THIRD DIVISION

MA. WENELITA S. TIRAZONA,

Petitioner,

G.R. No. 169712

Present:

- versus -

PHILIPPINE
EDS
TECHNOSERVICE INC. (PET INC.) AND/OR
KEN KUBOTA, MAMORU ONO
and JUNICHI HIROSE,
Respondents.

YNARES-SANTIAGO, J.,
Chairperson,
AUSTRIA-MARTINEZ,
CHICO-NAZARIO,
NACHURA, and
LEONARDO-DE CASTRO,*JJ.
Promulgated:

January 20, 2009

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

RESOLUTION

CHICO-NAZARIO, J.:
Before Us is a Motion for Leave to File [a] Second Motion for Reconsideration, [1] with the
Second Motion for Reconsideration incorporated therein, where petitioner Ma. Wenelita Tirazona
(Tirazona) seeks the reconsideration of the Resolution [2] of this Court dated 23 June 2008. Said
Resolution denied for lack of merit petitioners previous Motion for Reconsideration, [3] which
sought the reversal of our Decision [4] dated 14 March 2008 or, in the alternative, modification
thereof by awarding her separation pay and retirement benefits under existing laws.
In our 14 March 2008 Decision, we subscribed to the factual findings of the National Labor
Relations Commission (NLRC) and the Court of Appeals that Tirazona, being the Administrative
Manager of Philippine EDS Techno-Service, Inc. (PET), was a managerial employee who held a
position of trust and confidence; that after PET officers/directors called her attention to her
improper handling of a situation involving a rank-and-file employee, she claimed that she was
denied due process for which she demanded P2,000,000.00 indemnity from PET and its
officers/directors; that she admitted to reading a confidential letter addressed to PET
officers/directors containing the legal opinion of the counsel of PET regarding her case; and that
she was validly terminated from her employment on the ground that she willfully breached the
trust and confidence reposed in her by her employer. In the end, we concluded that:
Tirazona, in this case, has given PET more than enough reasons to distrust
her. The arrogance and hostility she has shown towards the company and her
stubborn, uncompromising stance in almost all instances justify the companys
termination of her employment. Moreover, Tirazonas reading of what was supposed
to be a confidential letter between the counsel and directors of the PET, even if it
concerns her, only further supports her employers view that she cannot be trusted.
In fine, the Court cannot fault the actions of PET in dismissing petitioner. [5]

Hence, the fallo of our 14 March 2008 Decision reads:

WHEREFORE,
premises
considered,
the
instant
petition
is
hereby DENIED for lack of merit and the Decision of the Court of Appeals dated 24
May 2005 is hereby AFFIRMED. Costs against the petitioner.[6]

On 29 April 2008, Tirazona moved for reconsideration [7] of our afore-mentioned

Decision. She argued therein that the Court failed to consider the length of her service to PET in
affirming her termination from employment. She prayed that her dismissal be declared
illegal. Alternatively, should the Court uphold the legality of her dismissal, Tirazona pleaded that
she be awarded separation pay and retirement benefits, out of humanitarian considerations.
In our Resolution[8] dated 23 June 2008, we denied Tirazonas Motion for Reconsideration,
as the same did not present any substantial arguments that would warrant a modification of our
previous ruling. We thus decreed:
ACCORDINGLY, the Court resolves to DENY the motion for reconsideration
with FINALITY for lack of merit.

On 21 August 2008, Tirazona filed the instant Motion for Leave to File [a] Second Motion
for Reconsideration, with the Second Motion for Reconsideration incorporated therein, raising
essentially the same arguments and prayers contained in her first Motion for Reconsideration.
The Court thereafter required PET to comment on the above motion. On 19 November
2008, PET filed its Comment/Opposition, [9] to which Tirazona filed her Reply [10] on 8 December
2008.
After thoroughly scrutinizing the averments of the present Motion, the Court unhesitatingly
declares the same to be completely unmeritorious.
Section 2, Rule 52 of the Rules of Court explicitly decrees that no second motion for
reconsideration of a judgment or final resolution by the same party shall be entertained.
Accordingly, a second motion for reconsideration is a prohibited pleading, which shall not be
allowed, except for extraordinarily persuasive reasons and only after an express leave shall have
first been obtained.[11] In this case, we fail to find any such extraordinarily persuasive reason to
allow Tirazonas Second Motion for Reconsideration.
As a general rule, an employee who has been dismissed for any of the just causes
enumerated under Article 282[12] of the Labor Code is not entitled to separation pay. [13] In Sy v.
Metropolitan Bank & Trust Company,[14] we declared that only unjustly dismissed
employees are entitled to retirement benefits and other privileges including reinstatement and
backwages.
Although by way of exception, the grant of separation pay or some other financial
assistance may be allowed to an employee dismissed for just causes on the basis of equity,
[15]
in Philippine Long Distance Telephone Company v. National Labor Relations Commission,[16] we
set the limits for such a grant and gave the following ratio for the same:
[S]eparation pay shall be allowed as a measure of social justice only in
those instances where the employee is validly dismissed for causes other
than serious misconduct or those reflecting on his moral character. x x x.
A contrary rule would, as the petitioner correctly argues, have the effect, of
rewarding rather than punishing the erring employee for his offense. And we do not
agree that the punishment is his dismissal only and that the separation pay has
nothing to do with the wrong he has committed. Of course it has. Indeed, if the
employee who steals from the company is granted separation pay even as he is
validly dismissed, it is not unlikely that he will commit a similar offense in his next
employment because he thinks he can expect a like leniency if he is again found
out. This kind of misplaced compassion is not going to do labor in general any good

as it will encourage the infiltration of its ranks by those who do not deserve the
protection and concern of the Constitution.
The policy of social justice is not intended to countenance wrongdoing simply
because it is committed by the underprivileged. At best it may mitigate the penalty
but it certainly will not condone the offense. Compassion for the poor is an
imperative of every humane society but only when the recipient is not a rascal
claiming an undeserved privilege. Social justice cannot be permitted to be [a]
refuge of scoundrels any more than can equity be an impediment to the
punishment of the guilty. Those who invoke social justice may do so only if their
hands are clean and their motives blameless and not simply because they happen
to be poor. This great policy of our Constitution is not meant for the protection of
those who have proved they are not worthy of it, like the workers who have tainted
the cause of labor with the blemishes of their own character. (Emphasis ours.)

In accordance with the above pronouncements, Tirazona is not entitled to the award of
separation pay.

Contrary to her exaggerated claims, Tirazona was not just gracelessly expelled or simply
terminated from the company on 22 April 2002. She was found to have violated the trust and
confidence reposed in her by her employer when she arrogantly and unreasonably demanded
from PET and its officers/directors the exorbitant amount of P2,000,000.00 in damages, coupled
with a threat of a lawsuit if the same was not promptly paid within five days. This unwarranted
imposition on PET and its officers/directors was made after the company sent Tirazona a letter,
finding her handling of the situation involving a rank-and-file employee to be less than ideal, and
merely reminding her to be more circumspect when dealing with the more delicate concerns of
their employees. To aggravate the situation, Tirazona adamantly and continually refused to
cooperate with PETs investigation of her case and to provide an adequate explanation for her
actions.
Verily, the actions of Tirazona reflected an obdurate character that is arrogant,
uncompromising, and hostile. By immediately and unreasonably adopting an adverse stance
against PET, she sought to impose her will on the company and placed her own interests above
those of her employer. Her motive for her actions was rendered even more questionable by her
exorbitant and arbitrary demand for P2,000,000.00 payable within five days from demand. Her
attitude towards her employer was clearly inconsistent with her position of trust and
confidence. Her poor character became even more evident when she read what was supposed to
be a confidential letter of the legal counsel of PET to PET officers/directors expressing his legal
opinion on Tirazonas administrative case. PET was, therefore, fully justified in terminating
Tirazonas employment for loss of trust and confidence.
Tirazona also failed to persuade us to consider in her favor her length of service to PET.
In the Motion for Reconsideration filed on 29 April 2008 and in the instant motion, Tirazona
prays for this Court to grant her separation and other retirement benefits, should we uphold the
legality of her dismissal. She anchors her claim on the fact that she had allegedly been in the
employ of PET for twenty-six (26) years and that the Court must give due consideration to the
length of her service to the company.[17] However, in her Reply to the Comment/Opposition to the
instant motion filed by PET, Tirazona retracted the above allegation and stated that the claim of
twenty-six (26) years of employment with PET was an error committed through
inadvertence. She then averred that the length of her employment with PET should indeed be
counted from July 1999, which up to the present time will result in a period of eight (8) years,
more or less.

We find that the above statement is still inaccurate. As this Court ruled in our Decision
dated 14 March 2008, Tirazona was validly terminated from her employment on 22 April
2002. Therefore, counting from the time when Tirazona was employed by PET on 19 July 1999 up
to the time when she was dismissed, she had only rendered a little more than two (2) years
and nine (9) months of service to PET.
Finally, the cases cited by Tirazona hardly support her cause.
In Soco v. Mercantile Corporation of Davao[18] and Firestone Tire and Rubber Company of
the Philippines v. Lariosa,[19] separation pay was granted to the dismissed employees, as they
were mere rank-and-file employees who did not have any previous derogatory record with their
companies and in equitable regard for their long years of service spanning more than ten (10)
years.
In Farrol v. Court of Appeals,[20] separation pay was awarded because the penalty of
dismissal was held to be harsh and disproportionate to the offense committed and the dismissed
employee had been at the service of the company for twenty four (24) years.
In Negros Navigation Co. Inc. v. National Labor Relations Commission,[21] separation pay
was awarded to the employee dismissed, as it was the employer itself that prayed for the award
of the same, in lieu of the employees reinstatement.
Lastly, in Philippine Commercial International Bank v. Abad,[22] separation pay was ordered
granted to a dismissed managerial employee because there was an express finding that the
violation of the bank policies was not perpetrated for the employees self-interest, nor did the
employee exhibit any lack of moral depravity.The employee had also been in the service of the
company for twenty-five (25) years.
Obviously, Tirazonas reliance upon the above-cited cases is misleading, as the
circumstances therein are markedly different from those in the case at bar.
In sum, we hold that the award of separation pay or any other kind of financial assistance
to Tirazona, under the guise of compassionate justice, is not warranted in this case. To hold
otherwise would only cause a disturbance of the sound jurisprudence on the matter and a
perversion of the noble dictates of social justice.
While the Court commiserates with the plight of Tirazona, who has recently
manifested[23] that she has since been suffering from her poor health condition, the Court cannot
grant her plea for the award of financial benefits based solely on this unfortunate
circumstance. For all its conceded merit, equity is available only in the absence of law and not as
its replacement. Equity as an exceptional extenuating circumstance does not favor, nor may it be
used to reward, the indolent [24] or the wrongdoer, for that matter. This Court will not allow a
party, in the guise of equity, to benefit from its own fault. [25]
WHEREFORE, the Motion for Leave to File [a] Second Motion for Reconsideration is
hereby DENIED for lack of merit and the Second Motion for Reconsideration incorporated therein
is NOTED WITHOUT ACTION in view of the denial of the former.
SO ORDERED.

MINITA V. CHICO-NAZARIO
Associate Justice

WE CONCUR:

CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson

MA. ALICIA AUSTRIA-MARTINEZ ANTONIO EDUARDO B. NACHURA

Associate Justice Associate Justice

TERESITA J. LEONARDO-DE CASTRO

Associate Justice
ATTESTATION
I attest that the conclusions in the above Resolution were reached in consultation before the case
was assigned to the writer of the opinion of the Courts Division.

CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson, Third Division
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairpersons Attestation,
it is hereby certified that the conclusions in the above Resolution were reached in consultation
before the case was assigned to the writer of the opinion of the Courts Division.

REYNATO S. PUNO
Chief Justice

* Per Special Order No. 546, Associate Justice Teresita J. Leonardo-De Castro was designated to
sit as additional member in view of the retirement of Associate Justice Ruben T. Reyes
dated 5 January 2009.
[1]
Rollo, pp. 252-261.
[2]
Id. at 250.
[3]
Id. at 232-249.
[4]
Penned by Associate Justice Minita V. Chico-Nazario with Associate Justices Consuelo YnaresSantiago, Ma. Alicia Austria-Martinez, Antonio Eduardo B. Nachura and Ruben T. Reyes,
concurring; rollo, pp. 207-230.
[5]
Id. at 228.
[6]
Id.
[7]
Id. at 232-247.
[8]
Id. at 250.
[9]
Id. at 274-282.
[10]
Id. at 443-447.
[11]
Ortigas and Company Limited Partnership v. Velasco, 324 Phil. 483, 489 (1996).
[12]
ART. 282. Termination by employer. - An employer may terminate an employment for any of
the following causes:
a. Serious misconduct or willful disobedience by the employee of the lawful orders of his
employer or representative in connection with his work;

[13]

[14]
[15]

[16]
[17]

[18]
[19]
[20]
[21]
[22]
[23]
[24]
[25]

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

c. Fraud or willful breach by the employee of the trust reposed in him by his employer or
duly authorized representative;
d. Commission of a crime or offense by the employee against the person of his employer
or any immediate member of his family or his duly authorized representative; and
e. Other causes analogous to the foregoing.
Section 7, Rule I, Book VI of the Omnibus Rules Implementing the Labor Code provides:
Sec. 7. Termination of employment by employer. The just causes for terminating the
services of an employee shall be those provided in Article 282 of the Code. The separation
from work of an employee for a just cause does not entitle him to the termination pay
provided in the Code, without prejudice, however, to whatever rights, benefits and
privileges he may have under the applicable individual or collective agreement with the
employer or voluntary employer policy or practice.
G.R. No. 160618, 2 November 2006, 506 SCRA 580, 588.
Philippine Commercial International Bank v. Abad, G.R. No. 158045, 28 February 2005, 452
SCRA 579, 587.
G.R. No. L-80609, 23 August 1988, 164 SCRA 671, 682-683.
Tirazona has consistently maintained throughout this case that she was only employed by PET
on 19 July 1999 as the Head of the Human Resource Department and as Administrative
Manager. Such fact was explicitly stated in her Complaint and Position Paper before the
Labor Arbiter; the Letter of Employment attached to said Position Paper; her Petition
for Certiorari and Memorandum before the Court of Appeals; and her originalPetition
for Review and Memorandum before this Court.
232 Phil. 488 (1987).
232 Phil. 201 (1987).
382 Phil. 212 (2000).
G.R. No. L-78207, 6 December 1988, 168 SCRA 258.
Supra note 15.
Rollo, pp. 268-273.
B. E. San Diego, Inc. v. Alzul, G.R. No. 169501, 8 June 2007, 524 SCRA 402, 435.
Id.

G.R. No. 162053

March 7, 2007

ST. LUKE'S MEDICAL CENTER EMPLOYEE'S ASSOCIATION-AFW (SLMCEA-AFW) AND

MARIBEL S. SANTOS, Petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION (NLRC) AND ST. LUKE'S MEDICAL CENTER,
INC.,Respondents.
DECISION
AZCUNA, J.:
Challenged in this petition for review on certiorari is the Decision1 of the Court of Appeals (CA)
dated January 29, 2004 in CA-G.R. SP No. 75732 affirming the decision 2 dated August 23, 2002
rendered by the National Labor Relations Commission (NLRC) in NLRC CA No. 026225-00.
The antecedent facts are as follows:
Petitioner Maribel S. Santos was hired as X-Ray Technician in the Radiology department of private
respondent St. Luke's Medical Center, Inc. (SLMC) on October 13, 1984. She is a graduate of
Associate in Radiologic Technology from The Family Clinic Incorporated School of Radiologic
Technology.

On April 22, 1992, Congress passed and enacted Republic Act No. 7431 known as the "Radiologic
Technology Act of 1992." Said law requires that no person shall practice or offer to practice as a
radiology and/or x-ray technologist in the Philippines without having obtained the proper
certificate of registration from the Board of Radiologic Technology.
On September 12, 1995, the Assistant Executive Director-Ancillary Services and HR Director of
private respondent SLMC issued a final notice to all practitioners of Radiologic Technology to
comply with the requirement of Republic Act No. 7431 by December 31, 1995; otherwise, the
unlicensed employee will be transferred to an area which does not require a license to practice if
a slot is available.
On March 4, 1997, the Director of the Institute of Radiology issued a final notice to petitioner
Maribel S. Santos requiring the latter to comply with Republic Act. No. 7431 by taking and
passing the forthcoming examination scheduled in June 1997; otherwise, private respondent
SLMC may be compelled to retire her from employment should there be no other position
available where she may be absorbed.
On May 14, 1997, the Director of the Institute of Radiology, AED-Division of Ancillary Services
issued a memorandum to petitioner Maribel S. Santos directing the latter to submit her PRC
Registration form/Examination Permit per Memorandum dated March 4, 1997.
On March 13, 1998, the Director of the Institute of Radiology issued another memorandum to
petitioner Maribel S. Santos advising her that only a license can assure her of her continued
employment at the Institute of Radiology of the private respondent SLMC and that the latter is
giving her the last chance to take and pass the forthcoming board examination scheduled in June
1998; otherwise, private respondent SLMC shall be constrained to take action which may include
her separation from employment.
On November 23, 1998, the Director of the Institute of Radiology issued a notice to petitioner
Maribel S. Santos informing the latter that the management of private respondent SLMC has
approved her retirement in lieu of separation pay.
On November 26, 1998, the Personnel Manager of private respondent SLMC issued a "Notice of
Separation from the Company" to petitioner Maribel S. Santos effective December 30, 1998 in
view of the latter's refusal to accept private respondent SLMC's offer for early retirement. The
notice also states that while said private respondent exerted its efforts to transfer petitioner
Maribel S. Santos to other position/s, her qualifications do not fit with any of the present vacant
positions in the hospital.
In a letter dated December 18, 1998, a certain Jack C. Lappay, President of the Philippine
Association of Radiologic Technologists, Inc., wrote Ms. Judith Betita, Personnel Manager of
private respondent SLMC, requesting the latter to give "due consideration" to the organization's
three (3) regular members of his organization (petitioner Maribel S. Santos included) "for not
passing yet the Board of Examination for X-ray Technology," "by giving them an assignment in
any department of your hospital awaiting their chance to pass the future Board Exam."
On January 6, 1999, the Personnel Manager of private respondent SLMC again issued a "Notice of
Separation from the Company" to petitioner Maribel S. Santos effective February 5, 1999 after
the latter failed to present/ submit her appeal for rechecking to the Professional Regulation
Commission (PRC) of the recent board examination which she took and failed.
On March 2, 1999, petitioner Maribel S. Santos filed a complaint against private respondent SLMC
for illegal dismissal and non-payment of salaries, allowances and other monetary benefits. She
likewise prayed for the award of moral and exemplary damages plus attorney's fees.
In the meantime, petitioner Alliance of Filipino Workers (AFW), through its President and Legal
Counsel, in a letter dated September 22, 1999 addressed to Ms. Rita Marasigan, Human
Resources Director of private respondent SLMC, requested the latter to accommodate petitioner
Maribel S. Santos and assign her to the vacant position of CSS Aide in the hospital arising from
the death of an employee more than two (2) months earlier.
In a letter dated September 24, 1999, Ms. Rita Marasigan replied thus:
Gentlemen:

Thank you for your letter of September 22, 1999 formally requesting to fill up the vacant regular
position of a CSS Aide in Ms. Maribel Santos' behalf.
The position is indeed vacant. Please refer to our Recruitment Policy for particulars especially on
minimum requirements of the job and the need to meet said requirements, as well as other preemployment requirements, in order to be considered for the vacant position. As a matter of fact,
Ms. Santos is welcome to apply for any vacant position on the condition that she possesses the
necessary qualifications.
As to the consensus referred to in your letter, may I correct you that the agreement is, regardless
of the vacant position Ms. Santos decides to apply, she must go through the usual application
procedures. The formal letter, I am afraid, will not suffice for purposes of recruitment processing.
As you know, the managers requesting to fill any vacancy has a say on the matter and correctly
so. The manager's inputs are necessarily factored into the standard recruitment procedures.
Hence, the need to undergo the prescribed steps.
Indeed we have gone through the mechanics to accommodate Ms. Santos' transfer while she was
employed with SLMC given the prescribed period. She was given 30 days from issuance of the
notice of termination to look for appropriate openings which incidentally she wittingly declined to
utilize. She did this knowing fully well that the consequences would be that her application
beyond the 30-day period or after the effective date of her termination from SLMC would be
considered a re-application with loss of seniority and shall be subjected to the pertinent
application procedures.
Needless to mention, one of the 3 X-ray Technologists in similar circumstances as Ms. Santos at
the time successfully managed to get herself transferred to E.R. because she opted to apply for
the appropriate vacant position and qualified for it within the prescribed 30-day period. The other
X-ray Technologist, on the other hand, as you may recall, was eventually terminated not just for
his failure to comply with the licensure requirement of the law but for cause (refusal to serve a
customer).
Why Ms. Santos opted to file a complaint before the Labor Courts and not to avail of the
opportunity given her, or assuming she was not qualified for any vacant position even if she tried
to look for one within the prescribed period, I simply cannot understand why she also refused the
separation pay offered by Management in an amount beyond the minimum required by law only
to re-apply at SLMC, which option would be available to her anyway even (if she) chose to accept
the separation pay!
Well, here's hoping that our Union can timely influence our employees to choose their options
well as it has in the past.
(Signed)
RITA MARASIGAN
Subsequently, in a letter dated December 27, 1999, Ms. Judith Betita, Personnel Manager of
private respondent SLMC wrote Mr. Angelito Calderon, President of petitioner union as follows:
Dear Mr. Calderon:
This is with regard to the case of Ms. Maribel Santos. Please recall that last Oct. 8, 1999, Ms. Rita
Marasigan, HR Director, discussed with you and Mr. Greg Del Prado the terms regarding the rehiring of Ms. Maribel Santos. Ms. Marasigan offered Ms. Santos the position of Secretary at the
Dietary Department. In that meeting, Ms. Santos replied that she would think about the offer. To
date, we still have no definite reply from her. Again, during the conference held on Dec. 14,
1999, Atty. Martir promised to talk to Ms. Santos, and inform us of her reply by Dec. 21, 1999.
Again we failed to hear her reply through him.
Please be informed that said position is in need of immediate staffing. The Dietary Department
has already been experiencing serious backlog of work due to the said vacancy. Please note that
more than 2 months has passed since Ms. Marasigan offered this compromise. Management
cannot afford to wait for her decision while the operation of the said department suffers from
vacancy.
Therefore, Management is giving Ms. Santos until the end of this month to give her decision. If
we fail to hear from her or from you as her representatives by that time, we will consider it as a

waiver and we will be forced to offer the position to other applicants so as not to jeopardize the
Dietary Department's operation.
For your immediate action.
(Signed)
JUDITH BETITA
Personnel Manager
On September 5, 2000, the Labor Arbiter came out with a Decision ordering private respondent
SLMC to pay petitioner Maribel S. Santos the amount of One Hundred Fifteen Thousand Five
Hundred Pesos (P115,500.00) representing her separation pay. All other claims of petitioner were
dismissed for lack of merit.
Dissatisfied, petitioner Maribel S. Santos perfected an appeal with the public respondent NLRC.
On August 23, 2002, public respondent NLRC promulgated its Decision affirming the Decision of
the Labor Arbiter. It likewise denied the Motion for Reconsideration filed by petitioners in its
Resolution promulgated on December 27, 2002.
Petitioner thereafter filed a petition for certiorari with the CA which, as previously mentioned,
affirmed the decision of the NLRC.
Hence, this petition raising the following issues:
I. Whether the CA overlooked certain material facts and circumstances on petitioners' legal
claim in relation to the complaint for illegal dismissal.
II. Whether the CA committed grave abuse of discretion and erred in not resolving with
clarity the issues on the merit of petitioner's constitutional right of security of tenure. 3
For its part, private respondent St. Luke's Medical Center, Inc. (SLMC) argues in its
comment4 that: 1) the petition should be dismissed for failure of petitioners to file a motion for
reconsideration; 2) the CA did not commit grave abuse of discretion in upholding the NLRC and
the Labor Arbiter's ruling that petitioner was legally dismissed; 3) petitioner was legally and
validly terminated in accordance with Republic Act Nos. 4226 and 7431; 4) private respondent's
decision to terminate petitioner Santos was made in good faith and was not the result of unfair
discrimination; and 5) petitioner Santos' non-transfer to another position in the SLMC was a valid
exercise of management prerogative.
The petition lacks merit.
Generally, the Court has always accorded respect and finality to the findings of fact of the CA
particularly if they coincide with those of the Labor Arbiter and the NLRC and are supported by
substantial evidence.5 True this rule admits of certain exceptions as, for example, when the
judgment is based on a misapprehension of facts, or the findings of fact are not supported by the
evidence on record6 or are so glaringly erroneous as to constitute grave abuse of
discretion.7 None of these exceptions, however, has been convincingly shown by petitioners to
apply in the present case. Hence, the Court sees no reason to disturb such findings of fact of the
CA.
Ultimately, the issue raised by the parties boils down to whether petitioner Santos was illegally
dismissed by private respondent SLMC on the basis of her inability to secure a certificate of
registration from the Board of Radiologic Technology.
The requirement for a certificate of registration is set forth under R.A. No. 7431 8 thus:
Sec. 15. Requirement for the Practice of Radiologic Technology and X-ray Technology. - Unless
exempt from the examinations under Sections 16 and 17 hereof, no person shall practice or offer
to practice as a radiologic and/or x-ray technologist in the Philippines without having obtained
the proper certificate of registration from the Board.
It is significant to note that petitioners expressly concede that the sole cause for petitioner
Santos' separation from work is her failure to pass the board licensure exam for X-ray
technicians, a precondition for obtaining the certificate of registration from the Board. It is
argued, though, that petitioner Santos' failure to comply with the certification requirement did

not constitute just cause for termination as it violated her constitutional right to security of
tenure. This contention is untenable.
While the right of workers to security of tenure is guaranteed by the Constitution, its exercise
may be reasonably regulated pursuant to the police power of the State to safeguard health,
morals, peace, education, order, safety, and the general welfare of the people. Consequently,
persons who desire to engage in the learned professions requiring scientific or technical
knowledge may be required to take an examination as a prerequisite to engaging in their chosen
careers.9 The most concrete example of this would be in the field of medicine, the practice of
which in all its branches has been closely regulated by the State. It has long been recognized
that the regulation of this field is a reasonable method of protecting the health and safety of the
public to protect the public from the potentially deadly effects of incompetence and ignorance
among those who would practice medicine. 10 The same rationale applies in the regulation of the
practice of radiologic and x-ray technology. The clear and unmistakable intention of the
legislature in prescribing guidelines for persons seeking to practice in this field is embodied in
Section 2 of the law:
Sec. 2. Statement of Policy. - It is the policy of the State to upgrade the practice of radiologic
technology in the Philippines for the purpose of protecting the public from the hazards posed by
radiation as well as to ensure safe and proper diagnosis, treatment and research through the
application of machines and/or equipment using radiation. 11
In this regard, the Court quotes with approval the disquisition of public respondent NLRC in its
decision dated August 23, 2002:
The enactment of R.A. (Nos.) 7431 and 4226 are recognized as an exercise of the State's
inherent police power. It should be noted that the police power embraces the power to prescribe
regulations to promote the health, morals, educations, good order, safety or general welfare of
the people. The state is justified in prescribing the specific requirements for x-ray technicians
and/or any other professions connected with the health and safety of its citizens. Respondentappellee being engaged in the hospital and health care business, is a proper subject of the cited
law; thus, having in mind the legal requirements of these laws, the latter cannot close its eyes
and [let] complainant-appellant's private interest override public interest.
Indeed, complainant-appellant cannot insist on her "sterling work performance without any
derogatory record" to make her qualify as an x-ray technician in the absence of a proper
certificate of Registration from the Board of Radiologic Technology which can only be obtained by
passing the required examination. The law is clear that the Certificate of Registration cannot be
substituted by any other requirement to allow a person to practice as a Radiologic Technologist
and/or X-ray Technologist (Technician).12
No malice or ill-will can be imputed upon private respondent as the separation of petitioner
Santos was undertaken by it conformably to an existing statute. It is undeniable that her
continued employment without the required Board certification exposed the hospital to possible
sanctions and even to a revocation of its license to operate. Certainly, private respondent could
not be expected to retain petitioner Santos despite the inimical threat posed by the latter to its
business. This notwithstanding, the records bear out the fact that petitioner Santos was given
ample opportunity to qualify for the position and was sufficiently warned that her failure to do so
would result in her separation from work in the event there were no other vacant positions to
which she could be transferred. Despite these warnings, petitioner Santos was still unable to
comply and pass the required exam. To reiterate, the requirement for Board certification was set
by statute. Justice, fairness and due process demand that an employer should not be penalized
for situations where it had no participation or control. 13
It would be unreasonable to compel private respondent to wait until its license is cancelled and it
is materially injured before removing the cause of the impending evil. Neither can the courts step
in to force private respondent to reassign or transfer petitioner Santos under these
circumstances. Petitioner Santos is not in the position to demand that she be given a different
work assignment when what necessitated her transfer in the first place was her own fault or
failing. The prerogative to determine the place or station where an employee is best qualified to
serve the interests of the company on the basis of the his or her qualifications, training and
performance belongs solely to the employer.14 The Labor Code and its implementing Rules do not
vest in the Labor Arbiters nor in the different Divisions of the NLRC (nor in the courts) managerial
authority.15

While our laws endeavor to give life to the constitutional policy on social justice and the
protection of labor, it does not mean that every labor dispute will be decided in favor of the
workers. The law also recognizes that management has rights which are also entitled to respect
and enforcement in the interest of fair play. 16 Labor laws, to be sure, do not authorize
interference with the employer's judgment in the conduct of the latter's business. Private
respondent is free to determine, using its own discretion and business judgment, all elements of
employment, "from hiring to firing" except in cases of unlawful discrimination or those which may
be provided by law. None of these exceptions is present in the instant case.
The fact that another employee, who likewise failed to pass the required exam, was allowed by
private respondent to apply for and transfer to another position with the hospital does not
constitute unlawful discrimination. This was a valid exercise of management prerogative,
petitioners not having alleged nor proven that the reassigned employee did not qualify for the
position where she was transferred. In the past, the Court has ruled that an objection founded on
the ground that one has better credentials over the appointee is frowned upon so long as the
latter possesses the minimum qualifications for the position. 17 Furthermore, the records show
that Ms. Santos did not even seriously apply for another position in the company.
WHEREFORE, the petition is DENIED for lack of merit. Costs against petitioners.
SO ORDERED.
ADOLFO S. AZCUNA
Associate Justice
WE CONCUR:
REYNATO S. PUNO
Chairperson
Chief Justice
ANGELINA SANDOVAL-GUTIERREZ
Associate Justice

RENATO C. CORONA
Asscociate Justice

CANCIO C. GARCIA
Associate Justice
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that the conclusions
in the above Decision had been reached in consultation before the case was assigned to the
writer of the opinion of the Court's Division.
REYNATO S. PUNO
Chief Justice

Footnotes
1

Rollo, pp. 37-50.

Id. at 26-36.

Id. at 5.

Id. at 59-167.

Lopez v. National Steel Corporation, G.R. No. 149674, February 16, 2004, 423 SCRA 109.

JAT General Services v. NLRC, G.R. No. 148340, January 26, 2004, 421 SCRA 78.

Suan v. NLRC, G.R. No. 141441, June 19, 2001, 358 SCRA 819.

Otherwise known as the "fadiologic Technology Act of 1992."

PRC v. De Guzman, G.R. No. 144681, June 21, 2004, 432 SCRA 505.

10

DECS v. San Diego, G.R. No. 89572, December 21, 1989, 180 SCRA 533.

11

Supra note 8.

12

Rollo, pp. 32-33.

13

Superstar Security Agency, Inc. v. NLRC, G.R. No. 81493 April 3, 1990, 184 SCRA 74; M.F
Violago Oiler Tank Trucks v. NLRC, G.R. Nos. 56950-51, September 30, 1982, 117 SCRA
544.
14

Benguet Electric Cooperative v. Fianza, G.R. No. 158606, March 9, 2004, 425 SCRA 41.

15

Almodiel v. NLRC, G.R. No. 100641, June 14, 1993, 223 SCRA 341.

16

Duncan Association of Detailman-PTGWO v. Glaxo Wellcome Philippines, Inc., G.R. No.

162994, September 17, 2004, 438 SCRA 343.
17

Supra note 15.

G.R. No. 80609 August 23, 1988

PHILIPPINE LONG DISTANCE TELEPHONE COMPANY, petitioner,
vs.
THE NATIONAL LABOR RELATIONS COMMISSION and MARILYN ABUCAY, respondents.
Nicanor G. Nuevas for petitioner.

CRUZ, J.:
The only issue presented in the case at bar is the legality of the award of financial assistance to
an employee who had been dismissed for cause as found by the public respondent.
Marilyn Abucay, a traffic operator of the Philippine Long Distance Telephone Company, was
accused by two complainants of having demanded and received from them the total amount of
P3,800.00 in consideration of her promise to facilitate approval of their applications for telephone
installation. 1 Investigated and heard, she was found guilty as charged and accordingly separated
from the service. 2 She went to the Ministry of Labor and Employment claiming she had been
illegally removed. After consideration of the evidence and arguments of the parties, the company
was sustained and the complaint was dismissed for lack of merit. Nevertheless, the dispositive
portion of labor arbiter's decision declared:
WHEREFORE, the instant complaint is dismissed for lack of merit.
Considering that Dr. Helen Bangayan and Mrs. Consolacion Martinez are not totally
blameless in the light of the fact that the deal happened outhide the premises of
respondent company and that their act of giving P3,800.00 without any receipt is
tantamount to corruption of public officers, complainant must be given one month
pay for every year of service as financial assistance. 3
Both the petitioner and the private respondent appealed to the National Labor Relations Board,
which upheld the said decision in toto and dismissed the appeals. 4 The private respondent took
no further action, thereby impliedly accepting the validity of her dismissal. The petitioner,

however, is now before us to question the affirmance of the above- quoted award as having been
made with grave abuse of discretion.
In its challenged resolution of September 22, 1987, the NLRC said:
... Anent the award of separation pay as financial assistance in complainant's favor,
We find the same to be equitable, taking into consideration her long years of service
to the company whereby she had undoubtedly contributed to the success of
respondent. While we do not in any way approve of complainants (private
respondent) mal feasance, for which she is to suffer the penalty of dismissal, it is for
reasons of equity and compassion that we resolve to uphold the award of financial
assistance in her favor. 5
The position of the petitioner is simply stated: It is conceded that an employee illegally dismissed
is entitled to reinstatement and backwages as required by the labor laws. However, an employee
dismissed for cause is entitled to neither reinstatement nor backwages and is not allowed any
relief at all because his dismissal is in accordance with law. In the case of the private respondent,
she has been awarded financial assistance equivalent to ten months pay corresponding to her 10
year service in the company despite her removal for cause. She is, therefore, in effect rewarded
rather than punished for her dishonesty, and without any legal authorization or justification. The
award is made on the ground of equity and compassion, which cannot be a substitute for law.
Moreover, such award puts a premium on dishonesty and encourages instead of deterring
corruption.
For its part, the public respondent claims that the employee is sufficiently punished with her
dismissal. The grant of financial assistance is not intended as a reward for her offense but merely
to help her for the loss of her employment after working faithfully with the company for ten
years. In support of this position, the Solicitor General cites the cases of Firestone Tire and
Rubber Company of the Philippines v. Lariosa 6 and Soco v. Mercantile Corporation of
Davao, 7 where the employees were dismissed for cause but were nevertheless allowed
separation pay on grounds of social and compassionate justice. As the Court put it in the
Firestone case:
In view of the foregoing, We rule that Firestone had valid grounds to dispense with
the services of Lariosa and that the NLRC acted with grave abuse of discretion in
ordering his reinstatement. However, considering that Lariosa had worked with the
company for eleven years with no known previous bad record, the ends of social
and compassionate justice would be served if he is paid full separation pay but not
reinstatement without backwages by the NLRC.
In the said case, the employee was validly dismissed for theft but the NLRC nevertheless
awarded him full separation pay for his 11 years of service with the company. In Soco, the
employee was also legally separated for unauthorized use of a company vehicle and refusal to
attend the grievance proceedings but he was just the same granted one-half month separation
pay for every year of his 18-year service.
Similar action was taken in Filipro, Inc. v. NLRC, 8 where the employee was validly dismissed for
preferring certain dealers in violation of company policy but was allowed separation pay for his 2
years of service. In Metro Drug Corporation v. NLRC, 9 the employee was validly removed for loss
of confidence because of her failure to account for certain funds but she was awarded separation
pay equivalent to one-half month's salary for every year of her service of 15 years. In
Engineering Equipment, Inc. v. NLRC, 10 the dismissal of the employee was justified because he
had instigated labor unrest among the workers and had serious differences with them, among
other grounds, but he was still granted three months separation pay corresponding to his 3-year
service. In New Frontier Mines, Inc. v. NLRC, 11 the employee's 3- year service was held validly
terminated for lack of confidence and abandonment of work but he was nonetheless granted
three months separation pay. And in San Miguel Corporation v. Deputy Minister of Labor and
Employment, et al ., 12 full separation pay for 6, 10, and 16 years service, respectively, was also

allowed three employees who had been dismissed after they were found guilty of
misappropriating company funds.
The rule embodied in the Labor Code is that a person dismissed for cause as defined therein is
not entitled to separation pay. 13 The cases above cited constitute the exception, based upon
considerations of equity. Equity has been defined as justice outside law, 14 being ethical rather
than jural and belonging to the sphere of morals than of law. 15 It is grounded on the precepts of
conscience and not on any sanction of positive law. 16 Hence, it cannot prevail against the
expressed provision of the labor laws allowing dismissal of employees for cause and without any
provision for separation pay.
Strictly speaking, however, it is not correct to say that there is no express justification for the
grant of separation pay to lawfully dismissed employees other than the abstract consideration of
equity. The reason is that our Constitution is replete with positive commands for the promotion of
social justice, and particularly the protection of the rights of the workers. The enhancement of
their welfare is one of the primary concerns of the present charter. In fact, instead of confining
itself to the general commitment to the cause of labor in Article II on the Declaration of Principles
of State Policies, the new Constitution contains a separate article devoted to the promotion of
social justice and human rights with a separate sub- topic for labor. Article XIII expressly
recognizes the vital role of labor, hand in hand with management, in the advancement of the
national economy and the welfare of the people in general. The categorical mandates in the
Constitution for the improvement of the lot of the workers are more than sufficient basis to justify
the award of separation pay in proper cases even if the dismissal be for cause.
The Court notes, however, that where the exception has been applied, the decisions have not
been consistent as to the justification for the grant of separation pay and the amount or rate of
such award. Thus, the employees dismissed for theft in the Firestone case and for animosities
with fellow workers in the Engineering Equipment case were both awarded separation pay
notnvithstanding that the first cause was certainly more serious than the second. No less
curiously, the employee in the Soco case was allowed only one-half month pay for every year of
his 18 years of service, but in Filipro the award was two months separation pay for 2 years
service. In Firestone, the emplovee was allowed full separation pay corresponding to his 11 years
of service, but in Metro, the employee was granted only one-half month separation pay for every
year of her 15year service. It would seem then that length of service is not necessarily a criterion
for the grant of separation pay and neither apparently is the reason for the dismissal.
The Court feels that distinctions are in order. We note that heretofore the separation pay, when it
was considered warranted, was required regardless of the nature or degree of the ground proved,
be it mere inefficiency or something graver like immorality or dishonesty. The benediction of
compassion was made to cover a multitude of sins, as it were, and to justify the helping hand to
the validly dismissed employee whatever the reason for his dismissal. This policy should be reexamined. It is time we rationalized the exception, to make it fair to both labor and management,
especially to labor.
There should be no question that where it comes to such valid but not iniquitous causes as
failure to comply with work standards, the grant of separation pay to the dismissed employee
may be both just and compassionate, particularly if he has worked for some time with the
company. For example, a subordinate who has irreconcilable policy or personal differences with
his employer may be validly dismissed for demonstrated loss of confidence, which is an
allowable ground. A working mother who has to be frequently absent because she has also to
take care of her child may also be removed because of her poor attendance, this being another
authorized ground. It is not the employee's fault if he does not have the necessary aptitude for
his work but on the other hand the company cannot be required to maintain him just the same at
the expense of the efficiency of its operations. He too may be validly replaced. Under these and
similar circumstances, however, the award to the employee of separation pay would be
sustainable under the social justice policy even if the separation is for cause.
But where the cause of the separation is more serious than mere inefficiency, the generosity of
the law must be more discerning. There is no doubt it is compassionate to give separation pay to

a salesman if he is dismissed for his inability to fill his quota but surely he does not deserve such
generosity if his offense is misappropriation of the receipts of his sales. This is no longer mere
incompetence but clear dishonesty. A security guard found sleeping on the job is doubtless
subject to dismissal but may be allowed separation pay since his conduct, while inept, is not
depraved. But if he was in fact not really sleeping but sleeping with a prostitute during his tour of
duty and in the company premises, the situation is changed completely. This is not only
inefficiency but immorality and the grant of separation pay would be entirely unjustified.
We hold that henceforth separation pay shall be allowed as a measure of social justice only in
those instances where the employee is validly dismissed for causes other than serious
misconduct or those reflecting on his moral character. Where the reason for the valid dismissal
is, for example, habitual intoxication or an offense involving moral turpitude, like theft or illicit
sexual relations with a fellow worker, the employer may not be required to give the dismissed
employee separation pay, or financial assistance, or whatever other name it is called, on the
ground of social justice.
A contrary rule would, as the petitioner correctly argues, have the effect, of rewarding rather
than punishing the erring employee for his offense. And we do not agree that the punishment is
his dismissal only and that the separation pay has nothing to do with the wrong he has
committed. Of course it has. Indeed, if the employee who steals from the company is granted
separation pay even as he is validly dismissed, it is not unlikely that he will commit a similar
offense in his next employment because he thinks he can expect a like leniency if he is again
found out. This kind of misplaced compassion is not going to do labor in general any good as it
will encourage the infiltration of its ranks by those who do not deserve the protection and
concern of the Constitution.
The policy of social justice is not intended to countenance wrongdoing simply because it is
committed by the underprivileged. At best it may mitigate the penalty but it certainly will not
condone the offense. Compassion for the poor is an imperative of every humane society but only
when the recipient is not a rascal claiming an undeserved privilege. Social justice cannot be
permitted to be refuge of scoundrels any more than can equity be an impediment to the
punishment of the guilty. Those who invoke social justice may do so only if their hands are clean
and their motives blameless and not simply because they happen to be poor. This great policy of
our Constitution is not meant for the protection of those who have proved they are not worthy of
it, like the workers who have tainted the cause of labor with the blemishes of their own character.
Applying the above considerations, we hold that the grant of separation pay in the case at bar is
unjustified. The private respondent has been dismissed for dishonesty, as found by the labor
arbiter and affirmed by the NLRC and as she herself has impliedly admitted. The fact that she
has worked with the PLDT for more than a decade, if it is to be considered at all, should be taken
against her as it reflects a regrettable lack of loyalty that she should have strengthened instead
of betraying during all of her 10 years of service with the company. If regarded as a justification
for moderating the penalty of dismissal, it will actually become a prize for disloyalty, perverting
the meaning of social justice and undermining the efforts of labor to cleanse its ranks of all
undesirables.
The Court also rules that the separation pay, if found due under the circumstances of each case,
should be computed at the rate of one month salary for every year of service, assuming the
length of such service is deemed material. This is without prejudice to the application of special
agreements between the employer and the employee stipulating a higher rate of computation
and providing for more benefits to the discharged employee. 17
WHEREFORE, the petition is GRANTED. The challenged resolution of September 22,1987, is
AFFIRMED in totoexcept for the grant of separation pay in the form of financial assistance, which
is hereby DISALLOWED. The temporary restraining order dated March 23, 1988, is LIFTED. It is so
ordered.
Narvasa, Melencio-Herrera, Gutierrez, Jr., Paras, Feliciano, Gancayco, Bidin, Sarmiento, Cortes
and Medialdea, JJ., concur.

Separate Opinions

FERNAN, C.J., dissenting:

The majority opinion itself declares that the reason for granting separation pay to lawfully
dismissed employees is that "our Constitution is replete with positive commands for the
promotion of social justice, and particularly the protection of the rights of the workers." 1
It is my firm belief that providing a rigid mathematical formula for determining the amounts of
such separation pay will not be in keeping with these constitutional directives. By computing the
allowable financial assistance on the formula suggested, we shall be closing our eyes to the spirit
underlying these constitutional mandates that "those who have less in life should have more in
law." It cannot be denied that a low salaried employee who is separated from work would suffer
more hardship than a well-compensated one. Yet, if we follow the formula suggested, we would in
effect be favoring the latter instead of the former, as it would be the low- salaried employee who
would encounter difficulty finding another job.
I am in accord with the opinion of Justice Sarmiento that we should not rationalize compassion
and that of Justice Padilla that the awards of financial assistance should be left to the discretion
of the National Labor Relations Commission as may be warranted by the "environmental facts" of
the case.
PADILIA, J., separate opinion
I concur in the decision penned by Mr. Justice Cruz when it disallows separation pay, as financial
assistance, to the private respondent, since the ground for termination of employment is
dishonesty in the performance of her duties.
I do not, however, subscribe to the view that "the separation pay, if found due under the
circumstances of each case, should be computed at the rate of one month salary for every year
of service, assuming the length of such service is deemed material." (p.11, Decision). It is my
considered view that, except for terminations based on dishonesty and serious misconduct
involving moral turpitude-where no separation pay should be allowed--in other cases, the grant
of separation pay, i.e. the amount thereof, as financial assistance to the terminated employee,
should be left to the judgment of the administrative agency concemed which is the NLRC. It is in
such cases- where the termination of employment is for a valid cause without, however,
involving dishonesty or serious misconduct involving moral turpitude-that the Constitutional
policy of affording protection to labor should be allowed full play; and this is achieved by leaving
to the NLRC the primary jurisdiction and judgment to determine the amount of separation pay
that should be awarded to the terminated employee in accordance with the "environmental
facts" of each case.
It is further my view that the Court should not, as a rule, disturb or alter the amount of
separation pay awarded by the NLRC in such cases of valid termination of employment but with
the financial assistance, in the absence of a demonstrated grave abuse of discretion on the part
of the NLRC.
GRIO AQUINO, J., dissent:
We should not rationalize compassion. I vote to affirm the grant of financial assistance.

[G.R. No. 146650. January 13, 2003]

DOLE PHILIPPINES, INC., petitioner, vs. PAWIS NG MAKABAYANG OBRERO (PAMAONFL), respondent.
DECISION
CORONA, J.:
Before us is a petition for review filed under Rule 45 of the 1997 Rules of Civil Procedure,
assailing the January 9, 2001 resolution of the Court of Appeals which denied petitioners motion
for reconsideration of its September 22, 2000 decision [1] which in turn upheld the Order issued by
the voluntary arbitrator[2] dated 12 October 1998, the dispositive portion of which reads:
WHEREFORE, premises considered, judgment is hereby rendered in favor of the
complainant. Respondent is hereby directed to extend the free meal benefit as provided for in
Article XVIII, Section 3 of the collective bargaining agreement to those employees who have
actually performed overtime works even for exactly three (3) hours only.
SO ORDERED.

[3]

The core of the present controversy is the interpretation of the provision for free meals under
Section 3 of Article XVIII of the 1996-2001 Collective Bargaining Agreement (CBA) between
petitioner Dole Philippines, Inc. and private respondent labor union PAMAO-NFL. Simply put, how
many hours of overtime work must a Dole employee render to be entitled to the free meal under
Section 3 of Article XVIII of the 1996-2001 CBA? Is it when he has rendered (a) exactly, or no less
than, three hours of actual overtime work or (b) more than three hours of actual overtime work?
The antecedents are as follows:
On February 22, 1996, a new five-year Collective Bargaining Agreement for the period
starting February 1996 up to February 2001, was executed by petitioner Dole Philippines, Inc.,
and private respondent Pawis Ng Makabayang Obrero-NFL (PAMAO-NFL). Among the provisions of
the new CBA is the disputed section on meal allowance under Section 3 of Article XVIII on
Bonuses and Allowances, which reads:
Section 3. MEAL ALLOWANCE. The COMPANY agrees to grant a MEAL ALLOWANCE of TEN PESOS
(P10.00) to all employees who render at least TWO (2) hours or more of actual overtime work on
a workday, and FREE MEALS, as presently practiced, not exceeding TWENTY FIVE PESOS
(P25.00) after THREE (3) hours of actual overtime work.[4]
Pursuant to the above provision of the CBA, some departments of Dole reverted to the
previous practice of granting free meals after exactly three hours of actual overtime
work. However, other departments continued the practice of granting free meals only after more
than three hours of overtime work. Thus, private respondent filed a complaint before the
National Conciliation and Mediation Board alleging that petitioner Dole refused to comply with
the provisions of the 1996-2001 CBA because it granted free meals only to those who rendered
overtime work for more than three hours and not to those who rendered exactly three hours
overtime work.
The parties agreed to submit the dispute to voluntary arbitration. Thereafter, the voluntary
arbitrator, deciding in favor of the respondent, issued an order directing petitioner Dole to extend
the free meal benefit to those employees who actually did overtime work even for exactly three
hours only.
Petitioner sought a reconsideration of the above order but the same was denied. Hence,
petitioner elevated the matter to the Court of Appeals by way of a petition for review on
certiorari.

On September 22, 2000, the Court of Appeals rendered its decision upholding the assailed
order.
Thus, the instant petition.
Petitioner Dole asserts that the phrase after three hours of actual overtime work should be
interpreted to mean after more than three hours of actual overtime work.
On the other hand, private respondent union and the voluntary arbitrator see it as
meaning after exactly three hours of actual overtime work.
The meal allowance provision in the 1996-2001 CBA is not new. It was also in the 1985-1988
CBA and the 1990-1995 CBA. The 1990-1995 CBA provision on meal allowance was amended by
the parties in the 1993-1995 CBA Supplement. The clear changes in each CBA provision on meal
allowance were in the amount of the meal allowance and free meals, and the use of the words
after and after more than to qualify the amount of overtime work to be performed by an
employee to entitle him to the free meal.
To arrive at a correct interpretation of the disputed provision of the CBA, a review of the
pertinent section of past CBAs is in order.
The CBA covering the period 21 September 1985 to 20 September 1988 provided:
Section 3. MEAL ALLOWANCE. The COMPANY agrees to grant a MEAL ALLOWANCE of FOUR
(P4.00) PESOS to all employees who render at least TWO (2) hours or more of actual overtime
work on a workday, and FREE MEALS, as presently practiced, after THREE (3) hours of actual
overtime work.[5]
The CBA for 14 January 1990 to 13 January 1995 likewise provided:
Section 3. MEAL ALLOWANCE. The COMPANY agrees to grant a MEAL ALLOWANCE of EIGHT
PESOS (P8.00) to all employees who render at least TWO (2) hours or more of actual overtime
work on a workday, and FREE MEALS, as presently practiced, not exceeding SIXTEEN PESOS
(P16.00) after THREE (3) hours of actual overtime work.[6]
The provision above was later amended when the parties renegotiated the economic
provisions of the CBA pursuant to Article 253-A of the Labor Code. Section 3 of Article XVIII of the
14 January 1993 to 13 January 1995 Supplement to the 1990-1995 CBA reads:
Section 3. MEAL ALLOWANCE. The COMPANY agrees to grant a MEAL SUBSIDY of NINE PESOS
(P9.00) to all employees who render at least TWO (2) hours or more of actual overtime work on a
workday, and FREE MEALS, as presently practiced, not exceeding TWENTY ONE PESOS
(P21.00) after more than THREE (3) hours of actual overtime work (Section 3, as amended). [7]
We note that the phrase more than was neither in the 1985-1988 CBA nor in the original
1990-1995 CBA. It was inserted only in the 1993-1995 CBA Supplement. But said phrase is again
absent in Section 3 of Article XVIII of the 1996-2001 CBA, which reverted to the phrase after
three (3) hours.
Petitioner asserts that the phrase after three (3) hours of actual overtime work does not
mean after exactly three hours of actual overtime work; it means after more than three hours of
actual overtime work. Petitioner insists that this has been the interpretation and practice of Dole
for the past thirteen years.
Respondent, on the other hand, maintains that after three (3) hours of actual overtime work
simply means after rendering exactly, or no less than, three hours of actual overtime work.
The Court finds logic in private respondents interpretation.

The omission of the phrase more than between after and three hours in the present CBA
spells a big difference.
No amount of legal semantics can convince the Court that after more than means the same
as after.
Petitioner asserts that the more than in the 1993-1995 CBA Supplement was mere
surplusage because, regardless of the absence of said phrase in all the past CBAs, it had always
been the policy of petitioner corporation to give the meal allowance only after more than 3
hours of overtime work. However, if this were true, why was it included only in the 1993-1995
CBA Supplement and the parties had to negotiate its deletion in the 1996-2001 CBA?
Clearly then, the reversion to the wording of previous CBAs can only mean that the parties
intended that free meals be given to employees after exactly, or no less than, three hours of
actual overtime work.
The disputed provision of the CBA is clear and unambiguous. The terms are explicit and the
language of the CBA is not susceptible to any other interpretation. Hence, the literal meaning of
free meals after three (3) hours of overtime work shall prevail, which is simply that an employee
shall be entitled to a free meal if he has rendered exactly, or no less than, three hours of
overtime work, not after more than or in excess of three hours overtime work.
Petitioner also invokes the well-entrenched principle of management prerogative that the
power to grant benefits over and beyond the minimum standards of law, or the Labor Code for
that matter, belongs to the employer x x x. According to this principle, even if the law is
solicitous of the welfare of the employees, it must also protect the right of the employer to
exercise what clearly are management prerogatives. [8] Petitioner claims that, being the employer,
it has the right to determine whether it will grant a free meal benefit to its employees and, if so,
under what conditions. To see it otherwise would amount to an impairment of its rights as an
employer.
We do not think so.
The exercise of management prerogative is not unlimited. It is subject to the limitations
found in law, a collective bargaining agreement or the general principles of fair play and justice.
[9]
This situation constitutes one of the limitations. The CBA is the norm of conduct between
petitioner and private respondent and compliance therewith is mandated by the express policy of
the law.[10]
Petitioner Dole cannot assail the voluntary arbitrators interpretation of the CBA for the
supposed impairment of its management prerogatives just because the same interpretation is
contrary to its own.
WHEREFORE, petition is hereby denied.
SO ORDERED.
Puno, (Chairman), Panganiban, Sandoval-Gutierrez, and Carpio-Morales, JJ., concur.

G.R. No. 155059. April 29, 2005]

AMERICAN WIRE AND CABLE
AMERICAN
WIRE
AND
APPEALS, respondents.

DAILY RATED EMPLOYEES UNION, petitioner, vs.

CABLE
CO.,
INC.
and
THE
COURT
OF

DECISION

CHICO-NAZARIO, J.:
Before Us is a special civil action for certiorari, assailing the Decision[1] of the Special Eighth
Division of the Court of Appeals dated 06 March 2002. Said Decision upheld the Decision [2] and
Order[3] of Voluntary Arbitrator Angel A. Ancheta of the National Conciliation and Mediation Board
(NCMB) dated 25 September 2001 and 05 November 2001, respectively, which declared the
private respondent herein not guilty of violating Article 100 of the Labor Code, as amended.
Assailed likewise, is the Resolution[4] of the Court of Appeals dated 12 July 2002, which denied the
motion for reconsideration of the petitioner, for lack of merit.
THE FACTS
The facts of this case are quite simple and not in dispute.
American Wire and Cable Co., Inc., is a corporation engaged in the manufacture of wires and
cables. There are two unions in this company, the American Wire and Cable Monthly-Rated
Employees Union (Monthly-Rated Union) and the American Wire and Cable Daily-Rated
Employees Union (Daily-Rated Union).
On 16 February 2001, an original action was filed before the NCMB of the Department of
Labor and Employment (DOLE) by the two unions for voluntary arbitration. They alleged that the
private respondent, without valid cause, suddenly and unilaterally withdrew and denied certain
benefits and entitlements which they have long enjoyed. These are the following:
a. Service Award;
b. 35% premium pay of an employees basic pay for the work rendered during Holy
Monday, Holy Tuesday, Holy Wednesday, December 23, 26, 27, 28 and 29;
c. Christmas Party; and
d. Promotional Increase.
A promotional increase was asked by the petitioner for fifteen (15) of its members who were
given or assigned new job classifications. According to petitioner, the new job classifications were
in the nature of a promotion, necessitating the grant of an increase in the salaries of the said 15
members.
On 21 June 2001, a Submission Agreement was filed by the parties before the Office for
Voluntary Arbitration. Assigned as Voluntary Arbitrator was Angel A. Ancheta.
On 04 July 2001, the parties simultaneously filed their respective position papers with the
Office of the Voluntary Arbitrator, NCMB, and DOLE.
On 25 September 2001, a Decision [5] was rendered by Voluntary Arbitrator Angel A. Ancheta
in favor of the private respondent. The dispositive portion of the said Decision is quoted
hereunder:
WHEREFORE, with all the foregoing considerations, it is hereby declared that the Company is
not guilty of violating Article 100 of the Labor Code, as amended, or specifically for withdrawing
the service award, Christmas party and 35% premium for work rendered during Holy Week and
Christmas season and for not granting any promotional increase to the alleged fifteen (15) DailyRated Union Members in the absence of a promotion. The Company however, is directed to grant
the service award to deserving employees in amounts and extent at its discretion, in consultation
with the Unions on grounds of equity and fairness. [6]
A motion for reconsideration was filed by both unions [7] where they alleged that the Voluntary
Arbitrator manifestly erred in finding that the company did not violate Article 100 of the Labor

Code, as amended, when it unilaterally withdrew the subject benefits, and when no promotional
increase was granted to the affected employees.
On 05 November 2001, an Order[8] was issued by Voluntary Arbitrator Angel A. Ancheta. Part
of the Order is quoted hereunder:
Considering that the issues raised in the instant case were meticulously evaluated and length[i]ly
discussed and explained based on the pleadings and documentary evidenc[e] adduced by the
contending parties, we find no cogent reason to change, modify, or disturb said decision.
WHEREFORE, let the instant MOTION[S] FOR RECONSIDERATION be, as they are hereby, denied
for lack of merit. Our decision dated 25 September 2001 is affirmed en toto. [9]
An appeal under Rule 43 of the 1997 Rules on Civil Procedure was made by the Daily-Rated
Union before the Court of Appeals [10] and docketed as CA-G.R. SP No. 68182. The petitioner
averred that Voluntary Arbitrator Angel A. Ancheta erred in finding that the company did not
violate Article 100 of the Labor Code, as amended, when the subject benefits were unilaterally
withdrawn. Further, they assert, the Voluntary Arbitrator erred in adopting the companys
unaudited Revenues and Profitability Analysis for the years 1996-2000 in justifying the latters
withdrawal of the questioned benefits. [11]
On 06 March 2002, a Decision in favor of herein respondent company was promulgated by
the Special Eighth Division of the Court of Appeals in CA-G.R. SP No. 68182. The decretal portion
of the decision reads:
WHEREFORE, premises considered, the present petition is hereby DENIED DUE COURSE and
accordingly DISMISSED, for lack of merit. The Decision of Voluntary Arbitrator Angel A. Ancheta
dated September 25, 2001 and his Order dated November 5, 2001 in VA Case No. AAA-10-6-42001 are hereby AFFIRMED and UPHELD.[12]
A motion for reconsideration[13] was filed by the petitioner, contending that the Court of
Appeals misappreciated the facts of the case, and that it committed serious error when it ruled
that the unaudited financial statement bears no importance in the instant case.
The Court of Appeals denied the motion in its Resolution dated 12 July 2002 [14] because it did
not present any new matter which had not been considered in arriving at the decision. The
dispositive portion of the Resolution states:
WHEREFORE, the motion for reconsideration is hereby DENIED for lack of merit.[15]
Dissatisfied with the court a quos ruling, petitioner instituted the instant special civil action
for certiorari,[16] citing grave abuse of discretion amounting to lack of jurisdiction.
ASSIGNMENT OF ERRORS
The petitioner assigns as errors the following:
I
THE COURT OF APPEALS ERRED IN HOLDING THAT THE COMPANY DID NOT VIOLATE ARTICLE 100
OF THE LABOR CODE, AS AMENDED, WHEN IT UNILATERALLY WITHDREW THE BENEFITS OF THE
MEMBERS OF PETITIONER UNION, TO WIT: 1) 35% PREMIUM PAY; 2) CHRISTMAS PARTY AND ITS
INCIDENTAL BENEFITS; AND 3) SERVICE AWARD, WHICH IN TRUTH AND IN FACT SAID
BENEFITS/ENTITLEMENTS HAVE BEEN GIVEN THEM SINCE TIME IMMEMORIAL, AS A MATTER OF
LONG ESTABLISHED COMPANY PRACTICE, WITH THE FURTHER FACT THAT THE SAME NOT BEING
DEPENDENT ON PROFITS.
II

THE COURT OF APPEALS ERRED WHEN IT JUST ACCEPTED HOOK, LINE AND SINKER, THE
RESPONDENT COMPANYS SELF SERVING AND UNAUDITED REVENUES AND PROFITABILITY
ANALYSIS FOR THE YEARS 1996-2000 WHICH THEY SUBMITTED TO FALSELY JUSTIFY THEIR
UNLAWFUL ACT OF UNILATERALLY AND SUDDENLY WITHDRAWING OR DENYING FROM THE
PETITIONER THE SUBJECT BENEFITS/ENTITLEMENTS.
III
THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE YEARLY SERVICE AWARD IS NOT
DEPENDENT ON PROFIT BUT ON SERVICE AND THUS, CANNOT BE UNILATERALLY WITHDRAWN BY
RESPONDENT COMPANY.
ISSUE
Synthesized, the solitary issue that must be addressed by this Court is whether or not private
respondent is guilty of violating Article 100 of the Labor Code, as amended, when the
benefits/entitlements given to the members of petitioner union were withdrawn.
THE COURTS RULING
Before we address the sole issue presented in the instant case, it is best to first discuss a
matter which was raised by the private respondent in its Comment. The private respondent
contends that this case should have been dismissed outright because of petitioners error in the
mode of appeal. According to it, the petitioner should have elevated the instant case to this
Court through a petition for review on certiorari under Rule 45, and not through a special civil
action for certiorari under Rule 65, of the 1997 Rules on Civil Procedure. [17]
Assuming arguendo that the mode of appeal taken by the petitioner is improper, there is no
question that the Supreme Court has the discretion to dismiss it if it is defective. However, sound
policy dictates that it is far better to dispose the case on the merits, rather than on technicality.
[18]

The Supreme Court may brush aside the procedural barrier and take cognizance of the
petition as it raises an issue of paramount importance. The Court shall resolve the solitary issue
on the merits for future guidance of the bench and bar. [19]
With that out of the way, we shall now resolve whether or not the respondent company is
guilty of violating Article 100 of the Labor Code, as amended.
Article 100 of the Labor Code provides:
ART. 100. PROHIBITION AGAINST ELIMINATION OR DIMINUTION OF BENEFITS. Nothing in
this Book shall be construed to eliminate or in any way diminish supplements, or other employee
benefits being enjoyed at the time of promulgation of this Code.
The petitioner submits that the withdrawal of the private respondent of the 35% premium
pay for selected days during the Holy Week and Christmas season, the holding of the Christmas
Party and its incidental benefits, and the giving of service awards violated Article 100 of the
Labor Code. The grant of these benefits was a customary practice that can no longer be
unilaterally withdrawn by private respondent without the tacit consent of the petitioner. The
benefits in question were given by the respondent to the petitioner consistently, deliberately,
and unconditionally since time immemorial. The benefits/entitlements were not given to
petitioner due to an error in interpretation, or a construction of a difficult question of law, but
simply, the grant has been a practice over a long period of time. As such, it cannot be withdrawn
from the petitioner at respondents whim and caprice, and without the consent of the former. The
benefits given by the respondent cannot be considered as a bonus as they are not founded on
profit. Even assuming that it can be treated as a bonus, the grant of the same, by reason of its
long and regular concession, may be regarded as part of regular compensation. [20]

With respect to the fifteen (15) employees who are members of petitioner union that were
given new job classifications, it asserts that a promotional increase in their salaries was in order.
Salary adjustment is a must due to their promotion. [21]
On respondent companys Revenues and Profitability Analysis for the years 1996-2000, the
petitioner insists that since the former was unaudited, it should not have justified the companys
sudden withdrawal of the benefits/entitlements. The normal and/or legal method for establishing
profit and loss of a company is through a financial statement audited by an independent auditor.
[22]

The petitioner cites our ruling in the case of Saballa v. NLRC,[23] where we held that financial
statements audited by independent auditors constitute the normal method of proof of the profit
and loss performance of the company. Our ruling in the case of Bogo-Medellin Sugarcane
Planters Association, Inc., et al. v. NLRC, et al.[24] was likewise invoked. In this case, we held:
The Court has previously ruled that financial statements audited by independent external
auditors constitute the normal method of proof of the profit and loss performance of a company.
On the matter of the withdrawal of the service award, the petitioner argues that it is the
employees length of service which is taken as a factor in the grant of this benefit, and not
whether the company acquired profit or not. [25]
In answer to all these, the respondent corporation avers that the grant of all subject benefits
has not ripened into practice that the employees concerned can claim a demandable right over
them. The grant of these benefits was conditional based upon the financial performance of the
company and that conditions/circumstances that existed before have indeed substantially
changed thereby justifying the discontinuance of said grants. The companys financial
performance was affected by the recent political turmoil and instability that led the entire nation
to a bleeding economy. Hence, it only necessarily follows that the companys financial situation at
present is already very much different from where it was three or four years ago. [26]
On the subject of the unaudited financial statement presented by the private respondent, the
latter contends that the cases cited by the petitioner indeed uniformly ruled that financial
statements audited by independent external auditors constitute the normal method of proof of
the profit and loss performance of a company. However, these cases do not require that the only
legal method to ascertain profit and loss is through an audited financial statement. The cases
only provide that an audited financial statement is the normal method. [27]
The respondent company likewise asseverates that the 15 members of petitioner union were
not actually promoted. There was only a realignment of positions. [28]
From the foregoing contentions, it appears that for the Court to resolve the issue presented,
it is critical that a determination must be first made on whether the benefits/entitlements are in
the nature of a bonus or not, and assuming they are so, whether they are demandable and
enforceable obligations.
In the case of Producers Bank of the Philippines v. NLRC [29] we have characterized what a
bonus is, viz:
A bonus is an amount granted and paid to an employee for his industry and loyalty which
contributed to the success of the employers business and made possible the realization of
profits. It is an act of generosity granted by an enlightened employer to spur the employee to
greater efforts for the success of the business and realization of bigger profits. The granting of a
bonus is a management prerogative, something given in addition to what is ordinarily received
by or strictly due the recipient. Thus, a bonus is not a demandable and enforceable obligation,
except when it is made part of the wage, salary or compensation of the employee.
Based on the foregoing pronouncement, it is obvious that the benefits/entitlements subjects
of the instant case are all bonuses which were given by the private respondent out of its

generosity and munificence. The additional 35% premium pay for work done during selected
days of the Holy Week and Christmas season, the holding of Christmas parties with raffle, and
the cash incentives given together with the service awards are all in excess of what the law
requires each employer to give its employees. Since they are above what is strictly due to the
members of petitioner-union, the granting of the same was a management prerogative, which,
whenever management sees necessary, may be withdrawn, unless they have been made a part
of the wage or salary or compensation of the employees.
The consequential question therefore that needs to be settled is if the subject
benefits/entitlements, which are bonuses, are demandable or not. Stated another way, can these
bonuses be considered part of the wage or salary or compensation making them enforceable
obligations?
The Court does not believe so.
For a bonus to be enforceable, it must have been promised by the employer and expressly
agreed upon by the parties,[30] or it must have had a fixed amount [31] and had been a long and
regular practice on the part of the employer. [32]
The benefits/entitlements in question were never subjects of any express agreement
between the parties. They were never incorporated in the Collective Bargaining Agreement
(CBA). As observed by the Voluntary Arbitrator, the records reveal that these
benefits/entitlements have not been subjects of any express agreement between the union and
the company, and have not yet been incorporated in the CBA. In fact, the petitioner has not
denied having made proposals with the private respondent for the service award and the
additional 35% premium pay to be made part of the CBA. [33]
The Christmas parties and its incidental benefits, and the giving of cash incentive together
with the service award cannot be said to have fixed amounts. What is clear from the records is
that over the years, there had been a downtrend in the amount given as service award. [34] There
was also a downtrend with respect to the holding of the Christmas parties in the sense that its
location changed from paid venues to one which was free of charge, [35] evidently to cut costs.
Also, the grant of these two aforementioned bonuses cannot be considered to have been the
private respondents long and regular practice. To be considered a regular practice, the giving of
the bonus should have been done over a long period of time, and must be shown to have been
consistent and deliberate.[36] The downtrend in the grant of these two bonuses over the years
demonstrates that there is nothing consistent about it. Further, as held by the Court of Appeals:
Anent the Christmas party and raffle of prizes, We agree with the Voluntary Arbitrator that the
same was merely sponsored by the respondent corporation out of generosity and that the same
is dependent on the financial performance of the company for a particular year [37]
The additional 35% premium pay for work rendered during selected days of the Holy Week
and Christmas season cannot be held to have ripened into a company practice that the petitioner
herein have a right to demand. Aside from the general averment of the petitioner that this
benefit had been granted by the private respondent since time immemorial, there had been no
evidence adduced that it had been a regular practice. As propitiously observed by the Court of
Appeals:
. . . [N]otwithstanding that the subject 35% premium pay was deliberately given and the same
was in excess of that provided by the law, the same however did not ripen into a company
practice on account of the fact that it was only granted for two (2) years and with the express
reservation from respondent corporations owner that it cannot continue to rant the same in view
of the companys current financial situation.[38]
To hold that an employer should be forced to distribute bonuses which it granted out of
kindness is to penalize him for his past generosity. [39]

Having thus ruled that the additional 35% premium pay for work rendered during selected
days of the Holy Week and Christmas season, the holding of Christmas parties with its incidental
benefits, and the grant of cash incentive together with the service award are all bonuses which
are neither demandable nor enforceable obligations of the private respondent, it is not necessary
anymore to delve into the Revenues and Profitability Analysis for the years 1996-2000 submitted
by the private respondent.
On the alleged promotion of 15 members of the petitioner union that should warrant an
increase in their salaries, the factual finding of the Voluntary Arbitrator is revealing,viz:
Considering that the Union was unable to adduce proof that a promotion indeed occur[ed] with
respect to the 15 employees, the Daily Rated Unions claim for promotional increase likewise
fall[s] there being no promotion established under the records at hand. [40]
WHEREFORE, in view of all the foregoing, the assailed Decision and Resolution of the Court
of Appeals dated 06 March 2002 and 12 July 2002, respectively, which affirmed and upheld the
decision of the Voluntary Arbitrator, are hereby AFFIRMED. No pronouncement as to costs.
SO ORDERED.
Puno, (Chairman), Austria-Martinez, Callejo, Sr., and Tinga, JJ., concur.

SECOND DIVISION

CHINA BANKING CORPORATION, G.R. No. 156515

Petitioner,
Present:
PUNO, J., Chairman,
AUSTRIA-MARTINEZ,
- versus - CALLEJO, SR.,
TINGA, and
CHICO-NAZARIO, JJ.*

Promulgated:
MARIANO M. BORROMEO,
Respondent. October 19, 2004
x--------------------------------------------------x

DECISION

CALLEJO, SR., J.:

Before the Court is the petition for review on certiorari filed by China Banking Corporation
seeking the reversal of the Decision [1] dated July 19, 2002 of the Court of Appeals in CA-G.R. SP
No. 57365, remanding to the Labor Arbiter for further hearings the complaint for payment of
separation pay, mid-year bonus, profit share and damages filed by respondent Mariano M.
Borromeo against the petitioner Bank. Likewise, sought to be reversed is the appellate courts
Resolution dated January 6, 2003, denying the petitioner Banks motion for reconsideration.
The factual antecedents of the case are as follows:

Respondent Mariano M. Borromeo joined the petitioner Bank on June 1, 1989 as Manager
assigned at the latters Regional Office in Cebu City. He then had the rank of Manager Level
I. Subsequently, the respondent was laterally transferred to Cagayan de Oro City as Branch
Manager of the petitioner Banks branch thereat.

For the years 1989 and 1990, the respondent received a highly satisfactory performance rating
and was given the corresponding profit sharing/performance bonus.From 1991 up to 1995, he
consistently received a very good performance rating for each of the said years and again
received the corresponding profit sharing/performance bonus. Moreover, in 1992, he was
promoted from Manager Level I to Manager Level II. In 1994, he was promoted to Senior Manager
Level I.Then again, in 1995, he was promoted to Senior Manager Level II. Finally, in 1996, with a
highly satisfactory performance rating, the respondent was promoted to the position of Assistant
Vice-President, Branch Banking Group for the Mindanao area effective October 16, 1996. Each
promotion had the corresponding increase in the respondents salary as well as in the benefits he
received from the petitioner Bank.

However, prior to his last promotion and then unknown to the petitioner Bank, the respondent,
without authority from the Executive Committee or Board of Directors, approved several
DAUD/BP accommodations amounting to P2,441,375 in favor of Joel Maniwan, with Edmundo
Ramos as surety. DAUD/BP is the acronym for checks Drawn Against Uncollected Deposits/Bills
Purchased. Such checks, which are not sufficiently funded by cash, are generally not honored by
banks. Further, a DAUD/BP accommodation is a credit accommodation granted to a few and
select bank clients through the withdrawal of uncollected or uncleared check deposits from their
current

account. Under

the

petitioner

Banks

standard

operating

procedures,

DAUD/BP

accommodations may be granted only by a bank officer upon express authority from its
Executive Committee or Board of Directors.

As a result of the DAUD/BP accommodations in favor of Maniwan, a total of ten out-of-town

checks (7 PCIB checks and 3 UCPB checks) of various dates amounting to P2,441,375 were
returned unpaid from September 20, 1996 to October 17, 1996. Each of the returned checks was
stamped with the notation Payment Stopped/Account Closed.

On October 8, 1996, the respondent wrote a Memorandum to the petitioner Banks senior
management requesting for the grant of a P2.4 million loan to Maniwan. The memorandum
stated that the loan was to regularize/liquidate subjects (referring to Maniwan) DAUD
availments. It was only then that the petitioner Bank came to know of the DAUD/BP
accommodations in favor of Maniwan. The petitioner Bank further learned that these DAUD/BP
accommodations exceeded the limit granted to clients, were granted without proper prior
approval and already past due. Acting on this information, Samuel L. Chiong, the petitioner
Banks First Vice- President and Head-Visayas Mindanao Division, in his Memorandum dated
November 19, 1996 for the respondent, sought clarification from the latter on the following
matters:

1)

When DAUD/BP accommodations were allowed, what efforts, if any,

were made to establish the identity and/or legitimacy of the alleged broker or
drawers of the checks accommodated?

2)

Did the branch follow and comply with operating procedure which
require that all checks accommodated for DAUD/BP should be previously
verified with the drawee bank and history if not outright balances determined
if enough to cover the checks?

3)

How did the accommodations reach P2,441,375.00 when our records

indicate that the borrowers B/P-DAUD line is only for P500,000.00? When did
the accommodations start exceeding the limit of P500,000.00 and under
whose authority?

4)

5)

When did the accommodated checks start bouncing?

What is the status of these checks now and what has the branch done
so far to protect/ensure collectibility of the returned checks?

6)

What about client Joel Maniwan and surety Edmund Ramos, what steps
have they done to pay the checks returned? [2]

In reply thereto, the respondent, in his Letter dated December 5, 1996, answered the
foregoing queries in seriatim and explained, thus:

1.

None

2.

No

3.

4.

The accommodations reach P2.4 million upon the request of Mr.

Edmund Ramos, surety, and this request was subsequently approved by
undersigned. The excess accommodations started in July 96 without higher
management approval.

Checks started bouncing on September 20, 1996.

5.

Checks have remained unpaid. The branch sent demand letters to

Messrs. Maniwan and Ramos and referred the matter to our Legal Dept. for
filing of appropriate legal action.

6.

Mr. Maniwan, thru his lawyer, Atty. Oscar Musni has signified their
intention to settle by Feb. 1997.

Justification for lapses committed (Item nos. 1 to 3).

The account was personally endorsed and referred to us by Mr. Edmund Ramos,
Branch Manager of Metrobank, Divisoria Br., Cagayan de Oro City. In fact, the CASA
account was opened jointly as &/or (Maniwan &/or Ramos). Mr. Ramos gave us his
full assurance that the checks that we intend to purchase are the same drawee that
Metrobank has been purchasing for the past one (1) year already. He even disclosed
that these checks were verified by his own branch accountant and that Mr.
Maniwans loan account was being co-maked by Mr. Elbert Tan Yao Tin, son of Jose
Tan Yao Tin of CIFC. To show his sincerity, Mr. Ramos signed as surety for Mr.
Maniwan for P2.5MM. Corollary to this, Mr. Ramos applied for a loan with us
mortgaging his house, lot and duplex with an estimated market value

of P4.508MM. The branch, therefore, is not totally negligent as officer to officer bank
checking was done. In fact, it is also for the very same reason that other banks
granted DAUD to subject account and, likewise, the checks returned unpaid,
namely:

Solidbank P1.8 Million

Allied Bank .8
Far East Bank 2.0
MBTC 5.0

The attached letter of Mr. Ramos dated 19 Nov. 1996 will speak for itself. Further to
this, undersigned conferred with the acting BOH VSYap if these checks are
legitimate 3rdparty checks.

On the other hand, Atty. Musni continues to insist that Mr. Maniwan was gypped by a
broker in the total amount of P10.00 Million.

Undersigned accepts full responsibility for committing an error in judgment, lapses

in control and abuse of discretion by relying solely on the word, assurance, surety
and REM of Mr. Edmund Ramos, a friend and a co-bank officer. I am now ready to
face the consequence of my action.[3]

In another Letter dated April 8, 1997, the respondent notified Chiong of his intention to
resign from the petitioner Bank and apologized for all the trouble I have caused because of the
Maniwan case.[4] The respondent, however, vehemently denied benefiting therefrom. In his Letter
dated April 30, 1997, the respondent formally tendered his irrevocable resignation effective May
31, 1997.[5]

In the Memorandum dated May 23, 1997 addressed to the respondent, Nancy D. Yang, the
petitioner Banks Senior Vice-President and Head-Branch Banking Group, informed the former that
his approval of the DAUD/BP accommodations in favor of Maniwan without authority and/or
approval of higher management violated the petitioner Banks Code of Ethics. As such, he was

directed to restitute the amount of P1,507,736.79 representing 90% of the total loss
of P1,675,263.10 incurred by the petitioner Bank. However, in view of his resignation and
considering the years of service in the petitioner Bank, the management earmarked
onlyP836,637.08 from the respondents total separation benefits or pay. The memorandum
addressed to the respondent stated:

After a careful review and evaluation of the facts surrounding the above case,
the following have been conclusively established:

1.

The branch granted various BP/DAUD accommodations to clients

Joel Maniwan/Edmundo Ramos in excess of approved lines through the
following out-of-town checks which were returned for the reason
Payment Stopped/Account Closed:

1. PCIB Cebu Check No. 86256 P251,816.00

2. PCIB Cebu Check No. 86261 235,880.00
3. PCIB Cebu Check No. 8215 241,443.00
4. UCPB Tagbilaran Check No. 277,630.00
5. PCIB Bogo, Cebu Check No. 6117 267,418.00
6. UCPB Tagbilaran Check No. 216070 197,467.00
7. UCPB Tagbilaran Check No. 216073 263,920.00
8. PCIB Bogo, Cebu Check No. 6129 253,528.00
9. PCIB Bogo, Cebu Check No. 6122 198,615.00
10. PCIB Bogo, Cebu Check No. 6134 253,658.00

2.

The foregoing checks were accommodated

approval which was in excess of your authority.

through

your

3.

The branch failed to follow the fundamental and basic

procedures in handling BP/DAUD accommodations which made the
accommodations basically flawed.

4.

The accommodations were attended by lapses in control

consisting of failure to report the exception and failure to cover the
account of Joel Maniwan with the required Credit Line Agreement.

Since the foregoing were established by your own admissions in your letter
explanation dated 5 December 1996, and the Audit Report and findings of the
Region Head, Management finds your actions in violation of the Banks Code of
Ethics:

Table 6.2., no. 1: Compliance with Standard Operating Procedures

- Infraction of Bank procedures in handling any bank transactions or
work assignment which results in a loss or probable loss.
Table 6.3., no. 6: Proper Conduct and Behavior Willful misconduct in the performance of duty whether or not the bank
suffers a loss, and/or
Table 6.5., no. 1: Work Responsibilities Dereliction of duty whether or not the Bank suffers a loss, and/or
Table 6.6., no. 2: Authority and Subordination Failure to carry out lawful orders or instructions of superiors.

Your approval of the accommodations in excess of your authority without prior

authority and/or approval from higher management is a violation of the above cited
Rules.

In view of these, you are directed to restitute the amount of P1,507,736.79

representing 90% of the total loss of P1,675,263.10 incurred by the Bank as your
proportionate share.However, in light of your voluntary separation from the Bank
effective May 31, 1997, in view of the years of service you have given to the
Bank, management shall earmark and segregate only the amount of P836,637.08
from your total separation benefits/pay. The Bank further directs you to fully assist
in the effort to collect from Joel Maniwan and Edmundo Ramos the sums due to the
Bank.[6]

In the Letter dated May 26, 1997 addressed to the respondent, Remedios Cruz, petitioner Banks
Vice-President of the Human Resources Division, again informed him that the management would

withhold the sum of P836,637.08 from his separation pay, mid-year bonus and profit sharing. The
amount withheld represented his proportionate share in the accountability vis--vis the DAUD/BP
accommodations in favor of Maniwan. The said amount would be released upon recovery of the
sums demanded from Maniwan in Civil Case No. 97174 filed against him by the petitioner Bank
with the Regional Trial Court in Cagayan de Oro City.

Consequently, the respondent, through counsel, made a demand on the petitioner Bank for the
payment of his separation pay and other benefits. The petitioner Bank maintained its position to
withhold the sum of P836,637.08. Thus, the respondent filed with the National Labor Relations
Commission (NLRC), Regional Arbitration Branch No. 10, in Cagayan de Oro City, the complaint
for payment of separation pay, mid-year bonus, profit share and damages against the petitioner
Bank.

The parties submitted their respective position papers to the Labor Arbiter. Thereafter, the
respondent filed a motion to set case for trial or hearing. Acting thereon, the Labor Arbiter, in the
Order dated January 29, 1999, denied the same stating that:
... This Branch views that if complainant finds the necessity to controvert the
allegations in the respondents pleadings, then he may file a supplemental position
paper and adduce thereto evidence and additional supporting documents, the
soonest possible time. All the evidence will be evaluated by the Branch to
determine whether or not a clarificatory hearing shall be conducted. [7]

On February 26, 1999, the Labor Arbiter issued another Order submitting the case for resolution
upon finding that he could judiciously pass on the merits without the necessity of further hearing.

On even date, the Labor Arbiter promulgated the Decision [8] dismissing the respondents
complaint. According to the Labor Arbiter, the respondent, an officer of the petitioner Bank, had
committed a serious infraction when, in blatant violation of the banks standard operating
procedures and policies, he approved the DAUD/BP accommodations in favor of Maniwan without

authorization by senior management. Even the respondent himself had admitted this breach in
the letters that he wrote to the senior officers of the petitioner Bank.

The Labor Arbiter, likewise, made the finding that the respondent offered to assign or convey a
property that he owned to the petitioner Bank as well as proposed the withholding of the benefits
due him to answer for the losses that the petitioner Bank incurred on account of unauthorized
DAUD/BP accommodations. But even if the respondent had not given his consent, the Labor
Arbiter held that the petitioner Banks act of withholding the benefits due the respondent was
justified under its Code of Ethics. The respondent, as an officer of the petitioner Bank, was bound
by the provisions of the said Code.

Aggrieved, the respondent appealed to the National Labor Relations Commission. After the
parties had filed their respective memoranda, the NLRC, in the Decision dated October 20, 1999,
dismissed the appeal as it affirmed in toto the findings and conclusions of the Labor Arbiter. The
NLRC preliminarily ruled that the Labor Arbiter committed no grave abuse of discretion when he
decided the case on the basis of the position papers submitted by the parties. On the merits, the
NLRC, like the Labor Arbiter, gave credence to the petitioner Banks allegation that the
respondent offered to pledge his property to the bank and proposed the withholding of his
benefits in acknowledgment of the serious infraction he committed against the bank. Further, the
NLRC concurred with the Labor Arbiter that the petitioner Bank was justified in withholding the
benefits due the respondent. Being a responsible bank officer, the respondent ought to know
that, based on the petitioner Banks Code of Ethics, restitution may be imposed on erring
employees apart from any other penalty for acts resulting in loss or damage to the bank. The
decretal portion of the NLRC decision reads:

WHEREFORE, the decision of the Labor Arbiter is Affirmed. The appeal is

Dismissed for lack of merit.

SO ORDERED.[9]

The respondent moved for a reconsideration of the said decision but the NLRC, in the
Resolution of December 20, 1999, denied his motion.

The respondent then filed a petition for certiorari with the Court of Appeals alleging that
the NLRC committed grave abuse of discretion when it affirmed the findings and conclusions of
the Labor Arbiter. He vehemently denied having offered to pledge his property to the bank or
proposed the withholding of his separation pay and other benefits. Further, he argued that the
petitioner Bank deprived him of his right to due process because it unilaterally imposed the
penalty of restitution on him. The DAUD/BP accommodations in favor of Maniwan allegedly could
not be considered as a loss to the bank as the amounts may still be recovered. The respondent,
likewise, maintained that the Labor Arbiter should not have decided the case on the basis of the
parties position papers but should have conducted a full-blown hearing thereon.

On July 19, 2002, the CA rendered the Decision [10] now being assailed by the petitioner
Bank. The CA found merit in the respondents contention that he was deprived of his right to due
process by the petitioner Bank as no administrative investigation was conducted by it prior to its
act of withholding the respondents separation pay and other benefits. The respondent was not
informed of any charge against him in connection with the Maniwan DAUD/BP accommodations
nor afforded the right to a hearing or to defend himself before the penalty of restitution was
imposed on him. This, according to the appellate court, was contrary not only to the fundamental
principle of due process but to the petitioner Banks Code of Ethics as well.

The CA further held that the Labor Arbiter, likewise, failed to afford the respondent due
process when it denied his motion to set case for trial or hearing. While the authority of the Labor
Arbiter to decide a case based on the parties position papers and documents is indubitable, the
CA opined that factual issues attendant to the case, including whether or not the respondent
proposed the withholding of his benefits or pledged the same to the petitioner Bank,
necessitated the conduct of a full-blown trial. The appellate court explained that:

Procedural due process, as must be remembered, has two main concerns, the
prevention of unjustified or mistaken deprivation and the promotion of participation
and dialogue by affected individuals in the decision-making process. Truly, the
magnitude of the case and the withholding of Borromeos property as well as the
willingness of the parties to conciliate, make a hearing imperative. As manifested by
the bank, it did not contest Borromeos motion for hearing or trial inasmuch as the
bank itself wanted to fully ventilate its side. [11]

Accordingly, the CA set aside the decision of the NLRC and ordered that the records of the
case be remanded to the Labor Arbiter for further hearings on the factual issues involved.

The petitioner Bank filed a motion for reconsideration of the said decision but the CA, in
the assailed Resolution of January 6, 2003, denied the same as it found no compelling ground to
warrant reconsideration.[12] Hence, its recourse to this Court alleging that the assailed CA
decision is contrary to law and jurisprudence in that:

I.
THE FACTUAL FINDINGS OF THE LABOR ARBITER AS AFFIRMED BY THE NATIONAL
LABOR RELATIONS COMMISSION ARE SUPPORTED BY SUBSTANTIAL EVIDENCE AND
SHOULD HAVE BEEN ACCORDED RESPECT AND FINALITY BY THE COURT OF APPEALS
IN ACCORDANCE WITH GOVERNING JURISPRUDENCE.

II.
AT ALL TIMES, THE LABOR ARBITER ACTED IN ACCORDANCE
REQUIREMENTS OF DUE PROCESS IN THE PROCEEDINGS A QUO.

WITH

THE

III.
THERE WAS NO VIOLATION BY PETITIONER BANK OF RESPONDENTS RIGHT TO DUE
PROCESS AS NO ADMINISTRATIVE INVESTIGATION WAS NEEDED TO BE CONDUCTED
ON HIS ADMITTED MISCONDUCT.[13]

The petitioner Bank posits that the sole factual issue that remained in dispute was whether the
respondent pledged his benefits as guarantee for the losses the bank incurred resulting from the
unauthorized DAUD/BP accommodations in favor of Maniwan. On this issue, both the Labor
Arbiter and the NLRC found that the respondent had indeed pledged his benefits to

the bank. According to the petitioner Bank, this factual finding should have been accorded
respect by the CA as the same is supported by the evidence on record. By ordering the remand
of the case to the Labor Arbiter, the CA allegedly unjustifiably analyzed and weighed all over
again the evidence presented.

The petitioner Bank insists that the Labor Arbiter acted within his authority when he denied the
respondents motion to set case for hearing or trial and instead decided the case on the basis of
the position papers and evidence submitted by the parties. Due process simply demands an
opportunity to be heard and the respondent was not denied of this as he was even given the
opportunity to file a supplemental position paper and other supporting documents, but he did not
do so.

The petitioner Bank takes exception to the findings of the appellate court that the respondent
was not afforded the right to a hearing or to defend himself by the petitioner Bank as it did not
conduct an administrative investigation. The petitioner Bank points out that it was poised to
conduct one but was preempted by the respondents resignation. In any case, respondent himself
in his Letter dated December 5, 1996, in reply to the clarificatory queries of Chiong, admitted
that the DAUD/BP accommodations were granted without higher management approval and that
he (the respondent) accepts full responsibility for committing an error of judgment, lapses in
control and abuse of discretion ... Given the respondents admission, the holding of a formal
investigation was no longer necessary.

For his part, the respondent, in his Comment, maintains that the DAUD/BP accommodations in
favor of Maniwan were approved, albeit not expressly, by the senior management of the
petitioner Bank. He cites the regular reports he made to Chiong, his superior, regarding the
DAUD/BP transactions made by the branch, including that of Maniwan, and Chiong never called
his attention thereto nor stopped or reprimanded him therefor. These reports further showed that
he did not conceal these transactions to the management.

The respondent vehemently denies having offered the withholding of his benefits or
pledged the same to the petitioner Bank. The findings of the Labor Arbiter and the NLRC that
what he did are allegedly not supported by the evidence on record.

The respondent is of the view that restitution is not proper because the petitioner Bank
has not, as yet, incurred any actual loss as the amount owed by Maniwan may still be recovered
from him. In fact, the petitioner Bank had already instituted a civil case against Maniwan for the
recovery of the sum and the RTC rendered judgment in the petitioner Banks favor. The case is
still pending appeal. In any case, the respondent argues that the petitioner Bank could not
properly impose the accessory penalty of restitution on him without imposing the principal
penalty of Written Reprimand/Suspension as provided under its Code of Ethics. He, likewise,
vigorously avers that, in contravention of its own Code of Ethics, he was denied due process by
the petitioner Bank as it did not conduct any administrative investigation relative to the
unauthorized DAUD/BP accommodations. He was not informed in writing of any charge against
him nor was he given the opportunity to defend himself.

The petition is meritorious.

The Court shall first resolve the procedural issue raised in the petition, i.e., whether the CA
erred in remanding the case to the Labor Arbiter. The Court rules in the affirmative. It is settled
that administrative bodies like the NLRC, including the Labor Arbiter, are not bound by the
technical niceties of the law and procedure and the rules obtaining in courts of law. [14] Rules of
evidence are not strictly observed in proceedings before administrative bodies like the NLRC,
where decisions may be reached on the basis of position papers. [15] The holding of a formal
hearing or trial is discretionary with the Labor Arbiter and is something that the parties cannot
demand as a matter of right.[16] As a corollary, trial-type hearings are not even required as the
cases may be decided based on verified position papers, with supporting documents and their
affidavits.[17]

Hence, the Labor Arbiter acted well within his authority when he issued the Order dated
February 26, 1999 submitting the case for resolution upon finding that he could judiciously pass
on the merits without the necessity of further hearing. On the other hand, the assailed CA
decisions directive requiring him to conduct further hearings constitutes undue interference with
the Labor Arbiters discretion. Moreover, to require the conduct of hearings would be to negate
the rationale and purpose of the summary nature of the proceedings mandated by the Rules and
to make mandatory the application of the technical rules of evidence. [18] The appellate court,
therefore, committed reversible error in ordering the remand of the case to the Labor Arbiter for
further hearings.

Before delving on the merits of the case, it is well to remember that factual findings of the NLRC
affirming those of the Labor Arbiter, both bodies being deemed to have acquired expertise in
matters within their jurisdiction, when sufficiently supported by evidence on record, are accorded
respect, if not finality, and are considered binding on this Court. [19] As long as their decisions are
devoid of any arbitrariness in the process of their deduction from the evidence proffered by the
parties, all that is left is for the Court to stamp its affirmation. [20]

In this case, the factual findings of the Labor Arbiter and those of the NLRC concur on the
following material points: the respondent was a responsible officer of the petitioner Bank; by his
own admission, he granted DAUD/BP accommodations in excess of the authority given to him
and in violation of the banks standard operating procedures; the petitioner Banks Code of Ethics
provides that restitution/forfeiture of benefits may be imposed on the employees for, inter
alia, infraction of the banks standard operating procedures; and, the respondent resigned from
the petitioner Bank on May 31, 1998. These factual findings are amply supported by the
evidence on record.

Indeed, it had been indubitably shown that the respondent admitted that he violated the
petitioner Banks standard operating procedures in granting the DAUD/BP accommodations in
favor of Maniwan without higher management approval. The respondents replies to the
clarificatory questions propounded to him by way of the Memorandum dated November 19, 1996

were particularly significant. When the respondent was asked whether efforts were made to
establish the identity and/or legitimacy of the drawers of the checks before the DAUD/BP
accommodations were allowed,[21] he replied in the negative.[22] To the query did the branch
follow and comply with operating procedure which require that all checks accommodated for
DAUD/BP should be previously verified with the drawee bank and history, if not outright
balances, determined if enough to cover the checks? [23] again, the respondent answered no.
[24]

When asked under whose authority the excess DAUD/BP accommodations were granted,

[25]

the respondent expressly stated that they were approved by undersigned (referring to

himself) and that the excess accommodation was granted without higher management approval.
[26]

More telling, however, is the respondents statement that he accepts full responsibility

forcommitting an error in judgment, lapses in control and abuse of discretion by relying solely on
the word, assurance, surety and REM of Mr. Edmundo Ramos. [27]The respondent added that he
was ready to face the consequence of [his] action. [28]

The foregoing sufficiently establish that the respondent, by his own admissions, had
violated the petitioner Banks standard operating procedures. Among others, the petitioner Banks
Code of Ethics provides:

Table 6.2 COMPLIANCE WITH STANDARD OPERATING PROCEDURES

VIOLATIONS

1. Infraction of Bank
procedures in handling
any Bank transaction or
work assignment which
results in a loss or
probable loss

PENALTIES

1ST

2ND

3RD

Written
Reprimand
/
Suspensio
n*

Suspensio
n/
Dismissal*

Dismissal*

* With restitution, if warranted.

4TH

Further, the said Code states that:

7.2.5. Restitution/Forfeiture of Benefits

Restitution may be imposed independently or together with any other penalty in

case of loss or damage to the property of the Bank, its employees, clients or other
parties doing business with the Bank. The Bank may recover the amount involved
by means of salary deduction or whatever legal means that will prompt offenders to
pay the amount involved.But restitution shall in no way mitigate the penalties
attached to the violation or infraction.

Forfeiture of benefits/privileges may also be effected in cases where infractions or

violations were incurred in connection with or arising from the application/availment
thereof.

It is well recognized that company policies and regulations are, unless shown to be grossly
oppressive

or

contrary

to

law,

generally

binding

and

valid on the parties and must be complied with until finally revised or amended unilaterally or
preferably through negotiation or by competent authority. [29]Moreover, management has the
prerogative to discipline its employees and to impose appropriate penalties on erring workers
pursuant to company rules and regulations. [30] With more reason should these truisms apply to
the respondent, who, by reason of his position, was required to act judiciously and to exercise his
authority in harmony with company policies.[31]

Contrary to the respondents contention that the petitioner Bank could not properly impose
the accessory penalty of restitution on him without imposing the principal penalty of Written
Reprimand/Suspension, the latters Code of Ethics expressly sanctions the imposition of
restitution/forfeiture of benefits apart from or independent of the other penalties. Obviously, in
view of his voluntary separation from the petitioner Bank, the imposition of the penalty of

reprimand or suspension would be futile. The petitioner Bank was left with no other recourse but
to impose the ancillary penalty of restitution. It was certainly within the petitioner Banks
prerogative to impose on the respondent what it considered the appropriate penalty under the
circumstances pursuant to its company rules and regulations.

Anent the issue that the respondents right to due process was violated by the petitioner
Bank since no administrative investigation was conducted prior to the withholding of his
separation benefits, the Court rules that, under the circumstances obtaining in this case, no
formal administrative investigation was necessary. Due process simply demands an opportunity
to be heard and this opportunity was not denied the respondent. [32]

Prior to the respondents resignation, he was furnished with the Memorandum [33] dated
November 19, 1996 in which several clarificatory questions were propounded to him regarding
the DAUD/BP accommodations in favor of Maniwan. Among others, the respondent was asked
whether the banks standard operating procedures were complied with and under whose
authority the accommodations were granted. From the tenor thereof, it could be reasonably
gleaned that the said memorandum constituted notice of the charge against the respondent.

Replying to the queries, the respondent, in his Letter [34] dated December 5, 1996,
admitted, inter alia, that he approved the DAUD/BP accommodations in favor of Maniwan and the
amount in excess of the credit limit of P500,000 was approved by him without higher
management approval. The respondent, likewise, admitted non-compliance with the banks
standard operating procedures, specifically, that which required that all checks accommodated
for DAUD/BP be previously verified with the drawee bank and history, if not outright balances
determined if enough to cover the checks. In the same letter, the respondent expressed that he
accepts full responsibility for committing an error in judgment, lapses in control and abuse of
discretion and that he is ready to face the consequence of his action.

Contrary to his protestations, the respondent was given the opportunity to be heard and
considering his admissions, it became unnecessary to hold any formal investigation. [35] More
particularly, it became unnecessary for the petitioner Bank to conduct an investigation on
whether the respondent had committed an [I]nfraction of Bank procedures in handling any Bank
transaction or work assignment which results in a loss or probable loss because the respondent
already admitted the same. All that was needed was to inform him of the findings of the
management[36] and this was done by way of the Memorandum [37] dated May 23, 1997 addressed
to the respondent. His claim of denial of due process must perforce fail.

Significantly, the respondent is not wholly deprived of his separation benefits. As the Labor
Arbiter stressed in his decision, the separation benefits due the complainant (the respondent
herein) were merely withheld.[38] The NLRC made the same conclusion and was even more
explicit as it opined that the respondent is entitled to the benefits he claimed in pursuance to the
Collective Bargaining Agreement but, in the meantime, such benefits shall be deposited with the
bank

by

way

of

pledge.[39] Even

the petitioner Bank itself gives the assurance that as soon as the Bank has satisfied a judgment
in Civil Case No. 97174, the earmarked portion of his benefits will be released without delay. [40]

It bears stressing that the respondent was not just a rank and file employee. At the time of
his resignation, he was the Assistant Vice- President, Branch Banking Group for the Mindanao
area of the petitioner Bank. His position carried authority for the exercise of independent
judgment and discretion, characteristic of sensitive posts in corporate hierarchy. [41] As such, he
was, as earlier intimated, required to act judiciously and to exercise his authority in harmony with
company policies.[42]

On the other hand, the petitioner Banks business is essentially imbued with public interest
and owes great fidelity to the public it deals with. [43] It is expected to exercise the highest degree
of diligence in the selection and supervision of their employees. [44] As a corollary, and like all
other business enterprises, its prerogative to discipline its employees and to impose appropriate

penalties on erring workers pursuant to company rules and regulations must be respected. [45] The
law, in protecting the rights of labor, authorized neither oppression nor self-destruction of an
employer company which itself is possessed of rights that must be entitled to recognition and
respect.[46]

WHEREFORE, the petition is GRANTED. The Decision dated July 19, 2002 of the Court of
Appeals and its Resolution dated January 6, 2003 in CA-G.R. SP No. 57365 are REVERSED AND
SET ASIDE. The Resolution dated October 20, 1999 of the NLRC, affirming the Decision dated
February 26, 1999 of the Labor Arbiter, is REINSTATED.

SO ORDERED.

SECOND DIVISION

MANOLO A. PEAFLOR,
Petitioner,

G.R. No. 177114

Present:
-

versus CARPIO, J., Chairperson,

BRION,
DEL CASTILLO,

OUTDOOR CLOTHING
MANUFACTURING
CORPORATION,NATHANIEL T.
SYFU, President, MEDYLENE M.
DEMOGENA, Finance Manager,
and PAUL U. LEE, Chairman,

ABAD, and

Respondents.

Promulgated:

PEREZ, JJ.

January 21, 2010

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

DECISION

BRION, J.:

Petitioner Manolo A. Peaflor (Peaflor) seeks the reversal of the Court of Appeals (CA)
decision[1] dated December 29, 2006 and its resolution[2] dated March 14, 2007, through the
present petition for review on certiorari filed under Rule 45 of the Rules of Court. The assailed CA
decision affirmed the September 24, 2002decision[3] of the National Labor Relations Commission
(NLRC) that in turn reversed the August 15, 2001 decision[4] of the Labor Arbiter.[5]

THE FACTUAL ANTECEDENTS

Peaflor was hired on September 2, 1999 as probationary Human Resource Department (HRD)
Manager of respondent Outdoor Clothing Manufacturing Corporation (Outdoor Clothing or the
company). As HRD head, Peaflor was expected to (1) secure and maintain the right quality and
quantity of people needed by the company; (2) maintain the harmonious relationship between
the employees and management in a role that supports organizational goals and individual
aspirations; and (3) represent the company in labor cases or proceedings. Two staff members
were assigned to work with him to assist him in undertaking these functions.

Peaflor claimed that his relationship with Outdoor Clothing went well during the first few months
of his employment; he designed and created the companys Policy Manual, Personnel Handbook,
Job Expectations, and Organizational Set-Up during this period. His woes began when the
companys Vice President for Operations, Edgar Lee (Lee), left the company after a big fight
between Lee and Chief Corporate Officer Nathaniel Syfu (Syfu). Because of his close association
with Lee, Peaflor claimed that he was among those who bore Syfus ire.

When Outdoor Clothing began undertaking its alleged downsizing program due to negative
business returns, Peaflor alleged that his department had been singled out. On the pretext of
retrenchment, Peaflors two staff members were dismissed, leaving him as the only member of
Outdoor Clothings HRD and compelling him to perform all personnel-related work. He worked as a
one-man department, carrying out all clerical, administrative and liaison work; he personally went
to various government offices to process the companys papers.

When an Outdoor Clothing employee, Lynn Padilla (Padilla), suffered injuries in a bombing
incident, the company required Peaflor to attend to her hospitalization needs; he had to work
outside office premises to undertake this task. As he was acting on the companys orders, Peaflor
considered himself to be on official business, but was surprised when the company deducted six
days salary corresponding to the time he assisted Padilla. According to Finance Manager
Medylene Demogena (Demogena), he failed to submit his trip ticket, but Peaflor belied this claim
as a trip ticket was required only when a company vehicle was used and he did not use any
company vehicle when he attended to his off-premises work. [6]

After Peaflor returned from his field work on March 13, 2000, his officemates informed him that
while he was away, Syfu had appointed Nathaniel Buenaobra (Buenaobra) as the new HRD
Manager. This information was confirmed by Syfus memorandum of March 10, 2000 to the entire
office stating that Buenaobra was the concurrent HRD and Accounting Manager. [7] Peaflor was
surprised by the news; he also felt betrayed and discouraged. He tried to talk to Syfu to clarify
the matter, but was unable to do so. Peaflor claimed that under these circumstances, he had no
option but to resign. He submitted a letter to Syfu declaring his irrevocable resignation from his
employment with Outdoor Clothing effective at the close of office hours on March 15, 2000.[8]

Peaflor then filed a complaint for illegal dismissal with the labor arbiter, claiming that he had
been constructively dismissed. He included in his complaint a prayer for reinstatement and
payment of backwages, illegally deducted salaries, damages, attorneys fees, and other monetary
claims.

Outdoor Clothing denied Peaflors allegation of constructive dismissal. It posited instead that
Peaflor had voluntarily resigned from his work. Contrary to Peaflors statement that he had been
dismissed from employment upon Syfus appointment of Buenaobra as the new HRD Manager
on March 10, 2000, Peaflor had in fact continued working for the company until his resignation
on March 15, 2000. The company cited as evidence the security report that Peaflor himself
prepared and signed on March 13, 2000.[9]

Outdoor Clothing disclaimed liability for any of Peaflors monetary claims. Since Peaflor had
voluntarily resigned, Outdoor Clothing alleged that he was not entitled to any backwages and
damages. The company likewise denied making any illegal deduction from Peaflors salary; while
deductions were made, they were due to Peaflors failure to report for work during the dates the
company questioned. As a probationary employee, he was not yet entitled to any leave credit
that would offset his absences.

In his August 15, 2001 decision, the labor arbiter found that Peaflor had been illegally dismissed.
[10]
Outdoor Clothing was consequently ordered to reinstate Peaflor to his former or to an
equivalent position, and to pay him his illegally deducted salary for six days, proportionate
13th month pay, attorneys fees, moral and exemplary damages.

Outdoor Clothing appealed the labor arbiters decision with the NLRC. It insisted that Peaflor had
not been constructively dismissed, claiming that Peaflor tendered his resignation on March 1,
2000 because he saw no future with the corporation due to its dire financial standing. Syfu
alleged that he was compelled to appoint Buenaobra as concurrent HRD Manager through a
memorandum dated March 1, 2000 to cover the position that Peaflor would soon vacate. [11] The
appointment was also made to address the personnel matters that had to be taken cared of while
Peaflor was on unauthorized leave. Incidentally, Outdoor Clothing alleged that Peaflor had already
been given two notices, on March 6 and 11, 2000 (absence without official leave memoranda
or the AWOL memoranda), for his unauthorized absences. In a memorandum dated March 3,
2000 addressed to Syfu, Buenaobra accepted the appointment. [12]

Peaflor contested Syfus March 1, 2000 memorandum, Buenaobras March 3, 2000 memorandum,
and the AWOL memoranda, claiming these pieces of evidence were fabricated and were never
presented before the labor arbiter. He pointed out that nothing in this resignation letter indicated
that it was submitted to and received by Syfu on March 1, 2000. He claimed that it was submitted
on March 15, 2000, the same date he made his resignation effective. The AWOL memoranda
could not be relied on, as he was never furnished copies of these. Moreover, he could not be on
prolonged absence without official leave, as his residence was just a few meters away from the
office.
The NLRC apparently found Outdoor Clothings submitted memoranda sufficient to overturn the
labor arbiters decision.[13] It characterized Peaflors resignation as a response, not to the allegedly
degrading and hostile treatment that he was subjected to by Syfu, but to Outdoor Clothings
downward financial spiral. Buenaobras appointment was made only after Peaflor had submitted
his resignation letter, and this was made to cover the vacancy Peaflors resignation would create.
Thus, Peaflor was not eased out from his position as HRD manager. No malice likewise was
present in the companys decision to dismiss Peaflors two staff members; the company simply
exercised its management prerogative to address the financial problems it faced. Peaflor, in fact,
drafted the dismissal letters of his staff members. In the absence of any illegal dismissal, no basis
existed for the monetary awards the labor arbiter granted.

Peaflor anchored his certiorari petition with the CA on the claim that the NLRC decision was
tainted with grave abuse of discretion, although he essentially adopted the same arguments he
presented before the labor arbiter and the NLRC.

In a decision dated December 29, 2006,[14] the CA affirmed the NLRCs decision, stating that
Peaflor failed to present sufficient evidence supporting his claim that he had been constructively
dismissed. The CA ruled that Peaflors resignation was knowingly and voluntarily
made. Accordingly, it dismissed Peaflors certioraripetition. It likewise denied the motion for
reconsideration that Peaflor subsequently filed. [15] Faced with these CA actions, Peaflor filed with
us the present petition for review on certiorari.

THE PARTIES ARGUMENTS

Peaflor insists that, contrary to the findings of the NLRC and the CA, he had been
constructively dismissed from his employment with Outdoor Clothing. He alleges that the
dismissal of his two staff members, the demeaning liaison work he had to perform as HRD
Manager, the salary deduction for his alleged unauthorized absences, and the appointment of
Buenaobra as the new HRD manager even before he tendered his resignation, were clear acts of
discrimination that made his continued employment with the Outdoor Clothing unbearable. He
was thus forced to resign.

Outdoor Clothing claims that Peaflor voluntarily resigned from his work and his contrary
allegations were all unsubstantiated. The HRD was not singled out for retrenchment, but was
simply the first to lose its staff members because the company had to downsize. Thus, all HRD
work had to be performed by Peaflor. Instead of being grateful that he was not among those
immediately dismissed due to the companys retrenchment program, Peaflor unreasonably felt
humiliated in performing work that logically fell under his department; insisted on having a full
staff complement; absented himself from work without official leave; and demanded payment for
his unauthorized absences.

THE ISSUE and THE COURTS RULING

The Court finds the petition meritorious.

A preliminary contentious issue is Outdoor Clothings argument that we should dismiss the
petition outright because it raises questions of facts, not the legal questions that should be
raised in a Rule 45 petition.[16]

We see no merit in this argument as the rule that a Rule 45 petition deals only with legal
issues is not an absolute rule; it admits of exceptions. In the labor law setting, we wade into
factual issues when conflict of factual findings exists among the labor arbiter, the NLRC, and the
CA. This is the exact situation that obtains in the present case since the labor arbiter found facts
supporting the conclusion that there had been constructive dismissal, while the NLRCs and the
CAs factual findings contradicted the labor arbiters findings. [17] Under this situation, the
conflicting factual findings below are not binding on us, and we retain the authority to pass on
the evidence presented and draw conclusions therefrom. [18]
The petition turns on the question of whether Peaflors undisputed resignation was a
voluntary or a forced one, in the latter case making it a constructive dismissal equivalent to an

illegal dismissal. A critical fact necessary in resolving this issue is whether Peaflor filed his
letter of resignation before or after the appointment of Buenaobra as the
new/concurrent HRD manager. This question also gives rise to the side issue of when
Buenaobras appointment was made. If the resignation letter was submitted before Syfus
appointment of Buenaobra as new HRD manager, little support exists for Peaflors allegation that
he had been forced to resign due to the prevailing abusive and hostile working
environment. Buenaobras appointment would then be simply intended to cover the vacancy
created by Peaflors resignation. On the other hand, if the resignation letter was
submitted after the appointment of Buenaobra, then factual basis exists indicating that Peaflor
had been constructively dismissed as his resignation was a response to the unacceptable
appointment of another person to a position he still occupied.

The question of when Peaflor submitted his resignation letter arises because this letter
undisputably made was undated. Despite Peaflors claim of having impressive intellectual and
academic credentials,[19] his resignation letter, for some reason, was undated. Thus, the parties
have directly opposing claims on the matter. Peaflor claims that he wrote and filed the letter on
the same date he made his resignation effective March 15, 2000. Outdoor Clothing, on the other
hand, contends that the letter was submitted on March 1, 2000, for which reason Syfu issued a
memorandum of the same date appointing Buenaobra as the concurrent HRD manager; Syfus
memorandum cited Peaflors intention to resign so he could devote his time to teaching. The
company further cites in support of its case Buenaobras March 3, 2000memorandum accepting
his appointment. Another piece of evidence is the Syfu memorandum of March 10, 2000, which
informed the office of the appointment of Buenaobra as the concurrent Head of HRD the position
that Peaflor occupied. Two other memoranda are alleged to exist, namely, the AWOL memoranda
of March 6 and 11, 2000, allegedly sent to Penaflor.

Several reasons arising directly from these pieces of evidence lead us to conclude
that Peaflor did indeed submit his resignation letter on March, 15, 2000, i.e., on the same day
that it was submitted.

First, we regard the Syfu memorandum of March 1, 2000 and the memorandum of
Buenaobra of March 3, 2000 accepting the position of HRD Head to be highly suspect. In our
view, these memoranda, while dated, do not constitute conclusive evidence of their dates of
preparation and communication. Surprisingly,Peaflor was never informed about these
memoranda when they directly concerned him, particularly the turnover of responsibilities to
Buenaobra if indeed Peaflor had resigned on March 1, 2000 and a smooth turnover to Buenaobra
was intended. Even the recipients of these communications do not appear to have signed for and
dated their receipt. The AWOL memoranda, to be sure, should have been presented with proof of
service if they were to have any binding effect on Peaflor.
Second,we find it surprising that these pieces of evidence pointing to a March 1,
2000 resignation specifically, Syfus March 1, 2000 memorandum to Buenaobra about Penaflors
resignation and Buenaobras own acknowledgment and acceptance were only presented to the
NLRC on appeal, not before the labor arbiter. The matter was not even mentioned in the
companys position paper filed with the labor arbiter. [20] While the presentation of evidence at the
NLRC level on appeal is not unheard of in labor cases, [21] still sufficient explanation must be
adduced to explain why this irregular practice should be allowed. In the present case, Outdoor
Clothing totally failed to explain the reason for its omission. This failure, to us, is significant, as

these were the clinching pieces of evidence that allowed the NLRC to justify the reversal of the
labor arbiters decision.
Third, the circumstances and other evidence surrounding Peaflors resignation support his
claim that he was practically compelled to resign from the company.

Foremost among these is the memorandum of March 10, 2000 signed by Syfu informing
the whole office (To: All concerned) about the designation of Buenaobra as concurrent
Accounting and HRD Manager. In contrast with the suspect memoranda we discussed above, this
memorandum properly bore signatures acknowledging receipt and dates of receipt by at least
five company officials, among them the readable signature of Demogene and one Agbayani;
three of them acknowledged receipt on March 13, 2000, showing that indeed it was only on that
day that the appointment of Buenaobra to the HRD position was disclosed. This evidence is fully
consistent with Peaflors position that it was only in the afternoon of March 13, 2000 that he was
told, informally at that, that Buenaobra had taken over his position. It explains as well why as
late as March 13, 2000, Peaflor still prepared and signed a security report, [22] and is fully
consistent with his position that on that day he was still working on the excuse letter of certain
sales personnel of the company. [23]

We note that the company only belatedly questioned the motivation that Peaflor cited for
his discriminatory treatment, i.e., that he was caught in the bitter fight between Syfu and Lee,
then Vice President for Operations, that led the latter to leave the company. [24] After Lee left,
Peaflor alleged that those identified with Lee were singled out for adverse treatment, citing in
this regard the downsizing of HRD that occurred on or about this time and which resulted in his
one-man HRD operation. We say this downsizing was only alleged as the company totally failed
despite Penaflors claim of discriminatory practice to adduce evidence showing that there had
indeed been a legitimate downsizing. Other than its bare claim that it was facing severe financial
problems, Outdoor Clothing never presented any evidence to prove both the reasons for its
alleged downsizing and the fact of such downsizing. No evidence was ever offered to rebut
Peaflors claim that his staff members were dismissed to make his life as HRD Head difficult. To be
sure, Peaflors participation in the termination of his staff members employment cannot be used
against him, as the termination of employment was a management decision that Peaflor, at his
level, could not have effectively contested without putting his own job on the line.

Peaflors own service with the company deserves close scrutiny. He started working for the
company on September 2, 1999 so that by March 1, 2000, his probationary period would have
ended and he would have become a regular employee. We find it highly unlikely that Peaflor
would resign on March 1, 2000 and would then simply leave given his undisputed record of
having successfully worked within his probationary period on the companys Policy Manual,
Personnel Handbook, Job Expectations, and Organizational Set-up. It does not appear sound and
logical to us that an employee would tender his resignation on the very same day he was entitled
by law to be considered a regular employee, especially when a downsizing was taking place and
he could have availed of its benefits if he would be separated from the service as a regular
employee. It was strange, too, that he would submit his resignation on March 1, 2000 and keep
completely quiet about this development until its effective date on March 15, 2000. In the usual
course, the turnover alone of responsibilities and work loads to the successor in a small company
would have prevented the matter from being completely under wraps for 10 days before any
announcement was ever made. That Peaflor was caught by surprise by the turnover of his post to
Buenaobra is in fact indicated by the companys own evidence that Peaflor still submitted a

security report on March 13, 2000. On the whole, Peaflors record with the company is not that of
a company official who would simply and voluntarily tender a precipitate resignation on the
excuse that he would devote his time to teaching a lame excuse at best considering that March
is the month the semester usually ends and is two or three months away from the start of
another school year.

In our view, it is more consistent with human experience that Peaflor indeed learned of the
appointment of Buenaobra only on March 13, 2000 and reacted to this development through his
resignation letter after realizing that he would only face hostility and frustration in his working
environment. Three very basic labor law principles support this conclusion and militate against
the companys case.

The first is the settled rule that in employee termination disputes, the employer bears the
burden of proving that the employees dismissal was for just and valid cause. [25] That Peaflor did
indeed file a letter of resignation does not help the companys case as, other than the fact of
resignation, the company must still prove that the employee voluntarily resigned. [26] There can be
no valid resignation where the act was made under compulsion or under circumstances
approximating compulsion, such as when an employees act of handing in his resignation was a
reaction to circumstances leaving him no alternative but to resign. [27] In sum, the evidence does
not support the existence of voluntariness in Peaflors resignation.

Another basic principle is that expressed in Article 4 of the Labor Code that all doubts in
the interpretation and implementation of the Labor Code should be interpreted in favor of the
workingman. This principle has been extended by jurisprudence to cover doubts in the evidence
presented by the employer and the employee. [28] As shown above, Peaflor has, at very least,
shown serious doubts about the merits of the companys case, particularly in the appreciation of
the clinching evidence on which the NLRC and CA decisions were based. In such contest of
evidence, the cited Article 4 compels us to rule in Peaflors favor. Thus, we find that Peaflor was
constructively dismissed given the hostile and discriminatory working environment he found
himself in, particularly evidenced by the escalating acts of unfairness against him that
culminated in the appointment of another HRD manager without any prior notice to him. Where
no less than the companys chief corporate officer was against him, Peaflor had no alternative but
to resign from his employment.[29]

Last but not the least, we have repeatedly given significance in abandonment and
constructive dismissal cases to the employees reaction to the termination of his employment and
have asked the question: is the complaint against the employer merely a convenient
afterthought subsequent to an abandonment or a voluntary resignation? We find from the
records that Peaflor sought almost immediate official recourse to contest his separation from
service through a complaint for illegal dismissal. [30] This is not the act of one who voluntarily
resigned; his immediate complaints characterize him as one who deeply felt that he had been
wronged.
WHEREFORE,
we GRANT the
petitioners
petition
for
review
on certiorari,
and REVERSE the decision and resolution of the Court of Appeals in CA-G.R. SP No. 87865
promulgated on December 29, 2006 and March 14, 2007, respectively. We REINSTATE the
decision of the labor arbiter dated August 15, 2001, with the MODIFICATION that, due to the

strained relations between the parties, respondents are additionally ordered to pay separation
pay equivalent to the petitioners one months salary.

Costs against the respondents.

SO ORDERED.