAVALERA,

Petitioners, Present:



-versus- CORONA, C. J.,
Chairperson,
VELASCO, JR.,

NACHURA,

GUILLERMO BISCOCHO, DEL CASTILLO, and

FERNANDO PEREDA, FERDINAND PEREZ, JJ.

MARIANO, GREGORIO BELLITA

and MIGUEL BOBILLO, Promulgated:

Respondents. February 23, 2011

x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
- - x


D E C I S I O N


DEL CASTILLO, J.:


In illegal dismissal cases, it is incumbent upon the employees to first establish the fact of their
dismissal before the burden is shifted to the employer to prove that the dismissal was legal.

This Petition for Review on Certiorari51[1] assails the Decision52[2] dated August 10, 2004 of
the Court of Appeals (CA) in CA-G.R. SP No. 79800, which dismissed the petition for certiorari







challenging the Resolutions dated January 17, 200353[3] and July 31, 200354[4] of the National Labor
Relations Commission (NLRC) in NLRC NCR CASE Nos. 30-11-04656-0055[5] and 30-12-04714-00.
Factual Antecedents

Petitioner Exodus International Construction Corporation (Exodus) is a duly licensed labor
contractor for the painting of residential houses, condominium units and commercial buildings. Petitioner
Antonio P. Javalera is the President and General Manager of Exodus.

On February 1, 1999, Exodus obtained from Dutch Boy Philippines, Inc. (Dutch Boy) a
contract56[6] for the painting of the Imperial Sky Garden located at Ongpin Street, Binondo, Manila. On
July 28, 1999, Dutch Boy awarded another contract57[7] to Exodus for the painting of Pacific Plaza
Towers in Fort Bonifacio, Taguig City.

In the furtherance of its business, Exodus hired respondents as painters on different dates with
the corresponding wages appearing opposite their names as hereunder listed:



Gui
llermo
Biscocho
(Guillermo)
was
assigned at the Imperial Sky Garden from February 8, 1999 to February 8, 2000. Fernando Pereda
(Fernando) worked in the same project from February 8, 1999 to June 17, 2000. Likewise, Ferdinand
Mariano (Ferdinand) worked there from April 12, 1999 to February 17, 2000. All of them were then
transferred to Pacific Plaza Towers.












Gregorio S. Bellita (Gregorio) was assigned to work at the house of Mr. Teofilo Yap in Ayala
Alabang, Muntinlupa City from May 20, 1999 to December 4, 1999. Afterwards he was transferred to
Pacific Plaza Towers.

Miguel B. Bobillo (Miguel) was hired and assigned at Pacific Plaza Towers on March 10, 2000.

On November 27, 2000, Guillermo, Fernando, Ferdinand, and Miguel filed a complaint58[8] for
illegal dismissal and non-payment of holiday pay, service incentive leave pay, 13th month pay and
night-shift differential pay. This was docketed as NLRC NCR CASE No. 30-11-04656-00.

On December 1, 2000, Gregorio also filed a complaint59[9] which was docketed as NLRC NCR
CASE No. 30-12-04714-00. He claimed that he was dismissed from the service on September 12, 2000
while Guillermo, Fernando, Ferdinand, and Miguel were orally notified of their dismissal from the service
on November 25, 2000.

Petitioners denied respondents allegations. As regards Gregorio, petitioners averred that on
September 15, 2000, he absented himself from work and applied as a painter with SAEI-EEI which is the
general building contractor of Pacific Plaza Towers. Since then, he never reported back to work.

Guillermo absented himself from work without leave on November 27, 2000. When he reported
for work the following day, he was reprimanded for being Absent Without Official Leave (AWOL).
Because of the reprimand, he worked only half-day and thereafter was unheard of until the filing of the
instant complaint.

Fernando, Ferdinand, and Miguel were caught eating during working hours on November 25,
2000 for which they were reprimanded by their foreman. Since then they no longer reported for work.

Ruling of the Labor Arbiter

On March 21, 2002, the Labor Arbiter rendered a Decision60[10] exonerating petitioners from
the charge of illegal dismissal as respondents chose not to report for work. The Labor Arbiter ruled that
since there is neither illegal dismissal nor abandonment of job, respondents should be reinstated but
without any backwages. She disallowed the claims for premium pay for holidays and rest days and
nightshift differential pay as respondents failed to prove that actual service was rendered on such non-
working days. However, she allowed the claims for holiday pay, service incentive leave pay and 13th
month pay. The dispositive portion of the Labor Arbiters Decision reads:








NAME DATE EMPLOYED DAILY SALARY
1. Guillermo B. Biscocho Feb. 8, 1999 P 222.00
2. Fernando S. Pereda Feb. 8, 1999 235.00
3. Ferdinand M. Mariano April 12, 1999 235.00
4. Gregorio S. Bellita May 20, 1999 225.00
5. Miguel B. Bobillo March 10, 2000 220.00
WHEREFORE, premises considered, respondents Exodus International Construction
Corporation and/or Antonio Javalera are hereby ordered to reinstate complainants to
their former positions as painters without loss of seniority rights and other benefits
appurtenant thereto without any backwages.

Respondents are likewise hereby ordered to pay complainants the following:

1. Guillermo Biscocho
P 1,968.75 - Service Incentive Leave Pay
10,237.50 - 13th Month Pay
3,600.00 - Holiday Pay
P 15,806.25 - Sub-Total
+ 1,580.87 - 10% Attorneys Fees
P 17,386.86 Total

2. Fernando Pereda
P 2,056.25 - Service Incentive Leave Pay
10,692.50 - 13th Month Pay
3,525.00 - Holiday Pay
P 16,273.75 - Sub-Total
+ 1,627.37 - 10% Attorneys Fees
P 17,901.12 Total

3. Miguel Bobillo
P 3,813.34 - 13th Month Pay
1,320.00 - Holiday Pay
P 5,133.34 - Sub-Total
+ 513.33 - 10% Attorneys Fees
P 5,646.67 Total

4. Ferdinand Mariano
P 1,860.42 - Service Incentive Leave Pay
9,674.19 - 13th Month Pay
3,055.00 - Holiday Pay
P 14,589.61 - Sub-Total
+ 1,458.96 - 10% Attorneys Fees
P 16,048.57 Total

5. Gregorio Bellita
P 1,500.00 - Service Incentive Leave Pay
7,800.00 - 13th Month Pay
2,700.00 - Holiday Pay
P 12,000.00 - Sub-Total
+ 1,200.00 - 10% Attorneys Fees
P 13,200.00 Total

or the total aggregate sum of Seventy Thousand, One Hundred Eighty Three and
23/100 (P70,183.23) Pesos, inclusive of the ten (10%) percent of the award herein by
way of attorneys fees, all within ten (10) days from receipt hereof;

The rest of complainants claims for lack of merit are hereby Dismissed.

SO ORDERED.61[11]


Ruling of the National Labor Relations Commission


Petitioners sought recourse to the NLRC limiting their appeal to the award of service incentive
leave pay, 13th month pay, holiday pay and 10% attorneys fees in the sum of P70,183.23.

On January 17, 2003, the NLRC dismissed the appeal. It ruled that petitioners, who have
complete control over the records of the company, could have easily rebutted the monetary claims
against it. All that it had to do was to present the vouchers showing payment of the same. However,
they opted not to lift a finger, giving an impression that they never paid said benefits.
As to the award of attorneys fees, the NLRC found the same to be proper because respondents
were forced to litigate in order to validate their claim.

The NLRC thus affirmed the Decision of the Labor Arbiter, viz:

Accordingly, premises considered, the decision appealed from is hereby
AFFIRMED and the appeal DISMISSED for lack of merit.

SO ORDERED.62[12]


Petitioners filed a Motion for Reconsideration63[13] which was denied by the NLRC in a
Resolution64[14] dated July 31, 2003.


Ruling of the Court of Appeals

Aggrieved, petitioners filed with the CA a petition for certiorari. The CA through a
Resolution65[15] dated October 22, 2003, directed the respondents to file their comment. On









December 4, 2003, respondents filed their comment.66[16] On January 12, 2004, petitioners filed their
reply.67[17]

On August 10, 2004, the CA dismissed the petition and affirmed the findings of the Labor
Arbiter and the NLRC. It opined that in a situation where the employer has complete control over the
records and could thus easily rebut any monetary claims against it but opted not to lift any finger, the
burden is on the employer and not on the complainants. This is so because the latter are definitely not
in a position to adduce any documentary evidence, the control of which being not with them.

However, in addition to the reliefs awarded to respondents in the March 21, 2002 Decision of
the Labor Arbiter which was affirmed by the NLRC in a Resolution dated January 17, 2003, the
petitioners were directed by the CA to solidarily pay full backwages, inclusive of all benefits the
respondents should have received had they not been dismissed.

The dispositive portion of the CA Decision reads:

WHEREFORE, the instant petition for certiorari is dismissed. However, in
addition to the reliefs awarded to private respondents in the decision dated March 21,
2002 of Labor Arbiter Aldas and resolution of the NLRC dated January 17, 2003, the
petitioners are directed to solidarily pay private respondents full backwages, inclusive
of all benefits they should have received had they not been dismissed, computed from
the time their wages were withheld until the time they are actually reinstated. Such
award of full backwages shall be included in the computation of public respondents
award of ten percent (10%) attorneys fees.

SO ORDERED.68[18]


Petitioners moved for reconsideration,69[19] but to no avail. Hence, this appeal anchored on
the following grounds:











Issues

I.
The Honorable Court of Appeals erred and committed grave abuse of discretion in
ordering the reinstatement of respondents to their former positions which were no
longer existing because its findings of facts are premised on misappreciation of facts.

II.
The Honorable Court of Appeals also seriously erred and committed grave abuse of
discretion in affirming the award of service incentive leave pay, 13th month pay, and
holiday pay in the absence of evidentiary and legal basis therefor.

III.
The Honorable Court of Appeals likewise seriously erred and committed grave abuse of
discretion in affirming the award of attorney's fees even in the absence of counsel on
record to handle and prosecute the case.

IV.
The Honorable Court of Appeals also seriously erred and gravely abused its discretion
in holding individual petitioner solidarily liable with petitioner company without specific
evidence on which the same was based.70[20]


Petitioners Arguments


Petitioners contend that, contrary to their allegations, respondents were never dismissed from
the service. If respondents find themselves no longer in the service of petitioners, it is simply because
of their refusal to report for work. Further, granting that they were dismissed, respondents prolonged
absences is tantamount to abandonment which is a valid ground for the termination of their
employment. As to respondents monetary claims, it is incumbent upon them to prove the same because
the burden of proof rests on their shoulders. But since respondents failed to prove the same, their
claims should be denied.

Respondents Arguments

Respondents, in support of their claim that they were illegally dismissed, argue that as painters,
they performed activities which were necessary and desirable in the usual business of petitioners, who
are engaged in the business of contracting painting jobs. Hence, they are regular employees who, under
the law, cannot just be dismissed from the service without prior notice and without any just or valid
cause. According to the respondents, they did not abandon their job. For abandonment to serve as
basis for a valid termination of their employment, it must first be established that there was a deliberate
and unjustified refusal on their part to resume work. Mere absences are not sufficient for these must be
accompanied by overt acts pointing to the fact that they simply do not want to work anymore.




Petitioners failed to prove this. Furthermore, the filing of a complaint for illegal dismissal ably defeats
the theory of abandonment of the job.

Our Ruling

The petition is partly meritorious.

[T]his Court is not unmindful of the rule that in cases of illegal dismissal, the employer bears
the burden of proof to prove that the termination was for a valid or authorized cause.71[21] But
[b]efore the [petitioners] must bear the burden of proving that the dismissal was legal, [the
respondents] must first establish by substantial evidence that indeed they were dismissed. [I]f there
is no dismissal, then there can be no question as to the legality or illegality thereof.72[22]

There was no dismissal in this case, hence, there is
no question that can be entertained regarding its
legality or illegality.


As found by the Labor Arbiter, there was no evidence that respondents were dismissed nor
were they prevented from returning to their work. It was only respondents unsubstantiated conclusion
that they were dismissed. As a matter of fact, respondents could not name the particular person who
effected their dismissal and under what particular circumstances.

In Machica v. Roosevelt Services Center, Inc.,73[23] this Court sustained the employer's denial
as against the employees' categorical assertion of illegal dismissal. In so ruling, this Court held that:

The rule is that one who alleges a fact has the burden of proving it; thus,
petitioners were burdened to prove their allegation that respondents dismissed them
from their employment. It must be stressed that the evidence to prove this fact must
be clear, positive and convincing. The rule that the employer bears the burden of proof
in illegal dismissal cases finds no application here because the respondents deny
having dismissed the petitioners.
In this case, petitioners were able to show that they never dismissed respondents. As to the
case of Fernando, Miguel and Ferdinand, it was shown that on November 25, 2000, at around 7:30 a.m.,
the petitioners foreman, Wenifredo Lalap (Wenifredo) caught the three still eating when they were
supposed to be working already. Wenifredo reprimanded them and, apparently, they resented it so they
no longer reported for work. In the case of Gregorio, he absented himself from work on September 15,
2000 to apply as a painter with SAEI-EEI, the general contractor of Pacific Plaza Towers. Since then he







never reported back to work. Lastly, in the case of Guillermo, he absented himself without leave on
November 27, 2000, and so he was reprimanded when he reported for work the following day. Because
of the reprimand, he did not report for work anymore.

Hence, as between respondents general allegation of having been orally dismissed from the
service vis-a-vis those of petitioners which were found to be substantiated by the sworn statement of
foreman Wenifredo, we are persuaded by the latter. Absent any showing of an overt or positive act
proving that petitioners had dismissed respondents, the latters claim of illegal dismissal cannot be
sustained. Indeed, a cursory examination of the records reveal no illegal dismissal to speak of.

There was also no abandonment of work on the
part of the respondents.


The Labor Arbiter is also correct in ruling that there was no abandonment on the part of
respondents that would justify their dismissal from their employment.

It is a settled rule that [m]ere absence or failure to report for work x x x is not enough to
amount to abandonment of work.74[24] Abandonment is the deliberate and unjustified refusal of an
employee to resume his employment.75[25]
In Northwest Tourism Corporation v. Former Special 3rd Division of the Court of Appeals76[26]
this Court held that [t]o constitute abandonment of work, two elements must concur, [namely]:

(1) the employee must have failed to report for work or must have been absent
without valid or justifiable reason; and

(2) there must have been a clear intention on the part of the employee to sever
the employer-employee relationship manifested by some overt act.


It is the employer who has the burden of proof to show a deliberate and unjustified refusal of the
employee to resume his employment without any intention of returning.77[27] It is therefore
incumbent upon petitioners to ascertain the respondents interest or non-interest in the continuance of
their employment. However, petitioners failed to do so.










Respondents must be reinstated and paid their
holiday pay, service incentive leave pay, and 13th
month pay.


Clearly therefore, there was no dismissal, much less illegal, and there was also no abandonment of job
to speak of. The Labor Arbiter is therefore correct in ordering that respondents be reinstated but
without any backwages.

However, petitioners are of the position that the reinstatement of respondents to their former positions,
which were no longer existing, is impossible, highly unfair and unjust. The project was already
completed by petitioners on September 28, 2001. Thus the completion of the project left them with no
more work to do. Having completed their tasks, their positions automatically ceased to exist.
Consequently, there were no more positions where they can be reinstated as painters.

Petitioners are misguided. They forgot that there are two types of employees in the construction
industry. The first is referred to as project employees or those employed in connection with a particular
construction project or phase thereof and such employment is coterminous with each project or phase of
the project to which they are assigned. The second is known as non-project employees or those
employed without reference to any particular construction project or phase of a project.

The second category is where respondents are classified. As such they are regular employees of
petitioners. It is clear from the records of the case that when one project is completed, respondents
were automatically transferred to the next project awarded to petitioners. There was no employment
agreement given to respondents which clearly spelled out the duration of their employment, the specific
work to be performed and that such is made clear to them at the time of hiring. It is now too late for
petitioners to claim that respondents are project employees whose employment is coterminous with
each project or phase of the project to which they are assigned.

Nonetheless, assuming that respondents were initially hired as project employees, petitioners must be
reminded of our ruling in Maraguinot, Jr. v. National Labor Relations Commission78[28] that [a] project
employee x x x may acquire the status of a regular employee when the following [factors] concur:

1. There is a continuous rehiring of project employees even after cessation of a
project; and

2. The tasks performed by the alleged project employee are vital, necessary and
indespensable to the usual business or trade of the employer.


In this case, the evidence on record shows that respondents were employed and assigned continuously
to the various projects of petitioners. As painters, they performed activities which were necessary and
desirable in the usual business of petitioners, who are engaged in subcontracting jobs for painting of
residential units, condominium and commercial buildings. As regular employees, respondents are
entitled to be reinstated without loss of seniority rights.




Respondents are also entitled to their money claims such as the payment of holiday pay, service
incentive leave pay, and 13th month pay. Petitioners as the employer of respondents and having
complete control over the records of the company could have easily rebutted the monetary claims
against it. All that they had to do was to present the vouchers or payrolls showing payment of the
same. However, they decided not to provide the said documentary evidence. Our conclusion therefore
is that they never paid said benefits and therefore they must be ordered to settle their obligation with
the respondents.

Respondents are also entitled to the payment of
attorneys fees.


Even though respondents were not represented by counsel in most of the stages of the proceedings of
this case, the award of attorneys fees as ruled by the Labor Arbiter, the NLRC and the CA to the
respondents is still proper. In Rutaquio v. National Labor Relations Commission,79[29] this Court held
that:

It is settled that in actions for recovery of wages or where an employee was forced to litigate
and, thus, incur expenses to protect his rights and interest, the award of attorneys fees is
legally and morally justifiable.


In Producers Bank of the Philippines v. Court of Appeals80[30] this Court ruled that:

Attorneys fees may be awarded when a party is compelled to litigate or to incur expenses to
protect his interest by reason of an unjustified act of the other party.

In this case, respondents filed a complaint for illegal dismissal with claim for payment of their
holiday pay, service incentive leave pay, and 13th month pay. The Labor Arbiter, the NLRC and the CA
were one in ruling that petitioners did not pay the respondents their holiday pay, service incentive leave
pay, and 13th month pay as mandated by law. For sure, this unjustified act of petitioners had
compelled the respondents to institute an action primarily to protect their rights and interests.

The CA erred when it ordered reinstatement of
respondents with payment of full backwages.


It must be noted that the Labor Arbiters disposition directed petitioners to reinstate
respondents without any backwages and awarded the payment of service incentive leave pay, holiday
pay, 13th month pay, and 10% attorneys fees in the sum of P70,183.23.






On appeal to the NLRC, petitioners limited their appeal to the award of service incentive leave
pay, holiday pay, 13th month pay, and 10% attorneys fees. No appeal was made on the order of
reinstatement.

In the proceedings before the CA, it is only the award of service incentive leave pay, holiday
pay, 13th month pay, and 10% attorneys fees that were raised by the petitioners. The CA in fact
dismissed the petition. However, the CA further concluded in its Decision that since there is no
abandonment to speak about, it is therefore indisputable that respondents were illegally dismissed.
Therefore, they deserve not only reinstatement but also the payment of full backwages.

We do not agree with this ruling of the CA.

In cases where there is no evidence of dismissal, the remedy is
reinstatement but without backwages. In this case, both the Labor Arbiter and the NLRC made a finding
that there was no dismissal much less an illegal one. It is settled that factual findings of quasi-judicial
agencies are generally accorded respect and finality so long as these are supported by substantial
evidence.81[31]

In Leonardo v. National Labor Relations Commission,82[32] this Court held that:

In a case where the employees failure to work was occasioned neither by his abandonment nor
by a termination, the burden of economic loss is not rightfully shifted to the employer; each
party must bear his own loss.


Thus, inasmuch as no finding of illegal dismissal had been made, and considering that the absence of
such finding is supported by the records of the case, this Court is bound by such conclusion and cannot
allow an award of the payment of backwages.

Lastly, since there was no need to award backwages to respondents, the ruling of the CA that Javalera is
solidarily liable with Exodus International Construction Corporation in paying full backwages need not be
discussed.

WHEREFORE, the instant petition for review on certiorari is PARTLY GRANTED. The Decision
of the Court of Appeals in CA-G.R. SP No. 79800 dated August 10, 2004, is AFFIRMED with
MODIFICATION that the award of full backwages is DELETED for lack of legal basis.

SO ORDERED.

SECOND DIVISION






LYNVIL FISHING ENTERPRISES, INC.
and/or ROSENDO S. DE BORJA,
Petitioners,



-versus-




ANDRES G. ARIOLA, JESSIE D.
ALCOVENDAS, JIMMY B. CALINAO AND
LEOPOLDO G. SEBULLEN,
Respondents.

G.R. No. 181974


Present:

CARPIO, J.,
Chairperson,
BRION,
PEREZ,
SERENO, and
REYES, JJ.

Promulgated:

February 1, 2012
x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

D E C I S I O N

PEREZ, J.:

Before the Court is a Petition for Review on Certiorari83[1] of the Decision84[2] of the
Fourteenth Division of the Court of Appeals in CA-G.R. SP No. 95094 dated 10 September 2007,
granting the Writ of Certiorari prayed for under Rule 65 of the 1997 Revised Rules of Civil Procedure by
herein respondents Andres G. Ariola, Jessie D. Alcovendas, Jimmy B. Calinao and Leopoldo Sebullen
thereby reversing the Resolution of the National Labor Relations Commission (NLRC). The dispositive
portion of the assailed decision reads:

WHEREFORE, premises considered, the Decision dated March 31, 2004
rendered by the National Labor Relations Commission is hereby REVERSED and SET





ASIDE. In lieu thereof, the Decision of the Labor Arbiter is hereby REINSTATED,
except as to the award of attorneys fees, which is ordered DELETED.85[3]

The version of the petitioners follows:

1. Lynvil Fishing Enterprises, Inc. (Lynvil) is a company engaged in deep-sea fishing, operating
along the shores of Palawan and other outlying islands of the Philippines.86[4] It is operated and
managed by Rosendo S. de Borja.

2. On 1 August 1998, Lynvil received a report from Romanito Clarido, one of its employees,
that on 31 July 1998, he witnessed that while on board the company vessel Analyn VIII, Lynvil
employees, namely: Andres G. Ariola (Ariola), the captain; Jessie D. Alcovendas (Alcovendas), Chief
Mate; Jimmy B. Calinao (Calinao), Chief Engineer; Ismael G. Nubla (Nubla), cook; Elorde Baez (Baez),
oiler; and Leopoldo D. Sebullen (Sebullen), bodegero, conspired with one another and stole eight (8)
tubs of pampano and tangigue fish and delivered them to another vessel, to the prejudice of
Lynvil.87[5]

3. The said employees were engaged on a per trip basis or por viaje which terminates at the
end of each trip. Ariola, Alcovendas and Calinao were managerial field personnel while the rest of the
crew were field personnel.88[6]

4. By reason of the report and after initial investigation, Lynvils General Manager Rosendo S.
De Borja (De Borja) summoned respondents to explain within five (5) days why they should not be
dismissed from service. However, except for Alcovendas and Baez,89[7] the respondents refused to
sign the receipt of the notice.

5. Failing to explain as required, respondents employment was terminated.












6. Lynvil, through De Borja, filed a criminal complaint against the dismissed employees for
violation of P.D. 532, or the Anti-Piracy and Anti-Highway Robbery Law of 1974 before the Office of the
City Prosecutor of Malabon City.90[8]

7. On 12 November 1998, First Assistant City Prosecutor Rosauro Silverio found probable
cause for the indictment of the dismissed employees for the crime of qualified theft91[9] under the
Revised Penal Code.

On the other hand, the story of the defense is:

1. The private respondents were crew members of Lynvils vessel named Analyn VIII.92[10]

2. On 31 July 1998, they arrived at the Navotas Fishport on board Analyn VIII loaded with
1,241 baeras of different kinds of fishes. These baeras were delivered to a consignee named SAS and
Royale.93[11]

The following day, the private respondents reported back to Lynvil office to inquire about their
new job assignment but were told to wait for further advice. They were not allowed to board any
vessel.94[12]

3. On 5 August 1998, only Alcovendas and Baez received a memorandum from De Borja
ordering them to explain the incident that happened on 31 July 1998. Upon being informed about this,
Ariola, Calinao, Nubla and Sebullen went to the Lynvil office. However, they were told that their
employments were already terminated.95[13]













Aggrieved, the employees filed with the Arbitration Branch of the National Labor Relations
Commission-National Capital Region on 25 August 1998 a complaint for illegal dismissal with claims for
backwages, salary differential reinstatement, service incentive leave, holiday pay and its premium and
13th month pay from 1996 to1998. They also claimed for moral, exemplary damages and attorneys
fees for their dismissal with bad faith.96[14]

They added that the unwarranted accusation of theft stemmed from their oral demand of
increase of salaries three months earlier and their request that they should not be required to sign a
blank payroll and vouchers.97[15]

On 5 June 2002, Labor Arbiter Ramon Valentin C. Reyes found merit in complainants charge of
illegal dismissal.98[16] The dispositive portion reads:

WHEREFORE, premises considered, judgment is hereby rendered finding that
complainants were illegally dismissed, ordering respondents to jointly and severally
pay complainants (a) separation pay at one half month pay for every year of service;
(b) backwages; (c) salary differential; (d) 13th month pay; and (e) attorneys fees, as
follows:


1) Andres Ariola
Backwages P234,000.00
(P6,500.00 x 36 = P234,000.00)

Separation Pay P74,650.00

13th Month Pay P6,500.00
P325,250.00

2) Jessie Alcovendas
Backwages P195,328.00
(P5,148.00 x 36 = P195,328.00)

Separation Pay P44,304.00









13th Month Pay 5,538.00

Salary Differential 1,547.52
P246,717.52

3) Jimmy Calinao
Backwages P234,000.00
(P6,500.00 x 36 = P234,000.00)

Separation Pay 55,250.00

13th Month Pay P6,500.00
P295,700.00

4) Leopoldo Sebullen

Backwages P154,440.00
(P4, 290.00 x 36 = P154,440.00)

Separation Pay P44,073.00

13th Month Pay 2,473.12

Salary Differential 4,472.00

P208,455.12
5) Ismael Nubla

Backwages P199,640.12

Separation Pay P58,149.00

13th Month Pay 2,473.12

Salary Differential P5,538.00

P265, 28.12
___________
TOTAL P 1, 341, 650.76

All other claims are dismissed for lack of merit.99[17]


The Labor Arbiter found that there was no evidence showing that the private respondents
received the 41 baeras of pampano as alleged by De Borja in his reply-affidavit; and that no proof



was presented that the 8 baeras of pampano [and tangigue] were missing at the place of
destination.100[18]

The Labor Arbiter disregarded the Resolution of Assistant City Prosecutor Rosauro Silverio on
the theft case. He reasoned out that the Labor Office is governed by different rules for the
determination of the validity of the dismissal of employees.101[19]

The Labor Arbiter also ruled that the contractual provision that the employment terminates
upon the end of each trip does not make the respondents dismissal legal. He pointed out that
respondents and Lynvil did not negotiate on equal terms because of the moral dominance of the
employer.102[20]

The Labor Arbiter found that the procedural due process was not complied with and that the
mere notice given to the private respondents fell short of the requirement of ample opportunity to
present the employees side.103[21]

On appeal before the National Labor Relations Commission, petitioners asserted that private
respondents were only contractual employees; that they were not illegally dismissed but were accorded
procedural due process and that De Borja did not commit bad faith in dismissing the employees so as to
warrant his joint liability with Lynvil.104[22]

On 31 March 2004, the NLRC reversed and set aside the Decision of the Labor Arbiter. The
dispositive portion reads:

WHEREFORE, judgment is hereby rendered REVERSING AND SETTING
ASIDE the Decision of the Labor Arbiter a quo and a new one entered DISMISSING the
present complaints for utter lack of merit;












However as above discussed, an administrative fine of PhP5,000.00 for each
complainant, Andres Ariola, Jessie Alcovendas, Jimmy Canilao, Leopoldo Sebullen and
Ismael Nobla or a total of PhP25,000.00 is hereby awarded.105[23]

The private respondents except Elorde Baez filed a Petition for Certiorari106[24] before the
Court of Appeals alleging grave abuse of discretion on the part of NLRC.

The Court of Appeals found merit in the petition and reinstated the Decision of the Labor Arbiter
except as to the award of attorneys fees. The appellate court held that the allegation of theft did not
warrant the dismissal of the employees since there was no evidence to prove the actual quantities of the
missing kinds of fish loaded to Analyn VIII.107[25] It also reversed the finding of the NLRC that the
dismissed employees were merely contractual employees and added that they were regular ones
performing activities which are usually necessary or desirable in the business and trade of Lynvil.
Finally, it ruled that the two-notice rule provided by law and jurisprudence is mandatory and non-
compliance therewith rendered the dismissal of the employees illegal.

The following are the assignment of errors presented before this Court by Lynvil:

I

THE HONORABLE COURT OF APPEALS ERRED IN FAILING TO CONSIDER THE
ESTABLISHED DOCTRINE LAID DOWN IN NASIPIT LUMBER COMPANY V. NLRC
HOLDING THAT THE FILING OF A CRIMINAL CASE BEFORE THE PROSECUTORS
OFFICE CONSTITUTES SUFFICIENT BASIS FOR A VALID TERMINATION OF
EMPLOYMENT ON THE GROUNDS OF SERIOUS MISCONDUCT AND/OR LOSS OF TRUST
AND CONFIDENCE.

II

THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT THE TERMINATION OF
RESPONDENTS EMPLOYMENT WAS NOT SUPPORTED BY SUBSTANTIAL EVIDENCE.
III

THE HONORABLE COURT OF APPEALS ERRED IN FAILING TO CONSIDER THAT THE
RESPONDENTS EMPLOYMENT, IN ANY EVENT, WERE CONTRACTUAL IN NATURE
BEING ON A PER VOYAGE BASIS. THUS, THEIR RESPECTIVE EMPLOYMENT
TERMINATED AFTER THE END OF EACH VOYAGE








IV

THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT THE RESPONDENTS
WERE NOT ACCORDED PROCEDURAL DUE PROCESS.

V

THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT THE RESPONDENTS
ARE ENTITLED TO THE PAYMENT OF THEIR MONEY CLAIMS.

VI

THE HONORABLE COURT OF APPEALS ERRED IN FAILING TO CONSIDER THAT
PETITIONER ROSENDO S. DE BORJA IS NOT JOINTLY AND SEVERALLY LIABLE FOR
THE JUDGMENT WHEN THERE WAS NO FINDING OF BAD FAITH.108[26]

The Courts Ruling

The Supreme Court is not a trier of facts. Under Rule 45,109[27] parties may raise only
questions of law. We are not duty-bound to analyze again and weigh the evidence introduced in and
considered by the tribunals below. Generally when supported by substantial evidence, the findings of
fact of the CA are conclusive and binding on the parties and are not reviewable by this Court, unless the
case falls under any of the following recognized exceptions:

(1) When the conclusion is a finding grounded entirely on speculation, surmises and
conjectures;
(2) When the inference made is manifestly mistaken, absurd or impossible;
(3) Where there is a grave abuse of discretion;
(4) When the judgment is based on a misapprehension of facts;
(5) When the findings of fact are conflicting;
(6) When the Court of Appeals, in making its findings, went beyond the issues of the
case and the same is contrary to the admissions of both appellant and appellee;
(7) When the findings are contrary to those of the trial court;
(8) When the findings of fact are conclusions without citation of specific evidence on
which they are based;
(9) When the facts set forth in the petition as well as in the petitioners' main and reply
briefs are not disputed by the respondents; and
(10) When the findings of fact of the Court of Appeals are premised on the supposed
absence of evidence and contradicted by the evidence on record. (Emphasis
supplied)110[28]







The contrariety of the findings of the Labor Arbiter and the NLRC prevents reliance on the
principle of special administrative expertise and provides the reason for judicial review, at first instance
by the appellate court, and on final study through the present petition.

In the first assignment of error, Lynvil contends that the filing of a criminal case before the
Office of the Prosecutor is sufficient basis for a valid termination of employment based on serious
misconduct and/or loss of trust and confidence relying on Nasipit Lumber Company v. NLRC.111[29]

Nasipit is about a security guard who was charged with qualified theft which charge was
dismissed by the Office of the Prosecutor. However, despite the dismissal of the complaint, he was still
terminated from his employment on the ground of loss of confidence. We ruled that proof beyond
reasonable doubt of an employee's misconduct is not required when loss of confidence is the ground for
dismissal. It is sufficient if the employer has "some basis" to lose confidence or that the employer has
reasonable ground to believe or to entertain the moral conviction that the employee concerned is
responsible for the misconduct and that the nature of his participation therein rendered him absolutely
unworthy of the trust and confidence demanded by his position.112[30] It added that the dropping of
the qualified theft charges against the respondent is not binding upon a labor tribunal.113[31]

In Nicolas v. National Labor Relations Commission,114[32] we held that a criminal conviction is
not necessary to find just cause for employment termination. Otherwise stated, an employees acquittal
in a criminal case, especially one that is grounded on the existence of reasonable doubt, will not
preclude a determination in a labor case that he is guilty of acts inimical to the employers
interests.115[33] In the reverse, the finding of probable cause is not followed by automatic adoption of
such finding by the labor tribunals.













In other words, whichever way the public prosecutor disposes of a complaint, the finding does
not bind the labor tribunal.

Thus, Lynvil cannot argue that since the Office of the Prosecutor found probable cause for theft
the Labor Arbiter must follow the finding as a valid reason for the termination of respondents
employment. The proof required for purposes that differ from one and the other are likewise different.

Nonetheless, even without reliance on the prosecutors finding, we find that there was valid
cause for respondents dismissal.

In illegal dismissal cases, the employer bears the burden of proving that the termination was
for a valid or authorized cause.116[34]

Just cause is required for a valid dismissal. The Labor Code117[35] provides that an employer
may terminate an employment based on fraud or willful breach of the trust reposed on the employee.
Such breach is considered willful if it is done intentionally, knowingly, and purposely, without justifiable
excuse, as distinguished from an act done carelessly, thoughtlessly, heedlessly or inadvertently. It must
also be based on substantial evidence and not on the employers whims or caprices or suspicions
otherwise, the employee would eternally remain at the mercy of the employer. Loss of confidence must
not be indiscriminately used as a shield by the employer against a claim that the dismissal of an
employee was arbitrary. And, in order to constitute a just cause for dismissal, the act complained of
must be work-related and shows that the employee concerned is unfit to continue working for the
employer. In addition, loss of confidence as a just cause for termination of employment is premised on
the fact that the employee concerned holds a position of responsibility, trust and confidence or that the
employee concerned is entrusted with confidence with respect to delicate matters, such as the handling
or care and protection of the property and assets of the employer. The betrayal of this trust is the
essence of the offense for which an employee is penalized.118[36]
Breach of trust is present in this case.
We agree with the ruling of the Labor Arbiter and Court of Appeals that the quantity of tubs
expected to be received was the same as that which was loaded. However, what is material is the kind
of fish loaded and then unloaded. Sameness is likewise needed.
We cannot close our eyes to the positive and clear narration of facts of the three witnesses to
the commission of qualified theft. Jonathan Distajo, a crew member of the Analyn VIII, stated in his
letter addressed to De Borja119[37] dated 8 August 1998, that while the vessel was traversing San








Nicolas, Cavite, he saw a small boat approach them. When the boat was next to their vessel,
Alcovendas went inside the stockroom while Sebullen pushed an estimated four tubs of fish away from
it. Ariola, on the other hand, served as the lookout and negotiator of the transaction. Finally, Baez
and Calinao helped in putting the tubs in the small boat. He further added that he received P800.00 as
his share for the transaction. Romanito Clarido, who was also on board the vessel, corroborated the
narration of Distajo on all accounts in his 25 August 1998 affidavit.120[38] He added that Alcovendas
told him to keep silent about what happened on that day. Sealing tight the credibility of the narration of
theft is the affidavit121[39] executed by Elorde Baez dated 3 May 1999. Baez was one of the
dismissed employees who actively participated in the taking of the tubs. He clarified in the affidavit that
the four tubs taken out of the stockroom in fact contained fish taken from the eight tubs. He further
stated that Ariola told everyone in the vessel not to say anything and instead file a labor case against
the management. Clearly, we cannot fault Lynvil and De Borja when it dismissed the employees.
The second to the fifth assignment of errors interconnect.

The nature of employment is defined in the Labor Code, thus:
Art. 280. Regular and casual employment. The provisions of written
agreement to the contrary notwithstanding and regardless of the oral
agreement of the parties, an employment shall be deemed to be regular
where the employee has been engaged to perform activities which are usually
necessary or desirable in the usual business or trade of the employer, except
where the employment has been fixed for a specific project or undertaking
the completion or termination of which has been determined at the time of
the engagement of the employee or where the work or service to be
performed is seasonal in nature and the employment is for the duration of the
season.
An employment shall be deemed to be casual if it is not covered by the
preceding paragraph: Provided, That any employee who has rendered at least
one year of service, whether such service is continuous or broken, shall be
considered a regular employee with respect to the activity in which he is
employed and his employment shall continue while such activity exists.

Lynvil contends that it cannot be guilty of illegal dismissal because the private respondents
were employed under a fixed-term contract which expired at the end of the voyage. The pertinent
provisions of the contract are:

xxxx
1. NA ako ay sumasang-ayon na maglingkod at gumawa ng mga gawain sang-
ayon sa patakarang por viaje na magmumula sa pagalis sa Navotas papunta sa
pangisdaan at pagbabalik sa pondohan ng lantsa sa Navotas, Metro Manila;
xxxx






1. NA ako ay nakipagkasundo na babayaran ang aking paglilingkod sa paraang
por viaje sa halagang P__________ isang biyahe ng kabuuang araw
xxxx.122[40]

Lynvil insists on the applicability of the case of Brent School,123[41] to wit:
Accordingly, and since the entire purpose behind the development of
legislation culminating in the present Article 280 of the Labor Code clearly appears to
have been, as already observed, to prevent circumvention of the employee's right to
be secure in his tenure, the clause in said article indiscriminately and completely ruling
out all written or oral agreements conflicting with the concept of regular employment
as defined therein should be construed to refer to the substantive evil that the Code
itself has singled out: agreements entered into precisely to circumvent security of
tenure. It should have no application to instances where a fixed period of employment
was agreed upon knowingly and voluntarily by the parties, without any force, duress
or improper pressure being brought to bear upon the employee and absent any other
circumstances vitiating his consent, or where it satisfactorily appears that the
employer and employee dealt with each other on more or less equal terms with no
moral dominance whatever being exercised by the former over the latter. Unless thus
limited in its purview, the law would be made to apply to purposes other than those
explicitly stated by its framers; it thus becomes pointless and arbitrary, unjust in its
effects and apt to lead to absurd and unintended consequences.

Contrarily, the private respondents contend that they became regular employees by reason of
their continuous hiring and performance of tasks necessary and desirable in the usual trade and
business of Lynvil.

Jurisprudence,124[42] laid two conditions for the validity of a fixed-contract agreement
between the employer and employee:
First, the fixed period of employment was knowingly and voluntarily agreed
upon by the parties without any force, duress, or improper pressure being
brought to bear upon the employee and absent any other circumstances
vitiating his consent; or
Second, it satisfactorily appears that the employer and the employee dealt
with each other on more or less equal terms with no moral dominance
exercised by the former or the latter.125[43]









Textually, the provision that: NA ako ay sumasang-ayon na maglingkod at gumawa ng mga
gawain sang-ayon sa patakarang por viaje na magmumula sa pagalis sa Navotas papunta sa
pangisdaan at pagbabalik sa pondohan ng lantsa sa Navotas, Metro Manila is for a fixed period of
employment. In the context, however, of the facts that: (1) the respondents were doing tasks
necessarily to Lynvils fishing business with positions ranging from captain of the vessel to bodegero; (2)
after the end of a trip, they will again be hired for another trip with new contracts; and (3) this
arrangement continued for more than ten years, the clear intention is to go around the security of
tenure of the respondents as regular employees. And respondents are so by the express provisions of
the second paragraph of Article 280, thus:

xxx Provided, That any employee who has rendered at least one year of service,
whether such service is continuous or broken, shall be considered a regular employee
with respect to the activity in which he is employed and his employment shall continue
while such activity exists.


The same set of circumstances indicate clearly enough that it was the need for a continued
source of income that forced the employees acceptance of the por viaje provision.

Having found that respondents are regular employees who may be, however, dismissed for
cause as we have so found in this case, there is a need to look into the procedural requirement of due
process in Section 2, Rule XXIII, Book V of the Rules Implementing the Labor Code. It is required that
the employer furnish the employee with two written notices: (1) a written notice served on the
employee specifying the ground or grounds for termination, and giving to said employee reasonable
opportunity within which to explain his side; and (2) a written notice of termination served on the
employee indicating that upon due consideration of all the circumstances, grounds have been
established to justify his termination.

From the records, there was only one written notice which required respondents to explain
within five (5) days why they should not be dismissed from the service. Alcovendas was the only one
who signed the receipt of the notice. The others, as claimed by Lynvil, refused to sign. The other
employees argue that no notice was given to them. Despite the inconsistencies, what is clear is that no
final written notice or notices of termination were sent to the employees.

The twin requirements of notice and hearing constitute the elements of [due] process in cases
of employee's dismissal. The requirement of notice is intended to inform the employee concerned of the
employer's intent to dismiss and the reason for the proposed dismissal. Upon the other hand, the
requirement of hearing affords the employee an opportunity to answer his employer's charges against
him and accordingly, to defend himself therefrom before dismissal is effected.126[44] Obviously, the
second written notice, as indispensable as the first, is intended to ensure the observance of due process.

Applying the rule to the facts at hand, we grant a monetary award of P50,000.00 as nominal
damages, this, pursuant to the fresh ruling of this Court in Culili v. Eastern Communication Philippines,




Inc.127[45] Due to the failure of Lynvil to follow the procedural requirement of two-notice rule,
nominal damages are due to respondents despite their dismissal for just cause.

Given the fact that their dismissal was for just cause, we cannot grant backwages and
separation pay to respondents. However, following the findings of the Labor Arbiter who with the
expertise presided over the proceedings below, which findings were affirmed by the Court of Appeals, we
grant the 13th month pay and salary differential of the dismissed employees.

Whether De Borja is jointly and severally liable with Lynvil

As to the last issue, this Court has ruled that in labor cases, the corporate directors and officers
are solidarily liable with the corporation for the termination of employment of employees done with
malice or in bad faith.128[46] Indeed, moral damages are recoverable when the dismissal of an
employee is attended by bad faith or fraud or constitutes an act oppressive to labor, or is done in a
manner contrary to good morals, good customs or public policy.

It has also been discussed in MAM Realty Development Corporation v. NLRC129[47] that:

x x x A corporation being a juridical entity, may act only through its directors, officers
and employees. Obligations incurred by them, acting as such corporate agents, are not
theirs but the direct accountabilities of the corporation they represent. True, solidary
liabilities may at times be incurred but only when exceptional circumstances warrant
such as, generally, in the following cases:

1. When directors and trustees or, in appropriate cases, the officers of a corporation:
xxx
(b) act in bad faith or with gross negligence in directing the corporate affairs;
x x x 130[48]

The term "bad faith" contemplates a "state of mind affirmatively operating with furtive design
or with some motive of self-interest or will or for ulterior purpose."131[49]











We agree with the ruling of both the NLRC and the Court of Appeals when they pronounced that
there was no evidence on record that indicates commission of bad faith on the part of De Borja. He is
the general manager of Lynvil, the one tasked with the supervision by the employees and the operation
of the business. However, there is no proof that he imposed on the respondents the por viaje
provision for purpose of effecting their summary dismissal.

WHEREFORE, the petition is partially GRANTED. The 10 September 2007 Decision of the
Court of Appeals in CA-G.R. SP No. 95094 reversing the Resolution dated 31 March 2004 of the National
Labor Relations Commission is hereby MODIFIED. The Court hereby rules that the employees were
dismissed for just cause by Lynvil Fishing Enterprises, Inc. and Rosendo S. De Borja, hence, the reversal
of the award for backwages and separation pay. However, we affirm the award for 13th month pay,
salary differential and grant an additional P50,000.00 in favor of the employees representing nominal
damages for petitioners non-compliance with statutory due process. No cost.

SO ORDERED.

Republic of the Philippines
Supreme Court
Manila

SECOND DIVISION

CANADIAN OPPORTUNITIES UNLIMITED, INC.,
Petitioner,




- versus -




BART Q. DALANGIN, JR.,
Respondent.
G.R. No. 172223

Present:

CARPIO, J.,
Chairperson,
BRION,
PEREZ,
SERENO, and
REYES, JJ.

Promulgated:

February 6, 2012
x------------------------------------------------------------------------------------x


DECISION

BRION, J.:







For resolution is the petition for review on certiorari132[1] to nullify the decision dated
December 19, 2005133[2] and the resolution dated March 30, 2006134[3] of the Court of Appeals (CA)
rendered in CA-G.R. SP No. 84907.

The Antecedents

On November 20, 2001, respondent Bart Q. Dalangin, Jr. filed a complaint for illegal dismissal,
with prayer for reinstatement and backwages, as well as damages (moral and exemplary) and attorneys
fees, against petitioner Canadian Opportunities Unlimited, Inc. (company). The company, based in
Pasong Tamo, Makati City, provides assistance and related services to applicants for permanent
residence in Canada.

Dalangin was hired by the company only in the previous month, or in October 2001, as
Immigration and Legal Manager, with a monthly salary of P15,000.00. He was placed on probation for
six months. He was to report directly to the Chief Operations Officer, Annie Llamanzares Abad. His tasks
involved principally the review of the clients applications for immigration to Canada to ensure that they
are in accordance with Canadian and Philippine laws.

Through a memorandum135[4] dated October 27, 2001, signed by Abad, the company
terminated Dalangins employment, declaring him unfit and unqualified to continue as Immigration
and Legal Manager, for the following reasons:

a) Obstinacy and utter disregard of company policies. Propensity to take
prolonged and extended lunch breaks, shows no interest in familiarizing
oneself with the policies and objectives.

b) Lack of concern for the companys interest despite having just been
employed in the company. (Declined to attend company sponsored activities,
seminars intended to familiarize company employees with Management
objectives and enhancement of company interest and objectives.)

c) Showed lack of enthusiasm toward work.










d) Showed lack of interest in fostering relationship with his co-
employees.136[5]





The Compulsory Arbitration Proceedings


Dalangins submission


Dalangin alleged, in his Position Paper,137[6] that the company issued a memorandum
requiring its employees to attend a Values Formation Seminar scheduled for October 27, 2001 (a
Saturday) at 2:00 p.m. onwards. He inquired from Abad about the subject and purpose of the seminar
and when he learned that it bore no relation to his duties, he told Abad that he would not attend the
seminar. He said that he would have to leave at 2:00 p.m. in order to be with his family in the province.
Dalangin claimed that Abad insisted that he attend the seminar so that the other employees would also
attend. He replied that he should not be treated similarly with the other employees as there are marked
differences between their respective positions and duties. Nonetheless, he signified his willingness to
attend the seminar, but requested Abad to have it conducted within office hours to enable everybody to
attend.

Dalangin further alleged that Abad refused his request and stressed that all company
employees may be required to stay beyond 2:00 p.m. on Saturdays which she considered still part of
office hours. Under his employment contract,138[7] his work schedule was from 9:00 a.m. to 6:00 p.m.,
Monday to Friday, and 9:00 a.m. to 2:00 p.m. on Saturdays. Dalangin argued that it has been an
established company practice that on Saturdays, office hours end at 2:00 p.m.; and that an employee
cannot be made to stay in the office beyond office hours, except under circumstances provided in Article
89 of the Labor Code.

On October 26, 2001, Dalangin claimed that Abad issued a memorandum139[8] requiring him
to explain why he could not attend the seminar scheduled for October 27, 2001 and the other
forthcoming seminars. The following day, October 27, 2001, Abad informed him that Mr. Yadi N. Sichani,
the companys Managing Director, wanted to meet with him regarding the matter. He alleged that at
the meeting, he was devastated to hear from Sichani that his services were being terminated because
Sichani could not keep in his company people who are hard-headed and who refuse to follow orders
from management.140[9] Sichani also told him that since he was a probationary employee, his
employment could be terminated at any time and at will. Sichani refused to accept his letter-reply to the
company memorandum dated October 26, 2001 and instead told him to just hand it over to Abad.










The companys defense

Through their position paper,141[10] the company and its principal officers alleged that at the
time of Dalangins engagement, he was advised that he was under probation for six months and his
employment could be terminated should he fail to meet the standards to qualify him as a regular
employee. He was informed that he would be evaluated on the basis of the results of his work; on his
attitude towards the company, his work and his co-employees, as spelled out in his job
description;142[11] and on the basis of Abads affidavit.143[12]

They further alleged that during his brief employment in the company, Dalangin showed lack of
enthusiasm towards his work and was indifferent towards his co-employees and the company clients.
Dalangin refused to comply with the companys policies and procedures, routinely taking long lunch
breaks, exceeding the one hour allotted to employees, and leaving the company premises without
informing his immediate superior, only to call the office later and say that he would be unable to return
because he had some personal matters to attend to. He also showed lack of interpersonal skills and
initiative which he manifested when the immigration application of a company client, Mrs. Jennifer
Tecson, was denied by the Canadian Embassy. Dalangin failed to provide counsel to Tecson; he also
should have found a way to appeal her denied application, but he did not. As it turned out, the
explanation he gave to Tecson led her to believe that the company did not handle her application well.
Dalangins lack of interest in the company was further manifested when he refused to attend company-
sponsored seminars designed to acquaint or update the employees with the companys policies and
objectives.

The company argued that since Dalangin failed to qualify for the position of Immigration and
Legal Manager, the company decided to terminate his services, after duly notifying him of the companys
decision and the reason for his separation.

The Compulsory Arbitration Rulings

In his decision dated April 23, 2003,144[13] Labor Arbiter Eduardo G. Magno declared
Dalangins dismissal illegal, and awarded him backwages of P75,000.00, moral damages of P50,000.00
and exemplary damages of P50,000.00, plus 10% attorneys fees. The labor arbiter found that the
charges against Dalangin, which led to his dismissal, were not established by clear and substantial proof.










On appeal by the company, the National Labor Relations Commission (NLRC) rendered a
decision on March 26, 2004145[14] granting the appeal, thereby reversing the labor arbiters ruling. It
found Dalangins dismissal to be a valid exercise of the companys management prerogative because
Dalangin failed to meet the standards for regular employment. Dalangin moved for reconsideration, but
the NLRC denied the motion, prompting him to go to the CA on a petition for certiorari under Rule 65 of
the Rules of Court.

The CA Decision

In its now assailed decision,146[15] the CA held that the NLRC erred when it ruled that
Dalangin was not illegally dismissed. As the labor arbiter did, the CA found that the company failed to
support, with substantial evidence, its claim that Dalangin failed to meet the standards to qualify as a
regular employee.

Citing a ruling of the Court in an earlier case,147[16] the CA pointed out that the company did
not allow Dalangin to prove that he possessed the qualifications to meet the reasonable standards for his
regular employment; instead, it dismissed Dalangin peremptorily from the service. It opined that it was
quite improbable that the company could fully determine Dalangins performance barely one month into
his employment.148[17]

The CA denied the companys subsequent motion for reconsideration in its resolution of March
30, 2006.149[18] Hence, this appeal.

The Companys Case












Through its submissions the Petition,150[19] the Reply151[20] and the
Memorandum152[21] the company seeks a reversal of the CA rulings, raising the following issues:
(1) whether the requirements of notice and hearing in employee dismissals are applicable to Dalangins
case; and (2) whether Dalangin is entitled to moral and exemplary damages, and attorneys fees.

On the first issue, the company argues that the notice and hearing requirements are to be
observed only in termination of employment based on just causes as defined in Article 282 of the Labor
Code. Dalangins dismissal, it maintains, was not based on a just cause under Article 282, but was due
to his failure to meet the companys standards for regular employment. It contends that under the Labor
Codes Implementing Rules and Regulations, [i]f the termination is brought about x x x by failure of an
employee to meet the standards of the employer in the case of probationary employment, it shall be
sufficient that a written notice is served the employee within a reasonable time from the effective date
of termination.153[22] It points out that it properly observed the notice requirement when it notified
Dalangin of his dismissal on October 27, 2001,154[23] after it asked him to explain (memorandum of
October 26, 2001) why he could not attend the seminar scheduled for October 27, 2001; Dalangin failed
to submit his explanation. It posits that contrary to the CAs conclusion, the companys finding that
Dalangin failed to meet its standards for regular employment was supported by substantial evidence.

With respect to the second issue, the company submits that Dalangin is not entitled to moral
and exemplary damages, and attorneys fees. It maintains that Dalangin failed to present convincing
evidence establishing bad faith or ill-motive on its part. It insists that it dismissed Dalangin in good faith
with the belief that he would not contribute any good to the company, as manifested by his behavior
towards his work and co-employees.

The Case for Dalangin












Through his Comment155[24] and Memorandum,156[25] Dalangin asks the Court to deny the
petition. He argues that (1) probationary employees, under existing laws and jurisprudence, are entitled
to notice and hearing prior to the termination of their employment; and (2) he is entitled to moral and
exemplary damages, and attorneys fees.

Dalangin disputes the companys submission that under the Labor Codes implementing rules,
only a written notice is required for the dismissal of probationary employees. He argues that the rules
cited by the company clearly mandate the employer to (1) serve the employee a written notice and (2)
within a reasonable time before effecting the dismissal. He stresses that for the dismissal to be valid,
these requirements must go hand in hand.

He explains that in the present case, the company did not observe the above two requirements
as he was dismissed the day after he was asked, by way of a memorandum dated October 26,
2001,157[26] to explain within twenty-four hours why he could not attend the October 27, 2001
seminar. He adds that on the assumption that the termination letter dated October 27, 2001 refers to
the written notice contemplated under the rules, still the company did not observe the second
requirement of providing him a reasonable time before he was dismissed. He posits that the company
disregarded the security of tenure guarantee under the Constitution which makes no distinction between
regular and probationary employees.

On the companys claim that he failed to perform in accordance with its standards, Dalangin
argues that a perusal of the grounds in support of his dismissal reveals that none of the charges
leveled against him is supported by concrete and tangible evidence. He maintains that the company
miserably failed to cite a single company policy which he allegedly violated and defied. He refutes the
companys claim that his job description and his employment contract apprise him of the company policy
that he is to observe for the duration of his employment. He, thus, maintains that he had not been
previously informed of the company standards he was supposed to satisfy. He stresses that the CA did
not err in holding that the companys general averments regarding his failure to meet its standards for
regular employment were not corroborated by any other evidence and, therefore, are insufficient to
justify his dismissal.

Dalangin insists that he is entitled to backwages, moral and exemplary damages, as well as
attorneys fees, claiming that his dismissal was unjust, oppressive, tainted with bad faith, and contrary
to existing morals, good customs and public policy. There was bad faith, he argues, because he was
dismissed without the requisite notice and hearing required under the law; and merely on the basis of
the companys bare, sweeping and general allegations that he is difficult to deal with and that he might
cause problems to the companys future business operations. He is entitled to attorneys fees, he
submits, because he was forced to litigate and vindicate his rights.








He bewails what he considers as a pre-conceived plan and determined design158[27] on the
part of Sichani and Abad to immediately terminate his employment. Elaborating, he points out that the
company, through Abad, prepared two memoranda, both dated October 26, 2001, one is the memo to
him requiring his written explanation159[28] and the other, addressed to Sichani, recommending his
dismissal.160[29] He was surprised that Sichani did not bother to ask Abad why she gave him two
conflicting memos on the same day; neither did Sichani or Abad investigate the surrounding
circumstances on the matter nor did they give him the opportunity to explain his side.

The Courts Ruling

As a rule, the Court is not a trier of facts, the resolution of factual issues being the function of
lower courts whose findings are received with respect and are binding on the Court subject to certain
exceptions.161[30] A recognized exception to the rule is the circumstance in which there are conflicting
findings of fact by the CA, on the one hand, and the trial court or government agency concerned, on the
other, as in the present case. The factual findings of the NLRC on the dispute between Dalangin and the
company are at variance with those of the CA, thus necessitating our review of the case, especially the
evidence on record.162[31]

We now resolve the core issue of whether Dalangin, a probationary employee, was
validly dismissed.

In International Catholic Migration Commission v. NLRC,163[32] the Court explained that a
probationary employee, as understood under Article 281 of the Labor Code, is one who is on trial by an












employer, during which, the latter determines whether or not he is qualified for permanent employment.
A probationary appointment gives the employer an opportunity to observe the fitness of a probationer
while at work, and to ascertain whether he would be a proper and efficient employee.

Dalangin was barely a month on the job when the company terminated his employment. He
was found wanting in qualities that would make him a proper and efficient employee or, as the
company put it, he was unfit and unqualified to continue as its Immigration and Legal Manager.

Dalangins dismissal was viewed differently by the NLRC and the CA. The NLRC upheld the
dismissal as it was, it declared, in the exercise of the companys management prerogative. On the other
hand, the CA found that the dismissal was not supported by substantial evidence and that the company
did not allow Dalangin to prove that he had the qualifications to meet the companys standards for his
regular employment. The CA did not believe that the company could fully assess Dalangins
performance within a month. It viewed Dalangins dismissal as arbitrary, considering that the company
had very little time to determine his fitness for the job.

We disagree.

The essence of a probationary period of employment fundamentally lies in the purpose or
objective of both the employer and the employee during the period. While the employer observes the
fitness, propriety and efficiency of a probationer to ascertain whether he is qualified for permanent
employment, the latter seeks to prove to the former that he has the qualifications to meet the
reasonable standards for permanent employment.164[33]

The trial period or the length of time the probationary employee remains on probation
depends on the parties agreement, but it shall not exceed six (6) months under Article 281 of the Labor
Code, unless it is covered by an apprenticeship agreement stipulating a longer period. Article 281
provides:

Probationary employment. Probationary employment shall not exceed
six (6) months from the date the employee started working, unless it is covered by an
apprenticeship agreement stipulating a longer period. The services of an employee
who has been engaged on a probationary basis may be terminated for a just cause or
when he fails to qualify as a regular employee in accordance with reasonable
standards made known by the employer to the employee at the time of his
engagement. An employee who is allowed to work after a probationary period shall be
considered a regular employee.


As the Court explained in International Catholic Migration Commission, the word
probationary, as used to describe the period of employment, implies the purpose of the term or period,
but not its length.165[34] Thus, the fact that Dalangin was separated from the service after only about
four weeks does not necessarily mean that his separation from the service is without basis.






Contrary to the CAs conclusions, we find substantial evidence indicating that the company was
justified in terminating Dalangins employment, however brief it had been. Time and again, we have
emphasized that substantial evidence is such relevant evidence as a reasonable mind might accept as
adequate to support a conclusion.166[35]

Dalangin overlooks the fact, wittingly or unwittingly, that he offered glimpses of his own
behavior and actuations during his four-week stay with the company; he betrayed his negative attitude
and regard for the company, his co-employees and his work.

Dalangin admitted in compulsory arbitration that the proximate cause for his dismissal was his
refusal to attend the companys Values Formation Seminar scheduled for October 27, 2001, a
Saturday. He refused to attend the seminar after he learned that it had no relation to his duties, as he
claimed, and that he had to leave at 2:00 p.m. because he wanted to be with his family in the province.
When Abad insisted that he attend the seminar to encourage his co-employees to attend, he stood pat
on not attending, arguing that marked differences exist between their positions and duties, and
insinuating that he did not want to join the other employees. He also questioned the scheduled 2:00
p.m. seminars on Saturdays as they were not supposed to be doing a company activity beyond 2:00
p.m. He considers 2:00 p.m. as the close of working hours on Saturdays; thus, holding them beyond
2:00 p.m. would be in violation of the law.

The Values Formation Seminar incident is an eye-opener on the kind of person and employee
Dalangin was. His refusal to attend the seminar brings into focus and validates what was wrong with
him, as Abad narrated in her affidavit167[36] and as reflected in the termination of employment
memorandum.168[37] It highlights his lack of interest in familiarizing himself with the companys
objectives and policies. Significantly, the seminar involved acquainting and updating the employees with
the companys policies and objectives. Had he attended the seminar, Dalangin could have broadened
his awareness of the companys policies, in addition to Abads briefing him about the companys policies
on punctuality and attendance, and the procedures to be followed in handling the clients applications.
No wonder the company charged him with obstinacy.

The incident also reveals Dalangins lack of interest in establishing good working relationship
with his co-employees, especially the rank and file; he did not want to join them because of his view
that the seminar was not relevant to his position and duties. It also betrays an arrogant and








condescending attitude on his part towards his co-employees, and a lack of support for the company
objective that company managers be examples to the rank and file employees.

Additionally, very early in his employment, Dalangin exhibited negative working habits,
particularly with respect to the one hour lunch break policy of the company and the observance of the
companys working hours. Thus, Abad stated that Dalangin would take prolonged lunch breaks or would
go out of the office without leave of the company only to call the personnel manager later to inform
the latter that he would be unable to return as he had to attend to personal matters. Without expressly
countering or denying Abads statement, Dalangin dismissed the charge for the companys failure to
produce his daily time record.169[38]

The same thing is true with Dalangins handling of Tecsons application for immigration to
Canada, especially his failure to find ways to appeal the denial of Tecsons application, as Abad stated in
her affidavit. Again, without expressly denying Abads statement or explaining exactly what he did with
Tecsons application, Dalangin brushes aside Abads insinuation that he was not doing his job well, with
the ready argument that the company did not even bother to present Tecsons testimony.

In the face of Abads direct statements, as well as those of his co-employees, it is puzzling that
Dalangin chose to be silent about the charges, other than saying that the company could not cite any
policy he violated. All along, he had been complaining that he was not able to explain his side, yet from
the labor arbiters level, all the way to this Court, he offered no satisfactory explanation of the charges.
In this light, coupled with Dalangins adamant refusal to attend the companys Values Formation
Seminar and a similar program scheduled earlier, we find credence in the companys submission that
Dalangin was unfit to continue as its Immigration and Legal Manager. As we stressed earlier, we are
convinced that the company had seen enough from Dalangins actuations, behavior and deportment
during a four-week period to realize that Dalangin would be a liability rather than an asset to its
operations.

We, therefore, disagree with the CA that the company could not have fully determined
Dalangins performance barely one month into his employment. As we said in International Catholic
Migration Commission, the probationary term or period denotes its purpose but not its length. To our
mind, four weeks was enough for the company to assess Dalangins fitness for the job and he was found
wanting. In separating Dalangin from the service before the situation got worse, we find the
company not liable for illegal dismissal.

The procedural due process issue

Section 2, Rule I, Book VI of the Labor Codes Implementing Rules and Regulations provides:

If the termination is brought about by the completion of a contract or phase
thereof, or by failure of an employee to meet the standards of the employer in the
case of probationary employment, it shall be sufficient that a written notice is served
the employee within a reasonable time from the effective date of termination.


The company contends that it complied with the above rule when it asked Dalangin, through
Abads Memorandum dated October 26, 2001,170[39] to explain why he could not attend the seminar




scheduled for October 27, 2001. When he failed to submit his explanation, the company, again through
Abad, served him a notice the following day, October 27, 2001, terminating his employment. Dalangin
takes strong exception to the companys submission. He insists that the company failed to comply with
the rules as he was not afforded a reasonable time to defend himself before he was dismissed.

The records support Dalangins contention. The notice served on him did not give him a
reasonable time, from the effective date of his separation, as required by the rules. He was dismissed on
the very day the notice was given to him, or, on October 27, 2001. Although we cannot invalidate his
dismissal in light of the valid cause for his separation, the companys non-compliance with the notice
requirement entitles Dalangin to indemnity, in the form of nominal damages in an amount subject to our
discretion.171[40] Under the circumstances, we consider appropriate an award of nominal damages of
P10,000.00 to Dalangin.

Damages and attorneys fees

Finally, given the valid reason for Dalangins dismissal, the claim for moral and exemplary
damages, as well as attorneys fees, must necessarily fail.

WHEREFORE, premises considered, the petition is hereby GRANTED. The assailed decision
and resolution of the Court of Appeals are hereby SET ASIDE. The complaint is DISMISSED for lack of
merit.

Petitioner Canadian Opportunities Unlimited, Inc. is DIRECTED to pay respondent Bart Q.
Dalangin, Jr. nominal damages in the amount of P10,000.00.

Costs against the respondent.





SO ORDERED.

Republic of the Philippines
SUPREME COURT
Baguio City

THIRD DIVISION

ARMANDO ALILING,
Petitioner,


- versus -


JOSE B. FELICIANO, MANUEL BERSAMIN, JJ.
F. SAN MATEO III, JOSEPH R.
LARIOSA, and WIDE WIDE Promulgated:
WORLD EXPRESS CORPORATION,
Respondents.
G.R. No. 185829

Present:

VELASCO, JR., J., Chairperson
PERALTA,
ABAD,
MENDOZA, and
PERLAS-BERNABE, JJ.


Promulgated:

April 25, 2012
x-----------------------------------------------------------------------------------------x

D E C I S I O N


VELASCO, JR., J.:

The Case


This Petition for Review on Certiorari under Rule 45 assails and seeks to set aside the July 3,
2008 Decision172[1] and December 15, 2008 Resolution173[2] of the Court of Appeals (CA), in CA-G.R.
SP No. 101309, entitled Armando Aliling v. National Labor Relations Commission, Wide Wide World
Express Corporation, Jose B. Feliciano, Manuel F. San Mateo III and Joseph R. Lariosa. The assailed
issuances modified the Resolutions dated May 31, 2007174[3] and August 31, 2007175[4] rendered by







the National Labor Relations Commission (NLRC) in NLRC NCR Case No. 00-10-11166-2004, affirming
the Decision dated April 25, 2006176[5] of the Labor Arbiter.
The Facts

Via a letter dated June 2, 2004,177[6] respondent Wide Wide World Express Corporation
(WWWEC) offered to employ petitioner Armando Aliling (Aliling) as Account Executive (Seafreight
Sales), with the following compensation package: a monthly salary of PhP 13,000, transportation
allowance of PhP 3,000, clothing allowance of PhP 800, cost of living allowance of PhP 500, each
payable on a per month basis and a 14th month pay depending on the profitability and availability of
financial resources of the company. The offer came with a six (6)-month probation period condition with
this express caveat: Performance during [sic] probationary period shall be made as basis for
confirmation to Regular or Permanent Status.

On June 11, 2004, Aliling and WWWEC inked an Employment Contract178[7] under the
following terms, among others:

Conversion to regular status shall be determined on the basis of work performance; and

Employment services may, at any time, be terminated for just cause or in accordance
with the standards defined at the time of engagement.179[8]

Training then started. However, instead of a Seafreight Sale assignment, WWWEC asked Aliling
to handle Ground Express (GX), a new company product launched on June 18, 2004 involving domestic
cargo forwarding service for Luzon. Marketing this product and finding daily contracts for it formed the
core of Alilings new assignment.

Barely a month after, Manuel F. San Mateo III (San Mateo), WWWEC Sales and Marketing
Director, emailed Aliling180[9] to express dissatisfaction with the latters performance, thus:












Armand,

My expectations is [sic] that GX Shuttles should be 80% full by the 3rd week (August
5) after launch (July 15). Pls. make that happen. It has been more than a month since
you came in. I am expecting sales to be pumping in by now. Thanks.

Nonong

Thereafter, in a letter of September 25, 2004,181[10] Joseph R. Lariosa (Lariosa), Human
Resources Manager of WWWEC, asked Aliling to report to the Human Resources Department to explain
his absence taken without leave from September 20, 2004.

Aliling responded two days later. He denied being absent on the days in question, attaching to
his reply-letter182[11] a copy of his timesheet183[12] which showed that he worked from September
20 to 24, 2004. Alilings explanation came with a query regarding the withholding of his salary
corresponding to September 11 to 25, 2004.

In a separate letter dated September 27, 2004,184[13] Aliling wrote San Mateo stating:
Pursuant to your instruction on September 20, 2004, I hereby tender my resignation effective October
15, 2004. While WWWEC took no action on his tender, Aliling nonetheless demanded reinstatement and
a written apology, claiming in a subsequent letter dated October 1, 2004185[14] to management that
San Mateo had forced him to resign.













Lariosas response-letter of October 1, 2004,186[15] informed Aliling that his case was still in
the process of being evaluated. On October 6, 2004,187[16] Lariosa again wrote, this time to advise
Aliling of the termination of his services effective as of that date owing to his non-satisfactory
performance during his probationary period. Records show that Aliling, for the period indicated, was
paid his outstanding salary which consisted of:

PhP 4,988.18 (salary for the September 25, 2004 payroll)
1,987.28 (salary for 4 days in October 2004)
-------------
PhP 6,975.46 Total

Earlier, however, or on October 4, 2004, Aliling filed a Complaint188[17] for illegal dismissal
due to forced resignation, nonpayment of salaries as well as damages with the NLRC against WWWEC.
Appended to the complaint was Alilings Affidavit dated November 12, 2004,189[18] in which he stated:
5. At the time of my engagement, respondents did not make known to me the standards under which I
will qualify as a regular employee.

Refuting Alilings basic posture, WWWEC stated in its Position Paper dated November 22,
2004190[19] that, in addition to the letter-offer and employment contract adverted to, WWWEC and
Aliling have signed a letter of appointment191[20] on June 11, 2004 containing the following terms of
engagement:














Additionally, upon the effectivity of your probation, you and your immediate
superior are required to jointly define your objectives compared with the job
requirements of the position. Based on the pre-agreed objectives, your performance
shall be reviewed on the 3rd month to assess your competence and work
attitude. The 5th month Performance Appraisal shall be the basis in elevating
or confirming your employment status from Probationary to Regular.

Failure to meet the job requirements during the probation stage means that your
services may be terminated without prior notice and without recourse to separation
pay.

WWWEC also attached to its Position Paper a memo dated September 20, 2004192[21] in
which San Mateo asked Aliling to explain why he should not be terminated for failure to meet the
expected job performance, considering that the load factor for the GX Shuttles for the period July to
September was only 0.18% as opposed to the allegedly agreed upon load of 80% targeted for August 5,
2004. According to WWWEC, Aliling, instead of explaining himself, simply submitted a resignation letter.

In a Reply-Affidavit dated December 13, 2004,193[22] Aliling denied having received a copy of
San Mateos September 20, 2004 letter.

Issues having been joined, the Labor Arbiter issued on April 25, 2006194[23] a Decision
declaring Alilings termination as unjustified. In its pertinent parts, the decision reads:

The grounds upon which complainants dismissal was based did not conform
not only the standard but also the compliance required under Article 281 of the Labor
Code, Necessarily, complainants termination is not justified for failure to comply with
the mandate the law requires. Respondents should be ordered to pay salaries
corresponding to the unexpired portion of the contract of employment and all
other benefits amounting to a total of THIRTY FIVE THOUSAND EIGHT HUNDRED
ELEVEN PESOS (P35,811.00) covering the period from October 6 to December 7,
2004, computed as follows:


Unexpired Portion of the Contract:

Basic Salary P13,000.00
Transportation 3,000.00
Clothing Allowance 800.00







ECOLA 500.00
--------------
P17,300.00


10/06/04 12/07/04
P17,300.00 x 2.7 mos. = P35,811.00

Complainants 13th month pay proportionately for 2004 was not shown to
have been paid to complainant, respondent be made liable to him therefore computed
at SIX THOUSAND FIVE HUNDRED THIRTY TWO PESOS AND 50/100 (P6,532.50).

For engaging the services of counsel to protect his interest, complainant is
likewise entitled to a 10% attorneys fees of the judgment amount. Such other claims
for lack of basis sufficient to support for their grant are unwarranted.

WHEREFORE, judgment is hereby rendered ordering respondent company to
pay complainant Armando Aliling the sum of THIRTY FIVE THOUSAND EIGHT
HUNDRED ELEVEN PESOS (P35,811.00) representing his salaries and other benefits as
discussed above.

Respondent company is likewise ordered to pay said complainant the amount
of TEN THOUSAND SEVEN HUNDRED SIXTY SIX PESOS AND 85/100 ONLY (10.766.85)
representing his proportionate 13th month pay for 2004 plus 10% of the total
judgment as and by way of attorneys fees.

Other claims are hereby denied for lack of merit. (Emphasis supplied.)


The labor arbiter gave credence to Alilings allegation about not receiving and, therefore, not
bound by, San Mateos purported September 20, 2004 memo. The memo, to reiterate, supposedly
apprised Aliling of the sales quota he was, but failed, to meet. Pushing the point, the labor arbiter
explained that Aliling cannot be validly terminated for non-compliance with the quota threshold absent a
prior advisory of the reasonable standards upon which his performance would be evaluated.

Both parties appealed the above decision to the NLRC, which affirmed the Decision in toto in its
Resolution dated May 31, 2007. The separate motions for reconsideration were also denied by the NLRC
in its Resolution dated August 31, 2007.

Therefrom, Aliling went on certiorari to the CA, which eventually rendered the assailed Decision,
the dispositive portion of which reads:
WHEREFORE, the petition is PARTLY GRANTED. The assailed Resolutions of
respondent (Third Division) National Labor Relations Commission are AFFIRMED, with
the following MODIFICATION/CLARIFICATION: Respondents Wide Wide World Express
Corp. and its officers, Jose B. Feliciano, Manuel F. San Mateo III and Joseph R. Lariosa,
are jointly and severally liable to pay petitioner Armando Aliling: (A) the sum of
Forty Two Thousand Three Hundred Thirty Three & 50/100 (P42,333.50) as the total
money judgment, (B) the sum of Four Thousand Two Hundred Thirty Three & 35/100
(P4,233.35) as attorneys fees, and (C) the additional sum equivalent to one-half (1/2)
month of petitioners salary as separation pay.

SO ORDERED.195[24] (Emphasis supplied.)




The CA anchored its assailed action on the strength of the following premises: (a) respondents
failed to prove that Alilings dismal performance constituted gross and habitual neglect necessary to
justify his dismissal; (b) not having been informed at the time of his engagement of the reasonable
standards under which he will qualify as a regular employee, Aliling was deemed to have been hired
from day one as a regular employee; and (c) the strained relationship existing between the parties
argues against the propriety of reinstatement.

Alilings motion for reconsideration was rejected by the CA through the assailed Resolution
dated December 15, 2008.

Hence, the instant petition.

The Issues

Aliling raises the following issues for consideration:

A. The failure of the Court of Appeals to order reinstatement (despite its
finding that petitioner was illegally dismissed from employment) is contrary to law and
applicable jurisprudence.

B. The failure of the Court of Appeals to award backwages (even if it did
not order reinstatement) is contrary to law and applicable jurisprudence.
C. The failure of the Court of Appeals to award moral and exemplary
damages (despite its finding that petitioner was dismissed to prevent the acquisition of
his regular status) is contrary to law and applicable jurisprudence.196[25]

In their Comment,197[26] respondents reiterated their position that WWWEC hired petitioner
on a probationary basis and fired him before he became a regular employee.

The Courts Ruling

The petition is partly meritorious.

Petitioner is a regular employee

On a procedural matter, petitioner Aliling argues that WWWEC, not having appealed from the
judgment of CA which declared Aliling as a regular employee from the time he signed the employment
contract, is now precluded from questioning the appellate courts determination as to the nature of his
employment.







Petitioner errs. The Court has, when a case is on appeal, the authority to review matters not
specifically raised or assigned as error if their consideration is necessary in reaching a just conclusion of
the case. We said as much in Sociedad Europea de Financiacion, SA v. Court of Appeals,198[27] It is
axiomatic that an appeal, once accepted by this Court, throws the entire case open to review, and that
this Court has the authority to review matters not specifically raised or assigned as error by the parties,
if their consideration is necessary in arriving at a just resolution of the case.


The issue of whether or not petitioner was, during the period material, a probationary or
regular employee is of pivotal import. Its resolution is doubtless necessary at arriving at a fair and just
disposition of the controversy.

The Labor Arbiter cryptically held in his decision dated April 25, 2006 that:

Be that as it may, there appears no showing that indeed the said September
20, 2004 Memorandum addressed to complainant was received by him. Moreover,
complainants tasked where he was assigned was a new developed service. In this
regard, it is noted:

Due process dictates that an employee be apprised beforehand of
the conditions of his employment and of the terms of advancement therein.
Precisely, implicit in Article 281 of the Labor Code is the requirement that
reasonable standards be previously made known by the employer to the
employee at the time of his engagement (Ibid, citing Sameer Overseas
Placement Agency, Inc. vs. NLRC, G.R. No. 132564, October 20,
1999).199[28]

From our review, it appears that the labor arbiter, and later the NLRC, considered Aliling a
probationary employee despite finding that he was not informed of the reasonable standards by which
his probationary employment was to be judged.

The CA, on the other hand, citing Cielo v. National Labor Relations Commission,200[29] ruled
that petitioner was a regular employee from the outset inasmuch as he was not informed of the
standards by which his probationary employment would be measured. The CA wrote:

Petitioner was regularized from the time of the execution of the employment
contract on June 11, 2004, although respondent company had arbitrarily shortened his







tenure. As pointed out, respondent company did not make known the
reasonable standards under which he will qualify as a regular employee at
the time of his engagement. Hence, he was deemed to have been hired from
day one as a regular employee.201[30] (Emphasis supplied.)

WWWEC, however, excepts on the argument that it put Aliling on notice that he would be
evaluated on the 3rd and 5th months of his probationary employment. To WWWEC, its efforts translate
to sufficient compliance with the requirement that a probationary worker be apprised of the reasonable
standards for his regularization. WWWEC invokes the ensuing holding in Alcira v. National Labor
Relations Commission202[31] to support its case:

Conversely, an employer is deemed to substantially comply with the rule on
notification of standards if he apprises the employee that he will be subjected to a
performance evaluation on a particular date after his hiring. We agree with the labor
arbiter when he ruled that:

In the instant case, petitioner cannot successfully say that he was
never informed by private respondent of the standards that he must satisfy in
order to be converted into regular status. This rans (sic) counter to the
agreement between the parties that after five months of service the
petitioners performance would be evaluated. It is only but natural that
the evaluation should be made vis--vis the performance standards for the
job. Private respondent Trifona Mamaradlo speaks of such standard in her
affidavit referring to the fact that petitioner did not perform well in his
assigned work and his attitude was below par compared to the companys
standard required of him. (Emphasis supplied.)

WWWECs contention is untenable.

Alcira is cast under a different factual setting. There, the labor arbiter, the NLRC, the CA, and
even finally this Court were one in their findings that the employee concerned knew, having been duly
informed during his engagement, of the standards for becoming a regular employee. This is in stark
contrast to the instant case where the element of being informed of the regularizing standards does not
obtain. As such, Alcira cannot be made to apply to the instant case.

To note, the June 2, 2004 letter-offer itself states that the regularization standards or the
performance norms to be used are still to be agreed upon by Aliling and his supervisor. WWWEC
has failed to prove that an agreement as regards thereto has been reached. Clearly then, there were
actually no performance standards to speak of. And lest it be overlooked, Aliling was assigned to GX
trucking sales, an activity entirely different to the Seafreight Sales he was originally hired and trained
for. Thus, at the time of his engagement, the standards relative to his assignment with GX sales could
not have plausibly been communicated to him as he was under Seafreight Sales. Even for this reason
alone, the conclusion reached in Alcira is of little relevant to the instant case.






Based on the facts established in this case in light of extant jurisprudence, the CAs holding as
to the kind of employment petitioner enjoyed is correct. So was the NLRC ruling, affirmatory of that of
the labor arbiter. In the final analysis, one common thread runs through the holding of the labor arbiter,
the NLRC and the CA, i.e., petitioner Aliling, albeit hired from managements standpoint as a
probationary employee, was deemed a regular employee by force of the following self-explanatory
provisions:

Article 281 of the Labor Code

ART. 281. Probationary employment. - Probationary employment shall not
exceed six (6) months from the date the employee started working, unless it is
covered by an apprenticeship agreement stipulating a longer period. The services of an
employee who has been engaged on a probationary basis may be terminated for a just
cause or when he fails to qualify as a regular employee in accordance with
reasonable standards made known by the employer to the employee at the
time of his engagement. An employee who is allowed to work after a probationary
period shall be considered a regular employee. (Emphasis supplied.)

Section 6(d) of the Implementing Rules of Book VI, Rule VIII-A of the Labor
Code

Sec. 6. Probationary employment. There is probationary employment where
the employee, upon his engagement, is made to undergo a trial period where the
employee determines his fitness to qualify for regular employment, based on
reasonable standards made known to him at the time of engagement.
Probationary employment shall be governed by the following rules:

x x x x

(d) In all cases of probationary employment, the employer shall make
known to the employee the standards under which he will qualify as a regular
employee at the time of his engagement. Where no standards are made
known to the employee at that time, he shall be deemed a regular employee.
(Emphasis supplied.)

To repeat, the labor arbiter, NLRC and the CA are agreed, on the basis of documentary
evidence adduced, that respondent WWWEC did not inform petitioner Aliling of the reasonable standards
by which his probation would be measured against at the time of his engagement. The Court is loathed
to interfere with this factual determination. As We have held:

Settled is the rule that the findings of the Labor Arbiter, when
affirmed by the NLRC and the Court of Appeals, are binding on the Supreme
Court, unless patently erroneous. It is not the function of the Supreme Court to
analyze or weigh all over again the evidence already considered in the proceedings
below. The jurisdiction of this Court in a petition for review on certiorari is limited to
reviewing only errors of law, not of fact, unless the factual findings being assailed are
not supported by evidence on record or the impugned judgment is based on a
misapprehension of facts.203[32]





The more recent Peafrancia Tours and Travel Transport, Inc., v. Sarmiento204[33] has
reaffirmed the above ruling, to wit:

Finally, the CA affirmed the ruling of the NLRC and adopted as its own the
latter's factual findings. Long-established is the doctrine that findings of fact of quasi-
judicial bodies x x x are accorded respect, even finality, if supported by substantial
evidence. When passed upon and upheld by the CA, they are binding and conclusive
upon this Court and will not normally be disturbed. Though this doctrine is not without
exceptions, the Court finds that none are applicable to the present case.

WWWEC also cannot validly argue that the factual findings being assailed are not
supported by evidence on record or the impugned judgment is based on a misapprehension of
facts. Its very own letter-offer of employment argues against its above posture. Excerpts of the letter-
offer:

Additionally, upon the effectivity of your probation, you and your
immediate superior are required to jointly define your objectives compared
with the job requirements of the position. Based on the pre-agreed objectives,
your performance shall be reviewed on the 3rd month to assess your competence and
work attitude. The 5th month Performance Appraisal shall be the basis in elevating or
confirming your employment status from Probationary to Regular.

Failure to meet the job requirements during the probation stage means that
your services may be terminated without prior notice and without recourse to
separation pay. (Emphasis supplied.)


Respondents further allege that San Mateos email dated July 16, 2004 shows that the
standards for his regularization were made known to petitioner Aliling at the time of his engagement. To
recall, in that email message, San Mateo reminded Aliling of the sales quota he ought to meet as a
condition for his continued employment, i.e., that the GX trucks should already be 80% full by August 5,
2004. Contrary to respondents contention, San Mateos email cannot support their allegation on Aliling
being informed of the standards for his continued employment, such as the sales quota, at the time of
his engagement. As it were, the email message was sent to Aliling more than a month after he signed
his employment contract with WWWEC. The aforequoted Section 6 of the Implementing Rules of Book
VI, Rule VIII-A of the Code specifically requires the employer to inform the probationary employee of
such reasonable standards at the time of his engagement, not at any time later; else, the latter shall
be considered a regular employee. Thus, pursuant to the explicit provision of Article 281 of the Labor
Code, Section 6(d) of the Implementing Rules of Book VI, Rule VIII-A of the Labor Code and settled
jurisprudence, petitioner Aliling is deemed a regular employee as of June 11, 2004, the date of his
employment contract.



Petitioner was illegally dismissed




To justify fully the dismissal of an employee, the employer must, as a rule, prove that the
dismissal was for a just cause and that the employee was afforded due process prior to dismissal. As a
complementary principle, the employer has the onus of proving with clear, accurate, consistent, and
convincing evidence the validity of the dismissal.205[34]

WWWEC had failed to discharge its twin burden in the instant case.

First off, the attendant circumstances in the instant case aptly show that the issue of
petitioners alleged failure to achieve his quota, as a ground for terminating employment, strikes the
Court as a mere afterthought on the part of WWWEC. Consider: Lariosas letter of September 25, 2004
already betrayed managements intention to dismiss the petitioner for alleged unauthorized absences.
Aliling was in fact made to explain and he did so satisfactorily. But, lo and behold, WWWEC nonetheless
proceeded with its plan to dismiss the petitioner for non-satisfactory performance, although the
corresponding termination letter dated October 6, 2004 did not even specifically state Alilings non-
satisfactory performance, or that Alilings termination was by reason of his failure to achieve his set
quota.

What WWWEC considered as the evidence purportedly showing it gave Aliling the chance to
explain his inability to reach his quota was a purported September 20, 2004 memo of San Mateo
addressed to the latter. However, Aliling denies having received such letter and WWWEC has failed to
refute his contention of non-receipt. In net effect, WWWEC was at a loss to explain the exact just reason
for dismissing Aliling.

At any event, assuming for argument that the petitioner indeed failed to achieve his sales
quota, his termination from employment on that ground would still be unjustified.

Article 282 of the Labor Code considers any of the following acts or omission on the part of the
employee as just cause or ground for terminating employment:

(a) Serious misconduct or willful disobedience by the employee of the lawful
orders of his employer or representative in connection with his work;

(b) Gross and habitual neglect by the employee of his duties;

(c) Fraud or willful breach by the employee of the trust reposed in him by his
employer or duly authorized representative;

(d) Commission of a crime or offense by the employee against the person of
his employer or any immediate member of his family or his duly authorized
representatives; and

(e) Other causes analogous to the foregoing. (Emphasis supplied)

In Lim v. National Labor Relations Commission,206[35] the Court considered inefficiency as an
analogous just cause for termination of employment under Article 282 of the Labor Code:





We cannot but agree with PEPSI that gross inefficiency falls within
the purview of other causes analogous to the foregoing, this constitutes,
therefore, just cause to terminate an employee under Article 282 of the Labor
Code. One is analogous to another if it is susceptible of comparison with the latter
either in general or in some specific detail; or has a close relationship with the latter.
Gross inefficiency is closely related to gross neglect, for both involve specific acts
of omission on the part of the employee resulting in damage to the employer or to his
business. In Buiser vs. Leogardo, this Court ruled that failure to observed prescribed
standards to inefficiency may constitute just cause for dismissal. (Emphasis supplied.)

It did so anew in Leonardo v. National Labor Relations Commission207[36] on the following
rationale:
An employer is entitled to impose productivity standards for its workers, and in
fact, non-compliance may be visited with a penalty even more severe than demotion.
Thus,

[t]he practice of a company in laying off workers because they
failed to make the work quota has been recognized in this
jurisdiction. (Philippine American Embroideries vs. Embroidery and Garment
Workers, 26 SCRA 634, 639). In the case at bar, the petitioners' failure to
meet the sales quota assigned to each of them constitute a just cause of their
dismissal, regardless of the permanent or probationary status of their
employment. Failure to observe prescribed standards of work, or to
fulfill reasonable work assignments due to inefficiency may constitute
just cause for dismissal. Such inefficiency is understood to mean failure to
attain work goals or work quotas, either by failing to complete the same
within the allotted reasonable period, or by producing unsatisfactory results.
This management prerogative of requiring standards may be availed
of so long as they are exercised in good faith for the advancement of
the employer's interest. (Emphasis supplied.)

In fine, an employees failure to meet sales or work quotas falls under the concept of gross
inefficiency, which in turn is analogous to gross neglect of duty that is a just cause for dismissal under
Article 282 of the Code. However, in order for the quota imposed to be considered a valid productivity
standard and thereby validate a dismissal, managements prerogative of fixing the quota must be
exercised in good faith for the advancement of its interest. The duty to prove good faith, however, rests
with WWWEC as part of its burden to show that the dismissal was for a just cause. WWWEC must show
that such quota was imposed in good faith. This WWWEC failed to do, perceptibly because it could not.
The fact of the matter is that the alleged imposition of the quota was a desperate attempt to lend a
semblance of validity to Alilings illegal dismissal. It must be stressed that even WWWECs sales
manager, Eve Amador (Amador), in an internal e-mail to San Mateo, hedged on whether petitioner
performed below or above expectation:

Could not quantify level of performance as he as was tasked to handle a new product
(GX). Revenue report is not yet administered by IT on a month-to-month basis.




Moreover, this in a way is an experimental activity. Practically you have a close
monitoring with Armand with regards to his performance. Your assessment of him
would be more accurate.

Being an experimental activity and having been launched for the first time, the sales of GX
services could not be reasonably quantified. This would explain why Amador implied in her email that
other bases besides sales figures will be used to determine Alilings performance. And yet, despite such
a neutral observation, Aliling was still dismissed for his dismal sales of GX services. In any event,
WWWEC failed to demonstrate the reasonableness and the bona fides on the quota imposition.

Employees must be reminded that while probationary employees do not enjoy permanent
status, they enjoy the constitutional protection of security of tenure. They can only be terminated for
cause or when they otherwise fail to meet the reasonable standards made known to them by the
employer at the time of their engagement.208[37] Respondent WWWEC miserably failed to prove the
termination of petitioner was for a just cause nor was there substantial evidence to demonstrate the
standards were made known to the latter at the time of his engagement. Hence, petitioners right to
security of tenure was breached.

Alilings right to procedural due process was violated

As earlier stated, to effect a legal dismissal, the employer must show not only a valid ground
therefor, but also that procedural due process has properly been observed. When the Labor Code speaks
of procedural due process, the reference is usually to the two (2)-written notice rule envisaged in
Section 2 (III), Rule XXIII, Book V of the Omnibus Rules Implementing the Labor Code, which provides:

Section 2. Standard of due process: requirements of notice. In all cases of
termination of employment, the following standards of due process shall be
substantially observed.

I. For termination of employment based on just causes as defined in Article
282 of the Code:
(a) A written notice served on the employee specifying the ground or
grounds for termination, and giving to said employee reasonable opportunity
within which to explain his side;

(b) A hearing or conference during which the employee concerned,
with the assistance of counsel if the employee so desires, is given opportunity
to respond to the charge, present his evidence or rebut the evidence
presented against him; and

(c) A written notice [of] termination served on the employee
indicating that upon due consideration of all the circumstance, grounds have
been established to justify his termination.

In case of termination, the foregoing notices shall be served on the
employees last known address.





MGG Marine Services, Inc. v. NLRC209[38] tersely described the mechanics of what may be
considered a two-part due process requirement which includes the two-notice rule, x x x one, of the
intention to dismiss, indicating therein his acts or omissions complained against, and two, notice of the
decision to dismiss; and an opportunity to answer and rebut the charges against him, in between such
notices.


King of Kings Transport, Inc. v. Mamac210[39] expounded on this procedural requirement in
this manner:

(1) The first written notice to be served on the employees should contain
the specific causes or grounds for termination against them, and a directive that the
employees are given the opportunity to submit their written explanation within a
reasonable period. Reasonable opportunity under the Omnibus Rules means every
kind of assistance that management must accord to the employees to enable them to
prepare adequately for their defense. This should be construed as a period of at least
five calendar days from receipt of the notice xxxx Moreover, in order to enable the
employees to intelligently prepare their explanation and defenses, the notice should
contain a detailed narration of the facts and circumstances that will serve as basis for
the charge against the employees. A general description of the charge will not suffice.
Lastly, the notice should specifically mention which company rules, if any, are violated
and/or which among the grounds under Art. 288 [of the Labor Code] is being charged
against the employees

(2) After serving the first notice, the employees should schedule and conduct
a hearing or conference wherein the employees will be given the opportunity to (1)
explain and clarify their defenses to the charge against them; (2) present evidence in
support of their defenses; and (3) rebut the evidence presented against them by the
management. During the hearing or conference, the employees are given the chance
to defend themselves personally, with the assistance of a representative or counsel of
their choice x x x.

(3) After determining that termination is justified, the employer shall serve
the employees a written notice of termination indicating that: (1) all the
circumstances involving the charge against the employees have been considered; and
(2) grounds have been established to justify the severance of their employment.
(Emphasis in the original.)

Here, the first and second notice requirements have not been properly observed, thus tainting
petitioners dismissal with illegality.

The adverted memo dated September 20, 2004 of WWWEC supposedly informing Aliling of the
likelihood of his termination and directing him to account for his failure to meet the expected job





performance would have had constituted the charge sheet, sufficient to answer for the first notice
requirement, but for the fact that there is no proof such letter had been sent to and received by him. In
fact, in his December 13, 2004 Complainants Reply Affidavit, Aliling goes on to tag such
letter/memorandum as fabrication. WWWEC did not adduce proof to show that a copy of the letter was
duly served upon Aliling. Clearly enough, WWWEC did not comply with the first notice requirement.

Neither was there compliance with the imperatives of a hearing or conference. The Court need
not dwell at length on this particular breach of the due procedural requirement. Suffice it to point out
that the record is devoid of any showing of a hearing or conference having been conducted. On the
contrary, in its October 1, 2004 letter to Aliling, or barely five (5) days after it served the notice of
termination, WWWEC acknowledged that it was still evaluating his case. And the written notice of
termination itself did not indicate all the circumstances involving the charge to justify severance of
employment.
Aliling is entitled to backwages
and separation pay in lieu of reinstatement

As may be noted, the CA found Alilings dismissal as having been illegally effected, but
nonetheless concluded that his employment ceased at the end of the probationary period. Thus, the
appellate court merely affirmed the monetary award made by the NLRC, which consisted of the payment
of that amount corresponding to the unserved portion of the contract of employment.

The case disposition on the award is erroneous.

As earlier explained, Aliling cannot be rightfully considered as a mere probationary employee.
Accordingly, the probationary period set in the contract of employment dated June 11, 2004 was of no
moment. In net effect, as of that date June 11, 2004, Aliling became part of the WWWEC organization
as a regular employee of the company without a fixed term of employment. Thus, he is entitled to
backwages reckoned from the time he was illegally dismissed on October 6, 2004, with a PhP 17,300.00
monthly salary, until the finality of this Decision. This disposition hews with the Courts ensuing holding
in Javellana v. Belen:211[40]

Article 279 of the Labor Code, as amended by Section 34 of Republic Act 6715
instructs:

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. (Emphasis
supplied)

Clearly, the law intends the award of backwages and similar benefits to
accumulate past the date of the Labor Arbiters decision until the dismissed employee
is actually reinstated. But if, as in this case, reinstatement is no longer possible, this
Court has consistently ruled that backwages shall be computed from the time



of illegal dismissal until the date the decision becomes final. (Emphasis
supplied.)

Additionally, Aliling is entitled to separation pay in lieu of reinstatement on the ground of
strained relationship.

In Golden Ace Builders v. Talde,212[41] the Court ruled:

The basis for the payment of backwages is different from that for the award
of separation pay. Separation pay is granted where reinstatement is no longer
advisable because of strained relations between the employee and the employer.
Backwages represent compensation that should have been earned but were not
collected because of the unjust dismissal. The basis for computing backwages is
usually the length of the employee's service while that for separation pay is the actual
period when the employee was unlawfully prevented from working.

As to how both awards should be computed, Macasero v. Southern Industrial
Gases Philippines instructs:

[T]he award of separation pay is inconsistent with a finding that
there was no illegal dismissal, for under Article 279 of the Labor Code and as
held in a catena of cases, an employee who is dismissed without just cause
and without due process is entitled to backwages and reinstatement or
payment of separation pay in lieu thereof:

Thus, an illegally dismissed employee is entitled to
two reliefs: backwages and reinstatement. The two reliefs
provided are separate and distinct. In instances where
reinstatement is no longer feasible because of strained
relations between the employee and the employer, separation
pay is granted. In effect, an illegally dismissed employee is
entitled to either reinstatement, if viable, or separation pay if
reinstatement is no longer viable, and backwages.

The normal consequences of respondents illegal dismissal,
then, are reinstatement without loss of seniority rights, and payment
of backwages computed from the time compensation was withheld
up to the date of actual reinstatement. Where reinstatement is no
longer viable as an option, separation pay equivalent to one (1)
month salary for every year of service should be awarded as an
alternative. The payment of separation pay is in addition to payment
of backwages. x x x

Velasco v. National Labor Relations Commission emphasizes:
The accepted doctrine is that separation pay may avail in lieu of
reinstatement if reinstatement is no longer practical or in the best interest of
the parties. Separation pay in lieu of reinstatement may likewise be awarded



if the employee decides not to be reinstated. (emphasis in the original; italics
supplied)

Under the doctrine of strained relations, the payment of separation
pay is considered an acceptable alternative to reinstatement when the latter
option is no longer desirable or viable. On one hand, such payment liberates the
employee from what could be a highly oppressive work environment. On the other
hand, it releases the employer from the grossly unpalatable obligation of maintaining
in its employ a worker it could no longer trust.

Strained relations must be demonstrated as a fact, however, to be
adequately supported by evidence substantial evidence to show that the relationship
between the employer and the employee is indeed strained as a necessary
consequence of the judicial controversy.

In the present case, the Labor Arbiter found that actual animosity
existed between petitioner Azul and respondent as a result of the filing of the
illegal dismissal case. Such finding, especially when affirmed by the appellate
court as in the case at bar, is binding upon the Court, consistent with the
prevailing rules that this Court will not try facts anew and that findings of
facts of quasi-judicial bodies are accorded great respect, even finality.
(Emphasis supplied.)

As the CA correctly observed, To reinstate petitioner [Aliling] would only create an atmosphere
of antagonism and distrust, more so that he had only a short stint with respondent company.213[42]
The Court need not belabor the fact that the patent animosity that had developed between employer
and employee generated what may be considered as the arbitrary dismissal of the petitioner.

Following the pronouncements of this Court Sagales v. Rustans Commercial
Corporation,214[43] the computation of separation pay in lieu of reinstatement includes the period for
which backwages were awarded:

Thus, in lieu of reinstatement, it is but proper to award petitioner separation
pay computed at one-month salary for every year of service, a fraction of at
least six (6) months considered as one whole year. In the computation of
separation pay, the period where backwages are awarded must be included.
(Emphasis supplied.)

Thus, Aliling is entitled to both backwages and separation pay (in lieu of reinstatement) in the
amount of one (1) months salary for every year of service, that is, from June 11, 2004 (date of
employment contract) until the finality of this decision with a fraction of a year of at least six (6) months
to be considered as one (1) whole year. As determined by the labor arbiter, the basis for the
computation of backwages and separation pay will be Alilings monthly salary at PhP 17,300.






Finally, Aliling is entitled to an award of PhP 30,000 as nominal damages in consonance with
prevailing jurisprudence215[44] for violation of due process.

Petitioner is not entitled to moral and exemplary damages

In Nazareno v. City of Dumaguete,216[45] the Court expounded on the requisite elements for a
litigants entitlement to moral damages, thus:

Moral damages are awarded if the following elements exist in the case: (1) an
injury clearly sustained by the claimant; (2) a culpable act or omission factually
established; (3) a wrongful act or omission by the defendant as the proximate cause of
the injury sustained by the claimant; and (4) the award of damages predicated on any
of the cases stated Article 2219 of the Civil Code. In addition, the person claiming
moral damages must prove the existence of bad faith by clear and convincing evidence
for the law always presumes good faith. It is not enough that one merely suffered
sleepless nights, mental anguish, and serious anxiety as the result of the actuations of
the other party. Invariably such action must be shown to have been willfully done in
bad faith or with ill motive. Bad faith, under the law, does not simply connote
bad judgment or negligence. It imports a dishonest purpose or some moral
obliquity and conscious doing of a wrong, a breach of a known duty through
some motive or interest or ill will that partakes of the nature of fraud.
(Emphasis supplied.)

In alleging that WWWEC acted in bad faith, Aliling has the burden of proof to present evidence
in support of his claim, as ruled in Culili v. Eastern Telecommunications Philippines, Inc.:217[46]

According to jurisprudence, basic is the principle that good faith is presumed
and he who alleges bad faith has the duty to prove the same. By imputing bad faith
to the actuations of ETPI, Culili has the burden of proof to present substantial evidence
to support the allegation of unfair labor practice. Culili failed to discharge this burden
and his bare allegations deserve no credit.

This was reiterated in United Claimants Association of NEA (UNICAN) v. National Electrification
Administration (NEA),218[47] in this wise:









It must be noted that the burden of proving bad faith rests on the one
alleging it. As the Court ruled in Culili v. Eastern Telecommunications, Inc., According
to jurisprudence, basic is the principle that good faith is presumed and he who alleges
bad faith has the duty to prove the same. Moreover, in Spouses Palada v. Solidbank
Corporation, the Court stated, Allegations of bad faith and fraud must be proved by
clear and convincing evidence.

Similarly, Aliling has failed to overcome such burden to prove bad faith on the part of WWWEC.
Aliling has not presented any clear and convincing evidence to show bad faith. The fact that he was
illegally dismissed is insufficient to prove bad faith. Thus, the CA correctly ruled that [t]here was no
sufficient showing of bad faith or abuse of management prerogatives in the personal action taken
against petitioner.219[48] In Lambert Pawnbrokers and Jewelry Corporation v. Binamira,220[49] the
Court ruled:

A dismissal may be contrary to law but by itself alone, it does not establish
bad faith to entitle the dismissed employee to moral damages. The award of moral and
exemplary damages cannot be justified solely upon the premise that the employer
dismissed his employee without authorized cause and due process.


The officers of WWWEC cannot be held
jointly and severally liable with the company

The CA held the president of WWWEC, Jose B. Feliciano, San Mateo and Lariosa jointly and
severally liable for the monetary awards of Aliling on the ground that the officers are considered
employers acting in the interest of the corporation. The CA cited NYK International Knitwear
Corporation Philippines (NYK) v. National Labor Relations Commission221[50] in support of its
argument. Notably, NYK in turn cited A.C. Ransom Labor Union-CCLU v. NLRC.222[51]











Such ruling has been reversed by the Court in Alba v. Yupangco,223[52] where the Court ruled:

By Order of September 5, 2007, the Labor Arbiter denied respondents motion
to quash the 3rd alias writ. Brushing aside respondents contention that his liability is
merely joint, the Labor Arbiter ruled:

Such issue regarding the personal liability of the officers of a corporation for
the payment of wages and money claims to its employees, as in the instant case, has
long been resolved by the Supreme Court in a long list of cases [A.C. Ransom Labor
Union-CLU vs. NLRC (142 SCRA 269) and reiterated in the cases of Chua vs. NLRC
(182 SCRA 353), Gudez vs. NLRC (183 SCRA 644)]. In the aforementioned cases, the
Supreme Court has expressly held that the irresponsible officer of the corporation (e.g.
President) is liable for the corporations obligations to its workers. Thus, respondent
Yupangco, being the president of the respondent YL Land and Ultra Motors Corp., is
properly jointly and severally liable with the defendant corporations for the labor
claims of Complainants Alba and De Guzman. x x x

x x x x

As reflected above, the Labor Arbiter held that respondents liability is
solidary.

There is solidary liability when the obligation expressly so states, when the
law so provides, or when the nature of the obligation so requires. MAM Realty
Development Corporation v. NLRC, on solidary liability of corporate officers in labor
disputes, enlightens:

x x x A corporation being a juridical entity, may act only through its
directors, officers and employees. Obligations incurred by them, acting as
such corporate agents are not theirs but the direct accountabilities of the
corporation they represent. True solidary liabilities may at times be incurred
but only when exceptional circumstances warrant such as, generally, in the
following cases:

1. When directors and trustees or, in appropriate cases, the
officers of a corporation:

(a) vote for or assent to patently unlawful acts of the
corporation;

(b) act in bad faith or with gross negligence in directing the
corporate affairs;

x x x x

In labor cases, for instance, the Court has held corporate directors and
officers solidarily liable with the corporation for the termination of employment of
employees done with malice or in bad faith.




A review of the facts of the case does not reveal ample and satisfactory proof that respondent
officers of WWEC acted in bad faith or with malice in effecting the termination of petitioner Aliling. Even
assuming arguendo that the actions of WWWEC are ill-conceived and erroneous, respondent officers
cannot be held jointly and solidarily with it. Hence, the ruling on the joint and solidary liability of
individual respondents must be recalled.

Aliling is entitled to Attorneys Fees and Legal Interest

Petitioner Aliling is also entitled to attorneys fees in the amount of ten percent (10%) of his
total monetary award, having been forced to litigate in order to seek redress of his grievances, pursuant
to Article 111 of the Labor Code and following our ruling in Exodus International Construction
Corporation v. Biscocho,224[53] to wit:

In Rutaquio v. National Labor Relations Commission, this Court held that:
It is settled that in actions for recovery of wages or where an employee was
forced to litigate and, thus, incur expenses to protect his rights and interest,
the award of attorneys fees is legally and morally justifiable.

In Producers Bank of the Philippines v. Court of Appeals this Court ruled that:

Attorneys fees may be awarded when a party is compelled to litigate or to
incur expenses to protect his interest by reason of an unjustified act of the
other party.

While in Lambert Pawnbrokers and Jewelry Corporation,225[54] the Court specifically ruled:

However, the award of attorneys fee is warranted pursuant to Article 111 of
the Labor Code. Ten (10%) percent of the total award is usually the reasonable
amount of attorneys fees awarded. It is settled that where an employee was forced to
litigate and, thus, incur expenses to protect his rights and interest, the award of
attorneys fees is legally and morally justifiable.

Finally, legal interest shall be imposed on the monetary awards herein granted at the rate of
6% per annum from October 6, 2004 (date of termination) until fully paid.

WHEREFORE, the petition is PARTIALLY GRANTED. The July 3, 2008 Decision of the Court of
Appeals in CA-G.R. SP No. 101309 is hereby MODIFIED to read:

WHEREFORE, the petition is PARTIALLY GRANTED. The assailed
Resolutions of respondent (Third Division) National Labor Relations Commission are
AFFIRMED, with the following MODIFICATION/CLARIFICATION: Respondent Wide
Wide World Express Corp. is liable to pay Armando Aliling the following: (a) backwages





reckoned from October 6, 2004 up to the finality of this Decision based on a salary of
PhP 17,300 a month, with interest at 6% per annum on the principal amount from
October 6, 2004 until fully paid; (b) the additional sum equivalent to one (1) month
salary for every year of service, with a fraction of at least six (6) months considered as
one whole year based on the period from June 11, 2004 (date of employment
contract) until the finality of this Decision, as separation pay; (c) PhP 30,000 as
nominal damages; and (d) Attorneys Fees equivalent to 10% of the total award.
SO ORDERED.

THIRD DIVISION
[G.R. No. 149974. June 15, 2005]
PHILIPPINE INDUSTRIAL SECURITY AGENCY CORPORATION, petitioner, vs. PERCIVAL AGUINALDO,
respondent.
D E C I S I O N
SANDOVAL-GUTIERREZ, J.:
Before us is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure, as
amended, assailing the Decision[1] of the Court of Appeals dated May 31, 2001 and its Resolution dated
September 11, 2001 in CA-G.R. No. 62704, PERCIVAL AGUINALDO, Petitioner, versus NATIONAL
LABOR RELATIONS COMMISSION, PHILIPPINE INDUSTRIAL SECURITY AGENCY CORP., and FAR EAST
BANK AND TRUST COMPANY, Respondents.
On April 11, 1988, Philippine Industrial Security Agency Corporation (PISAC), petitioner, hired Percival
Aguinaldo, respondent, as a security guard. He was assigned to secure the premises of Far East Bank &
Trust Company (FEBTC) Branch in Santiago City. In 1993, he was promoted as Branch Head Guard.[2]
On November 13, 1998, Ms. Remy Tumamao, petitioners roving personnel, caught respondent without
headgear and smoking while on duty. Respondent explained his side in a Memorandum[3] dated
November 14, 1998, thus:
This is in response with the inspection done last Friday November 13, 1998 at 10:30AM by Ms. Remy
Tumamao of the Chief security office.
I was not able to use my perching cap at that time because my hair is still wet. I was in complete attire
before the incident but when I received an emergency call from our armor crew who, on that time has a
cash transfer to Central Bank Tuguegarao Cagayan, I was informed that our armor car had a mechanical
trouble. So even if it was raining, I called our Mechanic immediately residing beside our branch.
Thank you for your kind consideration on this matter.
SG. PERCIVAL AGUINALDO
HEAD GUARD
On November 23, 1998, petitioner security agency issued a memorandum to respondent directing him to
report to the FEBTC main office in Malabon City for investigation.[4] The following day, or on November
24, petitioner issued a Relief Order[5] ordering him to report to its head office for further clarification
of his status, thus:
(Y)ou are hereby relieved from your post at FEBTC Br., Santiago City effective 24 November
1998.
Report to PISACORP head Office for further clarification of your status.
By order: x x x
Also on November 24, Antonio B. Banastas, Jr., Branch Head of FEBTC, Santiago City, wrote a
Memorandum[6] to petitioner requesting the retention of respondent in the same office, thus:
MEMORANDUM:
F O R : COL. MARCIAL CONACO, JR.
ASSISTANT VICE PRESIDENT
SECURITY OFFICE
S U B J E C T: WAIVER OF RELIEVE ORDER TO
SECURITY GUARD PERCIVAL
AGUINALDO
--------------------------------------------------------------------------------------
This is relative to the spot inspection report of Ms. Remy Tumamao on November 13, 1998.
On the morning of November 13, 1998 our armoured car was on its way to deliver cash to Central Bank
in Tuguegarao. At around 10:00 A.M., our armoured car personnel called up Mr. Aguinaldo and
informed him that they incurred a mechanical trouble. Upon receiving the message, Mr. Aguinaldo went
out to fetch or call a mechanic. Since it was raining on that morning, he did not wear his perching cap
because his hair was still wet. It was during that moment when Ms. Tumamao saw him in the branch.
In view of the degree of offense committed by our Security Guard, he should be given a
written reprimand and not relieved from his post since this was his first offense.
Mr. Aguinaldo has been with the branch for ten years, he is a person of good moral character
and has performed his job above our expectations.
In view of this, I would like to seek your approval for the retention of Mr. Aguinaldo.
Thank you.
(Sgd.) ANTONIO B. BANASTAS, JR.
BRANCH HEAD
However, petitioner, in its letter[7] dated December 2, 1998, denied the above request, thus:
Please be advised that your request of retention at your former post (FEBTC Santiago) was denied. In
view hereof, please report to Supervisor Lary Lopez for reassignment while you are reserved to the new
bank branch that will soon to operate at Santiago.
Please be guided accordingly.
PEPITO C. NOVERAS
Operations Officer
Forthwith, petitioner assigned respondent temporarily to FEBTC Malabon City Branch pending the
opening of another Branch in Santiago City where according to said petitioner, he will be re-assigned.
This prompted respondent to file with the Office of the Labor Arbiter, Tuguegarao, Cagayan a complaint
for illegal dismissal and non-payment of separation pay with damages against petitioner.
On November 3, 1999, Executive Labor Arbiter Ricardo N. Olairez rendered a Decision[8] dismissing
respondents complaint for lack of merit.
On appeal, the National Labor Relations Commission (NLRC) rendered its Decision[9] dated March 29,
2000 reversing the appealed Decision, thus:
Did the Executive Labor Arbiter err in not ruling that the complainant was illegally dismissed from
employment?
Based on the memorandum dated December 2, 1998, respondent PISAC did not put the complainant on
a floating status. Rather, it gave him a new assignment as a reserved (security guard) for the new
bank branch that was supposedly going to operate soon in Santiago. Clearly, what was given to him
was a mockery of an assignment. There was no date given for his assumption of his new post. There
was no assurance that it would ever be realized. In fact, there is not even a single reference to the
above-mentioned new agreement in any of the pleadings of respondent PISAC. Respondent PISAC
simply ignored every reference to the memorandum dated December 2, 1998 that the complainant
made in his own pleadings.
Respondent PISACs act of giving the complainant an assignment in the future amounts to an indefinite
suspension. It is settled that an indefinite suspension is tantamount to a constructive dismissal (Oriental
Mindoro Electric Cooperative, Inc. vs. NLRC (246 SCRA 294). Under these circumstances, the
complainant would ordinarily be entitled to reinstatement with full backwages (Article 279, Labor
Code). However, since he prayed for separation pay in the complaint, he should be awarded separation
pay in lieu of reinstatement and of course, full backwages.
WHEREFORE, the decision is hereby reversed. Respondent Philippine Industrial Security Agency Corp. is
hereby ordered to pay the complainant his full backwages from November 24, 1998 to the date of the
finality of this decision and separation pay amounting to P59,400.00 (P5,400 x 11 years = P59,400.00).
SO ORDERED.
On May 19, 2000, petitioner filed a motion for reconsideration. Surprisingly, it was granted by the NLRC
in its Decision[10] dated August 29, 2000 thus:
WHEREFORE, the instant Motion for Reconsideration is GRANTED. Our Decision of 29 March 2000 is
hereby RECONSIDERED and SET ASIDE. The 3 November 1999 Decision of Executive Labor Arbiter
Ricardo N. Olairez dismissing the case is hereby REINSTATED.
SO ORDERED.
Respondent then filed a motion for reconsideration but was denied by the NLRC in its Resolution[11]
dated December 7, 2000.
Hence, respondent filed with the Court of Appeals a petition for certiorari[12] under Rule 65 of the 1997
Rules of Civil Procedure, as amended.
On May 31, 2001, the Appellate Court rendered its Decision[13] granting the petition and setting aside
the Decision of the NLRC. In finding for respondent, the Appellate Court held:
The petition is impressed with merit.
Petitioner claims that his reassignment to another post that was not yet open amounted to constructive
dismissal. We agree.
A constructive dismissal is a quitting because continued employment is rendered impossible,
unreasonable or unlikely, as an offer involving a demotion in rank and a diminution in pay (Philippine
Japan Active Carbon Corp. vs. NLRC, G.R. No. 83239, March 8, 1989). As further explained in Jarcia vs.
NLRC (266 SCRA 97 [1997]):
In case of constructive dismissal, the employer has the burden of proving that the transfer and
demotion of an employee are for valid and legitimate grounds such as genuine business
necessity. Particularly, for a transfer not to be considered a constructive dismissal, the employer must
be able to show that such transfer is not unreasonable, inconvenient, or prejudicial to the employee; nor
does it involve a demotion in rank or a diminution of his salaries, privileges and other benefits. Failure
of the employer to overcome this burden of proof, the employees demotion shall no doubt be
tantamount to unlawful constructive dismissal.
In the case at bar, petitioner was validly relieved from his post for violating a company policy. The
petitioner did not contest this violation as he in fact admitted to committing it during the investigation,
though with a valid and plausible explanation. What tarnishes the whole scene is the fact that
after petitioner was relieved from his old post in Santiago City, Isabela, he was temporarily
reassigned to the head office of private respondent PISA in Malabon, Metro Manila pending
the opening of another bank in Isabela (Rollo, p. 60). This act is unfair and downright
oppressive considering that petitioner, along with his family, is a long-time resident of
Santiago City, Isabela. The transfer would mean that petitioner would be away from his
family or that he would bring his entire family to Manila entailing expenses. Further, it
remains unclear if petitioner would be reassigned back to Isabela, as the said plan remains
ambiguous for it is not clearly shown when the said reassignment would take place. In the
Notice given to petitioner, it is stated that his reassignment to Manila is good for 179 days and maybe
renewed after its expiration. We cannot give evidentiary weight to private respondent PISAs
claim that petitioner will be reassigned back to another branch in Isabela as no evidence to
that effect was offered.
While it is true that 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, layoff of workers and the discipline, dismissal and recall of workers
(San Miguel Brewery Sales vs. Ople, G.R. No. 53515, February 8, 1989), and this right to transfer
employees forms part of management prerogatives, the employees transfer should not be
unreasonable, nor inconvenient, nor prejudicial to him. It should not involve a demotion in rank or
diminution of his salaries, benefits and other privileges, as to constitute constructive dismissal (PT&T vs.
Laplana, G.R. No. 76645, July 23, 1991).
Hence, petitioner cannot be faulted for filing an illegal dismissal case. While the case does not directly
fall under the traditional concept of illegal dismissal case, We hold that it partakes of the nature of
constructive dismissal. In Philippine Advertising Counselors, Inc. vs. NLRC, 263 SCRA 395 (1996) and
Masagana Concrete Products vs. NLRC, 313 SCRA 576 (1999), the Supreme Court keenly made this
observation, to wit:
Constructive dismissal, however, does not always involve such kinds of diminution, an act of clear
discrimination, insensibility, or disdain by an employer may become so unbearable on the part of the
employee that it could foreclose any choice by him except to forego his continued employment.
As explained earlier, this Court is fully aware of the right of management to transfer its employees as
part of management prerogative. But like all rights, the same cannot be exercised with unbridled
discretion. The managerial prerogative to transfer personnel must be exercised without grave abuse of
discretion, bearing in mind the basic element of justice and fair play.
However, private respondent Far East Bank cannot be held liable for petitioners backwages as it is not
the employer of the petitioner.
WHEREFORE, the petition is GRANTED. The NLRC Decision dated August 29, 2000 is hereby SET
ASIDE. Private respondent PISA is hereby ordered to REINSTATE petitioner to his former position
without loss of seniority rights and privileges and to PAY his backwages computed from the time the
same were withheld from him.[14] (Emphasis supplied)
Petitioner filed a motion for reconsideration but was denied in a Resolution dated September 11,
2001.[15]
Hence, the present recourse, petitioner ascribing to the Court of Appeals the following assignments of
error:
1. The questioned Decision and Resolution of the Court of Appeals are manifestly not in accord with
law and established jurisprudence; and
2. The petition is dismissible outright for having been filed in violation of the Rule against forum-
shopping.[16]
Petitioner primarily contends that respondents re-assignment to Malabon City is only temporary,
otherwise, he would have been placed in a floating status. Moreover, such re-assignment is a valid
exercise of management prerogative done in good faith and with valid reason.
Respondent counters that the Court of Appeals correctly ruled that his re-assignment is unfair and
downright oppressive and constitutes constructive dismissal. The floating status anticipated by
petitioner is just imaginary and without any basis, as the move to transfer him to a new or other post is
completely unnecessary. Besides, Mr. Banastas, strongly recommended his retention in FEBTC-
Santiago City considering that he has been with the Santiago City Branch for ten years and has
performed his job efficiently.[17] His transfer to Malabon City is tantamount to constructive dismissal.
On the issue of forum-shopping, respondent contends that he filed only one petition for certiorari and
that is with the Court of Appeals, docketed therein as CA-G.R. SP No. 62704.
For his part, the Solicitor General submits that the Court of Appeals did not err in giving due course to
respondents petition. First, the issue raised by petitioner is factual which necessarily calls for an
examination of the evidence and is, therefore, not reviewable in a petition for certiorari. Second, there
is no evidence on record showing that respondent indeed filed another petition for review.
The petition must fail.
Settled is the rule that findings of facts of the Court of Appeals are accorded respect, even finality, and
will not be disturbed especially where such findings are supported by substantial evidence.[18] One of
the exceptions, however, is when there is a variance between the findings of the NLRC and the Court of
Appeals, as in this case.
Jurisprudence recognizes the exercise of management prerogative. For this reason, courts often decline
to interfere in legitimate business decisions of employers.[19] In fact, labor laws discourage interference
in employers judgment concerning the conduct of their business.[20]
In the pursuit of its legitimate business interest, management has the prerogative to transfer or
assign employees from one office or area of operation to another provided there is no
demotion in rank or diminution of salary, benefits, and other privileges; and the action is not
motivated by discrimination, made in bad faith, or effected as a form of punishment or demotion
without sufficient cause.[21]
By transferring respondent to the Malabon City FEBTC Branch, petitioner resorted to constructive
dismissal. A transfer amounts to constructive dismissal when the transfer is unreasonable, unlikely,
inconvenient, impossible, or prejudicial to the employee,[22] as in this case. It is defined as an
involuntary resignation resorted when a clear discrimination, insensibility or disdain by an employer
becomes unbearable to the employee.[23]
In constructive dismissal, the employer has the burden of proving that the transfer and demotion of an
employee are for just and valid grounds, such as genuine business necessity.[24] The employer must be
able to show that the transfer is not unreasonable, inconvenient, or prejudicial to the employee; nor
does it involve a demotion in rank or a diminution of salary and other benefits. Should the employer fail
to overcome this burden of proof, the employees transfer shall be tantamount to unlawful constructive
dismissal.[25]
In the case at bar, petitioner failed to overcome this burden of proof. Foremost, respondent explained
that he was in complete attire that morning. However, the bank personnel informed him that the FEBTC
armor car, on its way to deliver cash to the Central Bank Office in Tuguegarao, incurred mechanical
trouble. So he immediately went outside to fetch a mechanic. It was then raining, hence, he got wet
the reason why he was not wearing his perching cap. Under the circumstances, his failure to wear his
perching cap is justified. Thus, he should not be held liable for any violation of office regulations which
warrants his transfer to another work place.
Second, the letter of Mr. Banastas recommending the retention of respondent in the FEBTC Santiago
City Branch negates petitioners reasons in re-assigning the latter to the FEBTC Malabon City Branch.
Service-oriented enterprises, such as petitioner's business of providing security services, generally
adhere to the business adage that "the customer or client is always right".[26] Here, petitioner
disregarded such aphorism.
Petitioners act manifests insensibility to the welfare of respondent and his family. Obviously, his
transfer to Malabon City will be prejudicial to them economically and emotionally. Indeed, , petitioners
action is in defiance of basic due process and fair play in employment relations.[27]
Third, petitioners excuse in re-assigning respondent to Malabon City, pending the opening of another
FEBTC Branch in Santiago City is unreasonable. The Appellate Court is correct in holding that there is
no assurance that a new FEBTC Branch will be opened in Santiago City.
In Blue Dairy Corporation vs. NLRC,[28] we ruled that:
x x x the managerial prerogative to transfer personnel must not be exercised with grave abuse of
discretion, bearing in mind the basic elements of justice and fair play. Having the right should not be
confused with the manner in which that right is exercised. Thus, it cannot be used as a subterfuge by
the employer to rid himself of an undesirable worker. x x x
WHEREFORE, the petition is hereby DENIED. The assailed Decision of the Court of Appeals is
AFFIRMED. Costs against petitioner.
SO ORDERED.


Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 155421 July 7, 2004
ELMER M. MENDOZA, petitioner,
vs.
RURAL BANK OF LUCBAN, respondent.

D E C I S I O N

PANGANIBAN, J.:
The law protects both the welfare of employees and the prerogatives of management. Courts will not
interfere with business judgments of employers, provided they do not violate the law, collective
bargaining agreements, and general principles of fair play and justice. The transfer of personnel from
one area of operation to another is inherently a managerial prerogative that shall be upheld if exercised
in good faith -- for the purpose of advancing business interests, not of defeating or circumventing the
rights of employees.
The Case
The Court applies these principles in resolving the instant Petition for Review1 under Rule 45 of the
Rules of Court, assailing the June 14, 2002 Decision2 and September 25, 2002 Resolution3 of the Court
of Appeals (CA) in CA-GR SP No. 68030. The assailed Decision disposed as follows:
"WHEREFORE, the petition for certiorari is hereby DISMISSED for lack of merit."4
The challenged Resolution denied petitioner's Motion for Reconsideration.
The Facts
On April 25, 1999, the Board of Directors of the Rural Bank of Lucban, Inc., issued Board Resolution
Nos. 99-52 and 99-53, which read:
"Board Res. No. 99-52
"'RESOLVED AS IT IS HEREBY RESOLVED' that in line with the policy of the bank to familiarize
bank employees with the various phases of bank operations and further strengthen the existing
internal control system[,] all officers and employees are subject to reshuffle of assignments.
Moreover, this resolution does not preclude the transfer of assignment of bank officers and
employees from the branch office to the head office and vice-versa."
"Board Res. No. 95-53
"Pursuant to Resolution No. 99-52, the following branch employees are hereby reshuffled to
their new assignments without changes in their compensation and other benefits.
NAME OF EMPLOYEES PRESENT ASSIGNMENT NEW ASSIGNMENT
JOYCE V. ZETA Bank Teller C/A Teller
CLODUALDO ZAGALA C/A Clerk Actg. Appraiser
ELMER L. MENDOZA Appraiser Clerk-Meralco Collection
CHONA R. MENDOZA Clerk-Meralco Collection Bank Teller"5
In a letter dated April 30, 1999, Alejo B. Daya, the bank's board chairman, directed Briccio V. Cada, the
manager of the bank's Tayabas branch, to implement the reshuffle.6 The new assignments were to "be
effective on May 1, 1999 without changes in salary, allowances, and other benefits received by the
aforementioned employees."7
On May 3, 1999, in an undated letter addressed to Daya, Petitioner Elmer Mendoza expressed his
opinion on the reshuffle, as follows:
"RE: The recent reshuffle of employees as per
Board Resolution dated April 25, 1999
"Dear Sir:
"This is in connection with the aforementioned subject matter and which the undersigned
received on April 25, 1999.
"Needless to state, the reshuffling of the undersigned from the present position as Appraiser to
Clerk-Meralco Collection is deemed to be a demotion without any legal basis. Before this action
on your part[,] the undersigned has been besieged by intrigues due to [the] malicious
machination of a certain public official who is bruited to be your good friend. These malicious
insinuations were baseless and despite the fact that I have been on my job as Appraiser for the
past six (6) years in good standing and never involved in any anomalous conduct, my being
reshuffled to [C]lerk-[M]eralco [C]ollection is a blatant harassment on your part as a prelude to
my termination in due time. This will constitute an unfair labor practice.
"Meanwhile, may I beseech your good office that I may remain in my position as Appraiser until
the reason [for] my being reshuffled is made clear.
"Your kind consideration on this request will be highly appreciated."8
On May 10, 1999, Daya replied:
"Dear Mr. Mendoza,
"Anent your undated letter expressing your resentment/comments on the recent management's
decision to reshuffle the duties of bank employees, please be informed that it was never the
intention (of management) to downgrade your position in the bank considering that your due
compensation as Bank Appraiser is maintained and no future reduction was intended.
"Aside from giving bank employees a wider experience in various banking operations, the
reshuffle will also afford management an effective tool in providing the bank a sound internal
control system/check and balance and a basis in evaluating the performance of each employee.
A continuing bankwide reshuffle of employees shall be made at the discretion of management
which may include bank officers, if necessary as expressed in Board Resolution No. 99-53,
dated April 25, 1999. Management merely shifted the duties of employees, their position title
[may be] retained if requested formally.
"Being a standard procedure in maintaining an effective internal control system recommended
by the Bangko Sentral ng Pilipinas, we believe that the conduct of reshuffle is also a prerogative
of bank management."9
On June 7, 1999, petitioner submitted to the bank's Tayabas branch manager a letter in which he
applied for a leave of absence from work:
"Dear Sir:
"I wish I could continue working but due to the ailment that I always feel every now and then, I
have the honor to apply for at least ten (10) days sick leave effective June 7, 1999.
"Hoping that this request [merits] your favorable and kind consideration and understanding."10
On June 21, 1999, petitioner again submitted a letter asking for another leave of absence for twenty
days effective on the same date.11
On June 24, 1999, while on his second leave of absence, petitioner filed a Complaint before Arbitration
Branch No. IV of the National Labor Relations Commission (NLRC). The Complaint -- for illegal dismissal,
underpayment, separation pay and damages -- was filed against the Rural Bank of Lucban and/or its
president, Alejo B. Daya; and its Tayabas branch manager, Briccio V. Cada. The case was docketed as
NLRC Case SRAB-IV-6-5862-99-Q.12
The labor arbiter's June 14, 2000 Decision upheld petitioner's claims as follows:
"WHEREFORE, premises considered, judgment is hereby rendered as follows:
1. Declaring respondents guilty of illegal dismissal.
2. Ordering respondents to reinstate complainant to his former position without loss of
seniority rights with full backwages from date of dismissal to actual reinstatement in
the amount of P55,000.00 as of June 30, 2000.
3. Ordering the payment of separation pay if reinstatement is not possible in the
amount of P30,000.00 in addition to 13th month pay of P5,000.00 and the usual
P10,000.00 annual bonus afforded the employees.
4. Ordering the payment of unpaid salary for the period covering July 1-30, 1999 in
the amount of P5,000.00
5. Ordering the payment of moral damages in the amount of P50,000.00.
6. Ordering the payment of exemplary damages in the amount of P25,000.00
7. Ordering the payment of Attorney's fees in the amount of P18,000.00 which is 10%
of the monetary award."13
On appeal, the NLRC reversed the labor arbiter.14 In its July 18, 2001 Resolution, it held:
"We can conceive of no reason to ascribe bad faith or malice to the respondent bank for its
implementation of its Board Resolution directing the reshuffle of employees at its Tayabas
branch to positions other than those they were occupying. While at first the employees thereby
affected would experience difficulty in adjusting to their new jobs, it cannot be gainsaid that the
objective for the reshuffle is noble, as not only would the employees obtain additional
knowledge, they would also be more well-rounded in the operations of the bank and thus help
the latter further strengthen its already existing internal control system.
"The only inconvenience, as [w]e see it, that the [petitioner] may have experienced is that from
an appraiser he was made to perform the work of a clerk in the collection of Meralco payments,
which he may have considered as beneath him and his experience, being a pioneer employee.
But it cannot be discounted either that other employees at the Tayabas branch were similarly
reshuffled. The only logical conclusion therefore is that the Board Resolution was not aimed
solely at the [petitioner], but for all the other employees of the x x x bank as well. Besides, the
complainant has not shown by clear, competent and convincing evidence that he holds a vested
right to the position of Appraiser. x x x.
"How and by what manner a business concern conducts its affairs is not for this Commission to
interfere with, especially so if there is no showing, as in the case at bar, that the reshuffle was
motivated by bad faith or ill-will. x x x."15
After the NLRC denied his Motion for Reconsideration,16 petitioner brought before the CA a Petition for
Certiorari17 assailing the foregoing Resolution.
Ruling of the Court of Appeals
Finding that no grave abuse of discretion could be attributed to the NLRC, the CA Decision ruled thus:
"The so-called 'harassment' which Mendoza allegedly experienced in the aftermath of the
reshuffling of employees at the bank is but a figment of his imagination as there is no evidence
extant on record which substantiates the same. His alleged demotion, the 'cold shoulder'
stance, the things about his chair and table, and the alleged reason for the harassment are but
allegations bereft of proof and are perforce inadmissible as self-serving statements and can
never be considered repositories of truth nor serve as foundations of court decisions anent the
resolution of the litigants' rights.
"When Mendoza was reshuffled to the position of clerk at the bank, he was not demoted as
there was no [diminution] of his salary benefits and rank. He could even retain his position title,
had he only requested for it pursuant to the reply of the Chairman of the bank's board of
directors to Mendoza's letter protesting the reshuffle. There is, therefore, no cause to doubt the
reasons which the bank propounded in support of its move to reshuffle its employees, viz:
1. to 'familiarize bank employees with the various phases of bank operations,' and
2. to 'further strengthen the existing internal control system' of the bank.
"The reshuffling of its employees was done in good faith and cannot be made the basis of a
finding of constructive dismissal.
"The fact that Mendoza was no longer included in the bank's payroll for July 1 to 15, 1999 does
not signify that the bank has dismissed the former from its employ. Mendoza separated himself
from the bank's employ when, on June 24, 1999, while on leave, he filed the illegal dismissal
case against his employer for no apparent reason at all."18
Hence, this Petition.19
The Issues
Petitioner raises the following issues for our consideration:
"I. Whether or not the petitioner is deemed to have voluntarily separated himself from the
service and/or abandoned his job when he filed his Complaint for constructive and consequently
illegal dismissal;
"II. Whether or not the reshuffling of private respondent'[s] employees was done in good faith
and cannot be made as the basis of a finding of constructive dismissal, even as the
[petitioner's] demotion in rank is admitted by both parties;
"III. Whether or not the ruling in the landmark case of Ruben Serrano vs. NLRC [and Isetann
Department Store (323 SCRA 445)] is applicable to the case at bar;
"IV. Whether or not the Court of Appeals erred in dismissing the petitioner's money claims,
damages, and unpaid salaries for the period July 1-30, 1999, although this was not disputed by
the private respondent; and
"V. Whether or not the entire proceedings before the Honorable Court of Appeals and the NLRC
are a nullity since the appeal filed by private respondent before the NLRC on August 5, 2000
was on the 15th day or five (5) days beyond the reglem[e]ntary period of ten (10) days as
provided for by law and the NLRC Rules of Procedure."20
In short, the main issue is whether petitioner was constructively dismissed from his employment.
The Court's Ruling
The Petition has no merit.
Main Issue:
Constructive Dismissal
Constructive dismissal is defined as an involuntary resignation resorted to when continued employment
is rendered impossible, unreasonable or unlikely; when there is a demotion in rank or a diminution of
pay; or when a clear discrimination, insensibility or disdain by an employer becomes unbearable to the
employee.21 Petitioner argues that he was compelled to file an action for constructive dismissal,
because he had been demoted from appraiser to clerk and not given any work to do, while his table had
been placed near the toilet and eventually removed.22 He adds that the reshuffling of employees was
done in bad faith, because it was designed primarily to force him to resign.23
Management Prerogative
to Transfer Employees
Jurisprudence recognizes the exercise of management prerogatives. For this reason, courts often decline
to interfere in legitimate business decisions of employers.24 Indeed, labor laws discourage interference
in employers' judgments concerning the conduct of their business.25 The law must protect not only the
welfare of employees, but also the right of employers.
In the pursuit of its legitimate business interest, management has the prerogative to transfer or assign
employees from one office or area of operation to another -- provided there is no demotion in rank or
diminution of salary, benefits, and other privileges; and the action is not motivated by discrimination,
made in bad faith, or effected as a form of punishment or demotion without sufficient cause.26 This
privilege is inherent in the right of employers to control and manage their enterprise effectively.27 The
right of employees to security of tenure does not give them vested rights to their positions to the extent
of depriving management of its prerogative to change their assignments or to transfer them.28
Managerial prerogatives, however, are subject to limitations provided by law, collective bargaining
agreements, and general principles of fair play and justice.29 The test for determining the validity of the
transfer of employees was explained in Blue Dairy Corporation v. NLRC30 as follows:
"[L]ike other rights, there are limits thereto. The managerial prerogative to transfer personnel
must be exercised without grave abuse of discretion, bearing in mind the basic elements of
justice and fair play. Having the right should not be confused with the manner in which that
right is exercised. Thus, it cannot be used as a subterfuge by the employer to rid himself of an
undesirable worker. In particular, the employer must be able to show that the transfer is not
unreasonable, inconvenient or prejudicial to the employee; nor does it involve a demotion in
rank or a diminution of his salaries, privileges and other benefits. Should the employer fail to
overcome this burden of proof, the employee's transfer shall be tantamount to constructive
dismissal, which has been defined as a quitting because continued employment is rendered
impossible, unreasonable or unlikely; as an offer involving a demotion in rank and diminution in
pay. Likewise, constructive dismissal exists when an act of clear discrimination, insensibility or
disdain by an employer has become so unbearable to the employee leaving him with no option
but to forego with his continued employment."31
Petitioner's Transfer Lawful
The employer bears the burden of proving that the transfer of the employee has complied with the
foregoing test. In the instant case, we find no reason to disturb the conclusion of the NLRC and the CA
that there was no constructive dismissal. Their finding is supported by substantial evidence -- that
amount of relevant evidence that a reasonable mind might accept as justification for a conclusion.32
Petitioner's transfer was made in pursuit of respondent's policy to "familiarize bank employees with the
various phases of bank operations and further strengthen the existing internal control system"33 of all
officers and employees. We have previously held that employees may be transferred -- based on their
qualifications, aptitudes and competencies -- to positions in which they can function with maximum
benefit to the company.34 There appears no justification for denying an employer the right to transfer
employees to expand their competence and maximize their full potential for the advancement of the
establishment. Petitioner was not singled out; other employees were also reassigned without their
express consent.
Neither was there any demotion in the rank of petitioner; or any diminution of his salary, privileges and
other benefits. This fact is clear in respondent's Board Resolutions, the April 30, 1999 letter of Bank
President Daya to Branch Manager Cada, and the May 10, 1999 letter of Daya to petitioner.
On the other hand, petitioner has offered no sufficient proof to support his allegations. Given no
credence by both lower tribunals was his bare and self-serving statement that he had been positioned
near the comfort room, made to work without a table, and given no work assignment.35 Purely
conjectural is his claim that the reshuffle of personnel was a harassment in retaliation for an alleged
falsification case filed by his relatives against a public official.36 While the rules of evidence prevailing in
courts of law are not controlling in proceedings before the NLRC,37 parties must nonetheless submit
evidence to support their contentions.
Secondary Issues:
Serrano v. NLRC Inapplicable
Serrano v. NLRC38 does not apply to the present factual milieu. The Court ruled therein that the lack of
notice and hearing made the dismissal of the employee ineffectual, but not necessarily illegal.39 Thus,
the procedural infirmity was remedied by ordering payment of his full back wages from the time of his
dismissal.40 The absence of constructive dismissal in the instant case precludes the application of
Serrano. Because herein petitioner was not dismissed, then he is not entitled to his claimed monetary
benefits.
Alleged Nullity of NLRC
and CA Proceedings
Petitioner argues that the proceedings before the NLRC and the CA were void, since respondent's appeal
before the NLRC had allegedly been filed beyond the reglementary period.41 A careful scrutiny of his
Petition for Review42 with the appellate court shows that this issue was not raised there. Inasmuch as
the instant Petition challenges the Decision of the CA, we cannot rule on arguments that were not
brought before it. This ruling is consistent with the due-process requirement that no question shall be
entertained on appeal, unless it has been raised in the court below.43
WHEREFORE, this Petition is DENIED, and the June 14, 2002 Decision and the September 25, 2002
Resolution of the Court of Appeals are AFFIRMED. Costs against petitioner.
SO ORDERED.


Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 155421 July 7, 2004
ELMER M. MENDOZA, petitioner,
vs.
RURAL BANK OF LUCBAN, respondent.

D E C I S I O N

PANGANIBAN, J.:
The law protects both the welfare of employees and the prerogatives of management. Courts will not
interfere with business judgments of employers, provided they do not violate the law, collective
bargaining agreements, and general principles of fair play and justice. The transfer of personnel from
one area of operation to another is inherently a managerial prerogative that shall be upheld if exercised
in good faith -- for the purpose of advancing business interests, not of defeating or circumventing the
rights of employees.
The Case
The Court applies these principles in resolving the instant Petition for Review1 under Rule 45 of the
Rules of Court, assailing the June 14, 2002 Decision2 and September 25, 2002 Resolution3 of the Court
of Appeals (CA) in CA-GR SP No. 68030. The assailed Decision disposed as follows:
"WHEREFORE, the petition for certiorari is hereby DISMISSED for lack of merit."4
The challenged Resolution denied petitioner's Motion for Reconsideration.
The Facts
On April 25, 1999, the Board of Directors of the Rural Bank of Lucban, Inc., issued Board Resolution
Nos. 99-52 and 99-53, which read:
"Board Res. No. 99-52
"'RESOLVED AS IT IS HEREBY RESOLVED' that in line with the policy of the bank to familiarize
bank employees with the various phases of bank operations and further strengthen the existing
internal control system[,] all officers and employees are subject to reshuffle of assignments.
Moreover, this resolution does not preclude the transfer of assignment of bank officers and
employees from the branch office to the head office and vice-versa."
"Board Res. No. 95-53
"Pursuant to Resolution No. 99-52, the following branch employees are hereby reshuffled to
their new assignments without changes in their compensation and other benefits.
NAME OF EMPLOYEES PRESENT ASSIGNMENT NEW ASSIGNMENT
JOYCE V. ZETA Bank Teller C/A Teller
CLODUALDO ZAGALA C/A Clerk Actg. Appraiser
ELMER L. MENDOZA Appraiser Clerk-Meralco Collection
CHONA R. MENDOZA Clerk-Meralco Collection Bank Teller"5
In a letter dated April 30, 1999, Alejo B. Daya, the bank's board chairman, directed Briccio V. Cada, the
manager of the bank's Tayabas branch, to implement the reshuffle.6 The new assignments were to "be
effective on May 1, 1999 without changes in salary, allowances, and other benefits received by the
aforementioned employees."7
On May 3, 1999, in an undated letter addressed to Daya, Petitioner Elmer Mendoza expressed his
opinion on the reshuffle, as follows:
"RE: The recent reshuffle of employees as per
Board Resolution dated April 25, 1999
"Dear Sir:
"This is in connection with the aforementioned subject matter and which the undersigned
received on April 25, 1999.
"Needless to state, the reshuffling of the undersigned from the present position as Appraiser to
Clerk-Meralco Collection is deemed to be a demotion without any legal basis. Before this action
on your part[,] the undersigned has been besieged by intrigues due to [the] malicious
machination of a certain public official who is bruited to be your good friend. These malicious
insinuations were baseless and despite the fact that I have been on my job as Appraiser for the
past six (6) years in good standing and never involved in any anomalous conduct, my being
reshuffled to [C]lerk-[M]eralco [C]ollection is a blatant harassment on your part as a prelude to
my termination in due time. This will constitute an unfair labor practice.
"Meanwhile, may I beseech your good office that I may remain in my position as Appraiser until
the reason [for] my being reshuffled is made clear.
"Your kind consideration on this request will be highly appreciated."8
On May 10, 1999, Daya replied:
"Dear Mr. Mendoza,
"Anent your undated letter expressing your resentment/comments on the recent management's
decision to reshuffle the duties of bank employees, please be informed that it was never the
intention (of management) to downgrade your position in the bank considering that your due
compensation as Bank Appraiser is maintained and no future reduction was intended.
"Aside from giving bank employees a wider experience in various banking operations, the
reshuffle will also afford management an effective tool in providing the bank a sound internal
control system/check and balance and a basis in evaluating the performance of each employee.
A continuing bankwide reshuffle of employees shall be made at the discretion of management
which may include bank officers, if necessary as expressed in Board Resolution No. 99-53,
dated April 25, 1999. Management merely shifted the duties of employees, their position title
[may be] retained if requested formally.
"Being a standard procedure in maintaining an effective internal control system recommended
by the Bangko Sentral ng Pilipinas, we believe that the conduct of reshuffle is also a prerogative
of bank management."9
On June 7, 1999, petitioner submitted to the bank's Tayabas branch manager a letter in which he
applied for a leave of absence from work:
"Dear Sir:
"I wish I could continue working but due to the ailment that I always feel every now and then, I
have the honor to apply for at least ten (10) days sick leave effective June 7, 1999.
"Hoping that this request [merits] your favorable and kind consideration and understanding."10
On June 21, 1999, petitioner again submitted a letter asking for another leave of absence for twenty
days effective on the same date.11
On June 24, 1999, while on his second leave of absence, petitioner filed a Complaint before Arbitration
Branch No. IV of the National Labor Relations Commission (NLRC). The Complaint -- for illegal dismissal,
underpayment, separation pay and damages -- was filed against the Rural Bank of Lucban and/or its
president, Alejo B. Daya; and its Tayabas branch manager, Briccio V. Cada. The case was docketed as
NLRC Case SRAB-IV-6-5862-99-Q.12
The labor arbiter's June 14, 2000 Decision upheld petitioner's claims as follows:
"WHEREFORE, premises considered, judgment is hereby rendered as follows:
1. Declaring respondents guilty of illegal dismissal.
2. Ordering respondents to reinstate complainant to his former position without loss of
seniority rights with full backwages from date of dismissal to actual reinstatement in
the amount of P55,000.00 as of June 30, 2000.
3. Ordering the payment of separation pay if reinstatement is not possible in the
amount of P30,000.00 in addition to 13th month pay of P5,000.00 and the usual
P10,000.00 annual bonus afforded the employees.
4. Ordering the payment of unpaid salary for the period covering July 1-30, 1999 in
the amount of P5,000.00
5. Ordering the payment of moral damages in the amount of P50,000.00.
6. Ordering the payment of exemplary damages in the amount of P25,000.00
7. Ordering the payment of Attorney's fees in the amount of P18,000.00 which is 10%
of the monetary award."13
On appeal, the NLRC reversed the labor arbiter.14 In its July 18, 2001 Resolution, it held:
"We can conceive of no reason to ascribe bad faith or malice to the respondent bank for its
implementation of its Board Resolution directing the reshuffle of employees at its Tayabas
branch to positions other than those they were occupying. While at first the employees thereby
affected would experience difficulty in adjusting to their new jobs, it cannot be gainsaid that the
objective for the reshuffle is noble, as not only would the employees obtain additional
knowledge, they would also be more well-rounded in the operations of the bank and thus help
the latter further strengthen its already existing internal control system.
"The only inconvenience, as [w]e see it, that the [petitioner] may have experienced is that from
an appraiser he was made to perform the work of a clerk in the collection of Meralco payments,
which he may have considered as beneath him and his experience, being a pioneer employee.
But it cannot be discounted either that other employees at the Tayabas branch were similarly
reshuffled. The only logical conclusion therefore is that the Board Resolution was not aimed
solely at the [petitioner], but for all the other employees of the x x x bank as well. Besides, the
complainant has not shown by clear, competent and convincing evidence that he holds a vested
right to the position of Appraiser. x x x.
"How and by what manner a business concern conducts its affairs is not for this Commission to
interfere with, especially so if there is no showing, as in the case at bar, that the reshuffle was
motivated by bad faith or ill-will. x x x."15
After the NLRC denied his Motion for Reconsideration,16 petitioner brought before the CA a Petition for
Certiorari17 assailing the foregoing Resolution.
Ruling of the Court of Appeals
Finding that no grave abuse of discretion could be attributed to the NLRC, the CA Decision ruled thus:
"The so-called 'harassment' which Mendoza allegedly experienced in the aftermath of the
reshuffling of employees at the bank is but a figment of his imagination as there is no evidence
extant on record which substantiates the same. His alleged demotion, the 'cold shoulder'
stance, the things about his chair and table, and the alleged reason for the harassment are but
allegations bereft of proof and are perforce inadmissible as self-serving statements and can
never be considered repositories of truth nor serve as foundations of court decisions anent the
resolution of the litigants' rights.
"When Mendoza was reshuffled to the position of clerk at the bank, he was not demoted as
there was no [diminution] of his salary benefits and rank. He could even retain his position title,
had he only requested for it pursuant to the reply of the Chairman of the bank's board of
directors to Mendoza's letter protesting the reshuffle. There is, therefore, no cause to doubt the
reasons which the bank propounded in support of its move to reshuffle its employees, viz:
1. to 'familiarize bank employees with the various phases of bank operations,' and
2. to 'further strengthen the existing internal control system' of the bank.
"The reshuffling of its employees was done in good faith and cannot be made the basis of a
finding of constructive dismissal.
"The fact that Mendoza was no longer included in the bank's payroll for July 1 to 15, 1999 does
not signify that the bank has dismissed the former from its employ. Mendoza separated himself
from the bank's employ when, on June 24, 1999, while on leave, he filed the illegal dismissal
case against his employer for no apparent reason at all."18
Hence, this Petition.19
The Issues
Petitioner raises the following issues for our consideration:
"I. Whether or not the petitioner is deemed to have voluntarily separated himself from the
service and/or abandoned his job when he filed his Complaint for constructive and consequently
illegal dismissal;
"II. Whether or not the reshuffling of private respondent'[s] employees was done in good faith
and cannot be made as the basis of a finding of constructive dismissal, even as the
[petitioner's] demotion in rank is admitted by both parties;
"III. Whether or not the ruling in the landmark case of Ruben Serrano vs. NLRC [and Isetann
Department Store (323 SCRA 445)] is applicable to the case at bar;
"IV. Whether or not the Court of Appeals erred in dismissing the petitioner's money claims,
damages, and unpaid salaries for the period July 1-30, 1999, although this was not disputed by
the private respondent; and
"V. Whether or not the entire proceedings before the Honorable Court of Appeals and the NLRC
are a nullity since the appeal filed by private respondent before the NLRC on August 5, 2000
was on the 15th day or five (5) days beyond the reglem[e]ntary period of ten (10) days as
provided for by law and the NLRC Rules of Procedure."20
In short, the main issue is whether petitioner was constructively dismissed from his employment.
The Court's Ruling
The Petition has no merit.
Main Issue:
Constructive Dismissal
Constructive dismissal is defined as an involuntary resignation resorted to when continued employment
is rendered impossible, unreasonable or unlikely; when there is a demotion in rank or a diminution of
pay; or when a clear discrimination, insensibility or disdain by an employer becomes unbearable to the
employee.21 Petitioner argues that he was compelled to file an action for constructive dismissal,
because he had been demoted from appraiser to clerk and not given any work to do, while his table had
been placed near the toilet and eventually removed.22 He adds that the reshuffling of employees was
done in bad faith, because it was designed primarily to force him to resign.23
Management Prerogative
to Transfer Employees
Jurisprudence recognizes the exercise of management prerogatives. For this reason, courts often decline
to interfere in legitimate business decisions of employers.24 Indeed, labor laws discourage interference
in employers' judgments concerning the conduct of their business.25 The law must protect not only the
welfare of employees, but also the right of employers.
In the pursuit of its legitimate business interest, management has the prerogative to transfer or assign
employees from one office or area of operation to another -- provided there is no demotion in rank or
diminution of salary, benefits, and other privileges; and the action is not motivated by discrimination,
made in bad faith, or effected as a form of punishment or demotion without sufficient cause.26 This
privilege is inherent in the right of employers to control and manage their enterprise effectively.27 The
right of employees to security of tenure does not give them vested rights to their positions to the extent
of depriving management of its prerogative to change their assignments or to transfer them.28
Managerial prerogatives, however, are subject to limitations provided by law, collective bargaining
agreements, and general principles of fair play and justice.29 The test for determining the validity of the
transfer of employees was explained in Blue Dairy Corporation v. NLRC30 as follows:
"[L]ike other rights, there are limits thereto. The managerial prerogative to transfer personnel
must be exercised without grave abuse of discretion, bearing in mind the basic elements of
justice and fair play. Having the right should not be confused with the manner in which that
right is exercised. Thus, it cannot be used as a subterfuge by the employer to rid himself of an
undesirable worker. In particular, the employer must be able to show that the transfer is not
unreasonable, inconvenient or prejudicial to the employee; nor does it involve a demotion in
rank or a diminution of his salaries, privileges and other benefits. Should the employer fail to
overcome this burden of proof, the employee's transfer shall be tantamount to constructive
dismissal, which has been defined as a quitting because continued employment is rendered
impossible, unreasonable or unlikely; as an offer involving a demotion in rank and diminution in
pay. Likewise, constructive dismissal exists when an act of clear discrimination, insensibility or
disdain by an employer has become so unbearable to the employee leaving him with no option
but to forego with his continued employment."31
Petitioner's Transfer Lawful
The employer bears the burden of proving that the transfer of the employee has complied with the
foregoing test. In the instant case, we find no reason to disturb the conclusion of the NLRC and the CA
that there was no constructive dismissal. Their finding is supported by substantial evidence -- that
amount of relevant evidence that a reasonable mind might accept as justification for a conclusion.32
Petitioner's transfer was made in pursuit of respondent's policy to "familiarize bank employees with the
various phases of bank operations and further strengthen the existing internal control system"33 of all
officers and employees. We have previously held that employees may be transferred -- based on their
qualifications, aptitudes and competencies -- to positions in which they can function with maximum
benefit to the company.34 There appears no justification for denying an employer the right to transfer
employees to expand their competence and maximize their full potential for the advancement of the
establishment. Petitioner was not singled out; other employees were also reassigned without their
express consent.
Neither was there any demotion in the rank of petitioner; or any diminution of his salary, privileges and
other benefits. This fact is clear in respondent's Board Resolutions, the April 30, 1999 letter of Bank
President Daya to Branch Manager Cada, and the May 10, 1999 letter of Daya to petitioner.
On the other hand, petitioner has offered no sufficient proof to support his allegations. Given no
credence by both lower tribunals was his bare and self-serving statement that he had been positioned
near the comfort room, made to work without a table, and given no work assignment.35 Purely
conjectural is his claim that the reshuffle of personnel was a harassment in retaliation for an alleged
falsification case filed by his relatives against a public official.36 While the rules of evidence prevailing in
courts of law are not controlling in proceedings before the NLRC,37 parties must nonetheless submit
evidence to support their contentions.
Secondary Issues:
Serrano v. NLRC Inapplicable
Serrano v. NLRC38 does not apply to the present factual milieu. The Court ruled therein that the lack of
notice and hearing made the dismissal of the employee ineffectual, but not necessarily illegal.39 Thus,
the procedural infirmity was remedied by ordering payment of his full back wages from the time of his
dismissal.40 The absence of constructive dismissal in the instant case precludes the application of
Serrano. Because herein petitioner was not dismissed, then he is not entitled to his claimed monetary
benefits.
Alleged Nullity of NLRC
and CA Proceedings
Petitioner argues that the proceedings before the NLRC and the CA were void, since respondent's appeal
before the NLRC had allegedly been filed beyond the reglementary period.41 A careful scrutiny of his
Petition for Review42 with the appellate court shows that this issue was not raised there. Inasmuch as
the instant Petition challenges the Decision of the CA, we cannot rule on arguments that were not
brought before it. This ruling is consistent with the due-process requirement that no question shall be
entertained on appeal, unless it has been raised in the court below.43
WHEREFORE, this Petition is DENIED, and the June 14, 2002 Decision and the September 25, 2002
Resolution of the Court of Appeals are AFFIRMED. Costs against petitioner.
SO ORDERED.

Republic of the Philippines
SUPREME COURT
FIRST DIVISION
G.R. No. 115785 August 4, 2000
PHILIPPINE AIRLINES, INC., petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION (4th Division), and RAUL G. DIAMANTE,
respondents.
PARDO, J.:
The case is a petition for certiorari with prayer for preliminary injunction and temporary restraining
order, to nullify the decision of the National Labor Relations Commission1 dated March 18, 1994, which
states:
"WHEREFORE, the instant appeals are hereby granted. The decision under appeal is hereby set
aside and a new one entered declaring illegal the dismissal of the complainant appellants
Alfonso P. Araneta and Raul G. Diamante and ordering respondent Philippine Airlines to
reinstate them to their former or equivalent positions without loss of seniority rights, with three
(3) years backwages inclusive of allowances and other benefits.
"All other claims are hereby dismissed for lack of sufficient basis.
"SO ORDERED.
"Cebu City, Philippines.
"IRENEA E. CENIZA
"Commissioner"2
and the resolution of May 31, 1994 which provides:
"WHEREFORE, premises considered, the decision in question is hereby SET ASIDE as regards
complainant Alfonso Araneta only, whose appeal is hereby reopened to give the respondent-
appellee the opportunity to answer the same in accordance with our above discussion. Except
for this modification, the rest of the decision stays.
"SO ORDERED.
"Cebu City, Philippines.
"IRENEA E. CENIZA
"Presiding Commissioner"3
The facts are as follows:
On June 30, 1975, Philippine Airlines hired respondent Raul Diamante as Integrated Ticket
Representative for Bacolod City station.
On April 8, 1988, Edgardo Pineda, Rizalino Cabarloc, Ernesto Subia and Rolando Velasco went to Bacolod
Airport to have their tickets booked for their flight to Manila on April 9 and 10, 1988. Romeo Vista, a
former officemate of Edgardo Pineda, was their contact person. At the airport, Leticia Vista, wife of
Romeo Vista, introduced Raul Diamante to Edgardo Pineda as the person who could help in the booking
of his ticket. Pineda requested Diamante if he could book their tickets for the April 8, 1988 flight,
particularly Subia, who had to attend an important meeting in Manila. Diamante answered that all flights
for the week were fully booked. He suggested that he leave with him their tickets. Pineda gave four (4)
tickets to Diamante together with the amount of One Thousand Pesos (P1,000.00) then Diamante
assured them that they will be accommodated. Subia was booked for the April 8, 1988 flight to Manila
while Pineda, Velasco and Cabarloc were booked for the April 10, 1988 flight. When Subia failed to take
the flight due to illness, Diamante returned Subia's ticket to Vista the following day since it was
Diamante's day off. In order to facilitate Subia's re-booking, Vista asked for the help of her friend Nelia
Cawaling, a neighbor of PAL Station Agent Rodolfo Puentebella. With the help of Cawaling and
Puentebella, Subia was able to take the April 9, 1988 flight to Manila.
Upon their arrival in Manila, on June 20, 1988, Pineda executed an affidavit charging Diamante with
bribery/corruption. On July 08, 1988 petitioner's Bacolod Branch Manager required Diamante to
comment on the affidavit. On July 13, 1988, Diamante submitted his sworn statement denying the
allegations against him.
On July 27, 1988, after evaluation of the complaint and finding the explanation of Diamante insufficient,
petitioner's manager charged Diamante administratively with bribery/extortion and violation of PAL's
Code of Discipline, particularly Article VIII, Section 1, paragraph 2 thereof, which provides:
"Any employee who directly or indirectly requests or receives any consideration, share,
percentage or commission for himself or for another person in connection with the performance
of his duties."
Thereafter, petitioner convened an ad-hoc Committee on Administrative Investigation and conducted an
investigation. On October 3, 1988 at a clarificatory hearing of the committee Diamante appeared and
was investigated with the assistance of his counsel, Atty. Allan Zamora, and PALEA representative Mario
Cornelio. During the hearing, it was agreed to reset the hearing on October 24, 1988, to give Diamante
a chance to confront Pineda. After several postponements, there was never a confrontation. No
confrontation occurred due to the fact that the committee unilaterally set the confrontation on November
11, 1988, at Tuguegarao Airport, Cagayan, despite the previous agreement of the parties and
respondent counsel's request to reset it on November 22, 1988, in Manila. The Committee, after
deliberation, resolved the case on the basis of the evidence on record.
On December 14, 1988, Diamante received a notice of his dismissal from the service by an office
memorandum, dated November 29, 1988.
On January 17, 1989, Diamante filed with the National Labor Relations Commission, Regional Arbitration
Branch No. VI, Bacolod City, a complaint4 against Philippine Airlines, Inc. for illegal dismissal,
reinstatement with backwages and damages.
On October 28, 1992, Labor Arbiter Merlin Deloria rendered a decision5 declaring the dismissal legal and
valid.
On November 26, 1992, Diamante appealed the decision to the National Labor Relations Commission
(NLRC).
On March 18, 1994, the NLRC rendered a decision granting Diamante's appeal and setting aside the
Labor Arbiter's decision and ordering the reinstatement of Diamante with three years backwages.
On April 8, 1994, petitioner filed a motion for reconsideration which the NLRC denied in a resolution
dated May 31, 1994.
Hence, this petition.6
The principal issue before us is whether respondent was illegally dismissed which would entitle him to
reinstatement with backwages. Petitioner alleges that the National Labor Relations Commission
committed a grave error in ruling that private respondent was not accorded his full constitutional right to
due process of law.
We reiterate the rule that in certiorari proceedings under Rule 65 of the Revised Rules of Court, this
Court does not assess and weigh the sufficiency of evidence upon which the labor arbiter and the NLRC
based their decisions. Our query is limited to the determination of whether or not public respondent
acted without or in excess of jurisdiction or with grave abuse of discretion in rendering the assailed
decisions.7 When the findings of fact of the NLRC contradict those of the labor arbiters this Court must
of necessity review the records to determine which findings should be preferred as more conformable to
the evidentiary facts.8
Regarding the legality of respondent's dismissal, we note that respondent was found to have violated the
Company Code of Discipline. We recognize the right of an employer to regulate all aspects of
employment. This right, aptly called management prerogative, gives employers the freedom to regulate,
according to their discretion and best judgment, all aspects of employment, including work assignment,
working methods, processes to be followed, working regulations transfer of employees, work
supervision, lay-off of workers and the discipline, dismissal and recall of workers.9 In general,
management has the prerogative to discipline its employees and to impose appropriate penalties on
erring workers pursuant to company rules and regulations.
With respect to the procedural aspect of private respondent's dismissal, he was given ample opportunity
to present his side and to defend himself against the charges against him. He had every opportunity to
be heard. Petitioner sent a letter dated July 8, 1988, to respondent, requiring him to answer the charges
against him. He participated in the investigation conducted by the company and he appeared with his
counsel on October 3, 1988. After investigation, he was notified of his dismissal. The fact that
respondent Diamante was not able to confront Pineda did not mean that he was deprived of his right to
due process.
The essence of due process is simply an opportunity to be heard, or as applied to administrative
proceedings, an opportunity to explain one's side. A formal or trial type hearing is not at all times and in
all instances essential to due process, the requirements of which are satisfied where the parties are
afforded fair and reasonable opportunity to explain their side of the controversy.10
Since private respondent's dismissal was for just and valid cause, the order of public respondent for the
reinstatement of private respondent with award of backwages has no factual and legal basis.
WHEREFORE, the petition is hereby GRANTED. The challenged decision and resolution of the National
Labor Relations Commission are SET ASIDE. In lieu thereof, the decision of the Labor Arbiter dated
October 28, 1992, is AFFIRMED.
No costs.1wphi1.nt
SO ORDERED.

Republic of the Philippines
SUPREME COURT
Baguio City
FIRST DIVISION

G.R. No. 119205 April 15, 1998
SIME DARBY PILIPINAS, INC. petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION (2ND DIVISION) and SIME DARBY SALARIED
EMPLOYEES ASSOCIATION (ALU-TUCP), respondents.

BELLOSILLO, J.:
Is the act of management in revising the work schedule of its employees and discarding their paid lunch
break constitutive of unfair labor practice?
Sime Darby Pilipinas, Inc., petitioner, is engaged in the manufacture of automotive tires, tubes and
other rubber products. Sime Darby Salaried Employees Association (ALU-TUCP), private respondent, is
an association of monthly salaried employees of petitioner at its Marikina factory. Prior to the present
controversy, all company factory workers in Marikina including members of private respondent union
worked from 7:45 a.m. to 3:45 p.m. with a 30-minute paid "on call" lunch break.
On 14 August 1992 petitioner issued a memorandum to all factory-based employees advising all its
monthly salaried employees in its Marikina Tire Plant, except those in the Warehouse and Quality
Assurance Department working on shifts, a change in work schedule effective 14 September 1992 thus

TO: ALL FACTORY-BASED EMPLOYEES
RE: NEW WORK SCHEDULE
Effective Monday, September 14, 1992, the new work schedule of the factory office will be as
follows:
7:45 A.M. 4:45 P.M. (Monday to Friday)
7:45 A.M. 11:45 A.M. (Saturday).
Coffee break time will be ten minutes only anytime between:
9:30 A.M. 10:30 A.M. and
2:30 P.M. 3:30 P.M.
Lunch break will be between:
12:00 NN 1:00 P.M. (Monday to Friday).
Excluded from the above schedule are the Warehouse and QA employees who are on shifting.
Their work and break time schedules will be maintained as it is now. 1
Since private respondent felt affected adversely by the change in the work schedule and discontinuance
of the 30-minute paid "on call" lunch break, it filed on behalf of its members a complaint with the Labor
Arbiter for unfair labor practice, discrimination and evasion of liability pursuant to the resolution of this
Court in Sime Darby International Tire Co., Inc. v. NLRC. 2 However, the Labor Arbiter dismissed the
complaint on the ground that the change in the work schedule and the elimination of the 30-minute paid
lunch break of the factory workers constituted a valid exercise of management prerogative and that the
new work schedule, break time and one-hour lunch break did not have the effect of diminishing the
benefits granted to factory workers as the working time did not exceed eight (8) hours.
The Labor Arbiter further held that the factory workers would be unjustly enriched if they continued to
be paid during their lunch break even if they were no longer "on call" or required to work during the
break. He also ruled that the decision in the earlier Sime Darby case 3 was not applicable to the instant
case because the former involved discrimination of certain employees who were not paid for their 30-
minute lunch break while the rest of the factory workers were paid; hence, this Court ordered that the
discriminated employees be similarly paid the additional compensation for their lunch break.
Private respondent appealed to respondent National Labor Relations Commission (NLRC) which sustained
the Labor Arbiter and dismissed the appeal. 4 However, upon motion for reconsideration by private
respondent, the NLRC, this time with two (2) new commissioners replacing those who earlier retired,
reversed its earlier decision of 20 April 1994 as well as the decision of the Labor Arbiter. 5 The NLRC
considered the decision of this Court in the Sime Darby case of 1990 as the law of the case wherein
petitioner was ordered to pay "the money value of these covered employees deprived of lunch and/or
working time breaks." The public respondent declared that the new work schedule deprived the
employees of the benefits of a time-honored company practice of providing its employees a 30-minute
paid lunch break resulting in an unjust diminution of company privileges prohibited by Art. 100 of the
Labor Code, as amended. Hence, this petition alleging that public respondent committed grave abuse of
discretion amounting to lack or excess of jurisdiction: (a) in ruling that petitioner committed unfair labor
practice in the implementation of the change in the work schedule of its employees from 7:45 a.m.
3:45 p.m. to 7:45 a.m. 4:45 p.m. with one-hour lunch break from 12:00 nn to 1:00 p.m.; (b) in
holding that there was diminution of benefits when the 30-minute paid lunch break was eliminated; (c)
in failing to consider that in the earlier Sime Darby case affirming the decision of the NLRC, petitioner
was authorized to discontinue the practice of having a 30-minute paid lunch break should it decide to do
so; and, (d) in ignoring petitioner's inherent management prerogative of determining and fixing the
work schedule of its employees which is expressly recognized in the collective bargaining agreement
between petitioner and private respondent.
The Office of the Solicitor General filed in a lieu of comment a manifestation and motion recommending
that the petitioner be granted, alleging that the 14 August 1992 memorandum which contained the new
work schedule was not discriminatory of the union members nor did it constitute unfair labor practice on
the part of petitioner.
We agree, hence, we sustain petitioner. The right to fix the work schedules of the employees rests
principally on their employer. In the instant case petitioner, as the employer, cites as reason for the
adjustment the efficient conduct of its business operations and its improved production. 6 It rationalizes
that while the old work schedule included a 30-minute paid lunch break, the employees could be called
upon to do jobs during that period as they were "on call." Even if denominated as lunch break, this
period could very well be considered as working time because the factory employees were required to
work if necessary and were paid accordingly for working. With the new work schedule, the employees
are now given a one-hour lunch break without any interruption from their employer. For a full one-hour
undisturbed lunch break, the employees can freely and effectively use this hour not only for eating but
also for their rest and comfort which are conducive to more efficiency and better performance in their
work. Since the employees are no longer required to work during this one-hour lunch break, there is no
more need for them to be compensated for this period. We agree with the Labor Arbiter that the new
work schedule fully complies with the daily work period of eight (8) hours without violating the Labor
Code. 7 Besides, the new schedule applies to all employees in the factory similarly situated whether they
are union members or not. 8
Consequently, it was grave abuse of discretion for public respondent to equate the earlier Sime Darby
case 9 with the facts obtaining in this case. That ruling in the former case is not applicable here. The
issue in that case involved the matter of granting lunch breaks to certain employees while depriving the
other employees of such breaks. This Court affirmed in that case the NLRC's finding that such act of
management was discriminatory and constituted unfair labor practice.
The case before us does not pertain to any controversy involving discrimination of employees but only
the issue of whether the change of work schedule, which management deems necessary to increase
production, constitutes unfair labor practice. As shown by the records, the change effected by
management with regard to working time is made to apply to all factory employees engaged in the same
line of work whether or not they are members of private respondent union. Hence, it cannot be said that
the new scheme adopted by management prejudices the right of private respondent to self-organization.
Every business enterprise endeavors to increase its profits. In the process, it may devise means to attain
that goal. Even as the law is solicitous of the welfare of the employees, it must also protect the right of
an employer to exercise what are clearly management prerogatives. 10 Thus, management is free to
regulate, according to its own discretion and judgment, all aspects of employment, including hiring, work
assignments, working methods, time, place and manner of work, processes to be followed, supervision
of workers, working regulations, transfer of employees, work supervision, lay off of workers and
discipline, dismissal and recall of workers. 11 Further, management retains the prerogative, whenever
exigencies of the service so require, to change the working hours of its employees. So long as such
prerogative is exercised in good faith for the advancement of the employer's interest and not for the
purpose of defeating or circumventing the rights of the employees under special laws or under valid
agreements, this Court will uphold such exercise. 12
While the Constitution is committed to the policy of social justice and the protection of the working class,
it should not be supposed that every dispute will be automatically decided in favor of labor. Management
also has rights which, as such, are entitled to respect and enforcement in the interest of simple fair play.
Although this Court has inclined more often than not toward the worker and has upheld his cause in his
conflicts with the employer, such favoritism has not blinded the Court to the rule that justice is in every
case for the deserving, to be dispensed in the light of the established facts and the applicable law and
doctrine. 13
WHEREFORE, the Petition is GRANTED. The Resolution of the National Labor Relations Commission dated
29 November 1994 is SET ASIDE and the decision of the Labor Arbiter dated 26 November 1993
dismissing the complaint against petitioner for unfair labor practice is AFFIRMED.
SO ORDERED.


Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION

G.R. No. 122468 November 16, 1998
SENTINEL SECURITY AGENCY, INC., petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, ADRIANO CABANO JR., VERONICO C. ZAMBO,
HELCIAS ARROYO, RUSTICO ANDOY, and MAXIMO ORTIZ, respondents.
G.R. No. 122716 November 16, 1998
PHILIPPINE AMERICAN LIFE INSURANCE COMPANY, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, VERONICO ZAMBO, HELCIAS ARROYO, ADRIANO
CABANO, MAXIMO ORTIZ, and RUSTICO ANDOY, respondents.
R E S O L U T I O N

PANGANIBAN, J.:
Separately filed before us by Petitioners Sentinel Security Agency, Inc. and Philippine American Life
Insurance Company (hereafter referred to as the Agency and the Client, respectively) are two Motions
for Reconsideration of this Court's September 3, 1998 Decision in GR Nos. 122468 and 122716.
Petitioner Agency, in its Motion for Reconsideration, merely reiterates the same basic issues and
arguments already submitted to the Court, which has sufficiently passed upon them in the assailed
Decision. Thus, they cannot warrant a modification, much less a reversal, of our dispositions therein.
On the other hand, Petitioner Client requests a clarification of its own liability. That the complainants'
illegal dismissal was the sole responsibility of the Agency was clearly stated by the Court in the assailed
Decision, which we quote hereunder:
. . . [T]here was no suspension of operation, business or undertaking, bona fide or not,
that would have justified placing the complainants off-detail and making them wait for
a period of six months. . . . The only logical conclusion from the foregoing discussion is
that the Agency illegally dismissed the complainants. Hence, as a necessary
consequence, the complainants are entitled to . . . back wages. . . . . 1
Relevant to this controversy is the recent pronouncement of the Court in Rosewood v. National Labor
Relations Commission: 2
. . . [A]n order to pay back wages and separation pay is invested with a punitive
character, such that an indirect employer should not be made liable without a finding
that it had committed or conspired in the illegal dismissal.
In the present case, the Court held that the Client was not responsible for the illegal dismissal of the
complainants and, thus, not liable for the payment of back wages and separation pay, viz.:
The Client did not, as it could not, illegally dismiss the complainants. Thus, if should
not be held liable for separation pay and back wages. 3
In sum, while the exoneration of the Client from the payment of separation pay and back wages was
clearly stated in the body of our Decision, such fact was not included in the dispositive portion. In this
sense, the Motion for Reconsideration has merit.
However, the Decision did not completely exonerate the Client which, as an indirect employer, is
solidarily liable with Petitioner Agency for the complainants' unpaid service incentive leave, pursuant to
Articles 106, 107 and 109 of the Code. As clarified by the Court in Rosewood:
. . . Under these cited provisions of the Labor Code should the contractor fail to pay
the wages of its employees in accordance with law, the indirect employer (the
petitioner in this case), is jointly and severally liable with the contractor, but such
responsibility should be understood to be limited to the extent of the work performed
under the contract, in the same manner and extent that he is liable to the employees
directly employed by him. This liability of petitioner covers the payment of the
workers' performance of any work, task, job or project. So long as the work, task, job
or project has been performed for petitioner's benefit or on its behalf, the liability
accrues for such period even if, later on, the employees are eventually transferred or
reassigned elsewhere.
The complainants' service incentive leave pay accrued to them during the years 1991-1993; that is,
before they were illegally dismissed by the Agency on January 16, 1994, as clearly shown in the labor
arbiter's computation (see last page of Annex "A" to the Petition; rollo, p. 31).
WHEREFORE, the Motion for Reconsideration filed by the Agency is hereby DENIED, as it (1) raises the
same basic issues already sufficiently passed upon in the Court's Decision and (2) fails to submit any
substantial argument to warrant reversal or modification thereof insofar as its liabilities are concerned.
The Motion for Reconsideration filed by the Client is GRANTED IN PART. We hereby CLARIFY that for
complainants' back wages and separation pay, Philippine American Life Insurance Company is
ABSOLVED from liability; but for complainants' service incentive leave pay, its solidary liability with the
Agency is REITERATED.
SO ORDERED.

Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 155421 July 7, 2004
ELMER M. MENDOZA, petitioner,
vs.
RURAL BANK OF LUCBAN, respondent.

D E C I S I O N

PANGANIBAN, J.:
The law protects both the welfare of employees and the prerogatives of management. Courts will not
interfere with business judgments of employers, provided they do not violate the law, collective
bargaining agreements, and general principles of fair play and justice. The transfer of personnel from
one area of operation to another is inherently a managerial prerogative that shall be upheld if exercised
in good faith -- for the purpose of advancing business interests, not of defeating or circumventing the
rights of employees.
The Case
The Court applies these principles in resolving the instant Petition for Review1 under Rule 45 of the
Rules of Court, assailing the June 14, 2002 Decision2 and September 25, 2002 Resolution3 of the Court
of Appeals (CA) in CA-GR SP No. 68030. The assailed Decision disposed as follows:
"WHEREFORE, the petition for certiorari is hereby DISMISSED for lack of merit."4
The challenged Resolution denied petitioner's Motion for Reconsideration.
The Facts
On April 25, 1999, the Board of Directors of the Rural Bank of Lucban, Inc., issued Board Resolution
Nos. 99-52 and 99-53, which read:
"Board Res. No. 99-52
"'RESOLVED AS IT IS HEREBY RESOLVED' that in line with the policy of the bank to familiarize
bank employees with the various phases of bank operations and further strengthen the existing
internal control system[,] all officers and employees are subject to reshuffle of assignments.
Moreover, this resolution does not preclude the transfer of assignment of bank officers and
employees from the branch office to the head office and vice-versa."
"Board Res. No. 95-53
"Pursuant to Resolution No. 99-52, the following branch employees are hereby reshuffled to
their new assignments without changes in their compensation and other benefits.
NAME OF EMPLOYEES PRESENT ASSIGNMENT NEW ASSIGNMENT
JOYCE V. ZETA Bank Teller C/A Teller
CLODUALDO ZAGALA C/A Clerk Actg. Appraiser
ELMER L. MENDOZA Appraiser Clerk-Meralco Collection
CHONA R. MENDOZA Clerk-Meralco Collection Bank Teller"5
In a letter dated April 30, 1999, Alejo B. Daya, the bank's board chairman, directed Briccio V. Cada, the
manager of the bank's Tayabas branch, to implement the reshuffle.6 The new assignments were to "be
effective on May 1, 1999 without changes in salary, allowances, and other benefits received by the
aforementioned employees."7
On May 3, 1999, in an undated letter addressed to Daya, Petitioner Elmer Mendoza expressed his
opinion on the reshuffle, as follows:
"RE: The recent reshuffle of employees as per
Board Resolution dated April 25, 1999
"Dear Sir:
"This is in connection with the aforementioned subject matter and which the undersigned
received on April 25, 1999.
"Needless to state, the reshuffling of the undersigned from the present position as Appraiser to
Clerk-Meralco Collection is deemed to be a demotion without any legal basis. Before this action
on your part[,] the undersigned has been besieged by intrigues due to [the] malicious
machination of a certain public official who is bruited to be your good friend. These malicious
insinuations were baseless and despite the fact that I have been on my job as Appraiser for the
past six (6) years in good standing and never involved in any anomalous conduct, my being
reshuffled to [C]lerk-[M]eralco [C]ollection is a blatant harassment on your part as a prelude to
my termination in due time. This will constitute an unfair labor practice.
"Meanwhile, may I beseech your good office that I may remain in my position as Appraiser until
the reason [for] my being reshuffled is made clear.
"Your kind consideration on this request will be highly appreciated."8
On May 10, 1999, Daya replied:
"Dear Mr. Mendoza,
"Anent your undated letter expressing your resentment/comments on the recent management's
decision to reshuffle the duties of bank employees, please be informed that it was never the
intention (of management) to downgrade your position in the bank considering that your due
compensation as Bank Appraiser is maintained and no future reduction was intended.
"Aside from giving bank employees a wider experience in various banking operations, the
reshuffle will also afford management an effective tool in providing the bank a sound internal
control system/check and balance and a basis in evaluating the performance of each employee.
A continuing bankwide reshuffle of employees shall be made at the discretion of management
which may include bank officers, if necessary as expressed in Board Resolution No. 99-53,
dated April 25, 1999. Management merely shifted the duties of employees, their position title
[may be] retained if requested formally.
"Being a standard procedure in maintaining an effective internal control system recommended
by the Bangko Sentral ng Pilipinas, we believe that the conduct of reshuffle is also a prerogative
of bank management."9
On June 7, 1999, petitioner submitted to the bank's Tayabas branch manager a letter in which he
applied for a leave of absence from work:
"Dear Sir:
"I wish I could continue working but due to the ailment that I always feel every now and then, I
have the honor to apply for at least ten (10) days sick leave effective June 7, 1999.
"Hoping that this request [merits] your favorable and kind consideration and understanding."10
On June 21, 1999, petitioner again submitted a letter asking for another leave of absence for twenty
days effective on the same date.11
On June 24, 1999, while on his second leave of absence, petitioner filed a Complaint before Arbitration
Branch No. IV of the National Labor Relations Commission (NLRC). The Complaint -- for illegal dismissal,
underpayment, separation pay and damages -- was filed against the Rural Bank of Lucban and/or its
president, Alejo B. Daya; and its Tayabas branch manager, Briccio V. Cada. The case was docketed as
NLRC Case SRAB-IV-6-5862-99-Q.12
The labor arbiter's June 14, 2000 Decision upheld petitioner's claims as follows:
"WHEREFORE, premises considered, judgment is hereby rendered as follows:
1. Declaring respondents guilty of illegal dismissal.
2. Ordering respondents to reinstate complainant to his former position without loss of
seniority rights with full backwages from date of dismissal to actual reinstatement in
the amount of P55,000.00 as of June 30, 2000.
3. Ordering the payment of separation pay if reinstatement is not possible in the
amount of P30,000.00 in addition to 13th month pay of P5,000.00 and the usual
P10,000.00 annual bonus afforded the employees.
4. Ordering the payment of unpaid salary for the period covering July 1-30, 1999 in
the amount of P5,000.00
5. Ordering the payment of moral damages in the amount of P50,000.00.
6. Ordering the payment of exemplary damages in the amount of P25,000.00
7. Ordering the payment of Attorney's fees in the amount of P18,000.00 which is 10%
of the monetary award."13
On appeal, the NLRC reversed the labor arbiter.14 In its July 18, 2001 Resolution, it held:
"We can conceive of no reason to ascribe bad faith or malice to the respondent bank for its
implementation of its Board Resolution directing the reshuffle of employees at its Tayabas
branch to positions other than those they were occupying. While at first the employees thereby
affected would experience difficulty in adjusting to their new jobs, it cannot be gainsaid that the
objective for the reshuffle is noble, as not only would the employees obtain additional
knowledge, they would also be more well-rounded in the operations of the bank and thus help
the latter further strengthen its already existing internal control system.
"The only inconvenience, as [w]e see it, that the [petitioner] may have experienced is that from
an appraiser he was made to perform the work of a clerk in the collection of Meralco payments,
which he may have considered as beneath him and his experience, being a pioneer employee.
But it cannot be discounted either that other employees at the Tayabas branch were similarly
reshuffled. The only logical conclusion therefore is that the Board Resolution was not aimed
solely at the [petitioner], but for all the other employees of the x x x bank as well. Besides, the
complainant has not shown by clear, competent and convincing evidence that he holds a vested
right to the position of Appraiser. x x x.
"How and by what manner a business concern conducts its affairs is not for this Commission to
interfere with, especially so if there is no showing, as in the case at bar, that the reshuffle was
motivated by bad faith or ill-will. x x x."15
After the NLRC denied his Motion for Reconsideration,16 petitioner brought before the CA a Petition for
Certiorari17 assailing the foregoing Resolution.
Ruling of the Court of Appeals
Finding that no grave abuse of discretion could be attributed to the NLRC, the CA Decision ruled thus:
"The so-called 'harassment' which Mendoza allegedly experienced in the aftermath of the
reshuffling of employees at the bank is but a figment of his imagination as there is no evidence
extant on record which substantiates the same. His alleged demotion, the 'cold shoulder'
stance, the things about his chair and table, and the alleged reason for the harassment are but
allegations bereft of proof and are perforce inadmissible as self-serving statements and can
never be considered repositories of truth nor serve as foundations of court decisions anent the
resolution of the litigants' rights.
"When Mendoza was reshuffled to the position of clerk at the bank, he was not demoted as
there was no [diminution] of his salary benefits and rank. He could even retain his position title,
had he only requested for it pursuant to the reply of the Chairman of the bank's board of
directors to Mendoza's letter protesting the reshuffle. There is, therefore, no cause to doubt the
reasons which the bank propounded in support of its move to reshuffle its employees, viz:
1. to 'familiarize bank employees with the various phases of bank operations,' and
2. to 'further strengthen the existing internal control system' of the bank.
"The reshuffling of its employees was done in good faith and cannot be made the basis of a
finding of constructive dismissal.
"The fact that Mendoza was no longer included in the bank's payroll for July 1 to 15, 1999 does
not signify that the bank has dismissed the former from its employ. Mendoza separated himself
from the bank's employ when, on June 24, 1999, while on leave, he filed the illegal dismissal
case against his employer for no apparent reason at all."18
Hence, this Petition.19
The Issues
Petitioner raises the following issues for our consideration:
"I. Whether or not the petitioner is deemed to have voluntarily separated himself from the
service and/or abandoned his job when he filed his Complaint for constructive and consequently
illegal dismissal;
"II. Whether or not the reshuffling of private respondent'[s] employees was done in good faith
and cannot be made as the basis of a finding of constructive dismissal, even as the
[petitioner's] demotion in rank is admitted by both parties;
"III. Whether or not the ruling in the landmark case of Ruben Serrano vs. NLRC [and Isetann
Department Store (323 SCRA 445)] is applicable to the case at bar;
"IV. Whether or not the Court of Appeals erred in dismissing the petitioner's money claims,
damages, and unpaid salaries for the period July 1-30, 1999, although this was not disputed by
the private respondent; and
"V. Whether or not the entire proceedings before the Honorable Court of Appeals and the NLRC
are a nullity since the appeal filed by private respondent before the NLRC on August 5, 2000
was on the 15th day or five (5) days beyond the reglem[e]ntary period of ten (10) days as
provided for by law and the NLRC Rules of Procedure."20
In short, the main issue is whether petitioner was constructively dismissed from his employment.
The Court's Ruling
The Petition has no merit.
Main Issue:
Constructive Dismissal
Constructive dismissal is defined as an involuntary resignation resorted to when continued employment
is rendered impossible, unreasonable or unlikely; when there is a demotion in rank or a diminution of
pay; or when a clear discrimination, insensibility or disdain by an employer becomes unbearable to the
employee.21 Petitioner argues that he was compelled to file an action for constructive dismissal,
because he had been demoted from appraiser to clerk and not given any work to do, while his table had
been placed near the toilet and eventually removed.22 He adds that the reshuffling of employees was
done in bad faith, because it was designed primarily to force him to resign.23
Management Prerogative
to Transfer Employees
Jurisprudence recognizes the exercise of management prerogatives. For this reason, courts often decline
to interfere in legitimate business decisions of employers.24 Indeed, labor laws discourage interference
in employers' judgments concerning the conduct of their business.25 The law must protect not only the
welfare of employees, but also the right of employers.
In the pursuit of its legitimate business interest, management has the prerogative to transfer or assign
employees from one office or area of operation to another -- provided there is no demotion in rank or
diminution of salary, benefits, and other privileges; and the action is not motivated by discrimination,
made in bad faith, or effected as a form of punishment or demotion without sufficient cause.26 This
privilege is inherent in the right of employers to control and manage their enterprise effectively.27 The
right of employees to security of tenure does not give them vested rights to their positions to the extent
of depriving management of its prerogative to change their assignments or to transfer them.28
Managerial prerogatives, however, are subject to limitations provided by law, collective bargaining
agreements, and general principles of fair play and justice.29 The test for determining the validity of the
transfer of employees was explained in Blue Dairy Corporation v. NLRC30 as follows:
"[L]ike other rights, there are limits thereto. The managerial prerogative to transfer personnel
must be exercised without grave abuse of discretion, bearing in mind the basic elements of
justice and fair play. Having the right should not be confused with the manner in which that
right is exercised. Thus, it cannot be used as a subterfuge by the employer to rid himself of an
undesirable worker. In particular, the employer must be able to show that the transfer is not
unreasonable, inconvenient or prejudicial to the employee; nor does it involve a demotion in
rank or a diminution of his salaries, privileges and other benefits. Should the employer fail to
overcome this burden of proof, the employee's transfer shall be tantamount to constructive
dismissal, which has been defined as a quitting because continued employment is rendered
impossible, unreasonable or unlikely; as an offer involving a demotion in rank and diminution in
pay. Likewise, constructive dismissal exists when an act of clear discrimination, insensibility or
disdain by an employer has become so unbearable to the employee leaving him with no option
but to forego with his continued employment."31
Petitioner's Transfer Lawful
The employer bears the burden of proving that the transfer of the employee has complied with the
foregoing test. In the instant case, we find no reason to disturb the conclusion of the NLRC and the CA
that there was no constructive dismissal. Their finding is supported by substantial evidence -- that
amount of relevant evidence that a reasonable mind might accept as justification for a conclusion.32
Petitioner's transfer was made in pursuit of respondent's policy to "familiarize bank employees with the
various phases of bank operations and further strengthen the existing internal control system"33 of all
officers and employees. We have previously held that employees may be transferred -- based on their
qualifications, aptitudes and competencies -- to positions in which they can function with maximum
benefit to the company.34 There appears no justification for denying an employer the right to transfer
employees to expand their competence and maximize their full potential for the advancement of the
establishment. Petitioner was not singled out; other employees were also reassigned without their
express consent.
Neither was there any demotion in the rank of petitioner; or any diminution of his salary, privileges and
other benefits. This fact is clear in respondent's Board Resolutions, the April 30, 1999 letter of Bank
President Daya to Branch Manager Cada, and the May 10, 1999 letter of Daya to petitioner.
On the other hand, petitioner has offered no sufficient proof to support his allegations. Given no
credence by both lower tribunals was his bare and self-serving statement that he had been positioned
near the comfort room, made to work without a table, and given no work assignment.35 Purely
conjectural is his claim that the reshuffle of personnel was a harassment in retaliation for an alleged
falsification case filed by his relatives against a public official.36 While the rules of evidence prevailing in
courts of law are not controlling in proceedings before the NLRC,37 parties must nonetheless submit
evidence to support their contentions.
Secondary Issues:
Serrano v. NLRC Inapplicable
Serrano v. NLRC38 does not apply to the present factual milieu. The Court ruled therein that the lack of
notice and hearing made the dismissal of the employee ineffectual, but not necessarily illegal.39 Thus,
the procedural infirmity was remedied by ordering payment of his full back wages from the time of his
dismissal.40 The absence of constructive dismissal in the instant case precludes the application of
Serrano. Because herein petitioner was not dismissed, then he is not entitled to his claimed monetary
benefits.
Alleged Nullity of NLRC
and CA Proceedings
Petitioner argues that the proceedings before the NLRC and the CA were void, since respondent's appeal
before the NLRC had allegedly been filed beyond the reglementary period.41 A careful scrutiny of his
Petition for Review42 with the appellate court shows that this issue was not raised there. Inasmuch as
the instant Petition challenges the Decision of the CA, we cannot rule on arguments that were not
brought before it. This ruling is consistent with the due-process requirement that no question shall be
entertained on appeal, unless it has been raised in the court below.43
WHEREFORE, this Petition is DENIED, and the June 14, 2002 Decision and the September 25, 2002
Resolution of the Court of Appeals are AFFIRMED. Costs against petitioner.
SO ORDERED.


Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 156963 November 11, 2004
THE PHILIPPINE AMERICAN LIFE AND GENERAL INSURANCE CO., petitioner,
vs.
ANGELITA S. GRAMAJE, respondent.

D E C I S I O N

CHICO-NAZARIO, J.:
This is a Petition for Review on Certiorari which seeks the review and reversal of the Decision1 of the
Court of Appeals promulgated on 18 October 2002, reversing and setting aside the decision of the
National Labor Relations Commission (NLRC), and the Resolution2 of the same appellate court dated 20
January 2003, denying the Motion for Reconsideration, for lack of merit.
Once again, the Court is being called upon to rule on a question that continuously besets labor-
management relations --- what is and what is not to be considered a legitimate exercise of management
prerogative.
The facts, as found by the Court of Appeals,3 are as follows:
Private respondent Philippine American Life and General Insurance Company is a corporation
duly organized and existing under Philippine laws. Individual respondents occupy the following
positions, namely: Maurice Greenberg, as president of the Company; Jose Cuisia, Jr. as
Chairman of the Board; Maria Haas and Gardon Watson as Regional Coordinating Pensions
Officers, Reynaldo C. Centeno as Executive Vice-President, Chief Financial Officer and Chief
Actuary; and Anthony Sotelo as the Senior Vice-President and Head of the Human Resources
Department.
Petitioner was employed on October 28, 1997 by private respondent as Assistant Vice President
and Head of the Pensions Department and in concurrent capacity as Trust Officer of Philam
Savings Bank, a Philam Life subsidiary. She was to be paid P750,000.00 per annum and is
entitled to the benefits given by private respondent to its employees.
Working as Assistant Vice President of Pensions Department of Philamlife, petitioner was
offered an additional position by respondent Cuisia, which was then resolved and approved by
Philam Savings Bank's Board of Directors, for the position of Head of Trust Banking Division or
AVP-Trust Officer on a concurrent capacity and under a separate compensation.
Effective January 1998, however, petitioner's marketing manager and marketing officer were
immediately transferred to Group Insurance Division. Petitioner, thereafter, was never given
replacements for the marketing manager and marketing officer, contrary to private respondent
Cuisia's assurance. Thus, petitioner ran the Pensions Department single-handedly with only one
administrative assistant as her staff. Petitioner did the field work, the desk work
(administrative, legal, finance, marketing), the out of town meetings, the client presentations,
aside from her work with the Philam Savings Bank as fund manager, wherein private
respondent Cuisia offered to her for a separate compensation, but has still remain [sic] unpaid.
Sometime in November, 1998, petitioner availed of her housing and car benefits and applied for
a car loan and housing loan.
On November 18, 1998, however, private respondent through Centeno and Sotelo, offered her
P250,000.00 for her to vacate her position by December 1998. Petitioner declined the offer
considering that there was no valid reason for her to leave. Private respondents Centeno and
Sotelo admonished her that her filing of suit would prompt respondent Cuisia to blacklist her in
companies where he holds directorships and advised her that Philamlife is big and can stand the
long ordeal of justice system, whereas she may not withstand the phase of the trial. Evidence
that this meeting and matter took place was the formal letter of rejection dated November 25,
1998 sent by petitioner and duly received by the offices of respondents Cuisia, Centeno and
Sotelo.
Pertinent portion of the November 25, 1998 letter is hereby quoted:
[T]his shall summarize the discussion of meeting held at Mr. Centeno's Office last November
18, 1998.
Briefly, an offer of Two Hundred Fifty Thousand [Pesos] (P250,000) has been made as
Settlement fee so that Philamlife will not resort to transferring undersigned to another
department for reasons only known to management and which undersigned is still not fully
aware in writing. In so doing, it has been emphasized that Mr. Centeno and Mr. Sotelo is (sic)
sparing undersigned of the hardships that undersigned will undergo in the said other
department which is intended to make undersigned inefficient and eventually serve as basis for
her termination or as claimed "non-election" by March 1999. Further, it has been requested and
categorically stated by Mr. Sotelo that undersigned forgive Maria Haas for whatever she has
done
On December 6, 1998, respondent Cuisia met with petitioner and cajoled her to reconsider and
accept the offer of settlement. Cuisia even volunteered to help her look for another job.
Petitioner declined, and reiterated that the actuations of respondents clearly intended to harass
and humiliate her and have caused her and her family extreme emotional stress.
On December 8, 1998, two days after the aforesaid December 6 meeting, respondents issued
her a memorandum instructing her to transfer to the Legal Department effective December 14,
1998 and to make proper turnover and submit the status report not later than December 11,
1998.
By her letter dated December 10, 1998, petitioner protested the sudden unexplained transfer,
more so a non-existing position, and stressed that she was hired because of her marketing,
finance, and fund management skills, not her legal skills. She also made of record that her
department surpassed the target fund level volume set by the company, thus:
Undersigned wish to inform you that your directive for the transfer of undersigned to the legal
department is being contested on the ground of outright violation of undersigned's rights.
Undersigned believe that the transfer will not make her efficient in her work. Undersigned was
hired primarily because of her marketing, finance, and fund management skills. Her legal skills
are secondary and supplementary in nature. Thus, transfer to the legal department, which is
primarily legal, is not acceptable for it will only make undersigned less efficient and negates her
productivity and contribution to the company.
Let it be on record, that as of today, the Department has surpassed its P15 Million target, which
was originally at P12 Million, as set by no less than the president of Philamlife during the
budget preparation and as duly reviewed and approved by the head of the corporation planning
department, as fully documented. For the records, we are almost hitting the P20 Million fund
level volume, and we are just waiting for the confirmed P109 Million placement of Adamson
University Retirement Fund.
With the above, by December 14, 1998 undersigned will continue to be the head of the
Pensions Department until this new issue and the other issues raised are fully resolved.
Atty. Angelita S. Gramaje
AVP-Pensions Department
Also, on December 10, 1998, respondent Centeno declined the car loan benefit of petitioner,
thus:
This refers to your 9 December 1998 memorandum regarding your request for a car loan. I
have earlier discussed your application for a car loan with both Mr. Anthony B. Sotelo, FVP and
Corporate HR Director and Mr. Jose L. Cuisia, Jr., President and CEO. Considering your present
employment status, which has been the subject of several discussions between you and Messrs.
Jose L. Cuisia, Jr. and Anthony B. Sotelo and myself, we deem it prudent to defer action on
your loan request until such time that the issue is resolved with definitiveness.
On December 16, 1998, petitioner, while on Official Sick Leave, received a message in her
pager that the Pensions Department, which was then holding office at the fifth floor of the
Philamlife Building at United Nations Avenue was assumed to be headed by Corine Moralda as
her successor, and the Pensions Department was to be immediately physically transferred on
said date at the Philamlife Gammon Center in Makati City. Though sick and on official sick
leave, petitioner went to the office on December 17, 1998 to verify, and upon seeing the
Pensions Department totally dark, without any staff and with left over fixtures, petitioner,
emotionally shattered, opted to just leave the premises.
On December 18, 1998, respondent Cuisia through a memorandum appointed Ms. Corine
Moralda as replacement of petitioner as Head of the Pensions Department effective December
14, 1998. It was only at that time that petitioner learned that as early as August 23, 1998,
respondents had advertised in the Manila Bulletin for her replacement.
Also, although, it is the tradition of Philamlife to give, during the Christmas Season, officers and
employees a traditional Season's giveaways, i.e., ham and queso de bola, petitioner then, thru
her authorized representatives, asked for her share, but she was not in the list of recipients.
Petitioner's name was not in the Legal Department, not in the Pensions Department, and not in
the list of employees of Philamlife when verified with the Personnel Department.
Hence, on December 23, 1998, petitioner filed the instant case for illegal or constructive
dismissal against herein private respondents.
The Labor Arbiter, in his decision4 dated 01 June 2000, found that respondent was not illegally
dismissed. The said decision held in part:
After a careful evaluation of the records, this Office finds and so holds that complainant's
"alleged" illegal dismissal seemed never to have taken place at all, constructive or otherwise.
Complainant's insistence in holding onto her former position for which, as earlier assessed by
the Company, she did not meet the high standards expected of her, does not deserve support.
. . .
Complainant's supposed transfer to the Legal Department cannot be considered to be
unbearable, nor inconvenient, nor prejudicial to the employee, as it did not even involve a
demotion in rank or diminution of [her] salaries, benefits and other privileges. Complainant held
the position of AVP-Pensions. Her supposed transfer to the Legal Department, still with the rank
of AVP, and most importantly, with the same salaries and benefits, cannot, by any stretch of
imagination, be considered as amounting to a constructive dismissal.
. . .
WHEREFORE, decision is hereby rendered declaring that complainant was not illegally
dismissed. In ordering her transfer from the Pensions Department to the Legal Department, the
respondent company was just exercising a legitimate management prerogative.5
The NLRC, in its Decision dated 27 November 2000, affirmed in toto the Decision of the Labor Arbiter.
Respondent appealed to the Court of Appeals, which in a decision dated 18 October 2002 reversed and
set aside the decision of the NLRC, the dispositive portion of which reads:
WHEREFORE, in view of all the foregoing, the assailed decision of public respondent NLRC is
hereby REVERSED and SET ASIDE. Accordingly, private respondent is hereby ORDERED to pay
petitioner separation pay in lieu of reinstatement, her full backwages inclusive of allowances
and other benefits or their monetary equivalent. For this purpose, the case is remanded to the
Labor Arbiter for further proceedings solely for the purpose of determining and/or computing
the monetary liabilities of private respondents.
Additionally, considering that private respondents were proven to be in bad faith in the constructive
dismissal of petitioner, the former are hereby ordered to pay the latter exemplary damages in the
amount of Fifty Thousand Pesos (P50,000) and moral damages also in the amount of Fifty Thousand
Pesos (P50,000).
Petitioner assigned the following as errors on the part of the Court of Appeals:
1. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN RULING THAT THE RESPONDENT'S
TRANSFER TO THE LEGAL DEPARTMENT IS TANTAMOUNT TO CONSTRUCTIVE DISMISSAL FOR
THE SAME IS A LEGITIMATE EXERCISE OF MANAGEMENT PREROGATIVE;
2. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN RULING THAT THE RESPONDENT'S
TRANSFER TO THE LEGAL DEPARTMENT IS TANTAMOUNT TO CONSTRUCTIVE DISMISSAL
CONSIDERING THAT IT WAS THE RESPONDENT WHO SEVERED HER WORKING RELATIONSHIP
WITH THE COMPANY; AND
3. THERE BEING NO ILLEGAL DISMISSAL TO SPEAK OF, THE HONORABLE COURT OF APPEALS
GRAVELY ERRED IN ORDERING THE PETITIONER TO PAY RESPONDENT SEPARATION PAY,
BACKWAGES, EXEMPLARY DAMAGES AND MORAL DAMAGES.6
In short, the issue to be resolved is: Was respondent constructively dismissed or was her transfer a
legitimate exercise of management prerogative?
It is an established rule that in the exercise of the Supreme Court's power of review, the Court is not a
trier of facts and does not routinely undertake the re-examination of the evidence presented by the
contending parties during the trial of the case considering that the findings of facts of the Court of
Appeals are conclusive and binding on the Court.7 We have likewise held that factual findings of labor
officials who are deemed to have acquired expertise in matters within their respective jurisdiction are
generally accorded not only respect, but even finality, and bind the Supreme Court, when supported by
substantial evidence.8
As borne by the records, it appears that there is a divergence between the findings of facts of the Labor
Arbiter as affirmed by the NLRC, and that of the Court of Appeals. Therefore, for the purpose of clarity
and intelligibility, this Court will make an infinitesimal scrutiny of the findings of facts of the Labor
Arbiter and the NLRC.
The Labor Arbiter, in his Decision,9 held in part that "[c]omplainant's supposed transfer to the Legal
Department cannot be considered to be unbearable, nor inconvenient, nor prejudicial to the employee,
as it did not even involve a demotion in rank or diminution of [her] salaries, benefits and other
privileges. Complainant held the position AVP-Pensions. Her supposed transfer to the Legal Department,
still with the rank of AVP, and most importantly, with the same salaries and benefits, cannot, by any
stretch of imagination, be considered as amounting to a constructive dismissal."10
We do not agree in this finding of the Labor Arbiter. It may be true that in the transfer of respondent
from the Pensions Department to the Legal Department, there was no demotion in rank nor diminution
of the salaries, benefits and privileges. But this is not the only standard that must be satisfied in order to
substantiate the transfer. In the pursuit of its legitimate business interests, management has the
prerogative to transfer or assign employees from one office or area of operation to another provided
there is no demotion in rank or diminution of salary, benefits, and other privileges; and the action is not
motivated by discrimination, made in bad faith, or effected as a form of punishment or demotion without
sufficient cause.11
Discrimination is the unequal treatment of employees, which is proscribed as an unfair labor practice by
Art. 248(e) of the Labor Code.12 It is the failure to treat all persons equally when no reasonable
distinction can be found between those favored and those not favored.13
Bad faith has been defined as a state of mind affirmatively operating with furtive design or with some
motive of self-interest or ill will or for an ulterior purpose.14 It implies a conscious and intentional design
to do a wrongful act for a dishonest purpose or moral obliquity.15
In the case at bar, bad faith and discrimination on the part of petitioner are profusely perceived from its
actions.
First, as early as 23 August 1998, unbeknown to respondent, petitioner had already advertised in the
Manila Bulletin for the former's replacement.16 Respondent was not even notified in advance of an
impending transfer.
Second, the President and CEO of petitioner corporation, Jose L. Cuisia, Jr., in his Memorandum17 dated
18 December 1998, announced the appointment of respondent's replacement effective 14 December
1998, or during the time that respondent was still on official sick leave. It is worthy to note that on 10
December 1998, respondent, through a letter18 of even date, protested her sudden unexplained
transfer, more so, to a non-existing position. Respondent, in said letter, likewise pointed out that her
department surpassed the target fund level volume set by the company (which negates petitioner's
allegation of ineptness on the part of respondent, used as ground by the former to justify the transfer),
and thereby requested for status quo, until all issues were resolved. No response was made.
Third, the transfer of respondent to the Legal Department was unreasonable, inconvenient and
prejudicial to her. Petitioner must have known that respondent has no adequate exposure in the field of
litigation, and yet she was transferred to the Legal Department, and as AVP at that. The position of AVP-
Legal would have placed respondent in a very inopportune position because she would be heading a
team of lawyers who are far more experienced than she was in the area of litigation. It was a poor
business decision and it is unlikely that the officers of petitioner would have made such a decision,
except to inconvenience or prejudice respondent. Under the circumstances, the decision to transfer was
unreasonable.
Fourth, there was, likewise, discrimination against respondent, as shown from the following: (a) the
Pensions Department was run by respondent with practically no support from management. Respondent
was left to fend for herself, and yet was required to bring in the numbers, i.e., generate and develop
accounts. As found by the Court of Appeals, effective January 1998, respondent's marketing manager
and marketing officer were transferred to Group Insurance Division. Respondent, thereafter, was never
given replacements for said positions, contrary to Cuisia's assurance. Respondent herein ran the
Pensions Department single-handedly and with only one Administrative Assistant as her staff.
Respondent did the field work, the desk work (administrative, legal, finance, marketing), out-of-town
meetings, client presentations, aside from her work with Philam Savings Bank as fund manager;19 (b)
respondent tried to avail herself of her car loan benefit sometime in November 1998 by filing the
appropriate application. However, action on this application was deferred by Reynaldo Centeno in his
letter20 dated 10 December 1998, saying that respondent's employment status has been the subject of
several discussions between the high ranking officers of petitioner; and (c) it is a tradition on the part of
petitioner, during the Christmas season, to give its officers and employees a season's giveaway, i.e.,
ham and queso de bola. Respondent sent an authorized representative to ask for her share, but,
unfortunately, she was not in the list of recipients. Her name was not listed in the Legal Department, nor
in the Pensions Department. Respondent's name, when verified with the Personnel Department, was not
in the list of employees of Philamlife.21
Fifth, as clearly pointed out by respondent, she formally rejected the offer of P250,000 for her to leave
the company. The refutation was done in writing and duly received by the three highest offices of
petitioner, namely: the Office of the President; the Office of the Executive Vice-President; and the Office
of the Senior Vice-President and Head of Human Resources.22 Incongruously, taking into consideration
the said contents of the formal letter of rejection, there was no response whatsoever from the aforesaid
offices. It may be true, as stated by petitioner, that "the alleged memorandum pertaining to the meeting
held on 18 November 1998 on the alleged P250,000 settlement offer was prepared by respondent alone
without any participation from the company,"23 but the fact remains that no formal response was ever
made by any of the three offices which received the same. The contents thereof, if untrue, would have
elicited a stark and strong reaction from any of the three offices.
Quite conspicuously, the Labor Arbiter, in his decision, did not thoroughly pass upon the matter
involving an offer of P250,000 to respondent for the latter to vacate her position as AVP-Pensions.
Contemplation or consideration of this important detail would have been enough for the Labor Arbiter to
see that there was palpable bad faith on the part of petitioner when respondent was ordered to transfer
from the Pensions Department to the Legal Department.
In a long line of decisions,24 we have held that the right and privilege of the employer to exercise the
so-called management prerogative is recognized, and the courts will not interfere with it. This privilege
is inherent in the right of employers to control and manage their enterprise effectively. The right of
employees to security of tenure does not give them vested rights to their positions to the extent of
depriving management of its prerogative to change their assignments or to transfer them. Managerial
prerogatives, however, are subject to limitations provided by law, collective bargaining agreements, and
general principles of fair play and justice.25 In the case of Blue Dairy Corporation v. NLRC,26 we
explained the test for determining the validity of the transfer of employees, as follows:
But, like other rights, there are limits thereto. The managerial prerogative to transfer personnel
must be exercised without grave abuse of discretion, bearing in mind the basic elements of
justice and fair play. Having the right should not be confused with the manner in which that
right is exercised. Thus, it cannot be used as a subterfuge by the employer to rid himself of an
undesirable worker. In particular, the employer must be able to show that the transfer is not
unreasonable, inconvenient or prejudicial to the employee; nor does it involve a demotion in
rank or a diminution of his salaries, privileges and other benefits. Should the employer fail to
overcome this burden of proof, the employee's transfer shall be tantamount to constructive
dismissal, which has been defined as a quitting because continued employment is rendered
impossible, unreasonable or unlikely; as an offer involving a demotion in rank and diminution in
pay. Likewise, constructive dismissal exists when an act of clear discrimination, insensibility or
disdain by an employer has become so unbearable to the employee leaving him with no option
but to forego with his continued employment.
The NLRC, in its decision27 dated 27 November 2000, found that respondent herein was hired by
petitioner to head the Strategic Business Unit (SBU), and that she was specifically engaged as such
because of her representation that she was knowledgeable and experienced in the trust business.28 The
records reveal otherwise. Herein respondent was not hired to handle the so-called SBU. She was hired
as Assistant Vice-President in charge of Pensions Department.29 This fact is further inveterated by the
announcement of Cuisia in his Memorandum dated 08 December 1997,30 that, indeed, respondent
herein was appointed as such.
In petitioner's Memorandum dated 29 December 2003, it was alleged that due to a change in the
business strategy, the Pensions Department had to dispense with the position of respondent who was
specifically hired to perform trust work.31 This cannot be precise. As discussed above, respondent's
replacement was appointed effective 14 December 1998. If the position of AVP-Pensions Department
was dispensed with, then why was a replacement hired by petitioner to assume such post on said date?
Non sequitur. It does not follow.
In fine, this Court rules that there was constructive dismissal, and therefore, the petition must fail.
Constructive dismissal exists when an act of clear discrimination, insensibility or disdain by an employer
has become so unbearable to the employee leaving him with no option but to forego with his continued
employment.32 The circumstances which prevailed in the working environment of the respondent clearly
demonstrate this. The failure of the Labor Arbiter to resolutely consider these prevailing circumstances
before respondent was asked to transfer was a major flaw in his decision. Clearly, had the Labor Arbiter
considered them, he would have concluded that the transfer of respondent from the Pensions
Department to the Legal Department was not a legitimate exercise of management prerogative on the
part of petitioner. Before the order to transfer was made, discrimination, bad faith, and disdain towards
respondent were already displayed by petitioner.
Petitioner has repeatedly asserted that the performance of respondent did not meet the expectation of
the company and did not comply with accepted standards for a pension profit center manager, as she
lacked the skill, as well as the willingness, to perform her duties and responsibilities. Allegedly, based on
the evaluation of her performance, respondent proved to be so inept in the performance of her
obligations, viz:
a. Failure to prepare and submit a budget plan;
b. Failure to prepare and submit a Pension Production Report on time;
c. Strained relations with clients;
d. Failure to prepare an Operations Manual for the Department;
e. Inability to develop and maintain a good working relationship with her colleagues;
f. Inability to communicate her ideas; and
g. Others.33
It is rather peculiar that the alleged ineptness of respondent did not prompt petitioner to issue any
Inter-office Memorandum reprimanding, admonishing, or warning the former about her performance.
The solemnity of respondent's alleged non-performance was so immense, considering that the Pensions
Department is a profit center, which was so imperative to the existence of petitioner in terms of raising
revenue. The officers of petitioner should have been very much troubled about this.
This now puts into question the alleged ineptness of respondent as posited by petitioner. As aptly
declared by the Court of Appeals:
. . . We recall that what triggered petitioner's transfer was her alleged inefficiency and
ineptness in her work in the Pensions Department. Records, however, reveal otherwise.
Petitioner produced a fund level of 1000% over the previous year (her predecessor's year of
1997 with a fund level of about P2 Million generated for two years or an average of P1 Million
per year then) in the amount of P19,248,320.31 as a result of a meager 3 months marketing
efforts, although private respondents instructed her to stop marketing sometime in April 1998
for no apparent reason. All these were never rebutted nor disproved by private respondents.
They merely alleged her inefficiency without concrete and sufficient proof. But allegation is
different from proof. Hence, we cannot countenance their allegations.34 (emphasis ours)
Petitioner maintains that it was respondent who severed her working relationship with it.35 Per letter,
dated 11 January 1999, issued by petitioner's Legal Department, respondent was asked to report
immediately to her new assignment and submit to a medical examination, and that the latter took no
heed of this.36 It seems that the point impliedly being raised by petitioner is that respondent
disengaged her employment relationship with petitioner by abandoning her work and failing to report
accordingly. This argument is apocryphal. Respondent, on 23 December 1998, already filed a case for
illegal dismissal against petitioner.37 For petitioner to anticipate respondent to report for work after the
latter already filed a case for illegal dismissal before the NLRC, would be absurd. We have already laid
down the rule that for abandonment to exist, it is essential (1) that the employee must have failed to
report for work or must have been absent without valid or justifiable reason; and (2) that there must
have been a clear intention to sever the employer-employee relationship manifested by some overt
acts.38 Both these requisites are not present here. There was no abandonment as the latter is not
compatible with constructive dismissal.39
It is no less than the Constitution which guarantees protection to the workers' security of tenure as a
policy of the State. This guarantee is an act of social justice.40
Social justice, as held by this Court, speaking through Justice Laurel, in the case of Calalang v.
Williams:41
. . . Social justice is "neither communism, nor despotism, nor atomism, nor anarchy," but the
humanization of laws and the equalization of social and economic forces by the State so that
justice in its rational and objectively secular conception may at least be approximated. Social
justice means the promotion of the welfare of all the people, the adoption by the Government
of measures calculated to insure economic stability of all the competent elements of society,
through the maintenance of a proper economic and social equilibrium in the interrelations of the
members of the community, constitutionally, through the adoption of measures legally
justifiable, or extra-constitutionally, through the exercise of powers underlying the existence of
all governments on the time-honored principle of salus populi est suprema lex.
Social justice, therefore, must be founded on the recognition of the necessity of
interdependence among divers and 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.
WHEREFORE, in view of all the foregoing, the Petition is hereby DENIED, and the assailed Decision dated
18 October 2002 and Resolution dated 20 January 2003 of the Court of Appeals, are hereby AFFIRMED.
Costs against petitioner.
SO ORDERED.
Austria-Martinez, (Acting Chairman), and Callejo, Sr., JJ., concur.
Puno, (Chairman), on official leave.
Tinga, J., on leave.


SECOND DIVISION

[G.R. No. 150092. September 27, 2002.]

GLOBE TELECOM, INC., DELFIN LAZARO, JR., and ROBERTO GALANG, Petitioners, v. JOAN
FLORENDO-FLORES, Respondent.

D E C I S I O N

BELLOSILLO, J.:

This is a petition for review under Rule 45 of the Rules of Court seeking to annul and set aside the
Decision 1 of the Court of Appeals of 25 May 2001 in CA-G.R. SP No. 60284 which affirmed the Decision
of the National Labor Relations Commission of 28 January 2000 in NLRC RAB-CAR 05-0170-98, NLRC
NCR CA No. 020270-99. 2

Petitioner GLOBE TELECOM, INC. (GLOBE) is a corporation duly organized and existing under the laws of
the Philippines. Petitioners Delfin Lazaro Jr. was its President and Roberto Galang its former Director-
Regional Sales. Respondent Joan Florendo-Flores was the Senior Account Manager for Northern
Luzon.chanrob1es virtua1 1aw 1ibrary

On 1 July 1998 Joan Florendo-Flores filed with the Regional Arbitration Branch of the National Labor
Relations Commission (NLRC) an amended complaint for constructive dismissal against GLOBE, Lazaro,
Galang, and Cacholo M. Santos, her immediate superior, Luzon Head-Regional Sales. In her affidavit
submitted as evidence during the arbitration proceedings, Florendo-Flores bared that Cacholo M. Santos
never accomplished and submitted her performance evaluation report thereby depriving her of salary
increases, bonuses and other incentives which other employees of the same rank had been receiving;
reduced her to a house-to-house selling agent (person-to-person sales agent or direct sales agent) of
company products ("handyphone") despite her rank as supervisor of company dealers and agents; never
supported her in the sales programs and recommendations she presented; and, withheld all her other
benefits, i.e., gasoline allowance, per diems, representation allowance, and car maintenance, to her
extreme pain and humiliation. 3

GLOBE and its co-petitioners claimed that after receiving her salary in the second week of May 1998
Florendo-Flores went AWOL (Absent Without Leave) without signifying through letter or any other means
that she was resigning from her position; that notwithstanding her absence and the filing of her case,
respondent Florendo-Flores employment was not terminated as shown by the fact that salary was still
provided her until July 1998 to be released upon her presentation of the attendance-record sheet
indicating that she already returned and reported for work; that she continued to have the use a of
company car and company "handyphone" unit; that she was replaced only when her absence became
indefinite and intolerable as the marketing operations in Northern Luzon began to suffer; that during the
pre-trial conference it was learned that Florendo-Flores complaint rested on her alleged personal and
private disagreement with her immediate superior Cacholo M. Santos; that there was no official act from
GLOBE or from other officers of the company, including respondents Lazaro and Galang, which called for
Florendo-Flores termination, diminution in rank, seniority and benefits, or would imply, even remotely,
any of the same; and, that Florendo-Flores filed the complaint without going through the grievance
process of GLOBEs Human Resources Department and without informing its officers of her problems
with Cacholo M. Santos.

Labor Arbiter Monroe C. Tabingan declared Florendo-Flores to have been illegally dismissed and ordered
petitioners to reinstate her without loss of seniority rights and full benefits; and to pay full back wages,
inclusive of basic pay, allowances and bonuses as prayed for in the complaint amounting to
P307,625.00, exemplary damages in the sum of P200,000.00, and ten percent (10%) of the total
monetary award as attorneys fees. However, the Labor Arbiter set aside the claim of abandonment as
the company failed to send the requisite notice to Florendo-Flores, 4 hence, there was no adherence to
procedural due process. Although he recognized that the problem brewed and eventually boiled over due
to the acts of Cacholo M. Santos, GLOBEs former Head of Regional Sales, Luzon Area, the Labor Arbiter
found the company negligent in monitoring all its key personnel, and thus assessed against it exemplary
damages at the same time deleting actual and moral damages. 5

Petitioners appealed the decision to the NLRC which modified the judgment of the Labor Arbiter. The
NLRC ruled that petitioners did not dismiss Florendo-Flores but that the latter actually abandoned her
employment because of a disagreement with her immediate superior which she failed to bring to the
attention of GLOBE and its officers, particularly petitioners Lazaro and Galang. 6 However, the NLRC
declared that if only as an act of grace for the latters past services with the company, GLOBE, Lazaro
and Galang should be held accountable for the back wages of Florendo-Flores amounting to P307,625.00
minus the amount of P63,000.00 for the value of the company car in Florendo-Flores possession, or the
net amount of P244,625.00. 7

Both parties elevated the NLRC decision to the Court of Appeals, each side through a petition for
certiorari. In its Resolution of 2 September 2000 the appellate court dismissed the petition of Florendo-
Flores for failure to append the required verification and certification of non-forum shopping, 8 while it
gave due course to the petition of GLOBE, Lazaro and Galang.

In their petition before the appellate court, GLOBE, Lazaro and Galang averred that the NLRC committed
grave abuse of discretion amounting to lack or excess of jurisdiction when it ordered them to pay
Florendo-Flores full back wages and damages despite its express finding that they did not cause the
dismissal of Florendo-Flores as the latter had actually abandoned her employment on account of her
personal differences with her superior.

In its Decision of 25 May 2001 the Court of Appeals found that Florendo-Flores was constructively
dismissed and that payment of back wages and damages was in order. On 21 June 2001 GLOBE, Lazaro
and Galang filed a motion for reconsideration but the motion was denied in the appellate courts
Resolution of 19 September 2001.

Petitioners pose the following questions in this petition: In a special civil action for certiorari where
factual findings are deemed to be final and conclusive, can the Court of Appeals alter or substitute the
findings of fact of the lower court/tribunal? In the face of the finding of the NLRC that respondent
abandoned her employment because of a personal squabble with her immediate superior, and that
petitioners had nothing to do with the severance of Flores employment, can petitioners be held legally
liable for back wages while the guilty party Cacholo M. Santos is legally absolved of liability?

Petitioners submit that the answers to both questions must be in the negative. They argue that the
appellate court can neither alter nor substitute the factual findings of the NLRC as they are legally
deemed to be final and conclusive in a certiorari proceeding. They contend that a special civil action for
certiorari is an extraordinary remedy created not to correct mistakes in the factual findings or
conclusions of the lower court or tribunal, but a remedy intended to rectify jurisdictional errors and
grave abuse of discretion. Thus, the Court of Appeals cannot make its own factual findings and
substitute them for the factual findings of the NLRC, and on such basis render a decision.

Petitioners further note that the appellate court failed to address the issues raised in their petition. They
reiterate their position that they cannot be held liable for payment of back wages as an act of grace in
view of the express finding by the NLRC that respondent abandoned her employment because of a
personal rift with her immediate superior and not due to any act attributable to them. They stress that
there can be no liability in the absence of any wrongful act.

Invoking the principle of res inter alios acta declaring that the rights of a party cannot be prejudiced by
the act, declaration or omission of another, petitioners insist that since the NLRC found that
respondents problems arose from the acts and deeds of Santos, he alone should be held liable.
Petitioners find special exception to the NLRCs application of the concept of "act of grace" to justify the
award since an "act of grace" is not a source of demandable obligation. They argue that it is not within
the power of any judicial or administrative agency to compel an employer to be liberal.

In the review of an NLRC decision through a special civil action for certiorari, resolution is confined only
to issues of jurisdiction and grave abuse of discretion on the part of the labor tribunal. 9 Hence, the
Court refrains from reviewing factual assessments of lower courts and agencies exercising adjudicative
functions, such as the NLRC. Occasionally, however, the Court is constrained to delve into factual
matters where, as in the instant case, the findings of the NLRC contradict those of the Labor Arbiter.

In this instance, the Court in the exercise of its equity jurisdiction may look into the records of the case
and re-examine the questioned findings. 10 As a corollary, this Court is clothed with ample authority to
review matters, even if they are not assigned as errors in their appeal, if it finds that their consideration
is necessary to arrive at a just decision of the case. 11 The same principles are now necessarily adhered
to and are applied by the Court of Appeals in its expanded jurisdiction over labor cases elevated through
a petition for certiorari; thus, we see no error on its part when it made anew a factual determination of
the matters and on that basis reversed the ruling of the NLRC.

Glaring however is the discrepancy between the text of the decision of the appellate court which
declares that respondent Florendo-Flores "was unlawfully constructively dismissed" from employment,
12 and its dispositive portion which declares that "the assailed judgment is affirmed." 13 It should be
noted that the "assailed judgment" referred to the NLRC Decision which declared that respondent was
not illegally dismissed but that she abandoned her employment. Even in the award of back wages and
exemplary damages the two (2) decisions are at odds: The award of back wages made by the NLRC was
a gratuity or an act of grace from petitioners while the award made by the Court of Appeals could be
assumed to be anchored on its finding of illegal dismissal. How should the inconsistency be reconciled?

Where there is conflict between the dispositive portion of the decision and the body thereof, the
dispositive portion controls irrespective of what appears in the body. 14 While the body of the decision,
order or resolution might create some ambiguity in the manner the courts reasoning preponderates, it is
the dispositive portion thereof that finally invests rights upon the parties, sets conditions for the exercise
of those rights, and imposes the corresponding duties or obligations. 15 Hence, for the Court of Appeals
to have affirmed the assailed judgment is to adopt and uphold the NLRC finding of abandonment and its
award of full back wages to respondent as an "act of grace" from petitioners.

However, we believe this is not the proper view as the records reveal that respondent was constructively
dismissed from service.

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 and a diminution
in pay." 16 All these are discernible in respondents situation. She was singularly edged out of
employment by the unbearable or undesirable treatment she received from her immediate superior
Cacholo M. Santos who discriminated against her without reason not preparing and submitting her
performance evaluation report that would have been the basis for her increased salary; not forwarding
her project proposals to management that would have been the source of commendation; diminishing
her supervisor stature by assigning her to house-to-house sales or direct sales;. and withholding from
her the enjoyment of bonuses, allowances and other similar benefits that were necessary for her
efficient sales performance. Although respondent continued to have the rank of a supervisor, her
functions were reduced to a mere house-to-house sales agent or direct sales agent. This was
tantamount to a demotion. She might not have suffered any diminution in her basic salary but
petitioners did not dispute her allegation that she was deprived of all benefits due to another of her rank
and position, benefits which she apparently used to receive.

Far from pointing to Santos alone as the source of her woes, respondent attributes her degraded state to
petitioners as well. Florendo-Flores cited petitioners apathy or indifference to her plight as she was
twice left out in a salary increase in August 1987 and May 1998, without petitioners giving her any
reason. 17 It eludes belief that petitioners were entirely in the dark as the salary increases were granted
to all employees across-the-board but respondent was the only one left receiving a P19,100.00 per
month basic salary while the rest received a basic salary of almost P35,000.00 per month. 18 It is highly
improbable that the exclusion of respondent had escaped petitioners notice. The absence of an
evaluation report from Santos should have been noted by petitioners and looked into for proper action to
have been made. If a salary increase was unwarranted, then it should have been sufficiently explained
by petitioners to Respondent.

Petitioners argue that respondent Florendo-Flores could have brought to their attention the deplorable
treatment she received from Santos by resorting to the companys grievance machinery so that the
problems in her relationship with Santos could then have been easily ironed out, but she did not. It
remains uncontroverted that respondent had inquired from petitioners the reason why her other benefits
had been withheld and sought clarification for her undeserved treatment but petitioner company and
Santos remained mum. 19

Thus, contrary to the observation of the NLRC, the dispute was not a mere private spat between
respondent Florendo-Flores and her immediate superior Santos. Granting that this was the case, it had
exceeded the periphery of simple personal affairs that overflowed into the realm of respondents
employment.

Respondent narrates that sometime in June 1997 Santos wrote her a baseless accusatory letter, and he
together with GLOBE Sales Director Roberto Galang, one of petitioners herein, verbally told her that she
should resign from her job, but she refused. 20 Thereafter, in July 1997 and the months subsequent
thereto all of respondents other benefits were withheld without any reason nor explanation from the
company. 21 Even as petitioners endeavored to lay the blame on Santos alone, he would not have been
able to single-handedly mastermind the entire affair as to influence Sales Director Galang and
manipulate the payroll. It only stands to reason that Santos was acting pursuant to a management
directive, or if not, then petitioners had condoned it, or at the very least, were negligent in supervising
all of their employees. As aptly observed by the Labor Arbiter

. . . it would appear however that the respondent company was negligent in monitoring all its key
personnel. For it is the bounden duty of the corporate officialdom to constantly monitor their managerial
staff if only to ascertain the smooth flow of work and operations, which includes the inter-personal
relations of each and every key segment of the corporate machinery. For such, it must be assessed with
just and reasonable exemplary damages. 22

The unauthorized absence of respondent should not lead to the drastic conclusion that she had chosen
to abandon her work. To constitute abandonment, there must be: (a) failure to report for work or
absence without valid or justifiable reason; and, (b) a clear intention, as manifested by some overt act,
to sever the employer-employee relationship, 23 requisites that are negated by the immediate filing by
respondent Florendo-Flores of a complaint for constructive dismissal against petitioners. A charge of
abandonment is totally inconsistent with the immediate filing of a complaint for illegal dismissal; more
so, when it includes a prayer for reinstatement. 24

The reduction of respondents functions which were originally supervisory in nature to a mere house-to-
house sales agent or direct sales agent constitutes a demotion in rank. For this act of illegal dismissal,
she deserves no less than full back wages starting from the time she had been illegally dismissed until
her actual reinstatement to her former position without loss of seniority rights and other benefits
earned, accrued and demandable. She shall continue to enjoy her benefits, privileges and incentives
including the use of the company car and "handyphone."cralaw virtua1aw library

The managerial prerogative to transfer personnel must be exercised without grave abuse of discretion. It
must always bear in mind the basic elements of justice and fair play. Having the right should not be
confused with the manner that right is exercised. Thus, it cannot be used as a subterfuge by the
employer to rid himself of an undesirable worker.25cralaw:red

In constructive dismissal, the employer has the burden of proving that the transfer and demotion of an
employee are for just and valid grounds such as genuine business necessity. 26 The employer must be
able to show that the transfer is not unreasonable, inconvenient, or prejudicial to the employee. It must
not involve a demotion in rank or a diminution of salary and other benefits. If the employer cannot
overcome this burden of proof, the employees demotion shall be tantamount to unlawful constructive
dismissal.

It should be noted that the award of back wages in the instant case is justified upon the finding of illegal
dismissal, and not under the principle of "act of grace" for past services rendered. There are occasions
when the Court exercises liberality in granting financial awards to employees, but even then they
contemplate only the award of separation pay and/or financial assistance, and only as a measure of
social justice when the circumstances of the case so warrant, such as instances of valid dismissal for
causes other than serious misconduct or those reflecting on the employees moral character. 27 Proper
regard for the welfare of the labor sector should not dissuade us from protecting the rights of
management such that an award of back wages should be forthcoming only when valid grounds exist to
support it.

An award of actual and moral damages is not proper as the dismissal is not shown to be attended by
bad faith, or was oppressive to labor, or done in a manner contrary to morals, good customs or public
policy. 28 Exemplary damages are likewise not proper as these are imposed only if moral, temperate,
liquidated or compensatory damages are awarded. 29

WHEREFORE, the judgment appealed from is MODIFIED. The Decision of the Court of Appeals of 25 May
2001 in CA-G.R. SP No. 60284 affirming the Decision of the National Labor Relations Commission of 28
January 2000 declaring that respondent Joan Florendo-Flores had abandoned her work is SET ASIDE.
Petitioners Globe Telecom, Inc., Delfin Lazaro, Jr., and Roberto Galang are ordered to pay respondent
Joan Florendo-Flores full back wages from the time she was constructively dismissed on 15 May 1998
until the date of her effective reinstatement, without qualification or deduction. Accordingly, petitioners
are ordered to cause the immediate reinstatement of respondent to her former position, without loss of
seniority rights and other benefits. No pronouncement as to costs.chanrob1es virtua1 1aw 1ibrary

SO ORDERED.


Republic of the Philippines
Supreme Court
Manila

FIRST DIVISION

William Endeliseo Barroga, G.R. No. 174158
Petitioner,

Present:

- versus - CORONA, C.J., Chairperson,
LEONARDO-DE CASTRO,
BERSAMIN,
DEL CASTILLO, and
Data Center College of the VILLARAMA, JR., JJ.
philippines and Wilfred
Bactad,226[1]

Promulgated:
Respondents. June 27, 2011
x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
- - x

D E C I S I O N

DEL CASTILLO, J.:

Our labor laws are enacted not solely for the purpose of protecting the working class but also
the management by equally recognizing its right to conduct its own legitimate business affairs.

This Petition for Review on Certiorari227[2] seeks the reversal of the Resolutions dated May 15,
2006228[3] and August 4, 2006229[4] of the Court of Appeals (CA) in CA-G.R. SP No. 93991, which
dismissed petitioner William Endeliseo Barrogas Petition for Certiorari for procedural infirmities, as well
as the Decision230[5] dated August 25, 2005 and Resolution231[6] dated January 31, 2006 of the












National Labor Relations Commission (NLRC), with respect to the dismissal of petitioners claim of
constructive dismissal against respondents Data Center College of the Philippines and its President and
General Manager, Wilfred Bactad.

Factual Antecedents

On November 11, 1991, petitioner was employed as an Instructor in Data Center College Laoag
City branch in Ilocos Norte. In a Memorandum232[7] dated June 6, 1992, respondents transferred him
to University of Northern Philippines (UNP) in Vigan, Ilocos Sur where the school had a tie-up program.
Petitioner was informed through a letter233[8] dated June 6, 1992 that he would be receiving, in
addition to his monthly salary, a P1,200.00 allowance for board and lodging during his stint as instructor
in UNP-Vigan. In 1994, he was recalled to Laoag campus. On October 3, 2003, petitioner received a
Memorandum234[9] transferring him to Data Center College Bangued, Abra branch as Head for
Education/Instructor due to an urgent need for an experienced officer and computer instructor thereat.

However, petitioner declined to accept his transfer to Abra citing the deteriorating health
condition of his father and the absence of additional remuneration to defray expenses for board and
lodging which constitutes implicit diminution of his salary.235[10]

On November 10, 2003, petitioner filed a Complaint236[11] for constructive dismissal against
respondents. Petitioner alleged that his proposed transfer to Abra constitutes a demotion in rank and
diminution in pay and would cause personal inconvenience and hardship. He argued that although he
was being transferred to Abra branch supposedly with the same position he was then holding in Laoag












branch as Head for Education, he later learned through a Memorandum237[12] from the administrator
of Abra branch that he will be re-assigned merely as an instructor, thereby relegating him from an
administrative officer to a rank-and-file employee. Moreover, the elimination of his allowance for board
and lodging will result to an indirect reduction of his salary which is prohibited by labor laws. Petitioner
also claimed that when he questioned the indefinite suspension of the scholarship for post-graduate
studies extended to him by respondents,238[13] the latter became indifferent to his legitimate
grievances which eventually led to his prejudicial re-assignment. He averred that his transfer is not
indispensable to the schools operation considering that respondents even suggested that he take an
indefinite leave of absence in the meantime if only to address his personal difficulties.239[14] Petitioner
thus prayed for his reinstatement and backwages. Further, as Head for Education at Data Center
College Laoag branch, petitioner asked for the payment of an overload honorarium as compensation for
the additional teaching load in excess of what should have been prescribed to him. Exemplary damages
and attorneys fees were likewise prayed for.

For their part, respondents claimed that they were merely exercising their management
prerogative to transfer employees for the purpose of advancing the schools interests. They argued that
petitioners refusal to be transferred to Abra constitutes insubordination. They claimed that petitioners
appointment as instructor carries a proviso of possible re-assignments to any branch or tie-up schools as
the schools necessity demands. Respondents argued that petitioners designation as Head for Education
in Laoag branch was merely temporary and that he would still occupy his original plantilla item as
instructor at his proposed assignment in Abra branch. Respondents denied liability to petitioners
monetary claims.

Ruling of the Labor Arbiter

On September 24, 2004, the Labor Arbiter rendered a Decision240[15] dismissing the
Complaint for lack of merit. The Labor Arbiter ruled that there was no demotion in rank as petitioners
original appointment as instructor on November 11, 1991 conferred upon respondents the right to
transfer him to any of the schools branches and that petitioners designation as Head for Education can
be withdrawn anytime since he held such administrative position in a non-permanent capacity. The
Labor Arbiter held that the exclusion of his allowance for board, lodging and transportation was not
constructive dismissal, enunciating that the concept of non-diminution of benefits under Article 100 of
the Labor Code prohibits the elimination of benefits that are presently paid to workers to satisfy the









requirements of prevailing minimum wage rates. Since the benefit claimed by petitioner is beyond the
coverage of the minimum wage law, its non-inclusion in his re-assignment is not considered a violation.
The Labor Arbiter also denied petitioners claim for overload honorarium for failure to present sufficient
evidence to warrant entitlement to the same. The claim for damages was likewise denied.

Ruling of the National Labor Relations Commission

In a Decision241[16] dated August 25, 2005, the NLRC affirmed the findings of the Labor
Arbiter that there was no constructive dismissal. It ruled that the management decision to transfer
petitioner was well within the rights of respondents in consonance with petitioners contract of
employment and which was not sufficiently shown to have been exercised arbitrarily by respondents. It
agreed with the Labor Arbiter that petitioners designation as Head for Education was temporary for
which he could not invoke any tenurial security. Further, the NLRC held that it was not proven with
certainty that the transfer would unduly prejudice petitioners financial situation. The NLRC, however,
found petitioner to be entitled to overload honorarium pursuant to CHED Memorandum Order No. 25 for
having assumed the position of Head for Education, albeit on a temporary basis. The NLRC disposed of
the case as follows:

WHEREFORE, premises considered, the decision under review is hereby
MODIFIED by ordering the respondent Data Center College of the Philippines, to pay
the complainant the sum of SEVENTY THREE THOUSAND SEVEN THUNDRED [sic]
THIRTY and 39/100 Pesos (P73,730.39), representing overload honorarium.

All other claims are DISMISSED for lack of merit.

SO ORDERED.242[17]


From this Decision, both parties filed their respective motion for partial reconsideration.
Petitioner assailed the NLRC Decision insofar as it dismissed his claims for reinstatement, backwages,
damages and attorneys fees.243[18] Respondents, for their part, questioned the NLRCs award of
overload honorarium in favor of petitioner. These motions were denied by the NLRC in a Resolution
dated January 31, 2006.244[19]










Ruling of the Court of Appeals

Both parties filed petitions for certiorari before the CA. Respondents petition for certiorari was
docketed as CA-G.R. SP No. 94205, which is not subject of the instant review. On the other hand,
petitioner filed on April 7, 2006, a Petition for Certiorari245[20] with the CA docketed as CA-G.R. SP No.
93991 assailing the NLRCs finding that no constructive dismissal existed. Realizing his failure to attach
the requisite affidavit of service of the petition upon respondents, petitioner filed on April 27, 2006, an
Ex-Parte Manifestation and Motion246[21] to admit the attached affidavit of service and registry receipt
in compliance with the rules.

On May 15, 2006, the CA dismissed the petition in CA-G.R. SP No. 93991 in a Resolution which
reads:

Petition is DISMISSED outright due to the following infirmities:

1. there is no statement of material dates as to when the petitioner
received the assailed decision dated August 25, 2005 and when he filed a Motion for
Reconsideration thereof;

2. there is no affidavit of service attached to the petition;

3. these initiatory pleadings and the respondents Motion for
Reconsideration of the Decision dated August 25, 2005 are not attached to the
petition.

SO ORDERED. 247[22]


Petitioner filed a Motion for Reconsideration248[23] alleging that the material dates of receipt
of the NLRC Decision and the filing of his motion for reconsideration are explicitly stated in his Partial
Motion for Reconsideration which was attached as an annex to the petition and was made an integral
part thereof. As to the absence of the affidavit of service, petitioner argued that there is no legal









impediment for the belated admission of the affidavit of service as it was duly filed before the dismissal
of the petition. As for his failure to attach respondents motion for reconsideration, petitioner
manifested that a separate petition for certiorari has been filed by respondents and is pending with the
CA, docketed as CA-G.R. SP No. 94205, where the denial of said motion is at issue.

On August 4, 2006, the CA issued the following Resolution:

Due to non-compliance despite opportunity afforded to comply, petitioners
June 9, 2006 Motion for Reconsideration is hereby DENIED for
lack of merit.

SO ORDERED.249[24]


Issues

Hence, this petition assigning the following errors:

THE HONORABLE COURT OF APPEALS PATENTLY COMMITTED REVERSIBLE ERROR IN
DISMISSING THE PETITION FOR CERTIORARI [UNDER RULE 65] OF THE PETITIONER
BY GIVING PRECEDENT TO TECHNICALITIES RATHER THAN THE MERITORIOUS
GROUNDS ASSERTED THEREIN.

THE PUBLIC RESPONDENT, NATIONAL LABOR RELATIONS COMMISSION, SERIOUSLY
ERRED IN ITS CONSLUSIONS OF LAW IN RENDERING IT[S] ASSAILED DECISION AND
RESOLUTION STATING THAT THE PETITIONER WAS NOT CONSTRUCTIVELY
DISMISSED, THUS, NOT ENTITLED TO REINSTATEMENT, BACKWAGES, AND
ATTORNEYS FEES.250[25]


Petitioner imputes grave abuse of discretion on the CA in not giving due course to his petition
despite substantial compliance with the requisite formalities as well as on the NLRC in not ruling that he
was constructively dismissed by respondents.

Our Ruling

Petitioners substantial compliance calls
for the relaxation of the rules. Therefore, the CA
should have given due course to the petition.


The three material dates which should be stated in the petition for certiorari under Rule 65 are
the dates when the notice of the judgment was received, when a motion for reconsideration was filed





and when the notice of the denial of the motion for reconsideration was received.251[26] These dates
should be reflected in the petition to enable the reviewing court to determine if the petition was filed on
time.252[27] Indeed, petitioners petition before the CA stated only the date of his receipt of the NLRCs
Resolution denying his motion for partial reconsideration. It failed to state when petitioner received the
assailed NLRC Decision and when he filed his partial motion for reconsideration. However, this omission
is not at all fatal because these material dates are reflected in petitioners Partial Motion for
Reconsideration attached as Annex N of the petition. In Acaylar, Jr. v. Harayo,253[28] we held that
failure to state these two dates in the petition may be excused if the same are evident from the records
of the case. It was further ruled by this Court that the more important material date which must be duly
alleged in the petition is the date of receipt of the resolution of denial of the motion for reconsideration.
In the case at bar, petitioner has duly complied with this rule.

Next, the CA dismissed the petition for failure to attach an affidavit of service. However,
records show that petitioner timely rectified this omission by submitting the required affidavit of service
even before the CA dismissed his petition.

Thirdly, petitioners failure to attach respondents motion for reconsideration to the assailed
NLRC decision is not sufficient ground for the CA to outrightly dismiss his petition. The issue that was
raised in respondents motion for reconsideration is the propriety of the NLRCs grant of overload
honorarium in favor of petitioner. This particular issue was not at all raised in petitioners petition for
certiorari with the CA, therefore, there is no need for petitioner to append a copy of this motion to his
petition. Besides, as already mentioned, the denial of respondents motion for reconsideration has been
assailed by respondents before the CA docketed as CA-G.R. SP No. 94205. At any rate, the Rules do not
specify the documents which should be appended to the petition except that they should be relevant to
the judgment, final order or resolution being assailed. Petitioner is thus justified in attaching the
documents which he believed are sufficient to make out a prima facie case.254[29]

The Court has time and again upheld the theory that the rules of procedure are designed to
secure and not to override substantial justice.255[30] These are mere tools to expedite the decision or











resolution of cases, hence, their strict and rigid application which would result in technicalities that tend
to frustrate rather than promote substantial justice must be avoided.256[31] The CA thus should not
have outrightly dismissed petitioners petition based on these procedural lapses.

Petitioners transfer is not tantamount to
constructive dismissal.


Nevertheless, the instant petition merits dismissal on substantial grounds. After a careful
review of the records and the arguments of the parties, we do not find any sufficient basis to conclude
that petitioners re-assignment amounted to constructive dismissal.

Constructive dismissal is quitting because continued employment is rendered impossible,
unreasonable or unlikely, or because of a demotion in rank or a diminution of pay. It exists when there
is a clear act of discrimination, insensibility or disdain by an employer which becomes unbearable for the
employee to continue his employment.257[32] Petitioner alleges that the real purpose of his transfer is
to demote him to the rank of an instructor from being the Head for Education performing administrative
functions. Petitioner further argues that his re-assignment will entail an indirect reduction of his salary
or diminution of pay considering that no additional allowance will be given to cover for board and lodging
expenses. He claims that such additional allowance was given in the past and therefore cannot be
discontinued and withdrawn without violating the prohibition against non-diminution of benefits.

These allegations are bereft of merit.

Petitioner was originally appointed as instructor in 1991 and was given additional administrative
functions as Head for Education during his stint in Laoag branch. He did not deny having been
designated as Head for Education in a temporary capacity for which he cannot invoke any tenurial
security. Hence, being temporary in character, such designation is terminable at the pleasure of
respondents who made such appointment.258[33] Moreover, respondents right to transfer petitioner
rests not only on contractual stipulation but also on jurisprudential authorities. The Labor Arbiter and
the NLRC both relied on the condition laid down in petitioners employment contract that respondents
have the prerogative to assign petitioner in any of its branches or tie-up schools as the necessity
demands. In any event, it is management prerogative for employers to transfer employees on just and
valid grounds such as genuine business necessity.259[34] It is also important to stress at this point









that respondents have shown that it was experiencing some financial constraints. Because of this,
respondents opted to temporarily suspend the post-graduate studies of petitioner and some other
employees who were given scholarship grants in order to prioritize more important
expenditures.260[35]

Indeed, we cannot fully subscribe to petitioners contention that his re-assignment was tainted
with bad faith. As a matter of fact, respondents displayed commiseration over the health condition of
petitioners father when they suggested that he take an indefinite leave of absence to attend to this
personal difficulty. Also, during the time when respondents directed all its administrative officers to
submit courtesy resignations, petitioners letter of resignation was not accepted.261[36] This bolsters
the fact that respondents never intended to get rid of petitioner. In fine, petitioners assertions of bad
faith on the part of respondents are purely unsubstantiated conjectures.

The Court agrees with the Labor Arbiter that there was no violation of the prohibition on
diminution of benefits. Indeed, any benefit and perks being enjoyed by employees cannot be reduced
and discontinued, otherwise, the constitutional mandate to afford full protection to labor shall be
offended.262[37] But the rule against diminution of benefits is applicable only if the grant or benefit is
founded on an express policy or has ripened into a practice over a long period which is consistent and
deliberate.263[38]

Petitioner was granted a monthly allowance for board and lodging during his stint as instructor
in UNP-Vigan, Ilocos Sur as evinced in a letter dated June 6,
1992 with the condition stated in the following tenor:

Please be informed that during your assignment at our tie-up at UNP-VIGAN,
ILOCOS SUR , you will be receiving a monthly Board and Lodging of Pesos: One
Thousand Two Hundred x x x (P1,200.00).

However, you are only entitled to such allowance, if you are assigned to the
said tie-up and the same will be changed or forfeited depending upon the place of your
next reassignment.264[39] (Italics supplied.)












Petitioner failed to present any other evidence that respondents committed to provide the
additional allowance or that they were consistently granting such benefit as to have ripened into a
practice which cannot be peremptorily withdrawn. Moreover, there is no conclusive proof that
petitioners basic salary will be reduced as it was not shown that such allowance is part of petitioners
basic salary. Hence, there will be no violation of the rule against diminution of pay enunciated under
Article 100 of the Labor Code.265[40]

WHEREFORE, the Resolutions dated May 15, 2006 and August 4, 2006 of the Court of Appeals
in CA-G.R. SP No. 93991 are SET ASIDE. The Decision dated August 25, 2005 and Resolution dated
January 31, 2006 of the National Labor Relations Commission in NLRC Case No. RAB I-12-1242-03 (LC)
insofar as it found respondents Data Center College of the Philippines and Wilfred Bactad not liable for
constructive dismissal, are AFFIRMED.

SO ORDERED.

Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 112752 February 9, 2000
OSS SECURITY & ALLIED SERVICES, INC., JUAN MIGUEL M. VASQUEZ and MA. VICTORIA M.
VASQUEZ, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION and EDEN LEGASPI, respondents.
DE LEON, JR., J.:
Before us is a petition for certiorari under Rule 65 of the Rules of Court seeking to annul the Decision1
and the Resolution2 of the National Labor Relations Commission (NLRC), Second Division, dated October
20, 1993 and November 23, 1993, respectively, which affirmed the Decision3 dated February 25, 1993
of the Labor Arbiter declaring that the transfer of assignment of private respondent Eden Legaspi as
effected by petitioner OSS Security & Allied Services, Inc. was illegal tantamount to unjust dismissal.4
The facts of the case are the following:
Private respondent worked as a lady security guard of OSS Security Agency from June 16, 1986. On
January 17, 1986 petitioner of acquired the assets and properties of OSS Security Agency and absorbed
some of its personnel, including private respondent. As a lady security guard she was assigned to render
security services to the different clients of petitioner.5 She was last assigned at the Vicente Madrigal
Condominium II located in Ayala Avenue, Makati.6
In a memorandum7 dated July 30, 1991 addressed to petitioner's company President, retired General
Honesta Isleta, the Building Administrator of VM Condominium II, Licerio E. Baguyong, complied of the
laxity of the guards in enforcing security measures. The memorandum reads as follows:
For the reason that in the past few months the Building Administrator has observed
(1) laxity in the discipline of your guards;
(2) falsification of their log book by stating that they are present (especially on
Saturdays and Holidays) when in fact they have not reported for work;8
(3) lack of proper coordination and cooperation among themselves; and




(4) disseminating intrigues by and among themselves,
May I request that you reorganize the men and women assigned to the building to instill more
discipline and proper decorum by changing, if need be, some of the personnel, replacing, if
possible, on a temporary basis, the women complement, to find out if it would improve the
service.
It would be noted that I have not approved the renewal of your contract which will all depend
on the outcome of this request.9
In compliance therewith10, petitioner issued Duty Detail Order No. 0044611 on August 1, 1991 relieving
private respondent and another lady security guard, Digna Suelan, of their assignment at VM
Condominium II effective August 2, 1991 for reassignment to other units or detachments where vacancy
exists.
On August 3, 1991, petitioner issued Duty Detail Order No. 0060112, which detailed private respondent
to the Minami International Corporation in Taytay, Rizal from August 3 to September 2, 1991 to replace
lady security guard Susan Tan who filed her vacation leave for August 1991. However, it appears that
private respondent did not report for duty at her new assignment.13
On August 6, 1991 private respondent filed her complaint14 for under payment and constructive
dismissal. On February 25, 1993, Labor Arbiter Oswald B. Lorenzo rendered his decision upholding
private respondent's position and declared that private respondent's transfer was not sanctioned by law,
hence illegal and tantamount to unjust dismissal.15 The decretal portion of the Labor Arbiter's decision
reads:
WHEREFORE, premises considered, judgment is hereby rendered adjudging respondents herein
guilty of illegal dismissal and thus ordered to reinstate complainant to her former position
without loss of seniority rights. Backwages for eighteen (18) months is hereby ordered paid by
respondents to be reckoned from date of dismissal up to 03 February 1993, in the amount of
FIFTY FIVE THOUSAND TWO HUNDRED TWENTY FOUR AND 25/100 (P55,224.25), which
amount is based on twenty-six days work per month x P118.00 x eighteen (18) months.
In addition money claims in the amount of SEVEN THOUSAND SEVEN HUNDRED TWENTY FOUR
AND 20/100 (P7,724.20) is hereby awarded in favor of complainant plus ten (10) per cent
attorney's fees based on the total awards herein or P6,294.85.
All other unsubstantiated claims by respondent are hereby ordered dismissed.
SO ORDERED.16
Private respondent then appealed the decision of the Labor Arbiter to the public respondent NLRC where
it was assigned to the Second Division. In a Decision17 dated October 20, 1993, the NLRC affirmed the
decision of the Labor Arbiter. Petitioner sought reconsideration of the said decision but the same was
denied in a Resolution18 dated November 23, 1993.
Hence, this petition.
The NLRC out-and-out adopted the following findings of the Labor Arbiter:
This Office after a judicious calibration of the positions taken by the contending parties is of the
finding that the transfer of the complainant and Digna Suelan were not sanctioned by law,
hence, illegal and tantamount to unjust dismissal. As can be gleaned from the records it could
readily be seen that these two (2) Lady Security Guards were discriminated against by reason
of their being women. No reason was given why they were re-assigned, subject to availability of
vacancy, except of being (the women complement). Besides, there is nothing on record to show
complainant [sic] do not possess "discipline and proper decorum".
Based on Annex "A" of the POSITION PAPER/AFFIDAVIT FOR THE COMPLAINANT, there indeed,
appears no reason for the relief of LEGASPI, except that it was effected on the "decease [sic] of
top management.
It would be worthy of note, that a day before Duty Detail Order No. 00446, (Annex "A"), was
given to complainant LEGASPI, there was a letter Annex "1" dated 30 July 1991, which was
written by one LICERIO L. [sic] BUGAYONG, the Building Administrator of Madrigal
Condominium Corporation II and addressed to GENERAL HONESTO ISLETA (RET.) whereby [sic]
it was a "REQUEST FOR MORE DISCIPLINED SERVICE.
Considering the one (1) day gap of Duty Detail Order No. 00446 relieving complainant and the
receipt of respondent firm of their Annex "1", and without the benefit of investigation afforded
to the former, the inevitable conclusion is that her relief was relief was precipitately effected by
the latter firm.19
The issue, therefore, in the case at bench is whether public respondent NLRC committed grave abuse of
discretion amounting to lack or excess of jurisdiction in affirming and embracing the Labor Arbiter's
ruling that the transfer of assignment of private respondent by petitioner was illegal tantamount to
unjust dismissal.20
We answer in the affirmative.
Service-oriented enterprises, such as petitioner's business of providing security services, generally
adhere to the business adage that "the customer or client is always right". To satisfy the interests,
conform to the needs, and cater to the whims and wishes of its clients, along with its zeal to gain
substantial returns on its investments, employers adopt means designed towards these ends. These are
called management prerogatives in which the free will of management to conduct its own affairs to
achieve its purpose, takes from. Accordingly, an employer can regulate, generally without restraint,
according to its own discretion and judgment, every aspect of business.21
In the employment of personnel, the employer can prescribe the 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, subject only to limitations imposed by laws.22
Thus, the transfer of an employee ordinarily lies within the ambit of management prerogatives.23
However, a transfer amounts to constructive dismissal when the transfer is unreasonable, inconvenient,
or prejudicial to the employee, and it involves a demotion in rank or diminution of salaries, benefits and
other privileges.24 In the case at bench, nowhere in the record does it show that that the transfer of
private respondent was anything but done in good faith, without grave abuse of discretion, and in the
best interest of the business enterprise.
First. No malice should be imputed from the fact that private respondent was relieved of her assignment
and, a day later, assigned a new post. We must bear in mind that, unlike other contracts of service, the
availability of assignment for security guards is primarily at heart subservient to the contracts entered
into by the security agency with its client-third parties. As such, being sidelined temporarily is a
standard stipulation in employment contracts.25 When a security guard is placed "off detail" or on
"floating" status, in security agency parlance, it means "waiting to be posted."26 Private respondent has
not even been "off detail" for a week when she filed her complaint.
Second. Evidence is wanting to support the Labor Arbiter's conclusion that petitioner discriminated
against private respondent when it ordered her relief and transfer of assignment. Petitioner proved that
such transfer was effected in good faith to comply with the reasonable request27 of its client, Madrigal
Condominium Corporation Incorporated (MCCI), for a more disciplined service of the security guards on
detail. The renewal of the contract of petitioner with MCCI hinged on the action taken by the former on
the latter's request.28 Most contracts for security services stipulate that the client may request the
replacement of the guards assigned to it. Besides, a relief and transfer order in itself does not sever
employment relationship between a security guard and her agency.29 Neither was the transfer for any
ulterior design, such as to rid itself of an undesirable worker or to penalize an employee for his union
activities and thereby defeat his right to self-organization.30
Third. It appears that private respondent declined the post assigned to her inasmuch as she considered
it "a booby trap of crippling and dislocating [private respondent] from her employment".31 Private
respondent lived in V. Mapa, Sta. Mesa, Manila,32 and her new assigned post is in Taytay, Rizal, as
against her previous post at VM Condominium II in Makati. Her new assigned post would entail changes
in her routine, something that she was not agreeable with. But the mere fact that it would be
inconvenient for her, as she has been assigned to VM Condominium II for a number of years, does not
by itself make her transfer illegal.33 Even private respondent admitted34 that she was assigned to
render security service to the different clients of petitioner. An employee has a right to security of
tenure, but this does not give her such a vested right in her position as would deprive petitioner of its
prerogative to change her assignment or transfer her where her service, as security guard, will be most
beneficial to the client.35 Thus, there was no basis to order reinstatement and back wages inasmuch as
private respondent was not constructively dismissed. Neither is private respondent entitled to the award
of money claims for underpayment, absent evidence to substantiate the same.
Finally, the public respondent erred when it failed to note the absence of any employer-employee
relationship between private respondent and petitioners Juan Miguel M. Vasquez and Ma. Victoria M.
Vasquez. Petitioner Juan Miguel M. Vasquez is the Project Manager of MCCI which owns and operates VM
Condominium II, while petitioner Ma. Victoria Ma. Vasquez is the former's sister and merely has her
business office at VM Condominium II.36 Thus, no liability can be imposed on; them.
WHEREFORE, the petition is hereby GRANTED, and the challenged Decision and Resolution of public
respondent NLRC dated October 20, 1993 and November 23, 1993, respectively, are hereby REVERSED
and SET ASIDE. The complaint dated August 6, 1991 filed by private respondent Eden Legaspi against
petitioners is hereby DISMISSED. No pronouncement as to costs.1wphi1.nt
SO ORDERED.
Bellosillo, Mendoza, Quisumbing and Buena, JJ., concur.


Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION

G.R. No. 106107 June 2, 1994
AGUSTIN CHU, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and VICTORIAS MILLING COMPANY, INC.
respondents.
Legaspi, Rufon, Necesario & Asso. Law Office for petitioner.
Decena, Tabat, Jardaleza & Taoso Law Office for private respondent.

QUIASON, J.:
This is a petition for certiorari under Rule 65 of the Revised Rules of Court to reverse and set aside the
Decision of the Fourth Division of the National Labor Relations Commission (NLRC) in Case No. 06-02-
10081-89 which dismissed petitioners appeal and its Resolution dated March 20, 1992, which denied
petitioners motion for reconsideration.
We dismiss the petition.
I
Petitioner retired from the service of private respondent upon reaching the age of sixty under its regular
retirement program. He was granted an extention of service by the Board of Directors of private
respondent under a "Special Contract of Employment." The contract provided, inter alia, that its term
was for a period of one year commencing on August 1, 1988; that petitioner was employed as Head of
the Warehousing, Sugar, Shipping and Marine Department; and that he was to receive a basic salary of
P6,941.00 per month.
Private respondent issued Memorandum No. 1012-PS dated December 12, 1988 and Memorandum No.
1028-PS dated January 16, 1989, both providing for a rotation of the personnel and other organizational
changes. Pursuant to the memoranda, petitioner was transferred to the Sugar Sales Department.
Petitioner protested his transfer and requested a reconsideration thereof, which was denied.
Consequently, on February 27, 1989, petitioner filed a complaint for illegal dismissal, contending that he
was constructively dismissed from his employment (RAB IV Case No. 06-02-10081-89).
In support of his decision holding that there was no constructive dismissal of petitioner, the Labor
Arbiter said that: (1) petitioner was transferred to the Sugar Sales Department from the Warehousing,
Sugar, Shipping and Marine Department, both of which are under the Sugar Sales Area; (2) petitioners
transfer was without change in rank or salary; (3) petitioners designation in either department was the
same; (4) the personnel rotation was pursuant to organizational changes done in the valid exercise of
management prerogatives; (5) there was no bad faith in the transfer of petitioner, as other employees
similarly situated as he were likewise affected; and (6) petitioner failed to show that he was prejudiced
by the changes or transferred to a demeaning or humiliating position.
Petitioner appealed to the NLRC which, in a resolution dated January 13, 1992, affirmed the Labor
Arbiters decision. In a resolution dated March 20, 1992, the NLRC denied petitioners motion for
reconsideration.
II
In this petition, petitioner contends that there was no valid exercise of management prerogative
because: (1) his transfer violated the "Special Contract of Employment" which was the law between the
parties; and (2) said transfer was unreasonable and caused inconvenience to him.
Petitioner argues that private respondents prerogative to transfer him was limited by the "Special
Contract of Employment," which was the "law" between the parties. Thus, petitioner urges that private
respondent, by employing him specifically as Head of the Warehousing, Sugar, Shipping, and Marine
Department, waived its prerogative to reassign him within the term of the contract to another
department.
We disagree.
An owner of a business enterprise is given considerable leeway in managing his business because it is
deemed important to society as a whole that he should succeed. Our law, therefore, recognizes certain
rights as inherent in the management of business enterprises. These rights are collectively called
management prerogatives or acts by which one directing a business is able to control the variables
thereof so as to enhance the chances of making a profit. "Together, they may be taken as the freedom
to administer the affairs of a business enterprise such that the costs of running it would be below the
expected earnings or receipts. In short, the elbow room in the quest for profits" (Fernandez and
Quiason, The Law on Labor Relations, 1963 ed., p. 43).
One of the prerogatives of management, and a very important one at that, is the right to transfer
employees in their work station. In Philippine Japan Active Carbon Corporation v. National Labor
Relations Commission, 171 SCRA 164 (1989), we held:
It is the employers 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 employees right to security of tenure does
not give him such a vested right in his position as would deprive the company of its
prerogative to change his assignment or transfer him where he will be most useful.
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.
In Abbot Laboratories (Phils.) Inc. v. NLRC, 154 SCRA 713 (1987), we also held in referring to the
prerogative of transfer of employees, that:
This is a function associated with the employers inherent right to control and manage
effectively its enterprise. Even as the law is solicitous of the welfare of employees, it
must also protect the right of an employer to exercise what are clearly management
prerogatives. The free will of management to conduct its own business affairs to
achieve its purpose cannot be denied.
Of course, like other prerogatives, the right to transfer or re-assign is subject to limitations arising under
the law, contract or general principles of fair play and justice (Abbot Laboratories (Phil.) Inc. v. NLRC,
154 SCRA 713 [1987]). Jurisprudence proscribes transfers or re-assignments of employees when such
acts are unreasonable and cause inconvenience or prejudice to them (Philippine Japan Active Carbon
Corporation v. NLRC, supra).
We find nothing in the "Special Contract of Employment" invoked by petitioner wherein private
respondent had waived its right to transfer or re-assign petitioner to any other position in the company.
Before such right can be deemed to have been waived or contracted away, the stipulation to that effect
must be clearly stated so as to leave no room to doubt the intentions of the parties. The mere
specification in the employment contract of the position to be held by the employee is not such
stipulation.
As held in Philippine Japan Active Carbon Corporation v. National Labor Relations Commission, supra:
An employees right to security of tenure does not give him such a vested right in his
position as would deprive the company of its prerogatives to change his assignment or
transfer him where he will be most useful.
Petitioners bare assertion that the transfer was unreasonable and caused him inconvenience cannot
override the fact, as found by the Labor Arbiter and respondent Commission, that the rotation was made
in good faith and was not discriminatory, and that there was no demotion in rank or a diminution of his
salary, benefits and privileges.
WHEREFORE, the petition for certiorari is DISMISSED.
SO ORDERED.
Davide, Jr., Bellosillo and Kapunan, JJ., concur.
Cruz, J., is on leave.