Duncan vs. Glaxo Wellcome. G.R. No.

162994; September 17, 2004

Confronting the Court in this petition is a novel question, with constitutional

overtones, involving the validity of the policy of a pharmaceutical company
prohibiting its employees from marrying employees of any competitor company.

This is a Petition for Review on Certiorari assailing the Decision[1] dated May 19,
2003 and the Resolution dated March 26, 2004 of the Court of Appeals in CA-G.R. SP
No. 62434.[2]

Petitioner Pedro A. Tecson (Tecson) was hired by respondent Glaxo Wellcome

Philippines, Inc. (Glaxo) as medical representative on October 24, 1995, after Tecson
had undergone training and orientation.

Thereafter, Tecson signed a contract of employment which stipulates, among

others, that he agrees to study and abide by existing company rules; to disclose to
management any existing or future relationship by consanguinity or affinity with co-
employees or employees of competing drug companies and should management
find that such relationship poses a possible conflict of interest, to resign from the
company.

The Employee Code of Conduct of Glaxo similarly provides that an employee is

expected to inform management of any existing or future relationship by
consanguinity or affinity with co-employees or employees of competing drug
companies. If management perceives a conflict of interest or a potential conflict
between such relationship and the employees employment with the company, the
management and the employee will explore the possibility of a transfer to another
department in a non-counterchecking position or preparation for employment
outside the company after six months.

Tecson was initially assigned to market Glaxos products in the Camarines Sur-
Camarines Norte sales area.
 Subsequently, Tecson entered into a romantic relationship with Bettsy, an
employee of Astra Pharmaceuticals[3] (Astra), a competitor of Glaxo. Bettsy was
Astras Branch Coordinator in Albay. She supervised the district managers and
medical representatives of her company and prepared marketing strategies for
Astra in that area.

Even before they got married, Tecson received several reminders from his
District Manager regarding the conflict of interest which his relationship with Bettsy
might engender. Still, love prevailed, and Tecson married Bettsy in September 1998.

In January 1999, Tecsons superiors informed him that his marriage to Bettsy
gave rise to a conflict of interest. Tecsons superiors reminded him that he and
Bettsy should decide which one of them would resign from their jobs, although they
told him that they wanted to retain him as much as possible because he was
performing his job well.

Tecson requested for time to comply with the company policy against entering
into a relationship with an employee of a competitor company. He explained that
Astra, Bettsys employer, was planning to merge with Zeneca, another drug
company; and Bettsy was planning to avail of the redundancy package to be offered
by Astra. With Bettsys separation from her company, the potential conflict of
interest would be eliminated. At the same time, they would be able to avail of the
attractive redundancy package from Astra.

In August 1999, Tecson again requested for more time resolve the problem. In
September 1999, Tecson applied for a transfer in Glaxos milk division, thinking that
since Astra did not have a milk division, the potential conflict of interest would be
eliminated. His application was denied in view of Glaxos least-movement-possible
policy.

In November 1999, Glaxo transferred Tecson to the Butuan City-Surigao City-

Agusan del Sur sales area. Tecson asked Glaxo to reconsider its decision, but his
request was denied.
 Tecson sought Glaxos reconsideration regarding his transfer and brought the
matter to Glaxos Grievance Committee. Glaxo, however, remained firm in its
decision and gave Tescon until February 7, 2000 to comply with the transfer order.
Tecson defied the transfer order and continued acting as medical representative in
the Camarines Sur-Camarines Norte sales area.

During the pendency of the grievance proceedings, Tecson was paid his salary,
but was not issued samples of products which were competing with similar products
manufactured by Astra. He was also not included in product conferences regarding
such products.

Because the parties failed to resolve the issue at the grievance machinery level,
they submitted the matter for voluntary arbitration. Glaxo offered Tecson a
separation pay of one-half () month pay for every year of service, or a total
of P50,000.00 but he declined the offer. On November 15, 2000, the National
Conciliation and Mediation Board (NCMB) rendered its Decision declaring as valid
Glaxos policy on relationships between its employees and persons employed with
competitor companies, and affirming Glaxos right to transfer Tecson to another
sales territory.

Aggrieved, Tecson filed a Petition for Review with the Court of Appeals assailing
the NCMB Decision.

On May 19, 2003, the Court of Appeals promulgated its Decision denying
the Petition for Review on the ground that the NCMB did not err in rendering
its Decision. The appellate court held that Glaxos policy prohibiting its employees
from having personal relationships with employees of competitor companies is a
valid exercise of its management prerogatives.[4]

Tecson filed a Motion for Reconsideration of the appellate courts Decision, but
the motion was denied by the appellate court in its Resolution dated March 26,
2004.[5]

Petitioners filed the instant petition, arguing therein that (i) the Court of Appeals
erred in affirming the NCMBs finding that the Glaxos policy prohibiting its employees
from marrying an employee of a competitor company is valid; and (ii) the Court of
Appeals also erred in not finding that Tecson was constructively dismissed when he
was transferred to a new sales territory, and deprived of the opportunity to attend
products seminars and training sessions.[6]

Petitioners contend that Glaxos policy against employees marrying employees

of competitor companies violates the equal protection clause of the Constitution
because it creates invalid distinctions among employees on account only of
marriage. They claim that the policy restricts the employees right to marry. [7]

They also argue that Tecson was constructively dismissed as shown by the
following circumstances: (1) he was transferred from the Camarines Sur-Camarines
Norte sales area to the Butuan-Surigao-Agusan sales area, (2) he suffered a
diminution in pay, (3) he was excluded from attending seminars and training
sessions for medical representatives, and (4) he was prohibited from promoting
respondents products which were competing with Astras products. [8]

In its Comment on the petition, Glaxo argues that the company policy
prohibiting its employees from having a relationship with and/or marrying an
employee of a competitor company is a valid exercise of its management
prerogatives and does not violate the equal protection clause; and that Tecsons
reassignment from the Camarines Norte-Camarines Sur sales area to the Butuan
City-Surigao City and Agusan del Sur sales area does not amount to constructive
dismissal.[9]

Glaxo insists that as a company engaged in the promotion and sale of

pharmaceutical products, it has a genuine interest in ensuring that its employees
avoid any activity, relationship or interest that may conflict with their
responsibilities to the company. Thus, it expects its employees to avoid having
personal or family interests in any competitor company which may influence their
actions and decisions and consequently deprive Glaxo of legitimate profits. The
policy is also aimed at preventing a competitor company from gaining access to its
secrets, procedures and policies. [10]
 It likewise asserts that the policy does not prohibit marriage per se but only
proscribes existing or future relationships with employees of competitor companies,
and is therefore not violative of the equal protection clause. It maintains that
considering the nature of its business, the prohibition is based on valid grounds. [11]

According to Glaxo, Tecsons marriage to Bettsy, an employee of Astra, posed a

real and potential conflict of interest. Astras products were in direct competition
with 67% of the products sold by Glaxo. Hence, Glaxos enforcement of the foregoing
policy in Tecsons case was a valid exercise of its management prerogatives. [12] In
any case, Tecson was given several months to remedy the situation, and was even
encouraged not to resign but to ask his wife to resign from Astra instead. [13]

Glaxo also points out that Tecson can no longer question the assailed company
policy because when he signed his contract of employment, he was aware that such
policy was stipulated therein. In said contract, he also agreed to resign from
respondent if the management finds that his relationship with an employee of a
competitor company would be detrimental to the interests of Glaxo. [14]

Glaxo likewise insists that Tecsons reassignment to another sales area and his
exclusion from seminars regarding respondents new products did not amount to
constructive dismissal.

It claims that in view of Tecsons refusal to resign, he was relocated from the
Camarines Sur-Camarines Norte sales area to the Butuan City-Surigao City and
Agusan del Sur sales area. Glaxo asserts that in effecting the reassignment, it also
considered the welfare of Tecsons family. Since Tecsons hometown was in Agusan
del Sur and his wife traces her roots to Butuan City, Glaxo assumed that his transfer
from the Bicol region to the Butuan City sales area would be favorable to him and
his family as he would be relocating to a familiar territory and minimizing his travel
expenses.[15]

In addition, Glaxo avers that Tecsons exclusion from the seminar concerning the
new anti-asthma drug was due to the fact that said product was in direct
competition with a drug which was soon to be sold by Astra, and hence, would pose
a potential conflict of interest for him. Lastly, the delay in Tecsons receipt of his
sales paraphernalia was due to the mix-up created by his refusal to transfer to
the Butuan City sales area (his paraphernalia was delivered to his new sales area
instead of Naga City because the supplier thought he already transferred to
Butuan).[16]

The Court is tasked to resolve the following issues: (1) Whether the Court of
Appeals erred in ruling that Glaxos policy against its employees marrying
employees from competitor companies is valid, and in not holding that said policy
violates the equal protection clause of the Constitution; (2) Whether Tecson was
constructively dismissed.

The Court finds no merit in the petition.

The stipulation in Tecsons contract of employment with Glaxo being questioned

by petitioners provides:

10. You agree to disclose to management any existing or future relationship you
may have, either by consanguinity or affinity with co-employees or employees of
competing drug companies. Should it pose a possible conflict of interest in
management discretion, you agree to resign voluntarily from the Company as a
matter of Company policy.

[17]

The same contract also stipulates that Tecson agrees to abide by the existing
company rules of Glaxo, and to study and become acquainted with such policies.
[18]
In this regard, the Employee Handbook of Glaxo expressly informs its employees
of its rules regarding conflict of interest:

1. Conflict of Interest

Employees should avoid any activity, investment relationship, or interest that may
run counter to the responsibilities which they owe Glaxo Wellcome.

Specifically, this means that employees are expected:

 a. To avoid having personal or family interest, financial or otherwise, in any
competitor supplier or other businesses which may consciously or
unconsciously influence their actions or decisions and thus deprive Glaxo
Wellcome of legitimate profit.

b. To refrain from using their position in Glaxo Wellcome or knowledge of

Company plans to advance their outside personal interests, that of their
relatives, friends and other businesses.

c. To avoid outside employment or other interests for income which would impair
their effective job performance.

d. To consult with Management on such activities or relationships that may lead to

conflict of interest.

1.1. Employee Relationships

Employees with existing or future relationships either by consanguinity or affinity

with co-employees of competing drug companies are expected to disclose such
relationship to the Management. If management perceives a conflict or potential
conflict of interest, every effort shall be made, together by management and the
employee, to arrive at a solution within six (6) months, either by transfer to another
department in a non-counter checking position, or by career preparation toward
outside employment after Glaxo Wellcome.Employees must be prepared for possible
resignation within six (6) months, if no other solution is feasible. [19]

No reversible error can be ascribed to the Court of Appeals when it ruled that
Glaxos policy prohibiting an employee from having a relationship with an employee
of a competitor company is a valid exercise of management prerogative.

Glaxo has a right to guard its trade secrets, manufacturing formulas, marketing
strategies and other confidential programs and information from competitors,
especially so that it and Astra are rival companies in the highly competitive
pharmaceutical industry.
 The prohibition against personal or marital relationships with employees of
competitor companies upon Glaxos employees is reasonable under the
circumstances because relationships of that nature might compromise the interests
of the company. In laying down the assailed company policy, Glaxo only aims to
protect its interests against the possibility that a competitor company will gain
access to its secrets and procedures.

That Glaxo possesses the right to protect its economic interests cannot be
denied. No less than the Constitution recognizes the right of enterprises to adopt
and enforce such a policy to protect its right to reasonable returns on investments
and to expansion and growth.[20] Indeed, 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. [21]

As held in a Georgia, U.S.A case,[22] it is a legitimate business practice to guard

business confidentiality and protect a competitive position by even-handedly
disqualifying from jobs male and female applicants or employees who are married
to a competitor. Consequently, the court ruled than an employer that discharged an
employee who was married to an employee of an active competitor did not violate
Title VII of the Civil Rights Act of 1964. [23] The Court pointed out that the policy was
applied to men and women equally, and noted that the employers business was
highly competitive and that gaining inside information would constitute a
competitive advantage.

The challenged company policy does not violate the equal protection clause of
the Constitution as petitioners erroneously suggest. It is a settled principle that the
commands of the equal protection clause are addressed only to the state or those
acting under color of its authority. [24] Corollarily, it has been held in a long array of
U.S. Supreme Court decisions that the equal protection clause erects no shield
against merely private conduct, however, discriminatory or wrongful. [25] The only
exception occurs when the state [26] in any of its manifestations or actions has been
found to have become entwined or involved in the wrongful private conduct.
[27]
Obviously, however, the exception is not present in this case. Significantly, the
company actually enforced the policy after repeated requests to the employee to
comply with the policy. Indeed, the application of the policy was made in an
impartial and even-handed manner, with due regard for the lot of the employee.

In any event, from the wordings of the contractual provision and the policy in its
employee handbook, it is clear that Glaxo does not impose an absolute prohibition
against relationships between its employees and those of competitor companies. Its
employees are free to cultivate relationships with and marry persons of their own
choosing. What the company merely seeks to avoid is a conflict of interest between
the employee and the company that may arise out of such relationships. As
succinctly explained by the appellate court, thus:

The policy being questioned is not a policy against marriage. An employee of the
company remains free to marry anyone of his or her choosing. The policy is not
aimed at restricting a personal prerogative that belongs only to the
individual. However, an employees personal decision does not detract the employer
from exercising management prerogatives to ensure maximum profit and business
[28]
success. . .

The Court of Appeals also correctly noted that the assailed company policy
which forms part of respondents Employee Code of Conduct and of its contracts
with its employees, such as that signed by Tecson, was made known to him prior to
his employment. Tecson, therefore, was aware of that restriction when he signed his
employment contract and when he entered into a relationship with Bettsy. Since
Tecson knowingly and voluntarily entered into a contract of employment with Glaxo,
the stipulations therein have the force of law between them and, thus, should be
complied with in good faith.[29] He is therefore estopped from questioning said policy.

The Court finds no merit in petitioners contention that Tecson was constructively
dismissed when he was transferred from the Camarines Norte-Camarines Sur sales
area to the Butuan City-Surigao City-Agusan del Sur sales area, and when he was
excluded from attending the companys seminar on new products which were
directly competing with similar products manufactured by Astra. Constructive
dismissal is defined as a quitting, an involuntary resignation resorted to when
continued employment becomes impossible, unreasonable, or unlikely; when there
is a demotion in rank or diminution in pay; or when a clear discrimination,
insensibility or disdain by an employer becomes unbearable to the employee.
[30]
None of these conditions are present in the instant case. The record does not
show that Tecson was demoted or unduly discriminated upon by reason of such
transfer. As found by the appellate court, Glaxo properly exercised its management
prerogative in reassigning Tecson to the Butuan City sales area:

. . . In this case, petitioners transfer to another place of assignment was merely in

keeping with the policy of the company in avoidance of conflict of interest, and thus
validNote that [Tecsons] wife holds a sensitive supervisory position as Branch
Coordinator in her employer-company which requires her to work in close
coordination with District Managers and Medical Representatives. Her duties include
monitoring sales of Astra products, conducting sales drives, establishing and
furthering relationship with customers, collection, monitoring and managing Astras
inventoryshe therefore takes an active participation in the market war characterized
as it is by stiff competition among pharmaceutical companies. Moreover, and this is
significant, petitioners sales territory covers Camarines Sur and Camarines Norte
while his wife is supervising a branch of her employer in Albay. The proximity of
their areas of responsibility, all in the same Bicol Region, renders the conflict of
interest not only possible, but actual, as learning by one spouse of the others
market strategies in the region would be inevitable. [Managements] appreciation of
a conflict of interest is therefore not merely illusory and wanting in factual basis [31]

In Abbott Laboratories (Phils.), Inc. v. National Labor Relations Commission,

[32]
which involved a complaint filed by a medical representative against his
employer drug company for illegal dismissal for allegedly terminating his
employment when he refused to accept his reassignment to a new area, the Court
upheld the right of the drug company to transfer or reassign its employee in
accordance with its operational demands and requirements. The ruling of the Court
therein, quoted hereunder, also finds application in the instant case:

By the very nature of his employment, a drug salesman or medical representative is

expected to travel. He should anticipate reassignment according to the demands of
their business. It would be a poor drug corporation which cannot even assign its
representatives or detail men to new markets calling for opening or expansion or to
areas where the need for pushing its products is great. More so if such
reassignments are part of the employment contract. [33]

As noted earlier, the challenged policy has been implemented by Glaxo

impartially and disinterestedly for a long period of time. In the case at bar, the
record shows that Glaxo gave Tecson several chances to eliminate the conflict of
interest brought about by his relationship with Bettsy. When their relationship was
still in its initial stage, Tecsons supervisors at Glaxo constantly reminded him about
its effects on his employment with the company and on the companys
interests. After Tecson married Bettsy, Glaxo gave him time to resolve the conflict
by either resigning from the company or asking his wife to resign from Astra. Glaxo
even expressed its desire to retain Tecson in its employ because of his satisfactory
performance and suggested that he ask Bettsy to resign from her company
instead. Glaxo likewise acceded to his repeated requests for more time to resolve
the conflict of interest. When the problem could not be resolved after several years
of waiting, Glaxo was constrained to reassign Tecson to a sales area different from
that handled by his wife for Astra. Notably, the Court did not terminate Tecson from
employment but only reassigned him to another area where his home province,
Agusan del Sur, was included. In effecting Tecsons transfer, Glaxo even considered
the welfare of Tecsons family. Clearly, the foregoing dispels any suspicion of
unfairness and bad faith on the part of Glaxo. [34]

Star Paper Corporation v Ronaldo D. Simbol, G.R. No. 164774, April 12,
2006

We are called to decide an issue of first impression: whether the policy of the
employer banning spouses from working in the same company violates the rights of
the employee under the Constitution and the Labor Code or is a valid exercise of
management prerogative.
At bar is a Petition for Review on Certiorari of the Decision of the Court of Appeals
dated August 3, 2004 in CA-G.R. SP No. 73477 reversing the decision of the National
Labor Relations Commission (NLRC) which affirmed the ruling of the Labor Arbiter.

Petitioner Star Paper Corporation (the company) is a corporation engaged in trading

principally of paper products. Josephine Ongsitco is its Manager of the Personnel
and Administration Department while Sebastian Chua is its Managing Director.

The evidence for the petitioners show that respondents Ronaldo D. Simbol (Simbol),
Wilfreda N. Comia (Comia) and Lorna E. Estrella (Estrella) were all regular
employees of the company.1

Simbol was employed by the company on October 27, 1993. He met Alma Dayrit,
also an employee of the company, whom he married on June 27, 1998. Prior to the
marriage, Ongsitco advised the couple that should they decide to get married, one
of them should resign pursuant to a company policy promulgated in 1995, 2 viz.:

1. New applicants will not be allowed to be hired if in case he/she has [a]
relative, up to [the] 3rd degree of relationship, already employed by the
company.

2. In case of two of our employees (both singles [sic], one male and another
female) developed a friendly relationship during the course of their
employment and then decided to get married, one of them should resign to
preserve the policy stated above.3

Simbol resigned on June 20, 1998 pursuant to the company policy. 4

Comia was hired by the company on February 5, 1997. She met Howard Comia, a
co-employee, whom she married on June 1, 2000. Ongsitco likewise reminded them
that pursuant to company policy, one must resign should they decide to get
married. Comia resigned on June 30, 2000. 5

Estrella was hired on July 29, 1994. She met Luisito Zuiga (Zuiga), also a co-
worker. Petitioners stated that Zuiga, a married man, got Estrella pregnant. The
company allegedly could have terminated her services due to immorality but she
opted to resign on December 21, 1999.6

The respondents each signed a Release and Confirmation Agreement. They stated
therein that they have no money and property accountabilities in the company and
that they release the latter of any claim or demand of whatever nature. 7

Respondents offer a different version of their dismissal. Simbol and Comia allege
that they did not resign voluntarily; they were compelled to resign in view of an
illegal company policy. As to respondent Estrella, she alleges that she had a
relationship with co-worker Zuiga who misrepresented himself as a married but
separated man. After he got her pregnant, she discovered that he was not
separated. Thus, she severed her relationship with him to avoid dismissal due to the
company policy. On November 30, 1999, she met an accident and was advised by
the doctor at the Orthopedic Hospital to recuperate for twenty-one (21) days. She
returned to work on December 21, 1999 but she found out that her name was on-
hold at the gate. She was denied entry. She was directed to proceed to the
personnel office where one of the staff handed her a memorandum. The
memorandum stated that she was being dismissed for immoral conduct. She
refused to sign the memorandum because she was on leave for twenty-one (21)
days and has not been given a chance to explain. The management asked her to
write an explanation. However, after submission of the explanation, she was
nonetheless dismissed by the company. Due to her urgent need for money, she later
submitted a letter of resignation in exchange for her thirteenth month pay. 8

Respondents later filed a complaint for unfair labor practice, constructive dismissal,
separation pay and attorneys fees. They averred that the aforementioned company
policy is illegal and contravenes Article 136 of the Labor Code. They also contended
that they were dismissed due to their union membership.

On May 31, 2001, Labor Arbiter Melquiades Sol del Rosario dismissed the complaint
for lack of merit, viz.:

[T]his company policy was decreed pursuant to what the respondent corporation
perceived as management prerogative. This management prerogative is quite broad
and encompassing for it covers hiring, work assignment, working method, time,
place and manner of work, tools to be used, processes to be followed, supervision of
workers, working regulations, transfer of employees, work supervision, lay-off of
workers and the discipline, dismissal and recall of workers. Except as provided for or
limited by special law, an employer is free to regulate, according to his own
discretion and judgment all the aspects of employment. 9 (Citations omitted.)

On appeal to the NLRC, the Commission affirmed the decision of the Labor Arbiter
10
on January 11, 2002.

Respondents filed a Motion for Reconsideration but was denied by the NLRC in a
Resolution11 dated August 8, 2002. They appealed to respondent court via Petition
for Certiorari.

In its assailed Decision dated August 3, 2004, the Court of Appeals reversed the
NLRC decision, viz.:

WHEREFORE, premises considered, the May 31, 2002 (sic)12 Decision of the National
Labor Relations Commission is hereby REVERSED and SET ASIDE and a new one is
entered as follows:

(1) Declaring illegal, the petitioners dismissal from employment and ordering
private respondents to reinstate petitioners to their former positions without
loss of seniority rights with full backwages from the time of their dismissal
until actual reinstatement; and

(2) Ordering private respondents to pay petitioners attorneys fees amounting

to 10% of the award and the cost of this suit. 13

On appeal to this Court, petitioners contend that the Court of Appeals erred in
holding that:

1. x x x the subject 1995 policy/regulation is violative of the constitutional

rights towards marriage and the family of employees and of Article 136 of the
Labor Code; and
 2. x x x respondents resignations were far from voluntary. 14

We affirm.

The 1987 Constitution15 states our policy towards the protection of labor under the
following provisions, viz.:

Article II, Section 18. The State affirms labor as a primary social economic force. It
shall protect the rights of workers and promote their welfare.

xxx

Article XIII, Sec. 3. The State shall afford full protection to labor, local and overseas,
organized and unorganized, and promote full employment and equality of
employment opportunities for all.

It shall guarantee the rights of all workers to self-organization, collective bargaining

and negotiations, and peaceful concerted activities, including the right to strike in
accordance with law. They shall be entitled to security of tenure, humane conditions
of work, and a living wage. They shall also participate in policy and decision-making
processes affecting their rights and benefits as may be provided by law.

The State shall promote the principle of shared responsibility between workers and
employers, recognizing the right of labor to its just share in the fruits of production
and the right of enterprises to reasonable returns on investments, and to expansion
and growth.

The Civil Code likewise protects labor with the following provisions:

Art. 1700. The relation between capital and labor are not merely contractual. They
are so impressed with public interest that labor contracts must yield to the common
good. Therefore, such contracts are subject to the special laws on labor unions,
collective bargaining, strikes and lockouts, closed shop, wages, working conditions,
hours of labor and similar subjects.
Art. 1702. In case of doubt, all labor legislation and all labor contracts shall be
construed in favor of the safety and decent living for the laborer.

The Labor Code is the most comprehensive piece of legislation protecting labor. The
case at bar involves Article 136 of the Labor Code which provides:

Art. 136. It shall be unlawful for an employer to require as a condition of

employment or continuation of employment that a woman employee shall not get
married, or to stipulate expressly or tacitly that upon getting married a woman
employee shall be deemed resigned or separated, or to actually dismiss, discharge,
discriminate or otherwise prejudice a woman employee merely by reason of her
marriage.

Respondents submit that their dismissal violates the above provision. Petitioners
allege that its policy "may appear to be contrary to Article 136 of the Labor Code"
but it assumes a new meaning if read together with the first paragraph of the rule.
The rule does not require the woman employee to resign. The employee spouses
have the right to choose who between them should resign. Further, they are free to
marry persons other than co-employees. Hence, it is not the marital status of the
employee, per se, that is being discriminated. It is only intended to carry out its no-
employment-for-relatives-within-the-third-degree-policy which is within the ambit of
the prerogatives of management.16

It is true that the policy of petitioners prohibiting close relatives from working in the
same company takes the nature of an anti-nepotism employment policy. Companies
adopt these policies to prevent the hiring of unqualified persons based on their
status as a relative, rather than upon their ability. 17 These policies focus upon the
potential employment problems arising from the perception of favoritism exhibited
towards relatives.

With more women entering the workforce, employers are also enacting employment
policies specifically prohibiting spouses from working for the same company. We
note that two types of employment policies involve spouses: policies banning only
spouses from working in the same company (no-spouse employment policies),
and those banning all immediate family members, including spouses, from working
in the same company (anti-nepotism employment policies).18

Unlike in our jurisdiction where there is no express prohibition on marital

discrimination,19 there are twenty state statutes20 in the United States prohibiting
marital discrimination. Some state courts 21 have been confronted with the issue of
whether no-spouse policies violate their laws prohibiting both marital status and sex
discrimination.

In challenging the anti-nepotism employment policies in the United States,

complainants utilize two theories of employment discrimination:
the disparate treatment and the disparate impact. Under the disparate
treatment analysis, the plaintiff must prove that an employment policy is
discriminatory on its face. No-spouse employment policies requiring an employee of
a particular sex to either quit, transfer, or be fired are facially discriminatory. For
example, an employment policy prohibiting the employer from hiring wives of male
employees, but not husbands of female employees, is discriminatory on its face. 22

On the other hand, to establish disparate impact, the complainants must prove
that a facially neutral policy has a disproportionate effect on a particular class. For
example, although most employment policies do not expressly indicate which
spouse will be required to transfer or leave the company, the policy often
disproportionately affects one sex.23

The state courts rulings on the issue depend on their interpretation of the scope of
marital status discrimination within the meaning of their respective civil rights acts.
Though they agree that the term "marital status" encompasses discrimination
based on a person's status as either married, single, divorced, or widowed, they are
divided on whether the term has a broader meaning. Thus, their decisions vary. 24

The courts narrowly25 interpreting marital status to refer only to a person's status
as married, single, divorced, or widowed reason that if the legislature intended a
broader definition it would have either chosen different language or specified its
intent. They hold that the relevant inquiry is if one is married rather than to whom
one is married. They construe marital status discrimination to include only whether
a person is single, married, divorced, or widowed and not the "identity, occupation,
and place of employment of one's spouse." These courts have upheld the
questioned policies and ruled that they did not violate the marital status
discrimination provision of their respective state statutes.

The courts that have broadly26 construed the term "marital status" rule that it
encompassed the identity, occupation and employment of one's spouse. They strike
down the no-spouse employment policies based on the broad legislative intent of
the state statute. They reason that the no-spouse employment policy violate the
marital status provision because it arbitrarily discriminates against all spouses of
present employees without regard to the actual effect on the individual's
qualifications or work performance. 27 These courts also find the no-spouse
employment policy invalid for failure of the employer to present any evidence
of business necessity other than the general perception that spouses in the same
workplace might adversely affect the business. 28 They hold that the absence of such
a bona fide occupational qualification29 invalidates a rule denying employment
to one spouse due to the current employment of the other spouse in the same
office.30 Thus, they rule that unless the employer can prove that the reasonable
demands of the business require a distinction based on marital status and there is
no better available or acceptable policy which would better accomplish the business
purpose, an employer may not discriminate against an employee based on the
identity of the employees spouse. 31 This is known as the bona fide occupational
qualification exception.

We note that since the finding of a bona fide occupational qualification justifies an
employers no-spouse rule, the exception is interpreted strictly and narrowly by
these state courts. There must be a compelling business necessity for which no
alternative exists other than the discriminatory practice. 32 To justify a bona fide
occupational qualification, the employer must prove two factors: (1) that the
employment qualification is reasonably related to the essential operation of the job
involved; and, (2) that there is a factual basis for believing that all or substantially
all persons meeting the qualification would be unable to properly perform the duties
of the job.33
The concept of a bona fide occupational qualification is not foreign in our
jurisdiction. We employ the standard of reasonableness of the company policy
which is parallel to the bona fide occupational qualification requirement. In the
recent case of Duncan Association of Detailman-PTGWO and Pedro Tecson v.
Glaxo Wellcome Philippines, Inc.,34 we passed on the validity of the policy of a
pharmaceutical company prohibiting its employees from marrying employees of any
competitor company. We held that Glaxo has a right to guard its trade secrets,
manufacturing formulas, marketing strategies and other confidential programs and
information from competitors. We considered the prohibition against personal or
marital relationships with employees of competitor companies upon Glaxos
employees reasonable under the circumstances because relationships of that
nature might compromise the interests of Glaxo. In laying down the assailed
company policy, we recognized that Glaxo only aims to protect its interests against
the possibility that a competitor company will gain access to its secrets and
procedures.35

The requirement that a company policy must be reasonable under the

circumstances to qualify as a valid exercise of management prerogative was also at
issue in the 1997 case of Philippine Telegraph and Telephone Company v.
NLRC.36 In said case, the employee was dismissed in violation of petitioners policy
of disqualifying from work any woman worker who contracts marriage. We held that
the company policy violates the right against discrimination afforded all women
workers under Article 136 of the Labor Code, but established a permissible
exception, viz.:

[A] requirement that a woman employee must remain unmarried could be justified
as a "bona fide occupational qualification," or BFOQ, where the particular
requirements of the job would justify the same, but not on the ground of a general
principle, such as the desirability of spreading work in the workplace. A requirement
of that nature would be valid provided it reflects an inherent quality reasonably
necessary for satisfactory job performance.37(Emphases supplied.)

The cases of Duncan and PT&T instruct us that the requirement of reasonableness
must be clearly established to uphold the questioned employment policy. The
employer has the burden to prove the existence of a reasonable business necessity.
The burden was successfully discharged in Duncan but not in PT&T.

We do not find a reasonable business necessity in the case at bar.

Petitioners sole contention that "the company did not just want to have two (2) or
more of its employees related between the third degree by affinity and/or
consanguinity"38 is lame. That the second paragraph was meant to give teeth to the
first paragraph of the questioned rule 39 is evidently not the valid reasonable
business necessity required by the law.

It is significant to note that in the case at bar, respondents were hired after they
were found fit for the job, but were asked to resign when they married a co-
employee. Petitioners failed to show how the marriage of Simbol, then a Sheeting
Machine Operator, to Alma Dayrit, then an employee of the Repacking Section,
could be detrimental to its business operations. Neither did petitioners explain how
this detriment will happen in the case of Wilfreda Comia, then a Production Helper in
the Selecting Department, who married Howard Comia, then a helper in the cutter-
machine. The policy is premised on the mere fear that employees married to each
other will be less efficient. If we uphold the questioned rule without valid
justification, the employer can create policies based on an unproven presumption of
a perceived danger at the expense of an employees right to security of tenure.

Petitioners contend that their policy will apply only when one employee marries a
co-employee, but they are free to marry persons other than co-employees. The
questioned policy may not facially violate Article 136 of the Labor Code but it
creates a disproportionate effect and under the disparate impact theory, the only
way it could pass judicial scrutiny is a showing that it is reasonable despite the
discriminatory, albeit disproportionate, effect. The failure of petitioners to prove a
legitimate business concern in imposing the questioned policy cannot prejudice the
employees right to be free from arbitrary discrimination based upon stereotypes of
married persons working together in one company. 40

Lastly, the absence of a statute expressly prohibiting marital discrimination in our

jurisdiction cannot benefit the petitioners. The protection given to labor in our
jurisdiction is vast and extensive that we cannot prudently draw inferences from the
legislatures silence41 that married persons are not protected under our Constitution
and declare valid a policy based on a prejudice or stereotype. Thus, for failure of
petitioners to present undisputed proof of a reasonable business necessity, we rule
that the questioned policy is an invalid exercise of management prerogative.
Corollarily, the issue as to whether respondents Simbol and Comia resigned
voluntarily has become moot and academic.

As to respondent Estrella, the Labor Arbiter and the NLRC based their ruling on the
singular fact that her resignation letter was written in her own handwriting. Both
ruled that her resignation was voluntary and thus valid. The respondent court failed
to categorically rule whether Estrella voluntarily resigned but ordered that she be
reinstated along with Simbol and Comia.

Estrella claims that she was pressured to submit a resignation letter because she
was in dire need of money. We examined the records of the case and find Estrellas
contention to be more in accord with the evidence. While findings of fact by
administrative tribunals like the NLRC are generally given not only respect but, at
times, finality, this rule admits of exceptions, 42 as in the case at bar.

Estrella avers that she went back to work on December 21, 1999 but was dismissed
due to her alleged immoral conduct. At first, she did not want to sign the
termination papers but she was forced to tender her resignation letter in exchange
for her thirteenth month pay.

The contention of petitioners that Estrella was pressured to resign because she got
impregnated by a married man and she could not stand being looked upon or talked
about as immoral43 is incredulous. If she really wanted to avoid embarrassment and
humiliation, she would not have gone back to work at all. Nor would she have filed a
suit for illegal dismissal and pleaded for reinstatement. We have held that in
voluntary resignation, the employee is compelled by personal reason(s) to
dissociate himself from employment. It is done with the intention of relinquishing an
44
office, accompanied by the act of abandonment. Thus, it is illogical for Estrella to
resign and then file a complaint for illegal dismissal. Given the lack of sufficient
evidence on the part of petitioners that the resignation was voluntary, Estrellas
dismissal is declared illegal.

Domingo vs. Rayala, G.R. No. 155831, February 18, 2008

Sexual harassment is an imposition of misplaced superiority which is enough

to dampen an employees spirit and her capacity for advancement. It affects her
sense of judgment; it changes her life. [1]

Before this Court are three Petitions for Review on Certiorari assailing the
October 18, 2002 Resolution of the CAs Former Ninth Division [2] in CA-G.R. SP No.
61026. The Resolution modified the December 14, 2001 Decision [3] of the Court of
Appeals Eleventh Division, which had affirmed the Decision of the Office of the
President (OP) dismissing from the service then National Labor Relations
Commission (NLRC) Chairman Rogelio I. Rayala (Rayala) for disgraceful and immoral
conduct.

All three petitions stem from the same factual antecedents.

On November 16, 1998, Ma. Lourdes T. Domingo (Domingo), then

Stenographic Reporter III at the NLRC, filed a Complaint for sexual harassment
against Rayala before Secretary Bienvenido Laguesma of the Department of Labor
and Employment (DOLE).

After the last incident narrated, Domingo filed for leave of absence and asked
to be immediately transferred. Thereafter, she filed the Complaint for sexual
harassment on the basis of Administrative Order No. 250, the Rules and Regulations
Implementing RA 7877 in the Department of Labor and Employment.

Upon receipt of the Complaint, the DOLE Secretary referred the Complaint to
the OP, Rayala being a presidential appointee. The OP, through then Executive
Secretary Ronaldo Zamora, ordered Secretary Laguesma to investigate the
allegations in the Complaint and create a committee for such purpose. On
December 4, 1998, Secretary Laguesma issued Administrative Order (AO) No. 280,
Series of 1998,[5] constituting a Committee on Decorum and Investigation
(Committee) in accordance with Republic Act (RA) 7877, the Anti-Sexual
Harassment Act of 1995.[6]

The Committee heard the parties and received their respective evidence. On
March 2, 2000, the Committee submitted its report and recommendation to
Secretary Laguesma. It found Rayala guilty of the offense charged and
recommended the imposition of the minimum penalty provided under AO 250,
which it erroneously stated as suspension for six (6) months.

The following day, Secretary Laguesma submitted a copy of the Committee

Report and Recommendation to the OP, but with the recommendation that the
penalty should be suspension for six (6) months and one (1) day, in accordance with
AO 250.

On May 8, 2000, the OP, through Executive Secretary Zamora, issued AO 119,
[7]
the pertinent portions of which read:

Upon a careful scrutiny of the evidence on record, I concur with

the findings of the Committee as to the culpability of the respondent
[Rayala], the same having been established by clear and convincing
evidence. However, I disagree with the recommendation that
respondent be meted only the penalty of suspension for six (6) months
and one (1) day considering the circumstances of the case.

What aggravates respondents situation is the undeniable

circumstance that he took advantage of his position as the superior of
the complainant. Respondent occupies the highest position in the
NLRC, being its Chairman. As head of said office, it was incumbent
upon respondent to set an example to the others as to how they
should conduct themselves in public office, to see to it that his
subordinates work efficiently in accordance with Civil Service Rules and
Regulations, and to provide them with healthy working atmosphere
wherein co-workers treat each other with respect, courtesy and
cooperation, so that in the end the public interest will be benefited
(City Mayor of Zamboanga vs. Court of Appeals, 182 SCRA 785 [1990]).

What is more, public service requires the utmost integrity and

strictest discipline (Gano vs. Leonen, 232 SCRA 99 [1994]). Thus, a
public servant must exhibit at all times the highest sense of honesty
and integrity, and utmost devotion and dedication to duty (Sec. 4 (g),
RA 6713), respect the rights of others and shall refrain from doing acts
contrary to law, and good morals (Sec. 4(c)). No less than the
Constitution sanctifies the principle that a public office is a public trust,
and enjoins all public officers and employees to serve with the highest
degree of responsibility, integrity, loyalty and efficiency (Section 1,
Article XI, 1987 Constitution).

Given these established standards, I see respondents acts not

just [as] a failure to give due courtesy and respect to his co-employees
(subordinates) or to maintain good conduct and behavior but defiance
of the basic norms or virtues which a government official must at all
times uphold, one that is contrary to law and public sense of morality.
Otherwise stated, respondent to whom stricter standards must apply
being the highest official [of] the NLRC had shown an attitude, a frame
of mind, a disgraceful conduct, which renders him unfit to remain in
the service.

WHEREFORE, in view of the foregoing, respondent Rogelio I.

Rayala, Chairman, National Labor Relations Commission, is found guilty
of the grave offense of disgraceful and immoral conduct and is
hereby DISMISSED from the service effective upon receipt of this
Order.

SO ORDER[ED].
Rayala filed a Motion for Reconsideration, which the OP denied in a
Resolution[8] dated May 24, 2000. He then filed a Petition for Certiorari and
Prohibition with Prayer for Temporary Restraining Order under Rule 65 of the
Revised Rules on Civil Procedure before this Court on June 14, 2000. [9] However, the
same was dismissed in a Resolution dated June 26, 2000 for
disregarding the hierarchy of courts.[10] Rayala filed a Motion for
Reconsideration[11] on August 15, 2000. In its Resolution[12] dated September 4,
2000, the Court recalled its June 26 Resolution and referred the petition to the Court
of Appeals (CA) for appropriate action.

The CA rendered its Decision [13] on December 14, 2001. It held that there was
sufficient evidence on record to create moral certainty that Rayala committed the
acts he was charged with. It said:

The complainant narrated her story complete with details. Her

straightforward and uninhibited testimony was not emasculated by the
declarations of Commissioner Rayala or his witnesses. x x x

Moreover, Commissioner Rayala has not proven any vicious

motive for Domingo and her witnesses to invent their stories. It is very
unlikely that they would perjure themselves only to accommodate the
alleged conspiracy to oust petitioner from office. Save for his empty
conjectures and speculations, Rayala failed to substantiate his
contrived conspiracy. It is a hornbook doctrine that conspiracy must be
proved by positive and convincing evidence (People v. Noroa, 329
SCRA 502 [2000]). Besides, it is improbable that the complainant
would concoct a story of sexual harassment against the highest official
of the NLRC and thereby expose herself to the possibility of losing her
job, or be the subject of reprisal from her superiors and perhaps public
ridicule if she was not telling the truth.

It also held that Rayalas dismissal was proper. The CA pointed out that Rayala
was dismissed for disgraceful and immoral conduct in violation of RA 6713,
the Code of Conduct and Ethical Standards for Public Officials and Employees. It
held that the OP was correct in concluding that Rayalas acts violated RA 6713:

Indeed, [Rayala] was a public official, holding the Chairmanship

of the National Labor Relations Commission, entrusted with the sacred
duty of administering justice. Occupying as he does such an exalted
position, Commissioner Rayala must pay a high price for the honor
bestowed upon him. He must comport himself at all times in such a
manner that the conduct of his everyday life should be beyond
reproach and free from any impropriety. That the acts complained of
were committed within the sanctuary of [his] office compounded the
objectionable nature of his wrongdoing. By daring to violate the
complainant within the solitude of his chambers, Commissioner Rayala
placed the integrity of his office in disrepute. His disgraceful and
immoral conduct warrants his removal from office.[14]

Thus, it dismissed the petition, to wit:

IN VIEW OF ALL THE FOREGOING, the instant petition is hereby

DISMISSED and Administrative Order No. 119 as well [as] the
Resolution of the Office of the President in O.P. Case No. 00-E-9118
dated May 24, 2000 are AFFIRMED IN TOTO. No cost.

SO ORDERED.[15]

Rayala timely filed a Motion for Reconsideration. Justices Vasquez and

Tolentino voted to affirm the December 14 Decision. However, Justice Reyes
dissented mainly because AO 250 states that the penalty imposable is suspension
for six (6) months and one (1) day. [16] Pursuant to the internal rules of the CA, a
Special Division of Five was constituted.[17] In its October 18, 2002 Resolution, the
CA modified its earlier Decision:
 ACCORDINGLY, the Decision dated December [14], 2001 is
MODIFIED to the effect that the penalty of dismissal is DELETED and
instead the penalty of suspension from service for the maximum period
of one (1) year is HEREBY IMPOSED upon the petitioner. The rest of the
challenged decision stands.

SO ORDERED.

Domingo filed a Petition for Review [18] before this Court, which we denied in
our February 19, 2003 Resolution for having a defective verification. She filed a
Motion for Reconsideration, which the Court granted; hence, the petition was
reinstated.

Rayala likewise filed a Petition for Review [19] with this Court essentially
arguing that he is not guilty of any act of sexual harassment.

Meanwhile, the Republic filed a Motion for Reconsideration of the CAs October
18, 2002 Resolution. The CA denied the same in its June 3, 2003 Resolution, the
dispositive portion of which reads:

ACCORDINGLY, by a majority vote, public respondents Motion

for Reconsideration, (sic) is DENIED.

SO ORDERED.

The Republic then filed its own Petition for Review. [20]

On June 28, 2004, the Court directed the consolidation of the three (3)
petitions.

G.R. No. 155831

 Domingo assails the CAs resolution modifying the penalty imposed by the
Office of the President. She raises this issue:

The Court of Appeals erred in modifying the penalty for the respondent
from dismissal to suspension from service for the maximum period of
one year. The President has the prerogative to determine the proper
penalty to be imposed on an erring Presidential appointee. The
President was well within his power when he fittingly used that
prerogative in deciding to dismiss the respondent from the service. [21]

She argues that the power to remove Rayala, a presidential appointee, is

lodged with the President who has control of the entire Executive Department, its
bureaus and offices. The OPs decision was arrived at after affording Rayala due
process. Hence, his dismissal from the service is a prerogative that is entirely with
the President.[22]

As to the applicability of AO No. 250, she argues that the same was not
intended to cover cases against presidential appointees. AO No. 250 refers only to
the instances wherein the DOLE Secretary is the disciplining authority, and thus, the
AO does not circumscribe the power of the President to dismiss an erring
presidential appointee.

G.R. No. 155840

In his petition, Rayala raises the following issues:

I. CONTRARY TO THE FINDINGS OF THE COURT OF

APPEALS, THE ACTS OF HEREIN PETITIONER DO NOT
CONSTITUTE SEXUAL HARASSMENT AS LAID DOWN BY
THE En Banc RULING IN THE CASE OF AQUINO vs.
ACOSTA, ibid., AS WELL AS IN THE APPLICATION OF
EXISTING LAWS.
 II. CONTRARY TO THE FINDINGS OF THE HONORABLE
COURT OF APPEALS, INTENT IS AN INDISPENSABLE
ELEMENT IN A CASE FOR SEXUAL HARASSMENT. THE
HONORABLE COURT ERRED IN ITS FINDING THAT IT IS AN
OFFENSE THAT IS MALUM PROHIBITUM.

III. THE INVESTIGATION COMMITTEE, THE OFFICE OF THE

PRESIDENT, AND NOW, THE HONORABLE COURT OF
APPEALS, HAS MISAPPLIED AND EXPANDED THE
DEFINITION OF SEXUAL HARASSMENT IN THE
WORKPLACE UNDER R.A. No. 7877, BY APPLYING DOLE
A.O. 250, WHICH RUNS COUNTER TO THE RECENT
PRONOUNCEMENTS OF THIS HONORABLE SUPREME
[23]
COURT.

Invoking Aquino v. Acosta,[24] Rayala argues that the case is the definitive
ruling on what constitutes sexual harassment. Thus, he posits that for sexual
harassment to exist under RA 7877, there must be: (a) demand, request, or
requirement of a sexual favor; (b) the same is made a pre-condition to hiring, re-
employment, or continued employment; or (c) the denial thereof results in
discrimination against the employee.

Rayala asserts that Domingo has failed to allege and establish any sexual
favor, demand, or request from petitioner in exchange for her continued
employment or for her promotion. According to Rayala, the acts imputed to him are
without malice or ulterior motive. It was merely Domingos perception of malice in
his alleged acts a product of her own imagination [25] that led her to file the sexual
harassment complaint.

Likewise, Rayala assails the OPs interpretation, as upheld by the CA, that RA
7877 is malum prohibitum such that the defense of absence of malice is unavailing.
He argues that sexual harassment is considered an offense against a particular
person, not against society as a whole. Thus, he claims that intent is an essential
element of the offense because the law requires as a conditio sine qua non that a
sexual favor be first sought by the offender in order to achieve certain specific
results. Sexual harassment is committed with the perpetrators deliberate intent to
commit the offense.[26]

Rayala next argues that AO 250 expands the acts proscribed in RA 7877. In
particular, he assails the definition of the forms of sexual harassment:

Rule IV

FORMS OF SEXUAL HARASSMENT

Section 1. Forms of Sexual Harassment. Sexual harassment

may be committed in any of the following forms:

a) Overt sexual advances;

b) Unwelcome or improper gestures of affection;

c) Request or demand for sexual favors including but not limited

to going out on dates, outings or the like for the same purpose;

d) Any other act or conduct of a sexual nature or for purposes of

sexual gratification which is generally annoying, disgusting or offensive
to the victim.[27]

He posits that these acts alone without corresponding demand, request, or

requirement do not constitute sexual harassment as contemplated by the law. [28] He
alleges that the rule-making power granted to the employer in Section 4(a) of RA
7877 is limited only to procedural matters. The law did not delegate to the employer
the power to promulgate rules which would provide other or additional forms of
sexual harassment, or to come up with its own definition of sexual harassment. [29]
G.R. No. 158700

The Republic raises this issue:

Whether or not the President of the Philippines may validly

dismiss respondent Rayala as Chairman of the NLRC for
committing acts of sexual harassment.[30]

The Republic argues that Rayalas acts constitute sexual harassment under
AO 250. His acts constitute unwelcome or improper gestures of affection and are
acts or conduct of a sexual nature, which are generally annoying or offensive to the
victim.[31]

It also contends that there is no legal basis for the CAs reduction of the
penalty imposed by the OP. Rayalas dismissal is valid and warranted under the
circumstances. The power to remove the NLRC Chairman solely rests upon the
President, limited only by the requirements under the law and the due process
clause.

The Republic further claims that, although AO 250 provides only a one (1)
year suspension, it will not prevent the OP from validly imposing the penalty of
dismissal on Rayala. It argues that even though Rayala is a presidential appointee,
he is still subject to the Civil Service Law. Under the Civil Service Law, disgraceful
and immoral conduct, the acts imputed to Rayala, constitute grave misconduct
punishable by dismissal from the service. [32] The Republic adds that Rayalas position
is invested with public trust and his acts violated that trust; thus, he should be
dismissed from the service.

This argument, according to the Republic, is also supported by Article 215 of

the Labor Code, which states that the Chairman of the NLRC holds office until he
reaches the age of 65 only during good behavior. [33] Since Rayalas security of tenure
is conditioned upon his good behavior, he may be removed from office if it is proven
that he has failed to live up to this standard.
 All the issues raised in these three cases can be summed up in two ultimate
questions, namely:

(1) Did Rayala commit sexual harassment?

(2) If he did, what is the applicable penalty?

Initially, however, we must resolve a procedural issue raised by Rayala. He

accuses the Office of the Solicitor General (OSG), as counsel for the Republic, of
forum shopping because it filed a motion for reconsideration of the decision in CA-
G.R. SP No. 61026 and then filed a comment in G.R. No. 155840 before this Court.

We do not agree.

Forum shopping is an act of a party, against whom an adverse judgment or

order has been rendered in one forum, of seeking and possibly securing a favorable
opinion in another forum, other than by appeal or special civil action for certiorari.
[34]
It consists of filing multiple suits involving the same parties for the same cause of
action, either simultaneously or successively, for the purpose of obtaining a
favorable judgment.[35]

There is forum shopping when the following elements concur: (1) identity of
the parties or, at least, of the parties who represent the same interest in both
actions; (2) identity of the rights asserted and relief prayed for, as the latter is
founded on the same set of facts; and (3) identity of the two preceding particulars
such that any judgment rendered in the other action will amount to res judicata in
the action under consideration or will constitute litis pendentia.[36]

Reviewing the antecedents of these consolidated cases, we note that the CA

rendered the assailed Resolution on October 18, 2002. The Republic filed its Motion
for Reconsideration on November 22, 2002. On the other hand, Rayala filed his
petition before this Court on November 21, 2002. While the Republics Motion for
Reconsideration was pending resolution before the CA, on December 2, 2002, it was
directed by this Court to file its Comment on Rayalas petition, which it submitted on
June 16, 2003.

When the CA denied the Motion for Reconsideration, the Republic filed its own
Petition for Review with this Court on July 3, 2003. It cited in its Certification and
Verification of a Non-Forum Shopping (sic), that there was a case involving the same
facts pending before this Court denominated as G.R. No. 155840. With respect to
Domingos petition, the same had already been dismissed on February 19, 2003.
Domingos petition was reinstated on June 16, 2003 but the resolution was received
by the OSG only on July 25, 2003, or after it had filed its own petition. [37]

Based on the foregoing, it cannot be said that the OSG is guilty of forum
shopping. We must point out that it was Rayala who filed the petition in the CA, with
the Republic as the adverse party. Rayala himself filed a motion for reconsideration
of the CAs December 21, 2001 Decision, which led to a more favorable ruling, i.e.,
the lowering of the penalty from dismissal to one-year suspension. The parties
adversely affected by this ruling (Domingo and the Republic) had the right to
question the same on motion for reconsideration. But Domingo directly filed a
Petition for Review with this Court, as did Rayala. When the Republic opted to file a
motion for reconsideration, it was merely exercising a right. That Rayala and
Domingo had by then already filed cases before the SC did not take away this right.
Thus, when this Court directed the Republic to file its Comment on Rayalas petition,
it had to comply, even if it had an unresolved motion for reconsideration with the
CA, lest it be cited for contempt.

Accordingly, it cannot be said that the OSG file[d] multiple suits involving the
same parties for the same cause of action, either simultaneously or successively,
for the purpose of obtaining a favorable judgment.

We now proceed to discuss the substantive issues.

It is noteworthy that the five CA Justices who deliberated on the case were
unanimous in upholding the findings of the Committee and the OP. They found the
assessment made by the Committee and the OP to be a meticulous and
dispassionate analysis of the testimonies of the complainant (Domingo), the
respondent (Rayala), and their respective witnesses. [38] They differed only on the
appropriate imposable penalty.

That Rayala committed the acts complained of and was guilty of sexual
harassment is, therefore, the common factual finding of not just one, but three
independent bodies: the Committee, the OP and the CA. It should be remembered
that when supported by substantial evidence, factual findings made by quasi-
judicial and administrative bodies are accorded great respect and even finality by
the courts.[39] The principle, therefore, dictates that such findings should bind us. [40]

Indeed, we find no reason to deviate from this rule. There appears no valid
ground for this Court to review the factual findings of the CA, the OP, and the
Investigating Committee. These findings are now conclusive on the Court. And quite
significantly, Rayala himself admits to having committed some of the acts imputed
to him.

He insists, however, that these acts do not constitute sexual harassment,

because Domingo did not allege in her complaint that there was a demand, request,
or requirement of a sexual favor as a condition for her continued employment or for
her promotion to a higher position.[41] Rayala urges us to apply to his case our ruling
in Aquino v. Acosta.[42]

We find respondents insistence unconvincing.

Basic in the law of public officers is the three-fold liability rule, which states
that the wrongful acts or omissions of a public officer may give rise to civil, criminal
and administrative liability. An action for each can proceed independently of the
others.[43] This rule applies with full force to sexual harassment.

The law penalizing sexual harassment in our jurisdiction is RA 7877. Section 3

thereof defines work-related sexual harassment in this wise:
 Sec. 3. Work, Education or Training-related Sexual Harassment
Defined. Work, education or training-related sexual harassment is
committed by an employer, manager, supervisor, agent of the
employer, teacher, instructor, professor, coach, trainor, or any other
person who, having authority, influence or moral ascendancy over
another in a work or training or education environment, demands,
requests or otherwise requires any sexual favor from the other,
regardless of whether the demand, request or requirement for
submission is accepted by the object of said Act.

(a) In a work-related or employment environment, sexual

harassment is committed when:

(1) The sexual favor is made as a condition in the hiring or in the

employment, re-employment or continued employment of said
individual, or in granting said individual favorable compensation,
terms, conditions, promotions, or privileges; or the refusal to grant the
sexual favor results in limiting, segregating or classifying the employee
which in a way would discriminate, deprive or diminish employment
opportunities or otherwise adversely affect said employee;

(2) The above acts would impair the employees rights or

privileges under existing labor laws; or

(3) The above acts would result in an intimidating, hostile, or

offensive environment for the employee.

This section, in relation to Section 7 on penalties, defines the criminal aspect of the
unlawful act of sexual harassment. The same section, in relation to Section 6,
authorizes the institution of an independent civil action for damages and other
affirmative relief.
Section 4, also in relation to Section 3, governs the procedure for administrative
cases, viz.:

Sec. 4. Duty of the Employer or Head of Office in a Work-related,

Education or Training Environment. It shall be the duty of the employer
or the head of the work-related, educational or training environment or
institution, to prevent or deter the commission of acts of sexual
harassment and to provide the procedures for the resolution,
settlement or prosecution of acts of sexual harassment. Towards this
end, the employer or head of office shall:

(a) Promulgate appropriate rules and

regulations in consultation with and jointly
approved by the employees or students or
trainees, through their duly designated
representatives, prescribing the procedure
for the investigation or sexual harassment
cases and the administrative sanctions
therefor.

Administrative sanctions shall not be a

bar to prosecution in the proper courts for
unlawful acts of sexual harassment.

The said rules and regulations issued

pursuant to this section (a) shall include,
among others, guidelines on proper decorum
in the workplace and educational or training
institutions.

(b) Create a committee on decorum and

investigation of cases on sexual harassment.
The committee shall conduct meetings, as
the case may be, with other officers and
 employees, teachers, instructors, professors,
coaches, trainors and students or trainees to
increase understanding and prevent
incidents of sexual harassment. It shall also
conduct the investigation of the alleged
cases constituting sexual harassment.

In the case of a work-related environment, the committee shall

be composed of at least one (1) representative each from the
management, the union, if any, the employees from the supervisory
rank, and from the rank and file employees.

In the case of the educational or training institution, the

committee shall be composed of at least one (1) representative from
the administration, the trainors, teachers, instructors, professors or
coaches and students or trainees, as the case maybe.

The employer or head of office, educational or training

institution shall disseminate or post a copy of this Act for the
information of all concerned.

The CA, thus, correctly ruled that Rayalas culpability is not to be determined
solely on the basis of Section 3, RA 7877, because he is charged with the
administrative offense, not the criminal infraction, of sexual harassment. [44] It should
be enough that the CA, along with the Investigating Committee and the Office of the
President, found substantial evidence to support the administrative charge.

Yet, even if we were to test Rayalas acts strictly by the standards set in
Section 3, RA 7877, he would still be administratively liable. It is true that this
provision calls for a demand, request or requirement of a sexual favor. But it is not
necessary that the demand, request or requirement of a sexual favor be articulated
in a categorical oral or written statement. It may be discerned, with equal certitude,
from the acts of the offender. Holding and squeezing Domingos shoulders, running
his fingers across her neck and tickling her ear, having inappropriate conversations
with her, giving her money allegedly for school expenses with a promise of future
privileges, and making statements with unmistakable sexual overtones all these
acts of Rayala resound with deafening clarity the unspoken request for a sexual
favor.

Likewise, contrary to Rayalas claim, it is not essential that the demand,

request or requirement be made as a condition for continued employment or for
promotion to a higher position. It is enough that the respondents acts result in
creating an intimidating, hostile or offensive environment for the employee. [45]That
the acts of Rayala generated an intimidating and hostile environment for Domingo
is clearly shown by the common factual finding of the Investigating Committee, the
OP and the CA that Domingo reported the matter to an officemate and, after the
last incident, filed for a leave of absence and requested transfer to another unit.

Rayalas invocation of Aquino v. Acosta[46] is misplaced, because the factual

setting in that case is different from that in the case at bench. In Aquino, Atty. Susan
Aquino, Chief of the Legal and Technical Staff of the Court of Tax Appeals (CTA),
charged then CTA Presiding Judge (now Presiding Justice) Ernesto Acosta of sexual
harassment. She complained of several incidents when Judge Acosta allegedly
kissed her, embraced her, and put his arm around her shoulder. The case was
referred to CA Justice Josefina G. Salonga for investigation. In her report, Justice
Salonga found that the complainant failed to show by convincing evidence that the
acts of Judge Acosta in greeting her with a kiss on the cheek, in a `beso-beso
fashion, were carried out with lustful and lascivious desires or were motivated by
malice or ill motive. It is clear from the circumstances that most of the kissing
incidents were done on festive and special occasions, and they took place in the
presence of other people and the same was by reason of the exaltation or
happiness of the moment. Thus, Justice Salonga concluded:

In all the incidents complained of, the respondent's pecks on the

cheeks of the complainant should be understood in the context of
having been done on the occasion of some festivities, and not the
assertion of the latter that she was singled out by Judge Acosta in his
 kissing escapades. The busses on her cheeks were simply friendly and
innocent, bereft of malice and lewd design. The fact that respondent
judge kisses other people on the cheeks in the 'beso-beso' fashion,
without malice, was corroborated by Atty. Florecita P. Flores, Ms.
Josephine Adalem and Ms. Ma. Fides Balili, who stated that they usually
practice 'beso-beso' or kissing on the cheeks, as a form of greeting on
occasions when they meet each other, like birthdays, Christmas, New
Year's Day and even Valentine's Day, and it does not matter whether it
is Judge Acosta's birthday or their birthdays. Theresa Cinco Bactat, a
lawyer who belongs to complainant's department, further attested that
on occasions like birthdays, respondent judge would likewise greet her
with a peck on the cheek in a 'beso-beso' manner. Interestingly, in one
of several festive occasions, female employees of the CTA pecked
respondent judge on the cheek where Atty. Aquino was one of Judge
Acosta's well wishers.

In sum, no sexual harassment had indeed transpired on those

six occasions. Judge Acosta's acts of bussing Atty. Aquino on her cheek
were merely forms of greetings, casual and customary in nature. No
evidence of intent to sexually harass complainant was apparent, only
that the innocent acts of 'beso-beso' were given malicious
connotations by the complainant. In fact, she did not even relate to
anyone what happened to her. Undeniably, there is no manifest sexual
undertone in all those incidents. [47]

This Court agreed with Justice Salonga, and Judge Acosta was exonerated.

To repeat, this factual milieu in Aquino does not obtain in the case at bench. While
in Aquino, the Court interpreted the acts (of Judge Acosta) as casual gestures of
friendship and camaraderie, done during festive or special occasions and with other
people present, in the instant case, Rayalas acts of holding and squeezing
Domingos shoulders, running his fingers across her neck and tickling her ear, and
the inappropriate comments, were all made in the confines of Rayalas office when
no other members of his staff were around. More importantly, and a circumstance
absent in Aquino, Rayalas acts, as already adverted to above, produced a hostile
work environment for Domingo, as shown by her having reported the matter to an
officemate and, after the last incident, filing for a leave of absence and requesting
transfer to another unit.

Rayala also argues that AO 250 does not apply to him. First, he argues that
AO 250 does not cover the NLRC, which, at the time of the incident, was under the
DOLE only for purposes of program and policy coordination. Second, he posits that
even assuming AO 250 is applicable to the NLRC, he is not within its coverage
because he is a presidential appointee.

We find, however, that the question of whether or not AO 250 covers Rayala
is of no real consequence. The events of this case unmistakably show that the
administrative charges against Rayala were for violation of RA 7877; that the OP
properly assumed jurisdiction over the administrative case; that the participation of
the DOLE, through the Committee created by the Secretary, was limited to initiating
the investigation process, reception of evidence of the parties, preparation of the
investigation report, and recommending the appropriate action to be taken by the
OP. AO 250 had never really been applied to Rayala. If it was used at all, it was to
serve merely as an auxiliary procedural guide to aid the Committee in the orderly
conduct of the investigation.

Next, Rayala alleges that the CA erred in holding that sexual harassment is
an offense malum prohibitum. He argues that intent is an essential element in
sexual harassment, and since the acts imputed to him were done allegedly without
malice, he should be absolved of the charges against him.

We reiterate that what is before us is an administrative case for sexual

harassment. Thus, whether the crime of sexual harassment is malum in
se or malum prohibitum is immaterial.

We also reject Rayalas allegations that the charges were filed because of a
conspiracy to get him out of office and thus constitute merely political harassment.
A conspiracy must be proved by clear and convincing evidence. His bare assertions
cannot stand against the evidence presented by Domingo. As we have already
ruled, the acts imputed to Rayala have been proven as fact. Moreover, he has not
proven any ill motive on the part of Domingo and her witnesses which would be
ample reason for her to conjure stories about him. On the contrary, ill motive is
belied by the fact that Domingo and her witnesses all employees of the NLRC at that
time stood to lose their jobs or suffer unpleasant consequences for coming forward
and charging their boss with sexual harassment.

Furthermore, Rayala decries the alleged violation of his right to due process.
He accuses the Committee on Decorum of railroading his trial for violation of RA
7877. He also scored the OPs decision finding him guilty of disgraceful and immoral
conduct under the Revised Administrative Code and not for violation of RA 7877.
Considering that he was not tried for disgraceful and immoral conduct, he argues
that the verdict is a sham and total nullity.

We hold that Rayala was properly accorded due process. In previous cases,
this Court held that:

[i]n administrative proceedings, due process has been

recognized to include the following: (1) the right to actual or
constructive notice of the institution of proceedings which may affect a
respondents legal rights; (2) a real opportunity to be heard personally
or with the assistance of counsel, to present witnesses and evidence in
ones favor, and to defend ones rights; (3) a tribunal vested with
competent jurisdiction and so constituted as to afford a person charged
administratively a reasonable guarantee of honesty as well as
impartiality; and (4) a finding by said tribunal which is supported by
substantial evidence submitted for consideration during the hearing or
contained in the records or made known to the parties affected. [48]

The records of the case indicate that Rayala was afforded all these procedural
due process safeguards. Although in the beginning he questioned the authority of
the Committee to try him,[49] he appeared, personally and with counsel, and
participated in the proceedings.

On the other point raised, this Court has held that, even in criminal cases, the
designation of the offense is not controlling, thus:

What is controlling is not the title of the complaint, nor the

designation of the offense charged or the particular law or part thereof
allegedly violated, these being mere conclusions of law made by the
prosecutor, but the description of the crime charged and the particular
facts therein recited. The acts or omissions complained of must be
alleged in such form as is sufficient to enable a person of common
understanding to know what offense is intended to be charged, and
enable the court to pronounce proper judgment. No information for a
crime will be sufficient if it does not accurately and clearly allege the
elements of the crime charged. Every element of the offense must be
stated in the information. What facts and circumstances are necessary
to be included therein must be determined by reference to the
definitions and essentials of the specified crimes. The requirement of
alleging the elements of a crime in the information is to inform the
accused of the nature of the accusation against him so as to enable
him to suitably prepare his defense.[50]

It is noteworthy that under AO 250, sexual harassment amounts to

disgraceful and immoral conduct.[51] Thus, any finding of liability for sexual
harassment may also be the basis of culpability for disgraceful and immoral
conduct.
With the foregoing disquisitions affirming the finding that Rayala committed
sexual harassment, we now determine the proper penalty to be imposed.

Rayala attacks the penalty imposed by the OP. He alleges that under the
pertinent Civil Service Rules, disgraceful and immoral conduct is punishable by
suspension for a period of six (6) months and one (1) day to one (1) year. He also
argues that since he is charged administratively, aggravating or mitigating
circumstances cannot be appreciated for purposes of imposing the penalty.

Under AO 250, the penalty for the first offense is suspension for six (6)
months and one (1) day to one (1) year, while the penalty for the second offense is
dismissal.[52] On the other hand, Section 22(o), Rule XVI of the Omnibus Rules
Implementing Book V of the Administrative Code of 1987 [53] and Section 52 A(15) of
the Revised Uniform Rules on Administrative Cases in the Civil Service [54] both
provide that the first offense of disgraceful and immoral conduct is punishable by
suspension of six (6) months and one (1) day to one (1) year. A second offense is
punishable by dismissal.

Under the Labor Code, the Chairman of the NLRC shall hold office during
good behavior until he or she reaches the age of sixty-five, unless sooner
removed for cause as provided by law or becomes incapacitated to discharge
the duties of the office.[55]

In this case, it is the President of the Philippines, as the proper disciplining

authority, who would determine whether there is a valid cause for the removal of
Rayala as NLRC Chairman. This power, however, is qualified by the phrase for cause
as provided by law. Thus, when the President found that Rayala was indeed guilty of
disgraceful and immoral conduct, the Chief Executive did not have unfettered
discretion to impose a penalty other than the penalty provided by law for such
offense. As cited above, the imposable penalty for the first offense of either the
administrative offense of sexual harassment or for disgraceful and immoral conduct
is suspension of six (6) months and one (1) day to one (1) year. Accordingly, it was
error for the Office of the President to impose upon Rayala the penalty of dismissal
from the service, a penalty which can only be imposed upon commission of a
second offense.

Even if the OP properly considered the fact that Rayala took advantage of his
high government position, it still could not validly dismiss him from the service.
Under the Revised Uniform Rules on Administrative Cases in the Civil Service,
[56]
taking undue advantage of a subordinate may be considered as an aggravating
circumstance[57] and where only aggravating and no mitigating circumstances are
present, the maximum penalty shall be imposed. [58] Hence, the maximum penalty
that can be imposed on Rayala is suspension for one (1) year.

Rayala holds the exalted position of NLRC Chairman, with the rank equivalent
to a CA Justice. Thus, it is not unavailing that rigid standards of conduct may be
demanded of him. In Talens-Dabon v. Judge Arceo,[59] this Court, in upholding the
liability of therein respondent Judge, said:

The actuations of respondent are aggravated by the fact that

complainant is one of his subordinates over whom he exercises control
and supervision, he being the executive judge. He took advantage of
his position and power in order to carry out his lustful and lascivious
desires. Instead of he being in loco parentis over his subordinate
employees, respondent was the one who preyed on them, taking
advantage of his superior position.

In yet another case, this Court declared:

As a managerial employee, petitioner is bound by more exacting

work ethics. He failed to live up to his higher standard of responsibility
when he succumbed to his moral perversity. And when such moral
perversity is perpetrated against his subordinate, he provides a
justifiable ground for his dismissal for lack of trust and confidence. It is
the right, nay, the duty of every employer to protect its employees
from oversexed superiors.[60]

It is incumbent upon the head of office to set an example on how his

employees should conduct themselves in public office, so that they may work
efficiently in a healthy working atmosphere. Courtesy demands that he should set a
good example.[61]
 Rayala has thrown every argument in the book in a vain effort to effect his
exoneration. He even puts Domingos character in question and casts doubt on the
morality of the former President who ordered, albeit erroneously, his dismissal from
the service. Unfortunately for him, these are not significant factors in the disposition
of the case. It is his character that is in question here and sadly, the inquiry showed
that he has been found wanting.

Digitel vs. Soriano, G.R. No. 166039, June 26, 2006

In issue in the present Petition for Review[1] is whether respondent, Mariquit

Soriano (Mariquit), was forced to resign, due to professional and sexual harassment,
thus amounting to constructive dismissal.

The Labor Arbiter and the National Labor Relations Commission (NLRC) held
in the negative. The Court of Appeals held otherwise.

From the records of the case, the following antecedent facts are culled:

In the third quarter of 1998, petitioner Digitel Telecommunications

Philippines, Inc. (Digitel) hired Mariquit, then of 48 summers, a Bachelor of Science
in Nutrition graduate from the University of the Philippines and a graduate school
student of De La Salle University (she had not submitted her thesis), as Director for
Market and Communications effective August 15, 1998.

Digitels co-petitioners Senior Vice President for Business Division Eric J.

Severino (Severino) and Senior Executive Vice President Johnson Robert L. Go (Go)
were Mariquits immediate superior and next higher superior, respectively.

Working under Mariquit were Evelyn P. Inductivo (Evelyn), Manager of the

Promotion Section, Andrea S. Arnedo (Andrea), Manager of the Corporate and
Planning Information Section, and Joselito Macachor (Macachor), Ad and Promo
Manager.[2]
 In the Performance Review conducted by Digitel for the period of August 17,
1998 up to February 15, 1999,[3] Mariquit obtained for her first six months of work a
rating of 92% (Above Average).

Mariquit later had a rift with Macachor regarding an advertisement error. She
thus sought his termination through petitioner Severino. To her dismay, Severino
merely arranged for the transfer of Macachor to another department.

Mariquits performance soon began to deteriorate. The Performance

Review[4] for the period of April 1, 1999 up to April 1, 2000 showed that she obtained
a rating of 60% (Average) with the following notes from petitioner Severino:

REVIEW OF OVERALL PERFORMANCE:

(Special comments on performance in particular work areas,

overall performance and development under the covered
period.)

Clearly, Ms. Soriano possesses the requisite traits to be successful in

her responsibility areas. The overall performance of the department
assigned to her in both quantitative and qualitative aspects, will
increase significantly with Ms. Sorianos commitment to focus on output
expectations.

TRAINING AND DEVELOPMENT:

(Please comment on the staff members training and

development needs in the year to come, taking into
consideration his/her strengths and areas for improvement.)

Ms. Soriano should endeavor to overcome whatever residual effects

the P. Macachor situation caused. She should return to her overall
sunny and cheerful disposition. This will significantly contribute to the
 positive department work atmosphere with improved performance as a
result.[5] (Emphasis in the original; underscoring supplied)

Apparently in an attempt to shift the blame on the unfavorable evaluation

made on her, Mariquit gave unfavorable evaluation of her two remaining managers,
Evelyn and Andrea.

In a Memorandum of June 27, 2000[6] addressed to Severino, Evelyn

questioned the basis of her rating and charged Mariquit of harassing and framing-up
her very own managers. And she also charged Mariquit of violating company rules
and regulations.[7]

For her part Andrea, in a Memorandum of May 15, 2000 [8] also addressed to
Severino, challenged the factual basis of her poor performance rating and appealed
for a new evaluation, she attributing as possible motive of Mariquit her hatred,
prejudice, revenge and a desire to get rid of her. [9]

Mariquits personal conflicts with her two managers continued, prompting her
to also demand the termination of their services. [10] As in the case of Macachor, the
management retained them, however.

Mariquit later filed on June 27, 2000 a letter of resignation bearing the
date June 28, 2000, to take effect at the closing of office hours on June 30, 2000.
[11]
Severino acknowledged receipt of the letter of resignation which Mariquit left in
his office.[12] Severino thereafter forwarded the letter to the Human Resources
Department where it was stamped received on June 28, 2000.[13]

On August 22, 2000, Mariquit executed a Deed of Quitclaim and

Release[14] acknowledging receipt from Digitel of the sum of P97,560.02, and
declaring therein that her resignation on June 30, 2000 was of her own free will and
that in consideration of the said amount, she was releasing and forever discharging
Digitel, its officers, managers or representatives or successors from all claims or
cause in connection with her employment therewith.
 About five months after her execution of the Deed of Quitclaim and Release
or in January 2001, on the intercession of Mariquits friend Emma Teodoro (Emma),
Go and Mariquit, together with Emma, met during which Mariquit is said to have
pleaded for financial assistance. Go thus referred her to Digitel Executive Vice
President Policarpio B. Pau, Jr. (Pau).[15] Pau was to later relate what transpired when
Mariquit went to see him.

Eleven months after her resignation letter was filed or on May 28, 2001,
Mariquit filed criminal complaints against petitioners Go and Severino, [16] for
violation of R.A. 7877 (Anti-Sexual Harassment Law) and/or Article 336 of the
Revised Penal Code (Acts of Lasciviousness), before the Quezon City Prosecutors
Office which referred the complaints to the National Bureau of Investigation (NBI).

The NBI recommended to the City Prosecutor the filing of a case for sexual
harassment against petitioner Go. The City Prosecutor later dismissed Mariquits
complaints but, on her motion for reconsideration, it issued a Resolution finding
probable cause to hale Go to court for acts of lasciviousness. [17] Go appealed the
Resolution to the Department of Justice (DOJ).

In Paus affidavit dated July 6, 2001 which Go submitted in connection with

Mariquits criminal complaint against him, Pau gave the following account of what
transpired during his meeting with Mariquit after Go had, as stated above, referred
her to him.

xxxx

14. Sometime in January 2001 Ms. Soriano and her son went to
my office; She told me that she had dinner with Mr. Johnson [Go] and a
common friend and that Mr. Johnson [Go] told her to see me;
15. On my part, I was already expecting that this was what Mr.
Johnson [Go] and I had agreed in principle earlier to extend financial
assistance, for humanitarians [sic], to Ms. Soriano;
 16. To my surprise, Ms. Soriano told me that she was advised by
her lawyer to explore means in settling her case with Mr. Johnson
[Go]. She then told me that she needs money to: (a) send her children
abroad, (b) to start a business of her own and (c) to pay the fees of her
lawyers; Based on her insinuations I had the impression that she
wanted millions of pesos;

17. Clearly, she had a wrong impression and it appeared to me

that she is extorting money from the company; To end our
conversation, I told her that if that is what she wanted I have no
authority to grant the same, what the company intended was to give
her a separation pay, even though she is not entitled to it; I also told
her that maybe she has misunderstood the humanitarian gesture taken
by the company; Thereafter, she already left the office.

x x x x[18] (Underscoring supplied)

About one and a half years after she filed her letter of resignation or
on December 20, 2001, Mariquit filed a complaint [19] for illegal dismissal against
petitioners Digitel, Go and Severino before the NLRC, docketed as NLRC NCR Case
No. 12-06571-2001. During the initial mandatory conference which took place
on January 23, 2002, she clarified that her cause of action was
[20]
for constructive dismissal, alleging that she was harassed by herein individual
petitioners to thus compel her to resign from Digitel.

By Decision of April 24, 2003,[21] the Labor Arbiter, finding insufficient

Mariquits evidence to support her claim that she was forced to resign, held that she
voluntarily resigned:

The factual background of this case clearly shows that

complainant voluntarily resigned from her employment. We
sympathize with her but we cannot sustain her contention that she was
constructively dismissed. With complainants educational and
professional background, it would be absurd to assume that she did
not understand the import of her own words and the consequences of
her own acts of voluntary resignation.

Complainants submission that she was forced to resign

because of the way she was sexually and professionally
harassed by respondents Eric J. Severino and Johnson Robert L.
Go were not sufficiently established by substantial, concrete
and credible evidence.

The affidavit of Ms. Sta. Clara [submitted by Mariquit] is

purely hearsay evidence. Her statements do not even qualify as part
of the res gestae. Ms. Sta. Clara was not personally present during the
times that respondent Go allegedly poked, several times, at
complainants private parts. Neither was she physically present when
respondent Severino was allegedly staring at complainants crotch and
made suggestive remarks to the latter. She, therefore, could not
concretely, credibly nor substantially testify as to those facts or
circumstances that she acquired through her own perception or organs
of sense. Her affidavit does not establish the truth of the facts stated
therein.

The affidavit of Mr. Frank Wenceslao [also submitted by

Mariquit] is not only telling, so to speak; it is also highly suspect. It is
likewise hearsay, as that of Ms. Sta. Claras. It must be taken with
utmost precaution. It should be carefully scrutinized. Mr. Wenceslao
knew that respondent Go and his brother Henry were reputed to be
womanizers. Why then would he (Wenceslao) encourage the mother of
his own love child to apply and accept a job offered by respondent
company knowing fully well that she, with whom he was again sleeping
together at that time, would be working with and for Mr. Go who has a
questionable reputation with women? Why would he have prevailed
upon complainant who already wanted to resign from her job during
those periods that she was being allegedly professionally and sexually
harassed? His testimony is that of an interested person and should
thus be rejected.

Complainants own allegation, although they are so

detailed, appear incredible if not downright puny. An analysis of her
statements shows that her own conclusion that she was being sexually
and professionally harassed was on the basis of her own suppositions,
conjectures, and surmises. Some of her statements are inconsistent.
She could not satisfactorily explain her allegation that she was
consistently professionally harassed by respondent Severino. The
latters alleged words: How come you claim you know so much yet
nothing ever gets done in your department? do not jurisprudentially
constitute nor clearly establish professional harassment. Aside from
these words, the complainant could only venture to allege instances in
general and vague terms.

As to the facts allegedly constituting sexual harassment

advanced by Go and Severino, after an objective analysis over their
assertions as stated in their respective counter-affidavits and further
considering the other supporting documents attached to the
respondents pleadings, it is found that these far out weigh the
complainants own evidence.[22] (Emphasis and underscoring
supplied.)
The Labor Arbiter also observed:

One last note: During the initial mandatory conference

on January 23, 2003, while the respective parties counsels and the
undersigned were discussing on some matters, complainant who was
seated opposite respondent Severino discreetly showed him her middle
finger (the dirty finger sign) and later, took his cellular phone which he
placed on the table and banged it on the table. Mr. Severino then
asked the undersigned if it would be possible, at the next hearing, to
have someone officially record and take note of the deportment of the
parties during the hearings. When the undersigned asked what for,
 respondent Severino narrated what had just transpired between him
and the complainant. When the undersigned asked if this was true, the
complainant, looking at respondent Go, rudely replied: Because you
are not my boss anymore!

The conduct displayed by the complainant in the presence not

only of the undersigned, the parties respective legal counsels but also
with complainants own daughter around shows much of her character.
[23]
(Underscoring supplied)

The Labor Arbiter thus disposed:

WHEREFORE, in view of the foregoing, judgment is hereby

rendered DISMISSING this complaint for constructive dismissal for lack
of merit.

The counterclaim of the respondents is likewise dismissed for

lack of merit.

All other claims herein sought and prayed for are hereby denied
for lack of legal and factual bases.[24]

On appeal, the NLRC referred the case to Labor Arbiter Thelma M. Concepcion
for review, hearing when necessary with power to cite the parties for contempt
under Article 218(d), Labor Code and submission of report for the Commissions
deliberation.[25]

Finding Labor Arbiter Concepcions July 30, 2003 REPORT with

recommendation[26] for the dismissal of Mariquits appeal to be supported by facts on
record and the law on the matter, the NLRC adopted it as its own. It accordingly
dismissed Mariquits appeal.
 In holding that Mariquit voluntarily resigned and accordingly dismissing her
appeal, the NLRC, by Decision dated August 18, 2003,[27] observed, among other
things:

xxxx

With such tendency to threaten resignation everytime higher

management would refuse her demand to transfer subordinates who
had administrative differences with her, we therefore have no doubt
that complainant voluntarily resigned when respondent Severino
refused to heed her demand that Ms. Arnedo and Ms. Inductivo, her
subordinates, be transferred to other departments. We also have no
doubt that such resignation does not constitute constructive dismissal,
much less an illegal one.

x x x x[28] (Underscoring supplied)

Her motion for reconsideration having been denied by the NLRC by Order
of January 30, 2004,[29] Mariquit filed a Petition for Certiorari [30] before the Court of
Appeals.

The appellate court, by Decision of August 20, 2004,[31] taking exception to

the doctrine of finality of factual findings of labor tribunals, [32] reversed the NLRC
decision, disposing as follows:

WHEREFORE, premises considered, the present petition is

hereby GIVEN DUE COURSE and the questioned Decision and
Resolution of the NLRC dated August 18, 2003 and January 30, 2004,
respectively, are hereby both ANNULLED and SET ASIDE. Private
respondents are hereby declared liable for illegal dismissal and are
consequently ordered to pay petitioner jointly and severally the back
wages due to her computed from July 1, 2000 based on her latest
salary as of that date up to the time of the finality of this judgment. As
 reinstatement is no longer feasible, private respondents are hereby
also ordered to pay petitioner separation pay equivalent to one (1)
months salary for every year of service, as prayed for by petitioner in
her complaint.

Further, private respondents are hereby ordered to pay

petitioner the sums of P200,000.00 and P100,000.00 as moral and
exemplary damages, respectively, as well as attorneys fees in the
amount equivalent to 10% of the total monetary award.

No pronouncement as to costs.[33]

Petitioners Motion for Reconsideration having been denied by Resolution

of November 10, 2004,[34] they lodged the present petition faulting the appellate
court as follows:

I.

THE HONORABLE COURT OF APPEALS ERRED IN GIVING

RESPONDENTS PETITION FOR CERTIORARI DUE COURSE, THERE BEING
NO GRAVE ABUSE OF DISCRETION EITHER BY THE NLRC OR THE LABOR
ARBITER AMOUNTING TO LACK OR EXCESS OF JURISDICTION.

II.

THE HONORABLE COURT OF APPEALS COMMITTED AN ERROR OF

LAW IN REVERSING AND DISTURBING THE FINDINGS OF FACT AND
CONCLUSIONS OF AN ADMINISTRATIVE AGENCY WHICH ARE
SUPPORTED BY SUBSTANTIAL EVIDENCE.

A. THE FINDINGS AND CONCLUSIONS OF THE NLRC ARE

CONSISTENT WITH THE FINDINGS OF THE LABOR ARBITER, AND
BOTH ARE DULY SUPPORTED BY SUBSTANTIAL EVIDENCE.
 B. THE FINDINGS OF FACT OF THE ADMINISTRATIVE AGENCY
HAVING THE OPPORTUNITY TO PRIMARILY APPRECIATE THE
FACTS ARE GIVEN GREAT WEIGHT AND PREFERENCE.
C. THE FINDINGS OF THE ADMINISTRATIVE AGENCY MAY BE
REVERSED ONLY ON CLEAR SHOWING OF PALPABLE ERROR.

III.
THE COURT OF APPEALS ERRED WHEN IT FOUND PETITIONERS GUILTY
OF ILLEGAL DISMISSAL CONSIDERING THAT THE HONORABLE COURT
MADE SEVERAL FINDINGS OF FACT WITH ABSOLUTELY NO
EVIDENTIARY SUPPORT OR BASIS ON RECORD, AND RULED ON
SOME ISSUES WHICH NEITHER RESPONDENT NOR PETITIONERS RAISED
IN THE PRESENT CASE.

A. THE COURT OF APPEALS GAVE UNDUE AND UNDESERVED

CREDENCE TO THE PSYCHOLOGICAL EVALUATION REPORT
SUBMITTED BY DR. MAGNO.

B. THE EVIDENCE ON RECORD DOES NOT ESTABLISH THAT

SEXUAL HARASSMENT DID OCCUR.

C. PETITIONERS SHOWED SUFFICIENT EVIDENCE BY WAY OF

AFFIDAVITS TO DISPUTE THE ALLEGATIONS OF SEXUAL
HARASSMENT AND CONSTRUCTIVE DISMISSAL. THESE SHOULD
NOT HAVE BEEN SIMPLY BRUSHED ASIDE BY THE COURT OF
APPEALS.

D. THE COURT OF APPEALS MADE OTHER FACTUAL FINDINGS

THAT LACKED COHERENCE OR BASIS, DEFIED LOGIC, OR WERE
OTHERWISE IMMATERIAL TO THE REOLUTION OF THE CASE,
AND DISREGARDED OTHER ARGUMENTS AND EVIDENCE
PRESENTED BY PETITIONERS.
 E. THE COURT OF APPEALS ERRED IN AWARDING BACKWAGES,
SEPARATION PAY, AND DAMAGES, (Emphasis and underscoring
supplied),

and pleading that

IV

JUSTIFIABLE REASONS REQUIRE THE SUPREME COURT TO

REVIEW THE FINDINGS OF FACT OF THE COURT OF APPEALS.
[35]
(Emphasis and underscoring supplied)

The first two errors assigned by petitioners, along with their plea for a review
of the appellate courts findings of fact, being interrelated, shall be discussed
simultaneously.

Petitioners contend that in certiorari proceedings, judicial review does not go

as far as evaluating the sufficiency of evidence upon which the Labor Arbiter and
the NLRC had based their conclusion, and while the Court of Appeals concluded that
the factual findings of the NLRC are arbitrary and unfair, it failed to show the basis
thereof.

Further, petitioners contend that the factual findings of the Court of Appeals
are based on misapprehension of facts and speculations, surmises, or conjectures.

It is settled that factual findings of labor administrative officials, if supported

by substantial evidence, are accorded not only great respect but even finality,
unless there is a showing that they arbitrarily disregarded the evidence before them
or had misapprehended evidence of such nature as to compel a contrary conclusion
if properly appreciated.[36]
Judicial review of decisions of the NLRC via petition for certiorari under Rule 65 is
confined only to issues of lack or excess of jurisdiction and grave abuse of discretion
on the part of the NLRC. [37] Thus Danzas Intercontinental, Inc. v.
[38]
Daguman teaches:

x x x As a general rule, in certiorari proceedings under Rule 65 of the

Rules of Court under which the petition was brought to the Court of
Appeals, the appellate court does not assess and weigh the sufficiency
of evidence upon which the labor arbiter and the NLRC based their
conclusions, the query being limited to the determination of whether or
not the NLRC acted without or in excess of its jurisdiction or with grave
abuse of discretion in rendering its resolution, except if the findings of
the NLRC are not supported by substantial evidence.[39] (Italics in the
original; underscoring supplied)

In her petition for certiorari before the Court of Appeals, Mariquit attributed to the
NLRC the commission of grave abuse of discretion tantamount to lack or excess of
jurisdiction in dismissing the complaint for illegal dismissal[,] ignoring clear and
convincing proof of sexual harassment.[40] (Underscoring supplied)

It was thus incumbent for Mariquit to prove before the appellate court grave abuse
of discretion amounting to lack or excess of jurisdiction on the part of the NLRC. [41]

Mariquit failed to discharge the burden, however.

Contrary to Mariquits submission, the NLRC did not disregard the evidence she
proffered to prove that sexual harassment forced her to resign. Thus the NLRC
observed:

Indeed, the record is replete with substantial evidence showing that the
complainant was not forced to resign through any act of sexual
harassment. Rather, as reported by Arbiter Concepcion and as
admitted in complainants position paper [dated April 26, 2002],
she voluntarily resigned when her repeated requests for the transfer to
 some other department of two of her key personnel, Ms. Andrea Arnedo
and Ms. Evelyn Inductivo were refused by respondent Severino.
[42]
(Emphasis and underscoring supplied)

Petitioners third assigned error which bears on her claim of sexual

harassment calls for a determination of the weight of Mariquits evidence of forced
resignation.
Significantly, after the Court of Appeals promulgated on August 20, 2004 its
assailed Decision finding Mariquit to have been forced to resign, and on November
10, 2004 its Resolution denying herein petitioners Motion for Reconsideration, the
DOJ, through Undersecretary Ernesto Pineda, acting on petitioner Gos petition for
review of the earlier-mentioned Quezon City Prosecutors Resolution adverse to Go,
issued a Resolution of April 4, 2005 reversing the Prosecutors Resolution.

Held the DOJ:

Under the circumstances, it is improbable for respondent Go to have

committed the alleged acts of lasciviousness. In the company party
held [on November 19, 1999] in Quezon City, more or less sixty (60)
people were present occupying the living room and lanai area of the
residence of Policarpio B. Pau, Jr. It is highly unthinkable that
respondent Go would make any sexual advances in the
presence of so many people and no one would notice. Aside
from complainants allegations, there is nothing on record to
corroborate the same. In fact, not one of the sixty (60) guests
supported her claims. On the other hand, respondent Go submitted
the affidavit of the partys host, Policarpio B. Pau, Jr., stating that he
never saw respondent Go make advances to complainant. Moreover,
according to another guest, Ms. Purisima Y. Velasco, respondent Go
talked to complainant for a while and proceeded to join the other
guests.
 The conduct of the victim immediately following the alleged assault is
of utmost importance so as to establish the truth or falsity of the
charge for acts of lasciviousness.Complainants deportment seemed
unnatural for someone who allegedly went through a harrowing
experience. For evidence to be believed it must not only proceed from
the mouth of a credible witness but must be credible in itself such as
the common experiences and observation of mankind can approve
under the circumstances. In the instant case after the alleged sexual
advances, complainant continued working for Digitel until her
resignation effective on June 30, 2000. During her employment with
Digitel, she never initiated or filed any case for sexual harassment or
acts of lasciviousness against respondents. Further, when she
eventually resigned, she did not even state in her resignation letter
that her resignation was due to sexual harassment or sexual
abuse. Finally, it took complainant almost two (2) years before
filing her complaint.

Indeed, complainants uncorroborated testimony is not

sufficient to sustain a finding of probable cause for acts of
lasciviousness against respondent Go.

WHEREFORE, in view of the foregoing, the assailed resolution is hereby

REVERSED and SET ASIDE. The City Prosecutor of Quezon City is
directed to cause the withdrawal of the Information for acts of
lasciviousness against respondent Robert Johnson L. Go and report to
this Office the action taken within ten (10) days from receipt hereof.
[43]
(Emphasis and underscoring supplied).

At this juncture, this Court could stop and refrain from calibrating the evidence on
whether sexual harassment indeed forced Mariquit to resign. For Pono v. National
Labor Relations Commission[44] instructs:
 x x x The Court takes cognizance of the fact that a criminal complaint
for attempted rape or acts of lasciviousness filed by Pono against
Castillo before the Prosecutors Office in Makati was eventually
dismissed due to lack of merit, which dismissal was affirmed by the
Department of Justice. Indisputably, an investigating fiscal is under no
obligation to file a criminal information where he is not convinced that
he has the quantum of evidence at hand to support the averments.

Thus, the determination of the persons to be prosecuted rests primarily

with the prosecutor who is vested with quasi-judicial discretion in the
discharge of this function. The courts should give credence, in the
absence of a clear showing of arbitrariness, to the findings and
determination of probable cause by prosecutors in a preliminary
investigation.[45] (Emphasis and underscoring supplied)

Absent any showing that the DOJ acted with arbitrariness, this Court is bound to
accept its findings as it is this department which has control and supervision over
public prosecutors.

Nonetheless, this Court has given the evidence a hard look if only to put to rest any
nagging doubts on the correctness of the assessment thereof by the lower tribunals.

To prove that she was sexually harassed to thus force her to resign, Mariquit
submitted before the Labor Arbiter the following documents as part of her Position
Paper dated April 26, 2002: her Affidavit dated April 25, 2002;[46] Affidavit
dated April 25, 2002 of her friend Grace J. Sta. Clara;[47] and Affidavit dated April 25,
2002 of Francisco C. Wenceslao.[48]

In her April 25, 2002 Affidavit, Mariquit gave the following pertinent statements as
regards petitioner Go:

xxxx
8. Sometime in May 1999, during a cocktail party for the sales
department of Digitel held at the Summit Lounge of the Manila Galleria
Suites, Go, after noticing that I was wearing a short skirt, insisted that I
sit down so that he could take a better look at my legs.

9. On 20 August 1999, in a company-wide sales conference at Manila

Midtown Hotel in Ermita Manila, Go while purportedly asking questions
about my work, deliberately dropped his hand on my lap and
repeatedly stroked my thighs. I was shocked and deeply offended
by Gos indecent display of behavior;

10. After the sales conference, Go became more attentive to me and

began to drop by at my office to start a conversation with me. Such
sudden display of affection disturbed me as well as made me feel
awkward whenever Go approached me;

11. In October 1999, during a farewell party for departing Digitel

officers held at the residence of Digitel employee Matet Ruiz, Go
insisted that I dance with him. Fearful of causing a scene at a public
gathering, I agreed to dance a few steps with him and when I
attempted to sit down, Go blocked my way and pinched my waist;

12. On 19 November 1999, during another party given by an officer of

Digitel, Mr. Policarpio B. Pau at his residence in Quezon City, I could no
longer elude Gos advances because he cornered me on a sofa by
sitting so close and in such a way that I was virtually pinned against
the side of the sofa. Go held my hand and started massaging it in the
guise of looking at the ring that I was then wearing. Because I felt
uncomfortable and uneasy with Gos repulsive actions, I took off the
ring and gave it to him. To date, Go has not yet returned the ring to
me.

13. Go then crept his hand under the throw pillow which I had
placed to separate me from Go to reach for my vagina and to
 poke it several times. I could not escape because I was hemmed in
by the arm of the sofa.

14. When I was finally able to extricate myself from Gos clutches, I
stood up, but Go pulled me to the dance floor, pressed me close to him
and moved his hand across my back to feel my body. I tried to move
away from him and at the same time tried not to attract anyone [sic]
attention nor to cause a scene. Go then whispered in my ears, Do not
push me, I could make life in Digitel easy for you. I can take care of
your promotion and give you rewards.

15. In order to break free from Gos holds, I maneuvered to turn to

the beat of the music. Go then reached out his hand and
groped my breast, caressed my back and reached inside my
blouse to rub me from up my brassieres down to my
buttocks. As I was trying to resist Gos sexual advances, Go
again hinted that my promotion would be accelerated if I would only be
nice to him.

16. On 11 February 2000, during a dinner party for Digitels sales force
held at the Manila Galleria Suites, Go called for me to start the line for
the buffet and again rubbed his hand across my back to feel my
brassiere.

x x x x[49] (Italics in the original; emphasis and underscoring supplied)

As regards petitioner Severino, Mariquit stated:

xxxx
18. I also caught Severino looking at my legs up to the back of my
thighs on several occasions, to wit: (a) in January 1999 when he
intentionally pointed to my legs to a fellow company officer who also
looked at them; (b) in the NEAX Training Room in February 1999 when I
 picked up things I dropped on the floor, where Severino even walked
behind me to get a better view of my thighs; and (c) during our out-of-
town strategic planning session in September 1999 at the Princess
Urduja Hotel in Pangasinan.

19. Whenever Severino presided over meetings where I was asked to

attend, he always tilted his head to look at my legs and peek in
between my thighs thereby making me feel awkward and
uncomfortable such that I preferred to sit with my back facing him.

20. During my last few months in Digitel, specifically March to June

2000, Severino purposely sat near me during meetings and
intentionally brushed his legs on my legs;

21. After the 19 November 1999 incident with Go at the party of Mr.
Policarpio B. Pau, I reported my disgrace and outrage over the sexual
advances inflicted upon me by Go, to Severino to which he replied, I
saw what happened. I have eyes too.

x x x x (Italics in the original).[50]

Grace J. Sta. Clara, a licensed broker of the Insular Life Assurance Co., Ltd. and, as
stated above, a friend of Mariquit, declared in her affidavit:

xxxx

7. That Ms. Soriano told me she often caught Severino staring at her
crotch and made suggestive remarks, for instance, he asked her to
wear shorts during out of town trips.
8. That the real shock to me was when Ms. Soriano told me of the
incident at a party given by one of Digitel officials when she was
harassed by Johnson Go, a brother of Mr. John Gokongwei and Digitels
Senior EVP, which in her words ran, more or less, as follows: Hinipuan
ako sa boobs at dinukot yon pipi ko.
 9. That I asked Ms. Soriano to sue Johnson Go for his dastardly act but
she hesitated understandably because, as a single parent with four
children, she did not want to lose her job and decided to just avoid Go.

10. That after the incident and Go must have felt that Ms. Soriano was
avoiding him, which he said so according to her, Severino suddenly
changed his attitude toward her and, in Ms. Sorianos words, began
making impossible demands she could not possibly comply with.

11. That Ms. Soriano told me Severino must have been under pressure
from Go to make her give in to his advances because he (Go) knew she
was a single parent who could not afford to lose her job, which was a
usual technique of a sexual predator like Go who reportedly used it in
the past with female employees.[51]

x x x x (Italics in the original; underscoring supplied)

For his part, Francisco C. Wenceslao, father of one of Mariquits four children, stated
in his Affidavit:

xxxx

6. That I knew, with due respect to the memory of Mr. Henry Go, that he
and his brother (Respondent Go) were reputed to be womanizers as, in
fact, Henry while married impregnated his secretary but who he married
eventually after reportedly divorcing his wife.
7. That even before I met Ms. Soriano and her joining Digitel, I already
knew about Respondent Gos said reputation that reportedly led to his
separation from his wife and the resignation of lady employees not only
from Digitel but also from other companies he was connected with.
8. That it was no surprise therefore when Ms. Soriano complained to
me that Go made undeniable advances to her on at least two (2)
occasions, to wit:
 8.1 Sometime in late August 1999, Ms. Soriano confided to me
that in a company sales conference at Manila Midtown Hotel,
Respondent Go, who she barely knew then, sat close to her and
began a conversation. He immediately and repeatedly dropped
his hand on her lap and touched her thighs. She was naturally
outraged by such brazenness from which she excused herself
and moved away to join other Digitel employees on the dance
floor.

8.2 In a party given by a company official, Mr. Policarpio Pau, in

November 1999 at his residence in Loyola Heights, Quezon City,
obviously with malicious forethought suddenly sat on the sofas
side while massaging her hand and pretending to be interested
in her ring. She removed the ring and gave it to him so he would
release her hand. Worse, Go suddenly put his hand under her
thigh and moved it as far as he could with clear intention to
touch her private parts. According to Ms. Soriano, she was so
embarrassed and would have melted if she were a candle
because she sensed that Go was speaking in Chinese and telling
other guests what he was doing to her.

9. That Ms. Soriano angrily related to me the above incidents

immediately upon arriving home from each of the said occasions
because during the time in question, Ms. Soriano and I were again
sleeping together.

10. That Ms. Soriano was very angry and outraged on both occasions for
the humiliation she suffered because Go treated her so cheaply in front
of her fellow Digitel executives.[52]

x x x x (Underscoring supplied)
Wenceslao added:

xxxx

12. That Ms. Soriano told me about subsequent events in their office
such as when Go visited her in the office to ask why she had been
eluding him as if she did not like him at all.

13. That, according to Ms. Soriano, it was during that time when she
began avoiding Go that she noticed a big change in Mr. Eric Severinos
attitude towards her as though he wanted to make her job as
miserable and unbearable as he could possibly do because of the
following incidents:

13.1 He raised his voice and was virtually shouting at Ms.

Soriano during staff meetings with no apparent reason except to
embarrass her in front of her colleagues and subordinates. As a
result, two members of her staff, namely: Ms. Andrea Arnedo
and Ms. Evelyn Indu[c]tivo, became defiant and uncooperative
and refused to do the work Ms. Soriano assigned to them;

13.2 Severino refused Ms. Sorianos repeated requests to

transfer the two ladies to another department despite her
imploring him to understand that the hostility of the two to her
made it impossible to accomplish the work she assigned to
them;

13.3 Severino became more demanding in imposing work

deadlines while denying Ms. Sorianos requests for approval of
programs and projects that would enhance the work of her
department, for instance, Severino cavalierly disapproved
Digitels Web Magazine that would have been an effective
marketing tool;
 13.4 Severino denied outright Ms. Sorianos recommendation to
promote Ms. Lorraine Javier from a senior supervisory to
managerial position without any explanation despite Ms.
Sorianos belief that the promotion was not only well deserved
but would also improve her staffs morale;

13.5 Their relationship became worse when Severino gave Ms.

Sorianos performance a rating of only 60% from 90% a year
earlier.[53] (Underscoring supplied)

On the other hand, petitioners submitted the affidavits of Grace D. Rallos-

Bakunawa,[54] Ma. Lourdes B. Claveria,[55] Pau,[56] and Ma. Purisima Y. Velasco,[57] all
executed in 2001 and which were priorly presented before the Office of the City
Prosecutor. Also submitted were the affidavits of Andrea[58] and Evelyn.[59]
Grace D. Rallos-Bakunawa, former Vice President for Human Resource Division of
Digitel, stated the following:

xxxx

5. I have never seen Mr. Johnson [Go] shower any female employee,
moreso Mariquit with unusual attention or gaze for that matter that
would make anyone believe Mariquits allegations that Mr. Johnson [Go]
is interested in her sexually. I couldnt really imagine that, considering
Mariquits age and her being already a grandmother.

6. Owing to the character of Mr. Johnson, I wouldnt have entertained

the idea that he would harass her nor anyone sexually notwithstanding
her claim that she is physically attractive. Further, someone of
Mariquits age and stature would know how to conduct herself to avoid
incidents, as she is claiming, unless the provocation would actually
come from her.

xxxx
20. I was present during the sales conference at Manila Midtown Hotel
in Ermita Manila on August 1999. During this occasion, she was never
seated as she described, with Mr. Johnson Go. There were other male
executives seated beside her and that I saw her disappear after
dinner. I know that being the organizer of the conference, she had a
room with her staff at the Midtown. I presumed she slept after that
tiring day.

21. I was also present at the birthday party of Mr. Jun Pau on 19
November 1999. As my usual behavior in Digitel parties, I would go
around to check if people are interacting with each other. It has been
more than a month since I left the company, hence, I was excited to
chat with most of the people there. I noticed Mariquit somewhat feeling
out-of-place with other executives, as usual with her distant affect. I
never detected any unusual happenings between Mr. Johnson and her
during said party. I even sat in-between Mr[.] Johnson [Go] and Mariquit
owing to the space between them in the sofa, while Reby Magtuto was
in the single armchair perpendicular to the sofa.

22. My farewell party in Digitel, for clarification was on September 4,

1999 and not October 1, 1999 as Mariquit claims. Mr. Johnson [Go] was
seated in the middle of the party beside Camilo Tierro, Jun Pau, Isa
Alejandrino, Reby Magtuto and myself who would stand up to sing.

23. I never saw Mr. Johnson [Go] being seated beside Mariquit. Further,
that farewell party was exclusively tendered for me as it was my
advance birthday party, which was supposedly planned for October
3. Since I would be in Cebu for a PMAP Conference, I decided to hold it
in advance and coincide it with my farewell party. [60]

x x x x (Underscoring supplied)
Pau, Executive Vice President of Digitel, stated:

xxxx
2. As an executive officer of Digitel I have been invited to both official
as well as social functions/gathering of company officers and
employees;
3. On 19 November 1999 I organized a party at my residence
at Argentina St., Loyola Grand Villas, Quezon City to commemorate my
birthday;
4. The party was held in the living room, lanai and swimming pool area;
However, since it rained during the party; my guests stayed at the
living room and lanai area for most of the time; The lanai area and the
living room [are] separated by a door which was left open during the
party since the piano is located inside the living room; Thesaid rooms
are also well lighted since I have two chandeliers in the living room;
5. I approximately had sixty guests all officers and employees of
Digitel; The party started from 7:30 PM until 12 midnight of the
following day;
6. Since I am the host of the party, I was all over the place entertaining
and seeing to the convenience of everybody specially the senior
executive officer, Mr. Johnson Robert Go;
7. I did not see any unusual event which took place during the party
including the preposterous allegations made by Ms. Mariquit E. Soriano
on the alleged indecent advances made against her by Mr. Johnson Go;
8. Since the party area is small, anyone can see everyones activity,
any incident activity will definitely be noticed by everybody in the
house;

9. On May 1999 I was present at the cocktail party held by Digitel on the
Summit Lounge of Manila Galleria Suites (MGS); This was organized by
the company for reaching its sales target; The function room of MGS can
only accommodate 50-60 persons and there were 30-40 persons who
attended the said cocktail party; Thus, we could all see each other in the
 room; As far as I can remember I did not notice any indecent or
lascivious act committed by Mr. Johnson Go against Ms. Mariquit Soriano;
10. Furthermore, the department of Ms. Soriano is in charge of these
functions. She is always busy preparing, organizing and coordinating
these functions, hence, she could not have the luxury of socializing
with the guests;
11. I was also present during the October 1999 party which was held at
the residence of Matet Ruiz; I am very familiar with Matets house since
it is very near Digitels office and we always hold parties there; The
area is approximately 40 sq. meters big; Since there were more or less
20-30 persons present, every body was literally very close with each
other so everybody can see and notice the activity of the other
guests; Again there was no unusual or indecent incident which took
place during the said party;

x x x x[61] (Underscoring supplied)

From the above-quoted statements of affiants Wenceslao and Sta. Clara, it is readily
gathered that they are hearsay. The Labor Arbiter thus correctly discredited them as
such, as it did correctly observe that Mariquit failed to present a single witness to
corroborate her charges. At any rate, why Mariquit, for the first time raised the issue
of sexual harassment which was, in the case of Go, allegedly committed on five
occasions from May 1999 to February 11, 2000 only on May 28, 2001 when she filed
criminal complaints against herein individual petitioners, about 11 months after her
resignation or two years after the first alleged occurrence, she did not even proffer
the reason therefor.

In her Comment,[62] however, Mariquit argues that there is no prescription that

would bar the filing of cases involving sexual harassment [as] the period varies
depending on the needs, circumstances, and emotional threshold of the
employee. She cites Philippine Aelous Automotive United Corporation v.
NLRC[63]wherein the complainant therein cried sexual harassment after four years
and this Court held:
 x x x Strictly speaking, there is no time period within which he or she
[alleged victim of sexual harassment] is expected to complain through
the proper channels. The time to do so may vary depending upon the
needs, circumstances, and more importantly, the emotional threshold
of the employee.
Private respondent admittedly allowed four (4) years to pass before
finally coming out with her employers sexual impositions. Not many
women, especially in this country, are made of the stuff that can
endure the agony and trauma of a public, even corporate, scandal. x x
x[64]

The Labor Arbiter before which Mariquit also cited Philippine Aelous brushed aside
the same in this wise:

The ruling in the above-cited case does not squarely apply to the
present case. In that [case], the complainant thereat, Ms. Rosalinda C.
Cortez, did not resign from her job; she did not undergo psychological
treatment; and she was not an executive of the company she worked
with.[65]

In Philippine Aelous, the therein complainant employee Rosalinda raised the issue of
sexual harassment as soon as she had the opportunity to do so. Thus, after the
company issued a memorandum terminating her employment in November 1994,
she filed a complaint before the Labor Arbiter on December 6, 1994, raising the
issue of sexual harassment committed four years earlier by her superior who had
charged her of committing gross acts of disrespect. The earliest opportunity for her
to cry foul thus came only after she was terminated in November 1994.

It bears noting that in Philippine Aelous, this Court observed: If petitioner [Philippine
Aelous] had not issued the third memorandum that terminated the services of
private respondent, we could only speculate how much longer she would keep her
silence.[66]
If Rosalinda kept her silence, she must have done so out of fear of losing her
job. When, however, she was fired, she immediately broke her silence.

The case of Mariquit is different. She voluntarily submitted on June 27, 2000 a letter
of resignation dated June 28, 2000, to become effective on June 30, 2000.She
subsequently executed a Deed of Quitclaim and Release on August 22, 2000. There
was no reason for her to be afraid of losing her job or not getting anything from
Digitel. Still, she waited for about 11 months, counted from the date of filing of her
letter of resignation or about nine months counted from the day she executed the
Deed of Quitclaim and Release before she, for the first time, charged herein
individual petitioners with sexual harassment.

While, as this Court stated in Philippine Aelous, there is, strictly speaking, no fixed
period within which an alleged victim of sexual harassment may file a complaint, it
does not mean that she or he is at liberty to file one anytime she or he wants
to. Surely, any delay in filing a complaint must be justifiable or reasonable as not to
cast doubt on its merits.

At all events, it is settled that the only test of whether an alleged fact or
circumstance is worthy of credence is the common experience, knowledge and
observation of ordinary men.

As New Jersey Vice Chancellor Van Fleet stated in the often-cited case of Daggers v.
Van Dyck:[67] Evidence to be believed, must not only proceed from the mouth of a
credible witness, but it must be credible in itself such as the common experience
and observation of mankind can approve as probable under the circumstances. We
have no test of the truth of human testimony, except its conformity to our
knowledge, observation, and experience. Whatever is repugnant to these belongs to
the miraculous and is outside of judicial cognizance. [68]

From the earlier-quoted narration of alleged facts by Mariquit, this Court finds that it
does not pass the test of credibility.
Mariquit claimed that as regards petitioner Severino, she often caught him looking
at her legs up to the back of her thighs on several occasions. If to her the acts
amounted to sexual harassment, why did she not bring the matter to the attention
of any company official to make sure that they wont happen again and she be
spared of any disgrace or vexation?

Following Mariquits narration, it would appear that the earliest harassment

committed by Severino took place in January 1999 when he intentionally pointed to
[her] legs to a fellow company officer who also looked at them, while the earliest
committed by Go occurred in May 1999 during a cocktail party at the Manila Galleria
Suites. Yet, she claimed to have reported and expressed to, oddly enough, Severino,
who was the first to allegedly harass her, her disgrace and outrage over the sexual
advances made by Go, and only during the party of Pau on November 19, 1999, a
claim denied by Severino.

As regards the five incidents of sexual harassment attributed to Go, a discussion of

even only one of them betrays its non-conformity to human experience.

In paragraphs 12 to 15 of her April 25, 2002 Affidavit which were quoted earlier,
Mariquit, narrating the November 19, 1999 incident which allegedly took place at
the residence of Pau, claimed that she was cornered by Go on a sofa in such a way
that she was virtually pinned against its side, making it impossible for her to elude
his advances. It is not disputed that it was raining at the time and that the about 60
guests had no choice but to stay in the living room and covered lanai of Paus
residence. Could not have at least one noticed the incident? She presented no one,
however. On the other hand, Pau belied her claim.

Mariquit went on to claim that Go crept his hand under a throw pillow and poked her
vagina several times. She justified her failure to flee by claiming that she was
hemmed in by the arm of the sofa. But if indeed Go did such condemnable act,
could she not have slapped him or stood up and/or left?

Yet still, by her claim, Mariquit danced on the same occasion with Go, albeit
allegedly thru force, during which he pressed her close to him and moved his hand
across her back to feel her body. Any woman in her right mind, whose vagina had
earlier been poked several times without her consent and against her will, would,
after liberating herself from the clutches of the person who offended her, raise
hell. But Mariquit did not.

Mariquit claimed that while dancing, in order to free herself from Gos hold, she
maneuvered to turn to the beat of the music. It was at this time, according to her,
that Go reached out his hand and groped [her] breast, caressed [her] back and
reached inside [her] blouse to rub [her] from up [her] brassieres down to [her]
buttocks. Since this alleged incident occurred while Mariquit and Go were dancing,
and surely there were a lot of people around in the well lighted small area as stated
by house owner Pau, would Go be that maniacal to forego the respect accorded to
him by virtue of his high position? To be sure, a person who holds a very exalted
position would normally behave at social gatherings, unless he is a proven maniac,
to deserve that respect.

Petitioners Go and Severino, on the other hand, presented affidavits of persons who
were present during the time when alleged incidents took place and who declared in
effect that no such incidents did take place and could have taken place. The
appellate court dismissed the claim of these affiants, however, as obviously biased
in favor of [petitioners], their superior and employer. [69]

In Lufthansa German Airlines v. CA,[70] this Court, citing the earlier case of Santos v.
Concepcion and Santos[71], ruled that the presence of an employer-employee
relationship where a witness is an employee of a party is not or itself sufficient to
discredit his testimony.

While it may be true, as the trial court opines[,] that testimony of

employees of a party is of course open to the criticism that they would
naturally testify, as far as they possibly could in favor of their employers,
and in weighing testimony such a relation between a witness and a party
is frequently noticed by the court, it is equally true that the witness
is an employee or an overseer of a party is not of itself sufficient
to discredit his testimony.[72] (Emphasis and underscoring supplied)
Justifying her failure to present an eyewitness, Mariquit claimed that they
(eyewitnesses) were warned by Digitel of being dismissed from their jobs should
they testify in her favor. In support thereof, she presented the affidavit [73] dated June
12, 2002 of Grace L. Murphy, a former classmate at St. Theresas College in Manila.

A reading of the affidavit of Grace, who was never an employee nor present at the
party of Digitel, reveals, however, that she merely concluded that the employees of
Digitel were instructed or harassed not to testify in favor of Mariquit when they
failed to meet one Matet Ruiz, a Digitel employee who kept avoiding to meet
[Mariquit].

As petitioners put it: It is always easy to say that no one is willing to testify to
corroborate the accusers allegations against an employer for fear of retaliation on
ones livelihood. But courts should also not close their eyes to the possibility that the
failure to present a witness could only mean that the act complained of did not
actually happen.[74]

If indeed Mariquit was sexually harassed, her resignation would have been an
effective vehicle for her to raise it. Instead, however, of raising it in her resignation
letter,[75] she even thanked petitioner Severino for the opportunity of working with
[him]. Again, this is contrary to human nature and experience.For if indeed
petitioner Severino was her sexual harasser, she would have refrained from being
cordial to him on her resignation. Not only that. By her claim (in her Affidavit),[76] she
had an altercation with Severino on June 27, 2000, the day she filed her resignation
letter postdated June 28, 2000. So why such cordiality?

Again, after submitting her resignation letter, why would she, by her claim, want to
withdraw the same. Even if it would mean working again with her alleged sexual
harassers?[77] Given her educational background and her work experiences, it would
not be difficult for her to land on another job, free from any harassment. [78] To be
sure, she would not wish to stay in Digitel any longer if she was really harassed,
sexually and professionally.
Parenthetically, a resignation once accepted by the employer cannot be withdrawn
without the consent of the employer. [79] As Intertrod Maritime, Inc. v.
[80]
NLRC emphasized:

Once an employee resigns and his resignation is accepted, he no longer

has any right to the job. If the employee later changes his mind, he must
ask for approval of the withdrawal of his resignation from his employer, as
if he were re-applying for the job. It will then be up to the employer to
determine whether or not his service would be continued. If the employer
accepts said withdrawal, the employee retains his job. x x x[81]

Petitioners fault the appellate courts giving undue credence to the Psychological
Evaluation Report made by Dr. Estrella T. Tiongson-Magno, PhD dated December 14,
2000 (Magno Report) as it (the appellate court) noted what to it was the NLRCs
omission of the conclusion in said report that Mariquits behavioral problems
stemmed from the trauma she experienced confirming that indeed she was a victim
of sexual harassment.[82] They claim that the appellate court selectively seized upon
portions of the Magno Report and only highlighted the following statements from
the Report in its assailed decision:

Summary and Conclusion

She is a good, generous and hardworking person, there is no doubt

about this, and she has done her best to provide for the needs of her
children. Her achievements in this regard are remarkable and
praiseworthy. But she is emotionally immature and her comprehension
of human situations in surprisingly shallow (gullibility is her greatest
weakness) for a person of her intelligence and life experience. This
explains how she can be easily victimized by an abusive
employer.

Diagnosis for MES:

 Axis I Major Depression
Axis II Narcissistic/Borderline Personality
with compulsive and histrionic features
Axis III No diagnosis
Axis IV Psychosocial Stressors: Sexual Harassment and
job loss
Severity: severe[83] (Emphasis by the Court of Appeals).

In crediting the Magno Report, the appellate court described Dr. Magnos
experience in the field of psychology as extensive and specialized, whereas it found
petitioners witness-affiant Bakunawa to have just a degree in psychology and
human resource management background.[84]

The only indication on record of Dr. Magnos extensive and specialized

experience, however, is that appearing on the top page of the Magno Report-Annex
G[85] of Mariquits Reply-Position Paper wherein Dr. Magno is referred to as Clinical
Psychologist.

And, while sexual harassment is, in the Magno Report, mentioned as a

psychological stressor under the Summary and Conclusion portion, nothing therein,
as correctly pointed out by petitioners, mentions or discusses how Mariquit was
alleged to have been sexually harassed basis of the appellate court to hold that:

x x x Worse, the NLRC completely disregarded the findings of the

Clinical Psychologist who examined petitioner, Dr. Estrella T. Tiongson-
Magno, and selected only those portions of her evaluation report that
showed petitioners emotional dysfunction and omitting Dr. Magnos
conclusion that her behavioral problems stemmed from the trauma
she experienced confirming that indeed she was a victim of
sexual harassment x x x[86] (Emphasis and underscoring supplied)
 Any employee, male or female, may charge an employer or superior with
sexual harassment, but the claim must be well substantiated. [87] As reflected above,
however, Mariquits claim does not pass the test of credibility.
The findings of the NLRC, which adopted those of the Labor Arbiter, being in
accordance with the evidence on record, and, as earlier stated, Mariquit failed to
discharge the onus of proving that the NLRC committed grave abuse of discretion, it
was error for the appellate court to give due course to Mariquits petition for
certiorari.

In fine, Mariquit having failed to prove that she was constructively dismissed, a
discussion of the award of backwages, separation pay and damages is rendered
unnecessary.

Lores Realty Enterprises, Inc. V. Virginia E. Pacia, March 2011

FACTS:

Respondent Virginia E. Pacia(Pacia)was hired by Lores Realty Enterprises, Inc. (LREI).

At the time of her dismissal, she was the assistant manager and officer-in-charge of
LREI's Accounting Department under the Finance Administrative Division.

LREI's acting general manager, Sumulong, ordered Pacia to prepare a check

amounting to P150,000.00, an order which she was slow to follow. Pacia eventually
complied with the order, nevertheless. Pacia was ordered to prepare another check,
this time amounting to P175,000.00. She was again slow to comply, but eventually
the order was complied with. To explain her refusal to immediately follow the
directive, Pacia reasoned out that the funds in LREIs account were not sufficient to
cover the amounts to be indicated in the checks.

Thereafter Pacia received a notice of termination stating, among others, that she
was being dismissed because of her willful disobedience and their loss of trust and
confidence in her.

Pacia then filed a Complaint for Unfair Labor Practice due to Harassment,
Constructive Dismissal, Moral and Exemplary Damages against LREI and Sumulong.
Subsequently, Pacia filed an Amended Complaint to include the charges of illegal
dismissal and non-payment of salaries. The Labor Arbiter(LA)rendered a decision
finding that the dismissal of Pacia was for a just and valid cause but ordering
payment of what was due her.On appeal, the NLRC in its decision reversed the LA's
Decision and found LREI and Sumulong guilty of illegal dismissal. The case was
elevated to the CA. The CA held that LREI and Sumulong failed to establish with
substantial evidence that the dismissal of Pacia was for a just cause.It found that
Pacias initial reluctance to obey the orders of her superiors was for a good reason -
to shield the company from liability in the event that the checks would be
dishonored for insufficiency of funds.

ISSUE: Whether or not Pacias termination was justified under the circumstances

HELD:

The petition has no merit.

LABOR LAW: Just causes for termination.

At the outset, it must be emphasized that the issues raised in this petition are
questions of fact which are not proper subjects of an appeal by certiorari.A
disharmony between the factual findings of the LA and the NLRC, however,opens
the door to a review by this Court.Factual findings of administrative agencies are not
infallible and will be set aside when they fail the test of arbitrariness. Moreover,
when the findings of the NLRC contradict those of the LA, this Court, in the exercise
of its equity jurisdiction, may look into the records of the case and re-examine the
questioned findings.

Article 282 of the Labor Code enumerates the just causes for which an employer
may terminate the services of an employee, to wit:
(a)Serious misconduct or willful disobedience by the employee of the
lawful orders of his employer or representative in connection with his
work;

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

(c)Fraud or willful breach by the employee of the trust reposed in him by

his employer or duly authorized representative;

(d)Commission of a crime or offense by the employee against the person

of his employer or any immediate member of his family or his duly
authorized representative; and

(e)Other causes analogous to the foregoing.

The offense of willful disobedience requires the concurrence of two (2) requisites:

(1) the employee's assailed conduct must have been willful, that is
characterized by a wrongful and perverse attitude; and

(2) the order violated must have been reasonable, lawful, made known to
the employee and must pertain to the duties which he had been engaged
to discharge.

The Court finds nothing unlawful in the directive of Sumulong to prepare checks in
payment of LREI's obligations. The availability or unavailability of sufficient funds to
cover the check is immaterial in the physical preparation of the checks. Pacias initial
reluctance to prepare the checks, however, which was seemingly an act of
disrespect and defiance, was for honest and well intentioned reasons. Protecting
LREI and Sumulong from liability under the Bouncing Checks Law. was foremost in
her mind.It was not wrongful or willful. Neither can it be considered an obstinate
defiance of company authority.The Court takes into consideration that Pacia, despite
her initial reluctance, eventually did prepare the checks on the same day she was
tasked to do it. Pacias apprehension was justified when the check was
dishonored.This clearly affirms her assertion that she was just being cautious and
circumspect for the company's sake.Thus, her actuation should not be construed as
improper conduct.

Petition is DENIED

Hocheng Philippines Corporation v Antonio M. Farrales, G.R. No. 211497,

18 March 2015

Before this Court on Petition for Review on Certiorari1 is the Decision2 dated October
17, 2013 of the Court of Appeals (CA) in CA-G.R. SP No. 125103, which reversed the
Decision3 dated February 29, 2012 and Resolution 4 dated May 7, 2012 of the
National Labor Relations Commission (NLRC) in NLRC LAC No. 08-002249-11, and
reinstated with modifications the Decision 5 dated April 29, 2011 of the Labor Arbiter
(LA) in NLRC Case No. RAB-IV-03-00618-10-C, which found that respondent Antonio
M. Farrales (Farrales) was illegally dismissed by Hocheng Philippines Corporation
(HPC). The fallo of the appellate decision reads:chanRoblesvirtualLawlibrary

WHEREFORE, premises considered, the Decision of the Labor Arbiter dated April
29, 2011 in NLRC Case No. RAB-IV-03-00618-10-C is reinstated with
modifications. Private respondent Hocheng Philippines Corporation is liable to pay
[Farrales] the following:chanRoblesvirtualLawlibrary

(1) Full backwages from date of dismissal on February 15, 2010 until date of
decision equivalent to P276,466.67;

(2) Separation pay of one (1) month salary per year of service for a period of
twelve years equivalent to P228,800.00;

(3) Appraisal year-end bonus in the sum of P11,000.00; and,

(4) Attorneys fees equivalent to 10% of the total award.

SO ORDERED.6
The Facts
Farrales was first employed by HPC on May 12, 1998 as Production Operator,
followed by promotions as (1) Leadman in 2004, (2) Acting Assistant Unit Chief in
2007, and (3) Assistant Unit Chief of Production in 2008, a supervisory position with
a monthly salary of ?17,600.00. He was a consistent recipient of citations for
outstanding performance, as well as appraisal and year-end
bonuses.7chanroblesvirtuallawlibrary

On December 2, 2009, a report reached HPC management that a motorcycle helmet

of an employee, Reymar Solas (Reymar), was stolen at the parking lot within its
premises on November 27, 2009. On December 3, 2009, Security Officer Francisco
Paragas III confirmed a video sequence recorded on closed-circuit television (CCTV)
around 3:00 p.m. on November 27, 2009 showing Farrales taking the missing
helmet from a parked motorcycle, to wit:chanRoblesvirtualLawlibrary

a. At around 3:07:44, [Farrales] was seen walking towards the motorcycle

parking lot;chanrobleslaw

b. At around 3:08:47, [Farrales] walked back towards the pedestrian gate

of the company, passing by the motorcycle parking lot;chanrobleslaw

c. At around 3:08:51, [Farrales] walked back towards the motorcycle

parking lot and returned to the pedestrian gate;chanrobleslaw

d. At around 3:09:10, [Farrales] called on the person of Andy Lopega and

instructed him to get the helmet he was pointing at; [and]

e. At around 3:09:30, Andy gave the helmet to [Farrales]. 8

Later that day, HPC sent Farrales a notice to explain his involvement in the alleged
theft. The investigation was supported by the employees union, ULO-
9
Hocheng. Below is Farrales explanation, as summarized by the
CA:chanRoblesvirtualLawlibrary
On November 27, 2009, [Farrales] borrowed a helmet from his co-worker Eric
Libutan (Eric) since they reside in the same barangay. They agreed that Eric could
get it at the house of [Farrales] or the latter could return it the next time that they
will see each other. Eric told him that his motorcycle was black in color. As there
were many motorcycles with helmets, he asked another employee, Andy Lopega
(Andy) who was in the parking area where he could find Erics helmet. Andy
handed over to him the supposed helmet which he believed to be owned by Eric,
then he went home.

On November 28, 2009, at around 6 oclock in the morning, he saw Eric at

their barangay and told him to get the helmet. But Eric was in a rush to go to work,
he did not bother to get it.

In the morning of December 3, 2009, upon seeing Eric in the workplace, [Farrales]
asked him why he did not get the helmet from his house. Eric told him that, Hindi
po sa akin yung nakuha nyong helmet. [Farrales] was shocked and he immediately
phoned the HPCs guard to report the situation that he mistook the helmet which he
thought belonged to Eric. After several employees were asked as to the ownership
of the helmet, he finally found the owner thereof, which is Jun Reyess (Jun)
nephew, Reymar, who was with him on November 27, 2009. [Farrales] promptly
apologized to Jun and undertook to return the helmet the following day and
explained that it was an honest mistake. These all happened in the morning of
December 3, 2009; [Farrales] did not know yet that HPC will send a letter
demanding him to explain.10
A hearing was held on December 10, 2009 at 1:00 p.m. Present were Farrales, Eric
Libutan (Eric), Andy Lopega (Andy), Jun Reyes, Antonio Alinda, a witness, and
Rolando Garciso, representing ULO-Hocheng. From Andy it was learned that at the
time of the alleged incident, he was already seated on his motorcycle and about to
leave the company compound when Farrales approached and asked him to hand to
him a yellow helmet hanging from a motorcycle parked next to him. When Andy
hesitated, Farrales explained that he owned it, and so Andy complied. But Eric had
specifically told Farrales that his helmet was colored red and black and his
motorcycle was a black Honda XRM-125 with plate number 8746-DI, parked near
the perimeter fence away from the walkway to the pedestrian gate. The CCTV
showed Farrales instructing Andy to fetch a yellow helmet from a blue Rossi 110
motorcycle with plate number 3653-DN parked in the middle of the parking lot,
opposite the location given by Eric. Farrales in his defense claimed he could no
longer remember the details of what transpired that time, nor could he explain why
he missed Erics specific directions. 11chanroblesvirtuallawlibrary

On February 15, 2010, the HPC issued a Notice of Termination 12 to Farrales

dismissing him for violation of Article 69, Class A, Item No. 29 of the HPC Code of
Discipline, which provides that stealing from the company, its employees and
officials, or from its contractors, visitors or clients, is akin to serious misconduct
and fraud or willful breach by the employee of the trust reposed in him by
his employer or duly authorized representative, which are just causes for
termination of employment under Article 282 of the Labor Code.

On March 25, 2010, Farrales filed a complaint for illegal dismissal, non-payment of
appraisal and mid-year bonuses, service incentive leave pay and 13th month pay.
He also prayed for reinstatement, or in lieu thereof, separation pay with full
backwages, plus moral and exemplary damages and attorneys fees. During the
mandatory conference, HPC paid Farrales ?10,914.51, representing his 13th month
pay for the period of January to February 2010 and vacation leave/sick leave
conversion. Farrales agreed to waive his claim for incentive
bonus.13chanroblesvirtuallawlibrary

On April 29, 2011, the LA ruled in favor of Farrales, 14 the fallo of which is as
follows:chanRoblesvirtualLawlibrary

WHEREFORE, PREMISES CONSIDERED, all the respondents Hocheng Phils.

Corporation, Inc. Sam Chen[g] and Judy Geregale are found guilty of illegal dismissal
and ordered jointly and severally to pay complainant the
following:chanRoblesvirtualLawlibrary

1. Full backwages from date of dismissal on February 15, 2010 until date of
decision equivalent to P276,466.67.
2. Separation pay of one (1) month salary per year of service for a period of twelve
years equivalent to P228,800.00.

3. Appraisal year-end bonus in the sum of P11,000.00.

4. Moral damages in the sum of P200,000.00.

5. Exemplary damages in the sum of P100,000.00.

6. 10% of all sums owing as attorneys fees or the amount of P81,626.67.

SO ORDERED.15
On appeal by HPC,16 the NLRC reversed the LA,17 and denied Farrales motion for
reconsideration, finding substantial evidence of just cause to terminate
Farrales.18chanroblesvirtuallawlibrary

On petition for certiorari to the CA,19 Farrales sought to refute the NLRCs factual
finding that he committed theft, as well as to question NLRCs jurisdiction over
HPCs appeal for non-payment of appeal fees. But the CA found that HPC was able
to perfect its appeal by posting a bond equivalent to the monetary award of ?
897,893.37 and paying the appeal fees by postal money order in the amount of ?
520.00.20chanroblesvirtuallawlibrary

Concerning the substantive issues, the appellate court agreed with the LA that
Farrales act of taking Reymars helmet did not amount to theft, holding that HPC
failed to prove that Farrales conduct was induced by a perverse and wrongful intent
to gain, in light of the admission of Eric that he did let Farrales borrow one of his two
helmets, only that Farrales mistook Reymars helmet as the one belonging to him.

Petition for Review to the Supreme Court

In this petition, HPC raises the following grounds for this Courts
review:chanRoblesvirtualLawlibrary

A. THE HONORABLE [CA] PLAINLY ERRED AND ACTED CONTRARY TO

EXISTING LAW AND JURISPRUDENCE IN REVERSING THE DECISION OF
THE [NLRC] AND DECLARING ILLEGAL THE DISMISSAL FOR [HPCs]
ALLEGED FAILURE TO PROVE THE EXISTENCE OF JUST CAUSE.

1. THERE IS SUBSTANTIAL EVIDENCE TO SHOW THAT [FARRALES]

COMMITTED THEFT IN [HPCs] PREMISES.

2. THEFT IS A JUST CAUSE FOR TERMINATION.

3. BY COMMITTING THEFT, [FARRALES], BEING A SUPERVISORIAL

EMPLOYEE, FORFEITED THE TRUST REPOSED IN HIM BY [HPC],
THUS RENDERING HIM DISMISSIBLE FOR LOSS OF CONFIDENCE.

B. IN DECLARING ILLEGAL THE DISMISSAL OF [FARRALES], THE

HONORABLE [CA] VIOLATED DOCTRINES LAID DOWN BY THE SUPREME
COURT.

1. COURTS CANNOT SUBSTITUTE THEIR JUDGMENT FOR THAT OF

THE MANAGEMENT.

2. COURTS MUST ACCORD DUE RESPECT TO THE FINDINGS OF

ADMINISTRATIVE AGENCIES.21

Chiefly, HPC insists that since the complaint below involves an administrative case,
only substantial evidence, not proof of guilt beyond reasonable doubt, is required to
prove the guilt of Farrales;22 that what the CA has done is substitute its judgment for
that of the NLRC, which is vested with statutory duty to make factual determinations
based on the evidence on record. 23chanroblesvirtuallawlibrary
Ruling of the Court

The Court resolves to deny the petition.

To validly dismiss an employee, the law requires the employer to prove the
existence of any of the valid or authorized causes, 24 which, as enumerated in Article
282 of the Labor Code, are: (a) serious misconduct or willful disobedience by the
employee of the lawful orders of his employer or the latters representative in
connection with his work; (b) gross and habitual neglect by the employee of his
duties; (c) fraud or willful breach by the employee of the trust reposed in him by his
employer or his duly authorized representative; (d) commission of a crime or
offense by the employee against the person of his employer or any immediate
member of his family or his duly authorized representative; and (e) other causes
analogous to the foregoing. 25 As a supervisorial employee, Farrales is admittedly
subject to stricter rules of trust and confidence, and thus pursuant to its
management prerogative HPC enjoys a wider latitude of discretion to assess his
continuing trustworthiness, than if he were an ordinary rank-and-file
employee.26 HPC therefore insists that only substantial proof of Farrales guilt for
theft is needed to establish the just causes to dismiss him, as the NLRC lengthily
asserted in its decision.

Article 4 of the Labor Code mandates that all doubts in the implementation and
interpretation of the provisions thereof shall be resolved in favor of labor. Consistent
with the States avowed policy to afford protection to labor, as Article 3 of the Labor
Code and Section 3, Article XIII of the 1987 Constitution have enunciated,
particularly in relation to the workers security of tenure, the Court held that [t]o be
lawful, the cause for termination must be a serious and grave malfeasance to justify
the deprivation of a means of livelihood. This is merely in keeping with the spirit of
our Constitution and laws which lean over backwards in favor of the working class,
and mandate that every doubt must be resolved in their favor. 27 Moreover, the
penalty imposed on the erring employee ought to be proportionate to the
offense, taking into account its nature and surrounding circumstances.

The Court has always taken care, therefore, that the employer does not invoke any
baseless justification, much less management prerogative, as a subterfuge by which
to rid himself of an undesirable worker, 28and thus in exceptional cases the Court has
never hesitated to delve into the NLRCs factual conclusions where evidence was
found insufficient to support them, or too much was deduced from the bare facts
submitted by the parties, or the LA and the NLRC came up with conflicting positions,
as is true in this case.29chanroblesvirtuallawlibrary

As aptly pointed out by the LA, while HPC has the onus probandi that the taking of
Reymars helmet by Farrales was with intent to gain, it failed to discharge this
burden, as shown by the following circumstances: Farrales sought and obtained the
permission of Eric, his co-employee as well as barangay co-resident, to borrow his
helmet; at the parking lot, Farrales asked another employee, Andy, to fetch a yellow
helmet from one of the parked motorcycles, mistakenly thinking it belonged to Eric
(whom he knew owned two helmets); the following day, November 28, Farrales
asked Eric why he had not dropped by his house to get his helmet, and Eric replied
that Farrales got the wrong helmet because he still had his other helmet with him;
Farrales immediately sought the help of the company guards to locate the owner of
the yellow helmet, who turned out to be Reymar; Farrales apologized to Reymar for
his mistake, and his apology was promptly accepted. 30 All these circumstances belie
HPCs claim that Farrales took Reymars helmet with intent to gain, the LA said.

In ruling that Farrales dismissal by HPC was attended with utmost malice and bad
faith as to justify an award of moral and exemplary damages and attorneys fees,
the LA stated that [i]t is succinctly clear that [the] respondents [therein] tried to
blow out of proportions the indiscretion of [Farrales] for reasons known only to
them, and moreover, [f]inding that the dismissal on the ground of theft is
unavailing, [the] respondents [therein] immediately offered [Farrales] his former
position when he filed [his] complaint. What does this act of [the] respondents
[therein] speak [of]?31chanroblesvirtuallawlibrary

On the other hand, the NLRC found that Farrales lied, first, when he told Andy, then
already astride his motorbike at the parking area and about to leave the company
premises, that the yellow helmet belonged to him, 32 and second, when he claimed
that Eric was his neighbor, although they were not. It ruled as doubtful Farrales
hazy recollection about what happened that afternoon at the parking lot, since he
could not even give a description of the motorcycle from which he took the yellow
helmet. These circumstances, the NLRC determined, comprise substantial proof
belying Farrales claim of good faith. As a supervisory employee, he held a position
of high responsibility in the company making him accountable to stricter rules of
trust and confidence than an ordinary employee, and under Article 282 of the Labor
Code, he is guilty of a serious misconduct and a willful breach of trust. The NLRC
went on to cite a settled policy that in trying to protect the rights of labor, the law
does not authorize the oppression or self-destruction of the employer. Management
also has its own rights, which as such, are entitled to respect and enforcement in
the interest of simple fair play. 33chanroblesvirtuallawlibrary

But the Court agrees with the CA that Farrales committed no serious or willful
misconduct or disobedience to warrant his dismissal. It is not disputed that Farrales
lost no time in returning the helmet to Reymar the moment he was apprised of his
mistake by Eric, which proves, according to the CA, that he was not possessed of a
depravity of conduct as would justify HPCs claimed loss of trust in him. Farrales
immediately admitted his error to the company guard and sought help to find the
owner of the yellow helmet, and this, the appellate court said, only shows that
Farrales did indeed mistakenly think that the helmet he took belonged to Eric.

It is not, then, difficult to surmise that when Farrales told Andy that the yellow
helmet was his, his intent was not to put up a pretence of ownership over it and
thus betray his intent to gain, as the NLRC held, but rather simply to assuage Andys
reluctance to heed his passing request to reach for the helmet for him; Andy, it will
be recalled, was at that moment already seated in his motorbike and about to drive
out when Farrales made his request. As to Farrales claim that he and Eric were
neighbors, suffice it to say that as the CA noted, they resided in the same barangay,
and thus, loosely, were neighbors.

The CA also pointed out that although the alleged theft occurred within its premises,
HPC was not prejudiced in any way by Farrales conduct since the helmet did not
belong to it but to Reymar. In light of Article 69, Class A, Item No. 29 of the HPC
Code of Discipline, this observation may be irrelevant, although it may be that the
LA regarded it as proving HPCs bad faith.

Theft committed by an employee against a person other than his employer, if

proven by substantial evidence, is a cause analogous to serious
misconduct.34 Misconduct is improper or wrong conduct, it is the transgression of
some established and definite rule of action, a forbidden act, a dereliction of duty,
willful in character, and implies wrongful intent and not mere error in judgment. The
misconduct to be serious must be of such grave and aggravated character and not
merely trivial or unimportant. Such misconduct, however serious, must,
nevertheless, be in connection with the employees work to constitute just cause for
his separation.35chanroblesvirtuallawlibrary

But where there is no showing of a clear, valid and legal cause for termination of
employment, the law considers the case a matter of illegal dismissal. 36 If doubts
exist between the evidence presented by the employer and that of the employee,
the scales of justice must be tilted in favor of the latter. The employer must
affirmatively show rationally adequate evidence that the dismissal was for a
justifiable cause.37chanroblesvirtuallawlibrary

Nonetheless, the Court agrees with the CAs dismissal of the award of moral and
exemplary damages for lack of merit. There is no satisfactory proof that the
concerned officers of HPC acted in bad faith or with malice in terminating Farrales.
Notwithstanding the LAs assertion to this effect, Farrales bare allegations of bad
faith deserve no credence, and neither is the mere fact that he was illegally
dismissed sufficient to prove bad faith on the part of HPCs officers. 38 But concerning
the award of attorneys fees, Farrales was dismissed for a flimsy charge, and he was
compelled to litigate to secure what is due him which HPC unjustifiably withheld.

WHEREFORE, premises considered, the petition for review is DENIED.

Unilever Philippines v Rivera, G.R. No. 201701, June 3, 2013

Subject of this disposition is the petition for review on certiorari 1 under Rule 45 of
the Rules of Court filed by petitioner Unilever Philippines, Inc. (Unilever) questioning
the June 22, 2011 Decision2 and the April 25, 2012 Resolution3 of the Court of
Appeals (CA)-Cagayan de Oro City, in CA G.R. SP No. 02963-MIN, an Illegal Dismissal
case filed by respondent Maria Ruby M. Rivera (Rivera). The CA affirmed with
modification the March 31, 2009 Resolution of the National Labor Relations
Commission (NLRC) finding Rivera's dismissal from work to be valid as it was for a
just cause and declaring that she was not entitled to any retirement benefit. The CA,
however, awarded separation pay in her favor as a measure of social justice.

The Facts

Unilever is a company engaged in the production, manufacture, sale, and

distribution of various food, home and personal care products, while Rivera was
employed as its Area Activation Executive for Area 9 South in the cities of Cotabato
and Davao. She was primarily tasked with managing the sales, distribution and
promotional activities in her area and supervising Ventureslink International, Inc.
(Ventureslink), a third party service provider for the companys activation projects.
Unilever enforces a strict policy that every trade activity must be accompanied by a
Trade Development Program (TDP) and that the allocated budget for a specific
activity must be used for such activity only. 4

Sometime in 2007, Unilevers internal auditor conducted a random audit and found
out that there were fictitious billings and fabricated receipts supposedly from
Ventureslink amounting to P11,200,000.00. It was also discovered that some funds
were diverted from the original intended projects. Upon further verification,
Ventureslink reported that the fund deviations were upon the instruction of Rivera.

On July 16, 2007, Unilever issued a show-cause notice to Rivera asking her to
explain the following charges, to wit: a) Conversion and Misappropriation of
Resources; b) Breach of Fiduciary Trust; c) Policy Breaches; and d) Integrity Issues.
Responding through an email, dated July 16, 2007, Rivera admitted the fund
diversions, but explained that such actions were mere resourceful utilization of
budget because of the difficulty of procuring funds from the head office. 5She
insisted that the diverted funds were all utilized in the companys promotional
ventures in her area of coverage.

Through a letter, dated August 23, 2007, Unilever found Rivera guilty of serious
breach of the companys Code of Business Principles compelling it to sever their
professional relations. In a letter, dated September 20, 2007, Rivera asked for
reconsideration and requested Unilever to allow her to receive retirement benefits
having served the company for fourteen (14) years already. Unilever denied her
request, reasoning that the forfeiture of retirement benefits was a legal
consequence of her dismissal from work.

On October 19, 2007, Rivera filed a complaint for Illegal Dismissal and other
monetary claims against Unilever.

On April 28, 2008, the Labor Arbiter (LA) dismissed her complaint for lack of merit
and denied her claim for retirement benefits, but ordered Unilever to pay a
proportionate 13th month pay and the corresponding cash equivalent of her unused
leave credits. The decretal portion of the LA decision reads:

WHEREFORE, premises considered, judgment is hereby rendered dismissing for lack

of merit the illegal dismissal complaint. However, UNILEVER PHILIPPINES, INC. is
hereby ordered to pay complainant the total amount of PESOS: FIFTY SEVEN
THOUSAND EIGHTY TWO & 90/100 ONLY (P57,082.90) representing proportionate
13th month pay and unused leave credits.

The complaint against individual respondents Recto Sampang and Alejandro Concha
are likewise dismissed for it was not shown that they acted in bad faith in the
dismissal of complainant. Moreover, their legal personality is separate and distinct
from that of the corporation.

All other money claims are dismissed for lack of basis. 6

On appeal, the NLRC partially granted Riveras prayer. In its Resolution, dated
November 28, 2008, the NLRC held that although she was legally dismissed from
the service for a just cause, Unilever was guilty of violating the twin notice
requirement in labor cases. Thus, Unilever was ordered to pay her P30,000.00 as
nominal damages, retirement benefits and separation pay. The dispositive portion
reads:

WHEREFORE, foregoing premises considered, the appeal is PARTIALLY GRANTED.

The assailed Decision dated 28 April 2008 is hereby MODIFIED in the sense that
respondent UNILEVER PHILIPPINES, INC. is hereby ordered to pay the following
sums:

1. The amount of P30,000.00 representing nominal damages for violation of

complainants right to procedural due process;

2. Retirement benefits under the companys applicable retirement policy or

written agreement, and in the absence of which, to pay complainant her
retirement pay equivalent to at least one-half (1/2) month salary for every
year of service, a fraction of at least six (6) months being considered as one
whole year;

3. Separation pay under the companys applicable policy or written

agreement, and in the absence of which, to pay separation pay equivalent to
at least one-half (1/2) month salary for every year of service, a fraction of at
least six (6) months being considered as one whole year.

The rest of the Decision is hereby AFFIRMED.

SO ORDERED.7

Unilever asked for a reconsideration of the NLRC decision. In its Resolution, dated
March 31, 2009, the NLRC modified its earlier ruling by deleting the award of
separation pay and reducing the nominal damages from P30,000.00 to P20,000.00,
but affirmed the award of retirement benefits to Rivera. The fallo reads:
WHEREFORE, foregoing premises considered, the instant Motion for Partial
Reconsideration is PARTLY GRANTED. The Resolution dated 28 November 2008 of
the Commission is hereby

RECONSIDERED as follows:

(1)The award of separation pay is hereby deleted for lack of factual and legal
basis; and

(2)The award of nominal damages is hereby tempered and reduced to the

amount of P20,000.00.

The rest of the award for retirement benefits is affirmed in toto.

SO ORDERED.8

Unsatisfied with the ruling, Unilever elevated the case to CA-Cagayan de Oro City
via a petition for certiorari under Rule 65 of the Rules of Court.

On June 22, 2011, the CA affirmed with modification the NLRC resolution. Justifying
the deletion of the award of retirement benefits, the CA explained that, indeed,
under Unilevers Retirement Plan, a validly dismissed employee cannot claim any
retirement benefit regardless of the length of service. Thus, Rivera is not entitled to
any retirement benefit. It stated, however, that there was no proof that she
personally gained any pecuniary benefit from her infractions, as her instructions
were aimed at increasing the sales efficiency of the company and competing in the
local market. For said reason, the CA awarded separation pay in her favor as a
measure of social justice.9 The decretal portion of the CA decision reads:

WHEREFORE, the assailed Resolution dated March 31, 2009 of the NLRC (Branch 5),
Cagayan De Oro City is hereby AFFIRMED with MODIFICATION. Consequently,
UNILEVER is directed to pay MARIA RUBY M. RIVERA the following:

a) Separation pay, to be computed based on the companys applicable policy

or written agreement, or in the absence thereof, the equivalent of at least
 one-half (1/2) month salary for every year of service, a fraction of at least six
(6) months being considered as one whole year;

b) P20,000.00 as nominal damages; and

c) Proportionate 13th month pay and unused leave credits, to be computed

based on her salary during the period relevant to the case.

The award of retirement benefits is hereby DELETED.

SO ORDERED.10

Unilever filed a motion for partial reconsideration, 11 but it was denied in a

Resolution, dated April 25, 2012.

Hence, this petition.12

In support of its position, Unilever submits for consideration the following

GROUNDS

I.

THE COURT OF APPEALS SERIOUSLY ERRED AND GRAVELY ABUSED ITS DISCRETION
IN GRANTING AFFIRMATIVE RELIEFS IN FAVOR OF RIVERA EVEN IF SHE DID NOT FILE
ANY PETITION FOR CERTIORARI TO CHALLENGE THE NLRC RESOLUTIONS.

II.

THE COURT OF APPEALS SERIOUSLY ERRED AND GRAVELY ABUSED ITS DISCRETION
IN AWARDING SEPARATION PAY IN FAVOR OF RIVERA CONSIDERING THAT THE
LATTER WAS VALIDLY DISMISSED FROM EMPLOYMENT BASED ON JUST CAUSES
UNDER THE LAW.

III.
THE COURT OF APPEALS SERIOUSLY ERRED AND GRAVELY ABUSED ITS DISCRETION
IN RULING THAT THE COMPANY VIOLATED RIVERAS RIGHT TO PROCEDURAL DUE
PROCESS BEFORE TERMINATING HER EMPLOYMENT, AND CONSEQUENTLY, IN
AWARDING NOMINAL DAMAGES.13

Unilever argues that Rivera did not file any separate petition for certiorari before
the CA. Neither did she file any comment on its petition. Hence, it was erroneous for
the CA to grant an affirmative relief because it was inconsistent with the doctrine
that a party who has not appealed cannot obtain from the appellate court any
affirmative relief other than the ones granted in the appealed decision. The
petitioner stresses that Rivera misappropriated company funds amounting to
millions of pesos and that granting her separation pay undermines the serious
misdeeds she committed against the company. Moreover, the length of her service
with Unilever does not mitigate her offense, but even aggravates the depravity of
her acts.14

The petition is partly meritorious.

The pivotal issue in the case at bench is whether or not a validly dismissed
employee, like Rivera, is entitled to an award of separation pay.

As a general rule, an employee who has been dismissed for any of the just causes
enumerated under Article 28215of the Labor Code is not entitled to a separation
pay.16 Section 7, Rule I, Book VI of the Omnibus Rules Implementing the Labor Code
provides:

Sec. 7. Termination of employment by employer. The just causes for terminating

the services of an employee shall be those provided in Article 282 of the Code. The
separation from work of an employee for a just cause does not entitle him to the
termination pay provided in the Code, without prejudice, however, to whatever
rights, benefits and privileges he may have under the applicable individual or
collective agreement with the employer or voluntary employer policy or practice.

In exceptional cases, however, the Court has granted separation pay to a legally
dismissed employee as an act of "social justice" or on "equitable grounds." In both
instances, it is required that the dismissal (1) was not for serious misconduct; and
(2) did not reflect on the moral character of the employee. 17 The leading case of
Philippine Long Distance Telephone Co. vs. NLRC 18 is instructive on this point:

We hold that henceforth separation pay shall be allowed as a measure of social

justice only in those instances where the employee is validly dismissed for causes
other than serious misconduct or those reflecting on his moral character. Where the
reason for the valid dismissal is, for example, habitual intoxication or an offense
involving moral turpitude, like theft or illicit sexual relations with a fellow worker,
the employer may not be required to give the dismissed employee separation pay,
or financial assistance, or whatever other name it is called, on the ground of social
justice.

A contrary rule would, as the petitioner correctly argues, have the effect, of
rewarding rather than punishing the erring employee for his offense. And we do not
agree that the punishment is his dismissal only and the separation pay has nothing
to do with the wrong he has committed. Of course it has. Indeed, if the employee
who steals from the company is granted separation pay even as he is validly
dismissed, it is not unlikely that he will commit a similar offense in his next
employment because he thinks he can expect a like leniency if he is again found
out.1wphi1 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.19

In the subsequent case of Toyota Motor Philippines Corporation Workers Association

(TMPCWA) v. National Labor Relations Commission, 20 it was further elucidated that
"in addition to serious misconduct, in dismissals based on other grounds under Art.
282 like willful disobedience, gross and habitual neglect of duty, fraud or willful
breach of trust, and commission of a crime against the employer or his family,
separation pay should not be conceded to the dismissed employee." 21 In Reno
Foods, Inc, v. Nagkakaisang Lakas ng Manggagawa (NLM)-Katipunan, 22 the Court
wrote that "separation pay is only warranted when the cause for termination is not
attributable to the employees fault, such as those provided in Articles 283 and 284
of the Labor Code, as well as in cases of illegal dismissal in which reinstatement is
no longer feasible. It is not allowed when an employee is dismissed for just cause." 23

In this case, Rivera was dismissed from work because she intentionally
circumvented a strict company policy, manipulated another entity to carry out her
instructions without the companys knowledge and approval, and directed the
diversion of funds, which she even admitted doing under the guise of shortening the
laborious process of securing funds for promotional activities from the head office.
These transgressions were serious offenses that warranted her dismissal from
employment and proved that her termination from work was for a just cause.
Hence, she is not entitled to a separation pay.

More importantly, Rivera did not appeal the March 31, 2009 ruling of the NLRC
disallowing the award of separation pay to her. It was Unilever who elevated the
case to the CA. It is axiomatic that a party who does not appeal, or file a petition for
certiorari, is not entitled to any affirmative relief. 24 Due process prevents the grant
of additional awards to parties who did not appeal. 25 An appellee who is not an
appellant may assign errors in his brief where his purpose is to maintain the
judgment, but he cannot seek modification or reversal of the judgment or claim
affirmative relief unless he has also appealed. 26 It was, therefore, erroneous for the
CA to grant an affirmative relief to Rivera who did not ask for it.
Lastly, Unilever questions the grant of nominal damages in favor of Rivera for its
alleged non-observance of the requirements of procedural due process. It insists
that she was given ample opportunity "to explain her side, interpose an intelligent
27
defense and adduce evidence on her behalf."

The Court is not persuaded. Section 2, Rule XXIII, Book V of the Rules Implementing
the Labor Code expressly states:

Section 2. Standard of due process: requirements of notice.

In all cases of termination of employment, the following standards of due process

shall be substantially observed.

I. For termination of employment based on just causes as defined in Article 282 of

the Code:

(a) A written notice served on the employee specifying the ground or grounds
for termination, and giving to said employee reasonable opportunity within
which to explain his side;

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

(c) A written notice of termination served on the employee indicating that

upon due consideration of all the circumstance, grounds have been
established to justify his termination.

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

King of Kings Transport, Inc. v. Mamac 28 detailed the steps on how procedural due
process can be satisfactorily complied with. Thus:
To clarify, the following should be considered in terminating the services of
employees:

(1) The first written notice to be served on the employees should contain the
specific causes or grounds for termination against them, and a directive that
the employees are given the opportunity to submit their written explanation
within a reasonable period. "Reasonable opportunity" under the Omnibus
Rules means every kind of assistance that management must accord to the
employees to enable them to prepare adequately for their defense. This
should be construed as a period of at least five (5) calendar days from receipt
of the notice to give the employees an opportunity to study the accusation
against them, consult a union official or lawyer, gather data and evidence,
and decide on the defenses they will raise against the complaint. Moreover,
in order to enable the employees to intelligently prepare their explanation
and defenses, the notice should contain a detailed narration of the facts and
circumstances that will serve as basis for the charge against the employees.
A general description of the charge will not suffice. Lastly, the notice should
specifically mention which company rules, if any, are violated and/or which
among the grounds under Art. 282 is being charged against the employees.

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

(3) After determining that termination of employment is justified, the

employers shall serve the employees a written notice of termination
indicating that: (1) all circumstances involving the charge against the
 employees have been considered; and (2) grounds have been established to
justify the severance of their employment.29

In this case, Unilever was not direct and specific in its first notice to Rivera. The
words it used were couched in general terms and were in no way informative of the
charges against her that may result in her dismissal from employment. Evidently,
there was a violation of her right to statutory due process warranting the payment
of indemnity in the form of nominal damages. Hence, the Court finds no compelling
reason to reverse the award of nominal damages in her favor. The Court, however,
deems it proper to increase the award of nominal damages from P20,000.00
to P30,000.00, as initially awarded by the NLRC, in accordance with existing
jurisprudence.30

WHEREFORE, the petition is hereby PARTIALLY GRANTED.1wphi1 The June 22, 2011
Decision and the April 25, 2012 Resolution of the Court of Appeals (CA)-Cagayan de
Oro City in CA-G.R. SP No. 02963-MIN are AFFIRMED with MODIFICATION. The
dispositive portion should read as follows:

WHEREFORE, the March 31, 2009 Resolution of the NLRC (Branch 5), Cagayan de
Oro City, is hereby AFFIRMED with MODIFICATION. UNILEVER PHILIPPINES, INC., is
hereby directed to pay MARIA RUBY M. RIVERA the following:

a) P30,000.00 as nominal damages; and

b) Proportionate 13th month pay and unused leave credits, to be computed

based on her salary during the period relevant to the case.

The award of retirement benefit is DELETED.

Andrada vs. NLRC, G.R. no. 173231, December 28, 2007

To provide full protection to labor, the employers prerogative to bring down labor
costs through retrenchment must be exercised carefully and essentially as a
measure of last resort. So should managements prerogative to declare the
employees services redundant not be used a weapon to frustrate labor. This case
brings to fore the continuing labor-management struggle for mutual survival.

Petitioners Ruben Andrada, Jovencio Poblete, Filamer Alfonso, Harvey Cayetano,

Vicente Mantala, Jr., Bernaldo delos Santos, and Joven Pabustan were hired on
various dates from 1995 up to 1997 and worked as architects, draftsmen, operators,
engineers, and surveyors in the Subic Legend Resorts and Casino, Inc. (Legend)
Project Development Division on various projects. Hwa Puay, Flordeliza Maria Reyes
Rayel, and other corporate officers are impleaded in this case in their official
capacities as officers of Legend.

On January 6, 1998, Legend sent notice to the Department of Labor and

Employment of its intention to retrench and terminate the employment of thirty-four
(34) of its employees, which include petitioners, in the Project Development
Division. Legend explained that it would be retrenching its employees on a last-in-
first-out basis on the strength of the updated status report of its Project
Development Division, as follows: (1) shelving of the condotel project until economic
conditions in the Philippines improve; (2) completion of the temporary casino in
Cubi by mid-February 1998; (3) subcontracting the super structure work of Grand
Legend to a third party; (4) completion of most of the rectification work at the
Legenda Hotel; (5) completion of the temporary casino in Cubi; and (6) abolition of
the Personnel and Administrative Department of the Project Development Division
and transfer of its function back to Legends Human Resources Department.
The following day, on January 7, 1998, Legend sent the 34 employees their
respective notices of retrenchment, stating the same reasons for their
retrenchment.It also offered the employees the following options, to wit:

1. Temporary retrenchment/lay-off for a period not to exceed

six months within which we shall explore your possible
reassignment to other departments or affiliates, after six months
and redeployment and/or matching are unsuccessful, permanent
retrenchment takes place and separation pay is released.
 2. Permanent retrenchment and payment of separation pay
and other benefits after the thirty (30) days notice has lapsed; or
3. Immediate retrenchment and payment of separation pay,
benefits and one months salary in lieu of notice to allow you to
look for other employment opportunities. [1]
Legend gave said employees a period of one week or until January 14, 1998 to
choose their option, with option number 2 (permanent retrenchment) as the default
choice in case they failed to express their preferences. After the employees made
their choices, they also expressed their reservation that their choice should not be
deemed as waiver of their rights granted under the Labor Code or their right to
question the validity of their retrenchment should their separation benefits not be
settled by January 30, 1998.

Curiously, on the same day, the Labor and Employment Center of the Subic
Bay Metropolitan Authority advertised that Legend International Resorts, Inc. was in
need of employees for positions similar to those vacated by petitioners. [2]

Afterwards, on February 6, 1998, Legend informed the retrenched employees

of their permanent retrenchment and/or their options. Legend paid the retrenched
employees their salaries up to February 6, 1998, separation pay, pro-rated 13th-
month pay, ex-gratia, meal allowance, unused vacation leave credits, and tax
refund. Petitioners, in turn, signed quitclaims but reserved their right to sue Legend.

Subsequently, on March 3, 1998, 14 [3] of the 34 retrenched employees filed

before the Regional Arbitration Branch of the National Labor Relations Commission
(NLRC) in San Fernando City, Pampanga, a complaint for illegal dismissal and money
claims for the payment of their share in the service charges, unused leaves, and
their salaries for the unexpired portion of their respective employment contracts,
damages, and attorneys fees against Legend and its officials, Hwa Puay and
Flordeliza Maria Reyes Rayel. The complaint was docketed as NLRC RAB III-03-9080-
98.

Before the Labor Arbiter, complainants alleged that they were illegally
dismissed because Legend, after giving retrenchment as the reason for their
termination, created new positions similar to those they had just vacated. Legend,
on the other hand, invoked management prerogative when it terminated the
retrenched employees; and said that complainants voluntarily signed quitclaims so
that they were already barred from suing Legend.

On February 7, 2000, the Labor Arbiter rendered a Decision, the fallo of which
reads:

WHEREFORE, premises considered, respondents are hereby

adjudged guilty of Illegal dismissal, and they are ordered to
immediately reinstate the complainants without loss of seniority rights
and to pay to them the following:

1. Ruben Andrada:
a) Back salaries from February 6, 1998 to February 6, 2000 (24
months) in the sum of P14,300.00 and the same amount
every month thereafter until reinstated ---------
P343,200.00

b) Meal allowance at P800.00 a month from February 6,

1998 to February 6, 2000 (24 months) and the same
amount every month thereafter until reinstated
-----------P19,200.00

c) 13th month pay for 2 years (1998 to 1999) ------ P28,600.00

d) 14th month pay for 2 years (1998 to 1999) ------ P28,600.00

e) Damages -------------------------------------------- P100,000.00

T O T A L -------------------------------- P519,600.00

2. Darryl Bautista:
a) Back salaries from February 6, 1998 to February 6, 2000 (24
months) in the sum of P11,200.00 and the same amount
every month thereafter until reinstated ---------
P268,800.00

b) Meal allowance at P800.00 a month from February 6,

1998 to February 6, 2000 (24 months) and the same
amount every month thereafter until reinstated ----------
P19,200.00

c) 13th month pay for 2 years (1998 to 1999) ------ P22,400.00

d) 14th month pay for 2 years (1998 to 1999) ------ P22,400.00

T O T A L -------------------------------- P332,800.00

3. Jovencio Poblete

a) Back salaries from February 6, 1998 to February 6, 2000 (24

months) in the sum of P12,000.00 and the same amount
every month thereafter until reinstated ---------
P288,000.00

b) Meal allowance at P800.00 a month from February 6,

1998 to February 6, 2000 (24 months) and the same
amount every month thereafter until reinstated ----------
P19,200.00

c) 13th month pay for 2 years (1998 to 1999) ------ P24,000.00

d) 14th month pay for 2 years (1998 to 1999) ------ P24,000.00

e) Damages -------------------------------------------- P100,000.00
T O T A L -------------------------------- P455,200.00

4) Renato Pangilinan:
a) Back salaries from February 6, 1998 to February 6, 2000 (24
months) in the sum of P17,000.00 and the same amount
every month thereafter until reinstated ---------
P408,000.00

b) Meal allowance at P800.00 a month from February 6,

1998 to February 6, 2000 (24 months) and the same
amount every month thereafter until reinstated ----------
P19,200.00

c) 13th month pay for 2 years (1998 to 1999) ------ P34,000.00

d) 14th month pay for 2 years (1998 to 1999) ------ P34,000.00

T O T A L -------------------------------- P495,200.00

5) Dario Rapada:

a) Back salaries from February 6, 1998 to February 6, 2000 (24

months) in the sum of P10,000.00 and the same amount
every month thereafter until reinstated ---------
P240,000.00

b) Meal allowance at P800.00 a month from February 6,

1998 to February 6, 2000 (24 months) and the same
amount every month thereafter until reinstated ----------
P19,200.00

c) 13th month pay for 2 years (1998 to 1999) ------ P20,000.00

d) 14th month pay for 2 years (1998 to 1999) ------ P20,000.00

T O T A L -------------------------------- P299,200.00

6) Adrian Camacho:
a) Back salaries from February 6, 1998 to February 6, 2000 (24
months) in the sum of P7,000.00 and the same amount
every month thereafter until reinstated ---------
P168,000.00

b) Meal allowance at P800.00 a month from February 6, 1998 to

February 6, 2000 (24 months) and the same amount
every month thereafter until reinstated ----------
P19,200.00

c) 13th month pay for 2 years (1998 to 1999) ------ P14,000.00

d) 14th month pay for 2 years (1998 to 1999) ------ P14,000.00

T O T A L -------------------------------- P215,200.00

7) Marvin Samaniego:

a) Back salaries from February 6, 1998 to February 6, 2000 (24

months) in the sum of P7,000.00 and the same amount
every month thereafter until reinstated ---------
P168,000.00

b) Meal allowance at P800.00 a month from February 6, 1998 to

February 6, 2000 (24 months) and the same amount
every month thereafter until reinstated ----------
P19,200.00

c) 13th month pay for 2 years (1998 to 1999) ------ P14,000.00

d) 14th month pay for 2 years (1998 to 1999) ------ P14,000.00

T O T A L -------------------------------- P215,200.00

8) Filamer Alfonso:
a) Back salaries from February 6, 1998 to February 6, 2000 (24
months) in the sum of P10,000.00 and the same amount
every month thereafter until reinstated ---------
P240,000.00

b) Meal allowance at P800.00 a month from February 6,

1998 to February 6, 2000 (24 months) and the same
amount every month thereafter until reinstated ----------
P19,200.00

c) 13th month pay for 2 years (1998 to 1999) ------ P20,000.00

d) 14th month pay for 2 years (1998 to 1999) ------ P20,000.00

T O T A L -------------------------------- P299,200.00

9) Milton Maravilla:

a) Back salaries from February 6, 1998 to February 6, 2000 (24

months) in the sum of P13,000.00 and the same amount
every month thereafter until reinstated ---------
P312,000.00

b) Meal allowance at P800.00 a month from February 6,

1998 to February 6, 2000 (24 months) and the same
amount every month thereafter until reinstated ----------
P19,200.00

c) 13th month pay for 2 years (1998 to 1999) ------ P26,000.00

d) 14th month pay for 2 years (1998 to 1999) ------ P26,000.00

e) Damages -------------------------------------------- P100,000.00
T O T A L -------------------------------- P483,200.00
10) Harvey Cayetano:

a) Back salaries from February 6, 1998 to February 6, 2000 (24

months) in the sum of P8,000.00 and the same amount
every month thereafter until reinstated ---------
P192,000.00

b) Meal allowance at P800.00 a month from February 6,

1998 to February 6, 2000 (24 months) and the same
amount every month thereafter until reinstated ----------
P19,200.00

c) 13th month pay for 2 years (1998 to 1999) ------ P16,000.00

d) 14th month pay for 2 years (1998 to 1999) ------ P16,000.00

e) Damages -------------------------------------------- P100,000.00
T O T A L -------------------------------- P343,200.00

11) Vicente Mantala, Jr.:

a) Back salaries from February 6, 1998 to February 6, 2000 (24

months) in the sum of P5,500.00 and the same amount
every month thereafter until reinstated ---------
P132,000.00

b) Meal allowance at P800.00 a month from February 6,

1998 to February 6, 2000 (24 months) and the same
amount every month thereafter until reinstated ----------
P19,200.00

c) 13th month pay for 2 years (1998 to 1999) ------ P11,000.00

d) 14th month pay for 2 years (1998 to 1999) ------ P11,000.00

e) Damages -------------------------------------------- P100,000.00
T O T A L -------------------------------- P273,200.00

12) Carlos Mananquil:

a) Back salaries from February 6, 1998 to February 6, 2000 (24

months) in the sum of P30,000.00 and the same amount
every month thereafter until reinstated ---------
P720,000.00

b) Meal allowance at P800.00 a month from February 6,

1998 to February 6, 2000 (24 months) and the same
amount every month thereafter until reinstated ----------
P19,200.00

c) 13th month pay for 2 years (1998 to 1999) ------ P60,000.00

d) 14th month pay for 2 years (1998 to 1999) ------ P60,000.00

e) Damages -------------------------------------------- P100,000.00
T O T A L -------------------------------- P959,200.00

13) Bernaldo delos Santos:

a) Back salaries from February 6, 1998 to February 6, 2000 (24

months) in the sum of P18,500.00 and the same amount
every month thereafter until reinstated ---------
P444,000.00

b) Meal allowance at P800.00 a month from February 6,

1998 to February 6, 2000 (24 months) and the same
amount every month thereafter until reinstated ----------
P19,200.00

c) 13th month pay for 2 years (1998 to 1999) ------ P37,000.00

 d) 14th month pay for 2 years (1998 to 1999) ------ P37,000.00
e) Damages -------------------------------------------- P100,000.00
f) Service charge at P1,500.00 a month from May 15,
1996 to February 6, 2000 (44 months) and every month
thereafter until reinstated
-------------------------------------- P72,000.00
T O T A L -------------------------------- P709,200.00

14) Joven Pabustan:

a) Back salaries from February 6, 1998 to February 6, 2000 (24

months) in the sum of P10,000.00 and the same amount
every month thereafter until reinstated ---------
P240,000.00

b) Meal allowance at P800.00 a month from February 6,

1998 to February 6, 2000 (24 months) and the same
amount every month thereafter until reinstated ----------
P19,200.00

c) 13th month pay for 2 years (1998 to 1999) ------ P20,000.00

d) 14th month pay for 2 years (1998 to 1999) ------ P20,000.00

e) Damages -------------------------------------------- P100,000.00
T O T A L -------------------------------- P399,200.00

The respondents are further ordered to pay to the complainants

attorneys fees equivalent to ten (10%) percent of the total award due
the complainants. The payment of back salary, 13th month pay and
14th month pay, meal allowance and service charge shall be computed
up to the date of the finality of this decision.

SO ORDERED.[4]
 The Labor Arbiter stated that the documents submitted by Legend to justify
the retrenchment of its personnel were insufficient because the documents failed to
show that Legend was suffering from actual losses or that there was redundancy in
the positions occupied by petitioners. The Labor Arbiter also attributed bad faith on
the part of Legend when it advertised openings for positions similar to those
occupied by the retrenched employees at the same time the retrenchment program
was being implemented.

The Labor Arbiter gave no evidentiary weight to complainants quitclaims

because, according to the Labor Arbiter, these quitclaims were part of the clearance
forms prepared and imposed by Legend on the retrenched employees before their
clearances could be approved. The Labor Arbiter also found that in the conference
held on January 28, 1998 between complainants and Legends management,
complainants inscribed their reservations at the bottom of their clearance forms,
stating that they would accept Legends offer on the condition that they reserved the
option to later file their respective claims with the NLRC.

With regard to the issue of damages, the Labor Arbiter observed that
complainants, who were licensed professionals, had sufficiently proven that they
suffered social humiliation and mental trauma because their dismissal was clearly
attended by bad faith and contrary to laws and public policy. On account of Legends
bad faith, the Labor Arbiter awarded attorneys fees equivalent to ten percent (10%)
of the total amount awarded to complainants.

On April 7, 2000, Legend filed an appeal with the NLRC. Notably, its new
counsel did not submit his formal substitution as counsel. Complainants
consequently filed their Memorandum on Appeal with a prayer to declare the Labor
Arbiters decision final. They aver that since there was no formal substitution of
counsel, Legends new counsel had no personality to file an appeal; and because no
appeal was perfected within the reglementary period, the Labor Arbiters decision
should be deemed final and executory.

After three years, the NLRC rendered its June 23, 2003 Decision which
reversed the Labor Arbiter. The NLRC held that the Labor Arbiter erred when he
failed to consider the numerous documents presented and submitted by Legend to
prove that it was suffering from actual losses, and that there was redundancy in the
work of the retrenched employees. The NLRC also gave credence to Legends claim
that it was Yap Yuen Khong, and not Legend, who asked for Subic Bay Metropolitan
Authoritys help in recruiting personnel for Gaehin International Inc. (Gaehin) as the
sub-contractor for the construction of the Grand Legenda Hotel and Casino. The
NLRC observed that Gaehin was an entity distinct and separate from Legend.

With regard to the Labor Arbiters award of payment of service charges to

Bernaldo delos Santos and Carlos Mananquil, the NLRC held that the award was
improper since delos Santos and Mananquils employment contracts did not provide
for the payment of service charges. According to the NLRC, though they previously
received this benefit, it was because of an error in the administrative system; and
since the benefits were paid by mistake, these did not ripen into a company
practice.

The NLRC likewise held that the Labor Arbiter erred when it awarded the
retrenched employees 14th month pay, or ex-gratia payment. The NLRC explained
that this was a one-time bonus for the year 1997 given for the employees hard work
and contribution for the year 1997. Further, no evidence suggested that this was
done in the past or subsequent years.

The NLRC also held that Legend fully and properly complied with the 30-day
notice requirements to the DOLE and to the retrenched employees.

The NLRC Decisions fallo reads:

WHEREFORE, premises considered, the assailed decision is hereby

reversed and set aside. Respondents are adjudged not guilty of illegal
dismissal. The order of reinstatement as well as all monetary awards
are deleted from the decision.
SO ORDERED.[5]
Complainants moved for the reconsideration of the NLRCs Decision, but their
motion was denied by the NLRC. Consequently, 10[6] out of the 14[7]original
complainants filed a Petition for Certiorari with the Court of Appeals (CA), docketed
as CA-G.R. SP No. 81701. This petition was, however, denied by the CA for lack of
merit in its April 28, 2006 Decision.[8]

The CA held that the retrenched employees were validly dismissed from
employment due to redundancy and not retrenchment. The CA ratiocinated that
Legend had validly terminated the employment of its employees since it had proven
that complainants positions were superfluous and that there was an oversupply of
employees; more than what its projects needed.

On the issue of Legends recruitment of new personnel after terminating

complainants employment, the CA held that the NLRC had sufficiently explained
that it was not Legend but Gaehin, through Mr. Khong, which was recruiting for
personnel.

Aggrieved by the CA Decision, seven [9] out of the 14 original complainants

filed the present petition. They raise the following issues:

1. Did Legend perfect its appeal before the NLRC, though it had not
formally and properly substituted its counsel?

2. Were complainants illegally dismissed? Corrollarily, was there a

valid retrenchment? Or, did Legend prove the existence of redundancy
in its Project Development Division?

Petitioners argue that the Labor Arbiters decision should be deemed final and
executory since Legend failed to formally substitute its counsel, and, thus, failed to
perfect its appeal.

Legend, on the other hand, relies heavily on the CAs ruling, which held that lack of
proper substitution is not a sufficient ground to arrive at a finding of grave abuse of
discretion. Even without substitution, private respondents new lawyer could still be
considered a collaborating counsel. A party may have two or more lawyers working
in collaboration in a given litigation.
We rule for Legend.

The CA correctly held in this case that Legend perfected its appeal, albeit, through a
new counsel. It has long been settled that the NLRC is not bound by the strict
technical rules of procedure of the Rules of Court. The CA had correctly held that as
a general rule, our policy towards invocation of the right to appeal has been one of
liberality, since it is an essential part of the judicial system. In line with this
principle, courts have been advised to proceed with caution so as not to deprive a
party of the right to appeal. Every party litigant should be given the amplest
opportunity for the proper and just disposition of his/her cause freed from the
constraints of technicalities. Thus, the NLRC did not commit grave abuse of
discretion when it decided the case on the merits instead of dismissing the appeal
on a mere technicality.

With regard to the issue of the legality of the dismissals, petitioners argue that
Legend failed to prove the legal and factual existence of the cause for dismissal,
and that it failed to comply with the requirements for the implementation of
retrenchment. Petitioners further argue that the CA abused its discretion in ruling
that the employees were validly dismissed not because of retrenchment but for
redundancy. Legend, in contrast, relies on its management prerogative to justify the
termination of petitioners employment. Legend also relies on the CAs ruling that
Legend sufficiently proved the existence of redundancy that justified petitioners
dismissal from service.

On this issue, we rule for petitioners.

A companys exercise of its management prerogatives is not absolute. It cannot

exercise its prerogative in a cruel, repressive, or despotic manner. We held in F.F.
Marine Corp. v. NLRC:

This Court is not oblivious of the significant role played by the

corporate sector in the countrys economic and social progress. Implicit
 in turn in the success of the corporate form in doing business is the
ethos of business autonomy which allows freedom of business
determination with minimal governmental intrusion to ensure
economic independence and development in terms defined by
businessmen. Yet, this vast expanse of management choices cannot be
an unbridled prerogative that can rise above the constitutional
protection to labor. Employment is not merely a lifestyle choice to
stave off boredom. Employment to the common man is his very life
and blood, which must be protected against concocted causes to
legitimize an otherwise irregular termination of employment. Imagined
or undocumented business losses present the least propitious scenario
to justify retrenchment.[10]

Under the Labor Code, retrenchment and redundancy are authorized causes
for separation from service. However, to protect labor, dismissals due to
retrenchment or redundancy are subject to strict requirements under Article 283 of
the Labor Code, to wit:

ART. 283. CLOSURE OF ESTABLISHMENT AND REDUCTION OF

PERSONNEL. The employer may also terminate the employment of any
employee due to the installation of labor-saving devices, redundancy,
retrenchment to prevent losses or the closing or cessation of operation
of establishment or undertaking unless the closing is for the purpose of
circumventing the provisions of this Title by serving a written notice on
the worker and the Ministry of Labor and Employment at least one (1)
month before the intended date thereof. In case of termination due to
the installation of labor saving devices or redundancy, the worker
affected thereby shall be entitled to separation pay equivalent to at
least his one (1) month pay or at least one (1) month pay for every
year of service, whichever is higher. In case of retrenchment to prevent
losses and in cases of closures or cessation of operations of
establishment or undertaking not due to serious business losses or
 financial reverses, the separation pay shall be equivalent to one (1)
month pay or at least one half (1/2) month pay for every year of
service, whichever is higher. A fraction of at least six (6) months shall
be considered as one (1) whole year.

Retrenchment is an exercise of managements prerogative to terminate the

employment of its employees en masse, to either minimize or prevent losses, or
when the company is about to close or cease operations for causes not due to
business losses.

In Lopez Sugar Corporation v. Federation of Free Workers,[11] this Court had

the opportunity to lay down the following standards that a company must meet to
justify retrenchment to prevent abuse by employers:

Firstly, the losses expected should be substantial and not

merely de minimis in extent. If the loss purportedly sought to be
forestalled by retrenchment is clearly shown to be insubstantial and
inconsequential in character, the bona fide nature of retrenchment
would appear to be seriously in question. Secondly, the substantial loss
apprehended must be reasonably imminent, as such imminence can be
perceived objectively and in good faith by the employer. There should,
in other words, be a certain degree of urgency for the retrenchment,
which is after all a drastic recourse with serious consequences for the
livelihood of the employees retired or otherwise laid-off. Because of the
consequential nature of retrenchment, it must, thirdly, be reasonably
necessary and likely to effectively prevent the expected losses. The
employer should have taken other measures prior or parallel to
retrenchment to forestall losses, i.e., cut other costs other than labor
costs. An employer who, for instance, lays off substantial numbers of
workers while continuing to dispense fat executive bonuses and
perquisites or so-called golden parachutes, can scarcely claim to be
retrenching in good faith to avoid losses. To impart operational
meaning to the constitutional policy of providing full protection to
labor, the employers prerogative to bring down labor costs by
 retrenching must be exercised essentially as a measure of last resort,
after less drastic means e.g., reduction of both management and rank-
and-file bonuses and salaries, going on reduced time, improving
manufacturing efficiencies, trimming of marketing and advertising
costs, etc. have been tried and found wanting.

Lastly, but certainly not the least important, alleged losses if

already realized, and the expected imminent losses sought to be
forestalled, must be proved by sufficient and convincing evidence. The
reason for requiring this quantum of proof is readily apparent: any less
exacting standard of proof would render too easy the abuse of this
ground for termination of services of employees.

In Ariola v. Philex Mining Corporation,[12] the Court summarized the requirements for
retrenchment, as follows:

Thus, the requirements for retrenchment are: (1) it is undertaken

to prevent losses, which are not merely de minimis, but substantial,
serious, actual, and real, or if only expected, are reasonably imminent
as perceived objectively and in good faith by the employer; (2) the
employer serves written notice both to the employees and the DOLE at
least one month prior to the intended date of retrenchment; and (3)
the employer pays the retrenched employees separation pay
equivalent to one month pay or at least month pay for every year of
service, whichever is higher. The Court later added the requirements
that the employer must use fair and reasonable criteria in ascertaining
who would be dismissed and x x x retained among the employees and
that the retrenchment must be undertaken in good faith. Except for the
written notice to the affected employees and the DOLE, non-
compliance with any of these requirements render[s] the retrenchment
illegal.
 In the present case, Legend glaringly failed to show its financial condition
prior to and at the time it enforced its retrenchment program. It failed to submit
audited financial statements regarding its alleged financial losses. Though Legend
complied with the notice requirements and the payment of separation benefits to
the retrenched employees, its failure to establish the basis for the retrenchment of
its employees constrains us to declare the retrenchment illegal.

However, the CA in its decision ruled that the petitioners were validly
dismissed not for retrenchment but for redundancy. The CA explained that Legend
mistakenly used the term retrenchment when all its reasons and justifications for
the dismissal of its employees point to redundancy.

Were petitioners positions redundant? Had Legend sufficiently established the

fact of redundancy?

Petitioners claim that the CA erred in concluding that Legend substantially

established redundancy as the authorized cause underlying their dismissal from
service. They aver that retrenchment and redundancy are not interchangeable, and
both were not proven by Legend to justify their dismissal.

Legend, on the other hand, claims that petitioners never refuted the causes
for termination contained in the notice of retrenchment. It further explains that it
really had intended redundancy as the basis for the termination of the employees,
as seen in its arguments before the Labor Arbiter, NLRC, and CA, where it claimed
that before the retrenched employees were actually dismissed, the retrenched
employees were not doing any work; that the work of the Project Development
Division had already been completed and accomplished; and that the Engineering
Services Division and the Project Development Division performed overlapping
functions. Legend points out that it had really intended redundancy as the basis for
the termination of the employees, that is why it had paid one months pay instead of
one-half months pay for every year of service.
 We rule that Legend failed to establish redundancy.

Retrenchment and redundancy are two different concepts; they are not
synonymous and therefore should not be used interchangeably. This Court
explained in detail the difference between the two concepts in Sebuguero v. NLRC:
[13]

Redundancy exists where the services of an employee are in

excess of what is reasonably demanded by the actual requirements of
the enterprise. A position is redundant where it is superfluous, and
superfluity of a position or positions may be the outcome of a number
of factors, such as over hiring of workers, decreased volume of
business, or dropping of a particular product line or service activity
previously manufactured or undertaken by the enterprise.

Retrenchment, on the other hand, is used interchangeably with

the term lay-off. It is the termination of employment initiated by the
employer through no fault of the employees and without prejudice to
the latter, resorted to by management during periods of business
recession, industrial depression, or seasonal fluctuations, or during lulls
occasioned by lack of orders, shortage of materials, conversion of the
plant for a new production program or the introduction of new methods
or more efficient machinery, or of automation. Simply put, it is an act
of the employer of dismissing employees because of losses in the
operation of a business, lack of work, and considerable reduction on
the volume of his business, a right consistently recognized and
affirmed by this Court.

Thus, simply put, redundancy exists when the number of employees is in

excess of what is reasonably necessary to operate the business. The declaration of
redundant positions is a management prerogative. The determination that the
employees services are no longer necessary or sustainable and therefore properly
terminable is an exercise of business judgment by the employer. The wisdom or
soundness of this judgment is not subject to the discretionary review of the Labor
Arbiter and NLRC.[14]

It is however not enough for a company to merely declare that positions have
become redundant. It must produce adequate proof of such redundancy to justify
the dismissal of the affected employees. [15] In Panlilio v. NLRC,[16] we said that the
following evidence may be proffered to substantiate redundancy: the new staffing
pattern, feasibility studies/proposal, on the viability of the newly created positions,
job description and the approval by the management of the restructuring. In
another case, it was held that the company sufficiently established the fact of
redundancy through affidavits executed by the officers of the respondent PLDT,
explaining the reasons and necessities for the implementation of the redundancy
program.[17]

According to the CA, Legend proved the existence of redundancy when it

submitted a status review of its project division where it reported that the 78-man
personnel exceeded the needs of the company. The report further stated that there
was duplication of functions and positions, or an over supply of employees,
especially among architects, engineers, draftsmen, and interior designers.

We cannot agree with the conclusion of the CA.

The pieces of evidence submitted by Legend are mere allegations and

conclusions not supported by other evidence. Legend did not even bother to
illustrate or explain in detail how and why it considered petitioners positions
superfluous or unnecessary. The CA puts too much weight on petitioners failure to
refute Legends allegations contained in the document it submitted. However, it
must be remembered that the employer bears the burden of proving the cause or
causes for termination. Its failure to do so would necessarily lead to a judgment of
illegal dismissal.

Again, it bears stressing that substantial evidence is the question of evidence

required to establish a fact in cases before administrative and quasi-judicial bodies.
Substantial evidence, as amply explained in numerous cases, is that amount of
relevant evidence which a reasonable mind might accept as adequate to support a
conclusion.[18]

Thus, in the same way, we held that the basis for retrenchment was not
established by substantial evidence, we also rule that Legend failed to establish by
the same quantum of proof the fact of redundancy; hence, petitioners termination
from employment was illegal.

WHEREFORE, the petition is GRANTED. The April 28, 2006 Decision of the
CA in CA-G.R. SP No. 81701 and the June 23, 2003 Decision of the NLRC in NLRC
NCR CA No. 024306-2000 are hereby REVERSED and SET ASIDE. The February 7,
2000 Decision of Labor Arbiter Elias H. Salinas in NLRC RAB III-03-9080-98 is
hereby REINSTATED with the MODIFICATION that the award for 14th-month pay
or ex-gratia payment to all complainants in NLRC RAB III-03-9080-98 and the award
for service charges to Bernaldo delos Santos and Carlos Mananquil are
hereby DELETED.
SO ORDERED.

King of Kings Transport, Inc., et al. V. Santiago Mamac, G.R. no. 170083,
june 29, 2007

FACTS: Petitioner KKTI is a corporation engaged in public transportation and

managed by Claire Dela Fuente and Melissa Lim. Respondent was a conductor for
Don Mariano Transit Corporation (DMTC). He was one of the few people who
established Damayan ng mga Manggagawa, Tsuper at Conductor-Transport Workers
Union. Pending the unions certification election, respondent was transferred to
KKTI. The KKTI employees later organized the Kaisahan ng mga Kawani sa King of
Kings (KKKK) which was registered with DOLE. Respondent was elected KKKK
president.
Upon audit of the October 28, 2001 Conductors Report of respondent, KKTI noted
an irregularity. It discovered that respondent declared several sold tickets as
returned tickets causing KKTI to lose an income of eight hundred and ninety pesos.
While no irregularity report was prepared on the October 28, 2001 incident, KKTI
nevertheless asked respondent to explain the discrepancy. In his letter, respondent
said that the erroneous declaration in his October 28, 2001 Trip Report was
unintentional. He explained that during that days trip, the windshield of the bus
assigned to them was smashed; and they had to cut short the trip in order to
immediately report the matter to the police. As a result of the incident, he got
confused in making the trip report.
On November 26, 2001, respondent received a letter terminating his employment
effective November 29, 2001. The dismissal letter alleged that the October 28, 2001
irregularity was an act of fraud against the company. KKTI also cited as basis for
respondents dismissal the other offenses he allegedly committed since 1999.
After that, he filed an action for illegal dismissal, among other claims. He denied
committing any infraction and alleged that his dismissal was intended to bust union
activities. Moreover, he claimed that his dismissal was effected without due process.
KKTI averred that it had observed due process in dismissing respondent and
maintained that respondent was not entitled to his money claims such as service
incentive leave and 13th-month pay because he was paid on commission or
percentage basis.
LABOR ARBITER: he was validly dismissed
NLRC: Affirmed. CA held that there was just cause for respondents dismissal. It
ruled that respondents act in declaring sold tickets as returned tickets x x x
constituted fraud or acts of dishonesty justifying his dismissal.
ISSUE: WON respondent was given due process (procedural)
HELD: NO. There was failure to observe the requirements of due process
Due process under the Labor Code involves two aspects: first, substantivethe
valid and authorized causes of termination of employment under the Labor Code;
and second, proceduralthe manner of dismissal.
Section 2(d) of Rule I of Book VI of the Omnibus Rules Implementing the
Labor Code provides:
SEC. 2. Standards of due process; requirements of notice.In all cases of
termination of employment, the following standards of due process shall be
substantially observed:
1. For termination of employment based on just causes as defined in Article 282
of the Code:
(a) A written notice served on the employee specifying the ground or grounds for
termination, and giving said employee reasonable opportunity within which to
explain his side.
(b) A hearing or conference during which the employee concerned, with the
assistance of counsel if he so desires is given opportunity to respond to the charge,
present his evidence, or rebut the evidence presented against him.
(c) A written notice of termination served on the employee, indicating that upon due
consideration of all the circumstances, grounds have been established to justify his
termination.

1. The first written notice to be served on the employees should contain the
specific causes or grounds for termination against them, and a directive that the
employees are given the opportunity to submit their written explanation within a
reasonable period. Reasonable opportunity under the Omnibus Rules means
every kind of assistance that management must accord to the employees to
enable them to prepare adequately for their defense.15 This should be
construed as a period of at least five (5) calendar days from receipt of the notice
to give the employees an opportunity to study the accusation against them,
consult a union official or lawyer, gather data and evidence, and decide on the
defenses they will raise against the complaint. Moreover, in order to enable the
employees to intelligently prepare their explanation and defenses, the notice
should contain a detailed narration of the facts and circumstances that will serve
as basis for the charge against the employees. A general description of the
charge will not suffice. Lastly, the notice should specifically mention which
company rules, if any, are violated and/or which among the grounds under Art.
282 is being charged against the employees.
2. After serving the first notice, the employers should schedule and conduct a
hearing or conference wherein the employees will be given the opportunity to:
(1) explain and clarify their defenses to the charge against them; (2) present
evidence in support of their defenses; and (3) rebut the evidence presented
against them by the management. During the hearing or conference, the
employees are given the chance to defend themselves personally, with the
assistance of a representative or counsel of their choice. Moreover, this
 conference or hearing could be used by the parties as an opportunity to come to
an amicable settlement.
3. After determining that termination of employment is justified, the employers
shall serve the employees a written notice of termination indicating that: (1) all
circumstances involving the charge against the employees have been
considered; and (2) grounds have been established to justify the severance of
their employment.
Respondent was not issued a written notice charging him of committing an
infraction. A verbal appraisal of the charges against an employee does not comply
with the first notice requirement.
The court observed from the irregularity reports against respondent for his other
offenses that such contained merely a general description of the charges against
him. The reports did not even state a company rule or policy that the employee had
allegedly violated.
No hearing was conducted. Regardless of respondents written explanation, a
hearing was still necessary in order for him to clarify and present evidence in
support of his defense. Moreover, respondent made the letter merely to explain the
circumstances relating to the irregularity in his October 28, 2001 Conductors Trip
Report. He was unaware that a dismissal proceeding was already being effected.
Thus, he was surprised to receive the November 26, 2001 termination letter
indicating as grounds, not only his October 28, 2001 infraction, but also his previous
infractions.

Jaka Food Processing v. Pacot. G.R. No. 151378, March 28, 2005

Facts: Respondents were earlier hired by petitioner JAKA Foods Processing

Corporation until the latter terminated their employment because the corporation
was in dire financial straits. It is not disputed, however, that the termination was
effected without JAKA complying with the requirement under Article 283 of the
Labor Code regarding the service of a written notice upon the employees and the
Department of Labor and Employment at least one (1) month before the intended
date of termination. Respondents filed complaints for illegal dismissal,
underpayment of wages and nonpayment of service incentive leave and 13th month
pay against JAKA. The Labor Arbiter rendered a decision declaring the termination
illegal and ordering JAKA to reinstate respondents with full backwages, and
separation pay if reinstatement is not possible. The Court of Appeals reversed said
decision and ordered respondent JAKA to pay petitioners separation pay equivalent
to one (1) month salary, the proportionate 13th month pay and, in addition, full
backwages from the time their employment was terminated.

Issue: What are the legal implications of a situation where an employee is dismissed
for cause but such dismissal was effected without the employers compliance with
the notice requirement under the Labor Code?

Held: It was established that there was ground for respondents dismissal, i.e.,
retrenchment, which is one of the authorized causes enumerated under Article 283
of the Labor Code. Likewise, it is established that JAKA failed to comply with the
notice requirement under the same Article. Considering the factual circumstances in
the instant case, the Court deem it proper to fix the indemnity at P50, 000.00. The
Court of Appeals have been in error when it ordered JAKA to pay respondents
separation pay equivalent to one (1) month salary for every year of service. In all
cases of business closure or cessation of operation or undertaking of the employer,
the affected employee is entitled to separation pay. This is consistent with the state
policy of treating labor as a primary social economic force, affording full protection
to its rights as well as its welfare. The exception is when the closure of business or
cessation of operations is due to serious business losses or financial reverses; duly
proved, in which case, the right of affected employees to separation pay is lost for
obvious reasons.

Philippine Airlines, Inc. V. Reynaldo v. Paz, G.R. No. 192924, 26 November

2014

Before this Court is a petition for review on certiorari 1 filed under Rule 45 of the
Rules of Court by Philippine Airlines, Inc. (PAL), seeking to annul and set aside the
Amended Decision2 dated June 29, 2010 of the Court of Appeals (CA) in CA-G.R. SP
No. 75618. Reynaldo V. Paz (respondent) was a former commercial pilot of PAL and a
member of the Airlines Pilots Association of the Philippines (ALPAP), the sole and
exclusive bargaining representative of all the pilots in PAL.

On December 9, 1997, ALPAP filed a notice of strike with the National Conciliation
and Mediation Board of the Department of Labor and Employment (DOLE). Pursuant
to Article 263(g) of the Labor Code, the DOLE Secretary assumed jurisdiction over
the labor dispute and enjoined the parties from committing acts which will further
exacerbate the situation.3

On June 5, 1998, notwithstanding the directive of the DOLE Secretary, the ALPAP
officers and members staged a strike and picketed at the PALs premises. To control
the situation, the DOLE Secretary issued a return-to-work order on June 7, 1998,
directing all the striking officers and members of ALPAP to return to work within 24
hours from notice of the order. The said order was served upon the officers of ALPAP
on June 8, 1998 by the DOLE Secretary himself. Even then, the striking members of
ALPAP did not report for work.4

On June 25, 1998, Atty. Joji Antonio, the counsel for ALPAP, informed the members of
the union that she has just received a copy of the return-to-work order and that they
have until the following day within which to comply. When the striking members of
the ALPAP reported for work on the following day, the security guards of PAL denied
them entry.5

On June 13, 1998, the DOLE Secretary issued a resolution on the case from which
both parties filed a motion for reconsideration. Pending the resolution of the
motions, PAL filed a petition for approval of rehabilitation plan and for appointment
of a rehabilitation receiver with the Securities and Exchange Commission (SEC),
claiming serious financial distress brought about by the strike. Subsequently, on
June 23, 1998, the SEC appointed a rehabilitation receiver for PAL and declared the
suspension of all claims against it.6
On June 1, 1999, the DOLE Secretary resolved the motions for reconsideration filed
by both parties and declared the strike staged by ALPAP illegal and that the
participants thereof are deemed to have lost their employment. 7

On June 25, 1999, the respondentfiled a complaint for illegal dismissal against PAL
for not accepting him back towork, claiming non-participation in the illegal strike. In
his position paper, he alleged that on the day the ALPAP staged a strike onJune 5,
1998, he was off-duty from work and was in Iligan City. However, when he reported
back to work on June 12, 1998, after a week-long break, he was no longer allowed to
enter PALs premises in Nichols, Pasay City. 8

The respondent further alleged that on June 25, 1998, he learned that the DOLE
Secretary issued a return-to-work order, requiring all the striking pilots to return to
work within 24 hours from notice. Notwithstanding his non-participation in the
strike, he signed the logbook at the entrance of PALs office on the following day.
When he tried to report for work, however, he was denied entry by the PALs
security guards.9

For its part, PAL claimed that the respondent was among the participants of the
strike staged by ALPAP on June 5, 1998 who did not heed to the return-to-work order
issued on June 7, 1998 by the DOLE Secretary. The said order directed all the
participants of the strike to return to work within 24 hours from notice thereof.
However, ALPAP and its counsel unjustifiably refused to receive the copy of the
order and was therefore deemed served. The 24-hour deadline for the pilots to
return to work expired on June 9, 1998, without the respondent reporting back to
work. Subsequently, the DOLE Secretary issued the Resolution dated June 1, 1999,
declaring that the striking pilots have lost their employment for defying the return-
to-work order. Thus, PAL argued that the respondents charge of illegal dismissal is
utterly without merit.10

On March 5, 2001, the Labor Arbiter (LA) rendered a Decision, 11 holding that the
respondentwas illegally dismissed and ordered that he be reinstated to his former
position without loss of seniority rights and other privileges and paid his full
backwages inclusive of allowances and other benefits computed from June 12, 1998
up to his actual reinstatement. The dispositive portion of the decision reads, as
follows:

WHEREFORE, judgment is hereby rendered:

1. Declaring that this Arbitration Branch has jurisdiction over the causes of
action raised by the [respondent] in this case;

2. Declaring that the causes of action raised in the complaint in this case
have not been barred by prior judgment of the Secretary of Labor and
Employment in his Resolution of June 1, 1999; 3. Declaring that the
termination of the services of the [respondent] was not for any just or
authorized cause and also without due process and therefore illegal;

4. Ordering Philippine Airlines, Inc. to reinstate immediately upon receipt of

this decision [respondent] Reynaldo V. Paz to his former position as
commercial pilot without loss of seniority rights and other privileges and to
pay him his full backwages inclusive of allowances and other benefits or their
monetary equivalent computed from June 12, 1998 up to his actual
reinstatement even pending appeal but the respondent has the option to
actually reinstate [the respondent] to his former position or to reinstate him
merely in payroll. As of September 5, 2000, the full backwages due to the
[respondent] total P2,629,420.00;

5. Ordering Philippine Airlines, Inc. to pay the [respondent] the following:

Productivity Pay (P22,383.62 x 27 months P604,357.74

Retirement Fund Contribution

(P9,800.00 x 27 months). .. P264,600.00

PODF (P4,663.25 x 27 months)..... 125,907.75

Sick Leave (P3,000.62 x 42 days).. 126,026.04

Vacation Leave (P3,000.62 x 42 days).. 125,026.04

 Rice Subsidy (P600.00 x 27 months). 16,200.00

13th Month Pay (P93,265.00 x 2 years).. 188,030.00

Longevity Pay (P500.00 x 2 years) 1,000.00

6. Ordering Philippine Airlines, Inc. to pay [the respondent] attorneys fees

equivalent to 10% of the whole monetary award (Art. III, Labor Code);

7. Ordering Philippine Airlines, Inc. to pay [the respondent] moral damages

equivalent to Five Hundred Thousand Pesos (P500,00[0].00) and exemplary
damages of Five Hundred Thousand

Pesos (P500,000.00)

SO ORDERED.12

Unyielding, PAL appealed the foregoing decision to the National Labor Relations
Commission (NLRC). Pending appeal, the respondent filed a motion for partial
execution of the reinstatement aspect of the decision. The LA granted the said
motion and issued a partial writ of execution on May 25, 2001.

Subsequently, on June 27, 2001, the NLRC rendered a Resolution, 13 reversing the LA
decision. The NLRC ruled that the pieces of evidence presented by PAL proved that
the respondent participated in the strike and defied the return-to-work order of the
DOLE Secretary; hence, he is deemed to have lost his employment. The pertinent
portions of the decision read:

Indeed, other than [the respondents] self-serving assertions, he has failed to

substantiate his claim that he was in Iligan City and that he reported for work a
week after June5, 1998. [PAL], on the other hand, has presented photographs of the
complainant picketing [at the PALs] premises on June 15 & 26, 1998. x x x

x x x x In sum, [PALs] concrete evidence submitted in the proceedings below should

prevail over the self-serving assertions of [the respondent]. Consequently, we are of
the view that [PAL] acted within its rights when it refused to accept [the respondent]
when he reported for work on June 26, 1998. This is consistent with the finding[s] of
the DOLE Secretary when he declared the strikers to have lost their employment
status. x x x.

xxxx

WHEREFORE, premises considered, the appeal is hereby GRANTED, and the decision
dated March 5, 2001, is REVERSED and SET ASIDE for utter lack of merit.

SO ORDERED.14

Notwithstanding the reversal of the LA decision, the respondent pursued his move
for the issuance of a writ of execution, claiming that he was entitled to
reinstatement salaries which he supposedly earned during the pendency of the
appeal to the NLRC. On August 28, 2001, the LA granted the motion and issued the
corresponding writ of execution.15

On September 17, 2001, the LA issued an Order, 16 clarifying the respondents

entitlement to reinstatement salaries. He ratiocinated that the order of
reinstatement is immediately executory even pending appeal and that under Article
223 of the Labor Code, the employer has the option to admit the employee back
towork or merely reinstate him in the payroll. Considering, however, that there was
no physical reinstatement, the respondent, as a matter of right, must be reinstated
in the payroll. The accrued salaries may now be the subject of execution despite the
NLRCs reversal of the decision.

PAL appealed the LA Order dated September 17, 2001 to the NLRC, arguing that the
writ of execution lackedfactual and legal basis considering that the NLRC reversed
and set aside the LA decision and categorically declared the order of reinstatement
as totally devoid of merit. It contended that entitlement to salaries pending appeal
presupposes a finding that the employee is entitled to reinstatement. Absent such
finding, the employee is not entitled to reinstatement salaries and the writ of
execution issued pursuant thereto is a complete nullity. 17
On June 28, 2002, the NLRC rendered a Resolution, 18 sustaining the award of
reinstatement salaries to the respondent albeit suspending its execution in view of
the fact that PAL was under rehabilitation receivership. PAL filed a motion for
reconsideration but the NLRC denied the same in its Resolution 19 dated November
22, 2002.

Unperturbed, PAL filed a petition for certiorari with the CA, questioning the NLRC
Resolution dated June 28, 2002. Subsequently, in a Decision 20 dated January 31,
2005, the CA affirmed with modification the NLRC Resolution dated June 28, 2002,
the dispositive portion of which reads, as follows:

WHEREFORE, the NLRC Resolution dated June 28, 2002 is AFFIRMED with the
MODIFICATION that, in lieu of reinstatement salaries, petitioner Philippine Airlines,
Inc. is ordered to pay respondent Paz separation pay equivalent to one month salary
for every year of service, to be computed from the time respondent commenced
employment with petitioner PAL until the time the Labor Arbiter issued the writ
ordering respondents reinstatement, i.e., on May 25, 2001.

SO ORDERED.21

The CA ruled that while the respondent is entitled to reinstatement, the prevailing
circumstances rendered the same difficult if not impossible to execute. It noted that
at the time the reinstatement was ordered, there was no vacant B747-400 pilot
position available for the respondent. Further complicating the situation is the fact
that PAL has been under receivership since July 1998. Thus, in lieu of reinstatement
salaries, the CA ordered PAL to pay the respondent separation pay equivalent to one
(1) month salary for every year of service.22

PAL filed a motion for reconsideration of the CA decision. Subsequently, the CA

rendered the assailed Amended Decision 23 dated June 29, 2010, holding thus:

Accordingly, compliance with the reinstatement order is not affected by the fact
that private respondents previous position had been filled-up. In reinstatement
pending appeal, payroll reinstatement is an alternative to actual reinstatement.
Hence, public respondent did not err when it upheld the Labor Arbiter that private
respondent is entitled to reinstatement salaries during the period of appeal.

WHEREFORE, premises considered, the modification contained in Our January 31,

2005 Decision is DELETED and SET ASIDE. The June 28, 2002 Resolution of the
National Labor Relations Commission is hereby REINSTATED in toto.

SO ORDERED.24

On August 3, 2010, PAL filed the instant petition with the Court, contending that the
CA acted in a manner contrary to law and jurisprudence when it upheld the award of
reinstatement salaries to the respondent.25

The petition is meritorious.

The same issue had been raised and addressed by the Court in the case of Garcia v.
Philippine Airlines, Inc.26 In the said case, the Court deliberated on the application of
Paragraph 3, Article 223 of the Labor Code in light of the apparent divergence in its
interpretation, specifically on the contemplation of the reinstatement aspectof the
LA decision. The pertinent portion of the provision reads, thus:

In any event, the decision of the Labor Arbiter reinstating a dismissed or separated
employee, insofar as the reinstatement aspectis concerned, shall immediately be
executory, pending appeal. The employee shall either be admitted back to work
under the same terms and conditions prevailing prior to his dismissal or separation
or, at the option of the employer, merely reinstated inthe payroll. The posting of a
bond by the employer shall not stay the execution for reinstatement provided
herein.27 (Emphasis and underscoring in the original)

Briefly, in Garcia, the petitioners were dismissed by their employer, respondent PAL,
after they were allegedly caught in the act of sniffing shabu when a team of
company security personnel and law enforcers raided the PAL Technical Centers
Toolroom Section. After they filed a complaint for illegal dismissal, respondent PAL
was placed under rehabilitation receivership due to serious financial losses.
Eventually, the LA resolved the case in favor of the petitioners and ordered their
immediate reinstatement. Upon appeal, however, the NLRC reversed the LA
decision and dismissed the complaint. Even then, the LA issued a writ of execution,
with respect to the reinstatement aspect of the decision, and issued a notice of
garnishment. Respondent PAL filed an urgent petition for injunction with the NLRC
but the latter, by way of Resolutions dated November 26, 2001 and January 28,
2002, affirmed the validity of the writ and the notice issued by the LA but
suspended and referred the action to the rehabilitation receiver. On appeal, the CA
ruled in favor of respondent PAL and nullified the NLRC resolutions, holding that (1)
a subsequent finding of a valid dismissal removes the basis for the reinstatement
aspect of a LA decision, and (2) the impossibility to comply with the reinstatement
order due to corporate rehabilitation justifies respondent PALs failure to exercise
the options under Article 223 of the Labor Code. When the case was further
elevated to this Court, the petition was partially granted and reinstated the NLRC
resolutions insofar as it suspended the proceedings. Subsequently, respondent PAL
notified the Court that it has exited from the rehabilitation proceedings. The Court
then proceeded to determine the main issue of whether the petitioners therein are
entitled to collect salaries pertaining to the period when the LAs order of
reinstatement is pending appeal to the NLRC until it was reversed.

The factual milieu of the instant case resembles that of Garcia. The respondent
herein obtained a favorable ruling from the LA in the complaint for illegal dismissal
case he filed against PAL but the same was reversed on appeal by the NLRC. Also,
PAL was under rehabilitation receivership during the entire period that the illegal
dismissal case was being heard. A similar question is now being raised, i.e., whether
the respondent may collect reinstatement salaries which he is supposed to have
received from the time PAL received the LA decision, orderinghis reinstatement,
until the same was overturned by the NLRC.

The rule is that the employee is entitled to reinstatement salaries notwithstanding

the reversal of the LA decision granting him said relief. In Roquero v. Philippine
Airlines,28 the Court underscored that it is obligatory on the part of the employer to
reinstate and pay the wages of the dismissed employee during the period of appeal
untilreversal by the higher court. This is so because the order of reinstatement is
immediately executory. Unless there is a restraining order issued, it is ministerial
upon the LA to implement the order of reinstatement. The unjustified refusal of the
employer to reinstate a dismissed employee entitles him to payment of his salaries
effective from the time the employer failed to reinstate him. 29

In Garcia, however, the Court somehow relaxed the rule by taking into consideration
the cause of delay in executing the order of reinstatement of the LA. It was
declared, thus:

After the labor arbiters decision is reversed by a higher tribunal, the employee may
be barred from collecting the accrued wages, if it is shown that the delay in
enforcing the reinstatement pending appeal was without fault on the part of the
employer.

The test is two-fold: (1) there must be actual delay or the fact that the order of
reinstatement pending appeal was not executed prior to its reversal; and (2) the
delay must not be due to the employers unjustified act or omission. If the delay is
due to the employers unjustified refusal, the employer may still be required to pay
the salaries notwithstanding the reversal of the LaborArbiters decision. 30 (Italics
ours and emphasis and underscoring deleted)

It is clear from the records that PAL failed to reinstate the respondent pending
appeal of the LA decision to the NLRC.1wphi1 It can be recalled that the LA
rendered the decision ordering the reinstatement of the respondent on March 5,
2001. And, despite the self-executory nature of the order of reinstatement, the
respondent nonetheless secured a partial writ of execution on May 25, 2001. Even
then, the respondent was not reinstated to his former position or even through
payroll.

A scrutiny of the circumstances, however, will show that the delay in reinstating the
respondent was not due to the unjustified refusal of PAL to abide by the order but
because of the constraints of corporate rehabilitation. It bears noting that a year
before the respondent filed his complaint for illegal dismissal on June 25, 1999, PAL
filed a petition for approval of rehabilitation plan and for appointment of a
rehabilitation receiver with the SEC. On June 23, 1998, the SEC appointed an Interim
Rehabilitation Receiver. Thereafter, the SEC issued an Order 31 dated July 1, 1998,
suspending all claims for payment against PAL.

The inopportune event of PALs entering rehabilitation receivership justifies the

delay or failure to complywith the reinstatement order of the LA. Thus, in Garcia, the
Court held:

It is settled that upon appointment by the SEC of a rehabilitation receiver, all

actions for claims beforeany court, tribunal or board against the corporation shall
ipso jurebe suspended. As stated early on, during the pendency of petitioners
complaint before the Labor Arbiter, the SEC placed respondent under an Interim
Rehabilitation Receiver. After the Labor Arbiter rendered his decision, the SEC
replaced the Interim Rehabilitation Receiver with a Permanent Rehabilitation
Receiver.

Case law recognizes that unless there is a restraining order, the implementation of
the order of reinstatement is ministerial and mandatory. This injunction or
suspension of claimsby legislative fiat partakes of the nature of a restraining order
that constitutes a legal justification for respondent's non-compliance with the
reinstatement order. Respondent's failure to exercise the alternative options of
actual reinstatement and payroll reinstatement was thus justified. Such being the
case, respondent's obligation to pay the salaries pending appeal, as the normal
effect of the non-exercise of the options, did not attach. 32 (Citations omitted)

In light of the fact that PAL's failure to comply with the reinstatement order was
justified by the exigencies of corporation rehabilitation, the respondent may no
longer claim salaries which he should have received during the period that the LA
decision ordering his reinstatement is still pending appeal until it was overturned by
the NLRC. Thus, the CA committed a reversible error in recognizing the respondent's
right to collect reinstatement salaries albeit suspending its execution while PAL is
still under corporate rehabilitation.

WHEREFORE, the petition is GRANTED. The Amended Decision dated June 29, 2010
of the Court of Appeals in CA-G.R. SP No. 75618 is hereby REVERSED and SET
ASIDE. Respondent Reynaldo V. Paz is not entitled to the payment of reinstatement
salaries.

SO ORDERED.

Wesleyan University Philippines v. Nowella Reyes, G.R. no. 208321, July

30, 2014

NATURE: The issue in this petition boils down to the legality of respondent Nowella
Reyes termination as University Treasurer of petitioner Wesleyan University
Philippines (WUP) on the ground of loss of trust and confidence. Petitioner prays in
this recourse that We reverse the February 28, 2013 Decision of the Court of
Appeals (CA) in CA-G.R. SP No. 122536 which declared respondents termination
illegal.
SUBJECT: Labor Law (Labor Relations)
FACTS: On March 16, 2004, respondent Nowella Reyes was appointed as WUPs
University Treasurer on probationary basis. A little over a year after, she was
appointed as full time University Treasurer. On April 27, 2009, a new WUP Board of
Trustees was constituted. Among its first acts was to engage the services of
Nepomuceno Suner & Associates Accounting Firm (External Auditor) to investigate
circulating rumors on alleged anomalies in the contracts entered into by petitioner
and in its finances. They discovered that there were irregularities in the handling of
petitioners finances, mainly, the encashment by its Treasury Department of checks
issued to WUP personnel, a practice purportedly in violation of the imprest system
of cash management, and the encashment of various crossed checks payable to the
University Treasurer by Chinabank despite managements intention to merely have
the funds covered thereby transferred from one of petitioners bank accounts to
another. The External Auditors report embodied the following findings and
recommendations: Treasury Department (Cash Management):
Findings: It was noted that checks consisting of various checks payable to
teachers, staffs and other third parties had been the subject of encashment directly
with the Treasury Department under the stewardship of Mrs. Nowella A. Reyes, the
University Treasurer. This practice is a clear violation of imprest system of cash
management, hence, resulting to unsound accounting practice. This laxity in cash
management of those checks were paid as intended for them.
Recommendations: For internal control reasons, the treasury should not accept
any check encashment from its daily collections. Checks are being issued for
encashment with our depository bank for security reasons. The mere acceptance of
checks from the collections is tantamount to cash disbursement out of collections.
Findings:It was also noted that various checks payable to the Treasurer of WUP x x
x had been negotiated for encashment directly to China Bank Cabanatuan Branch,
while the intention of the management for these checks were merely for fund
transfer with the other account maintained at China Bank. This practice is a
violation not only in the practice of accounting/cash custodianship but had been
mingled with spurious elements. Unfortunately, check vouchers relating to this
exception are nowhere to be found or not on file. On June 18, 2009, respondent
submitted her Explanation. Following which, WUPs Human Resources Development
Office (HRDO) conducted an investigation. Finding respondents Explanation
unsatisfactory, the HRDO, on July 2, 2009, submitted an Investigation
Reportto the University President containing its findings and
recommending respondents dismissal as University Treasurer. Upon receipt
of her notice of termination on July 9, 2009, respondent post-haste filed a complaint
for illegal dismissal with the Arbitration Branch of the National Labor Relations
Commission. She contended that her dismissal was illegal, void and unjust,
for the following reasons: First, her 60-day preventive suspension violated
the Labor Code provisions prohibiting such suspensions to last for more
than thirty (30) days. Thus, the fact that she was not reinstated to her
former position before the lapse of thirty (30) days, amounted to
constructive dismissal; Second, there was a violation of her right to
substantive and procedural due process, as evidenced by petitioners
failure to apply the pertinent due process provisions under its
Administrative and Personnel Policy Manual; and Finally, the charges against
her were based on mere suspicion and speculations and unsupported by evidence.
Petitioner, for its part, predicated its defense on the contention that respondent was
a highly confidential employee who handled significant amounts of money as
University Treasurer and that the irregularities attributed to her in the performance
of her duties justify her dismissal on the basis of loss of trust and confidence.
Petitioner also averred that the 60-day preventive suspension thus imposed does
not necessarily make such suspension void, inasmuch as the law merely requires
that after a 30-day preventive suspension, the affected employee shall
automatically be reinstated. But in the case of respondent, there was no need for
her automatic reinstatement inasmuch as she was duly terminated within the 30-
day period of her preventive suspension. Moreover, respondent was duly afforded
her right to due process since WUP substantially complied with the twin-notice rule.
Ruling of the Labor Arbiter : WHEREFORE, premises considered, judgment is
hereby rendered, DECLARING that complainant Nowella Reyes x x x [was] illegally
dismissed by respondent Wesleyan University Philippines. The Labor Artbiter noted,
as respondent has insisted, that the charges against the latter were based on mere
rumors and speculations. As observed too by the Labor Arbiter, petitioner itself was
in the wrong because it had no proper policies on its accounting and financial
procedures and that the encashment and accommodation of checks to personnel,
especially after banking hours, had been the practice of its previous and present
administrations. Thus, it was unfair to put all the blame on respondent without any
evidence that her actions were highly irregular, unfair or unjustified. Ruling of the
NLRC Petitioner filed an appeal with the National Labor Relations
Commission (NLRC) which was granted in the tribunals Decision dated
July 11, 2011, declaring that respondent was legally dismissed. However,
petitioner was ordered to pay respondent her proportionate 13th month pay, the
monetary value of her vacation leave, and attorneys fees.
Ruling of the Court of Appeals Respondent was illegally dismissed.
ISSUE: Whether or not respondent was illegally dismissed by petitioner on the
ground of loss of trust and confidence.
DECISION: No, respondent was legally dismissed. Loss of trust and confidence as a
ground for termination We now proceed to the substantive issue on the propriety of
respondents dismissal due to loss of trust and confidence. As provided in Art.
282(c) of Presidential Decree No. 442, otherwise known as the Labor Code of the
Philippines: Article 282. Termination by employer. An employer may terminate an
employment for any of the following causes: x x x x c. Fraud or willful breach by the
employee of the trust reposed in him by his employer or duly authorized
representative; We explained in M+W Zander Philippines, Inc. v. Enriquez the
requisites of a valid dismissal based on loss of trust and confidence. As the case
elucidates: Article 282 (c) of the Labor Code allows an employer to terminate the
services of an employee for loss of trust and confidence. Certain guidelines must be
observed for the employer to terminate an employee for loss of trust and
confidence. We held in General Bank and Trust Company v. Court of Appeals, viz.:
[L]oss of confidence should not be simulated. It should not be used as a subterfuge
for causes which are improper, illegal, or unjustified. Loss of confidence may not be
arbitrarily asserted in the face of overwhelming evidence to the contrary. It must be
genuine, not a mere afterthought to justify earlier action taken in bad faith. The first
requisite for dismissal on the ground of loss of trust and confidence is that the
employee concerned must be one holding a position of trust and confidence.
Respondents employment classification is irrelevant in light of her proven willful
breach. There is no doubt that respondent held a position of trust; thus, greater
fidelity is expected of her. She was not an ordinary rank-and-file employee but an
employee occupying a very sensitive position. As University Treasurer, she handled
and supervised all monetary transactions and was the highest custodian of funds
belonging to WUP. To be sure, in the normal exercise of her functions, she regularly
handled significant amounts of money of her employer and managed a critical
department. The presence of the first requisite is certain. So is as regards the
second requisite. Indeed, the Court finds that petitioner adequately proved
respondents dismissal was for a just cause, based on a willful breach of trust and
founded on clearly established facts as required by jurisprudence. At the end of the
day, the question of whether she was a managerial or rank-and-file employee does
not matter in this case because not only is there basis for believing that she
breached the trust of her employer, her involvement in the irregularities attending
to petitioners finances has also been proved. In all, We find the Investigation Report
of the HRDO a credible, extensive and thorough account of respondents
involvement in incidents which are sufficient grounds for petitioners loss of trust
and confidence in her, to wit: Respondent Nowella C. Reyes has committed breach
of trust and confidence in the conduct of her office. In her answer, Respondent
admitted the encashment of the crossed check with the defense that the same was
done in the performance of her duty, not for her personal use but because of the
request of University heads who wanted their love gifts be given. She also admitted
habitual encashment of checks issued by the University to its personnel on the basis
of practice of previous administration. The charge against Respondent of the act of
improper encashment of a check, which aside from being irregular is clearly
violative of imprest system of cash management. Moreover, the same being a
crossed check, should not be negotiated for encashment to Chinabank
Cabanatuan Branch because of the restriction indicated on its face, which Mrs.
Reyes, by reason of her office knew very well. During the investigation conducted, it
was revealed that the check disbursement voucher attached by Respondent on her
answer to justify the regularity of its issuance and eventual encashment was not
exactly the same as the one filed at the Accounting Office. It showed that the
photocopy of the original CDV which was attached by Respondent (attached as
Annex Eof this report) bear some material alterations, namely: The absence of
entry of the Board Resolution which was reflected as a sort of inquiry by the Internal
Auditor, and which at present was left blank on the original, as compared to the
photocopy submitted by respondent bearing an entry of the Board Resolution
number; The word ATM on the payee portion of the CDV in the original as compared
to the photocopy wherein the entry ATM was crossed out. During a discussion with
the external auditors, it was categorically stated by them that during the course of
external audit, said document was inexistent in the records presented by the
Accounting and Treasurers Offices. The production of the photocopy by Respondent
already altered only after the suspension was effected cast doubt on the regularity
of its issuance, negating her otherwise claim. Another significant observation was
that the original copy of CDV (attached as Annex F of this report) and
corresponding signatures of administrative heads who received payments showed
folded marks halfways, with the fastener holes unmatched, showing that those two
documents were not really filed together, as regularly done, and the same were not
filed in the regular course and must have been kept previously on a different
manner in possession of person other than the office which must file the same. x x x
x On the last charge in the show cause order specifically the existence of duplicate
checks in the account of the University amounting to Php 1.050 Million, included in
Respondents defenses were that among the checks duplicated, only two of them
were encashed with the University Teller, and the check originally named to Norma
de Jesus as payee was paid by the pick-up teller only through the assistance of the
University teller. Again, Respondents defense were void of truth and merit. The act
of encashing checks issued by the Treasury Office, clearly violative of imprest
system of cash management which Mrs. Reyes by reason of her office knew very
well, showed that Respondent directly reneged in her duty to observe economic
security measures. As found on the documents attached to the Investigation report
of Dr. Garcia which had been expressly adopted by herein respondent in her answer
is an Affidavit of Norma de Jesus stating that she actually encashed the check with
the personnel of the Treasury Office particularly Shirley Punay, who gave her the
amount equivalent days after the check was handed to the Treasury office. However
noble the intention of herein Respondent in helping her fellow workers in the
University by her acts of accommodation by encashing their checks directly with the
Treasury Office when Chinabank was already closed, the same still reneged in her
duty to protect the economic security of the University. An act of misconduct which
caused [sic] An employer cannot be compelled to retain an employee who is guilty
of acts inimical to the interests of the employer. A company has the right to dismiss
its employees if only as a measure of self-protection. This is all the more true in the
case of supervisors or personnel occupying positions of responsibility. In this case,
let it be remembered that respondent was not an ordinary rank-and-file employee
as she was no less the Treasurer who was in charge of the coffers of the University.
It would be oppressive to require petitioner to retain in their management an officer
who has admitted to knowingly and intentionally committing acts which jeopardized
its finances and who was untrustworthy in the handling and custody of University
funds.

Zuellig Pharma Corporation v Sibal, et al., G.R. NO. 173587 (2013)

FACTS: Respondents (36 in all), on the other hand, were the employees of Zuellig at
its Syntex Division. In 1995, Roche Philippines, Inc. (Roche) purchased Syntex and
took over from Zuellig the distribution of Syntex products. Consequently, Zuellig
closed its Syntex Division and terminated the services of respondents due to
redundancy. They were properly notified of their termination 6 and were paid their
respective separation pay in accordance with Section 3(b), Article XIV of the March
21, 1995 Collective Bargaining Agreement (CBA) 7 for which, respondents
individually signed Release and Quitclaim 8 in full settlement of all claims
arising from their employment with Zuellig.
Controversy arose when respondents filed before the Arbitration Branch of the NLRC
separate Complaints9 (which were later consolidated) for payment of retirement
gratuity and monetary equivalent of their unused sick leave on top of the separation
pay already given them. Respondents claimed that they are still entitled to
retirement benefits and that their receipt of separation pay and execution
of Release and Quitclaim do not preclude pursuing such claim.
Zuellig concedes that, in the absence of contractual prohibition, payment of both
separation pay and retirement pay may be allowed as ruled by this Court in Aquino.
On the other hand, Zuellig insists that in this case, Section 2, Article XIV of
the parties CBA prohibits the recovery of both retirement gratuity and
severance pay. In addition, Section 2, Article VII of the Retirement and
Gratuity Plan likewise expressly limits the benefits the employees may
receive to their choice between (i) the benefits enumerated therein and
(ii) separation pay or other benefits that Zuellig may be required by law or
competent authority to pay them.
Respondents counter that there is nothing in the CBA which categorically
prohibits the recovery of retirement benefits in addition to separation pay.
They assert that Section 2, Article XIV of the CBA alluded to by Zuellig
does not constitute as an express prohibition that would foreclose
recovery of retirement gratuity after the employees had received
redundancy pay. Hence, following the ruling of this Court in Aquino, they
are entitled to said retirement gratuity.
ISSUE: Are the respondents entitled to the retirement gratuity?
Held: It is true that quitclaims executed by employees are often frowned
upon as contrary to public policy. But that is not to say that all waivers
and quitclaims are invalid as against public policy.31 Quitclaims will be upheld
as valid if the following requisites are present: "(1) the employee executes a deed of
quitclaim voluntarily; (2) there is no fraud or deceit on the part of any of the parties;
(3) the consideration of the quitclaim is credible and reasonable; and, (4) the
contract is not contrary to law, public order, public policy, morals or good customs
or prejudicial to a third person with a right recognized by law." 32

In this case, there is no showing that Zuellig coerced or forced respondents to sign
the Release and Quitclaim. In fact, there is no allegation that Zuellig employed fraud
or deceit in making respondents sign the Release and Quitclaim. On the other hand,
respondents declared that they had received the separation pay in full settlement of
all claims arising from their employment with Zuellig. For which reason, they have
remised, released and discharged Zuellig.
It is a familiar and fundamental doctrine in labor law that the CBA is the
law between the parties and they are obliged to comply with its
provisions. Here, and as discussed above, the parties CBA provides in no
uncertain terms that whatever amount of money the employees will receive as
retirement gratuity shall be chargeable against separation pay. It is the unequivocal
manifestation of their agreement that acceptance of retirement gratuity forecloses
receipt of separation pay and vice versa. The CBA likewise exclusively enumerates
departing employees who are entitled to the monetary equivalent of their unused
sick leave. These agreements must prevail and be given full effect.

Grace Christian High School, represented by its Principal, Dr. James Tan v
Filipinas A. Lavandera, G.R. No. 177845, 20 August 2014

Filipinas was employed by petitioner Grace Christian High School (GCHS) as high
school teacher since June1977, with a monthly salary of 18,662.00 as of May 31,
2001.

On August 30, 2001, Filipinas filed a complaint for illegal (constructive)

dismissal, non-payment of service incentive leave (SIL) pay, separation pay, service
allowance, damages, and attorneys fees against GCHS and/or its principal, Dr.
James Tan. She alleged that on May 11, 2001, she was informed that her services
were to be terminated effective May 31, 2001, pursuant to GCHS retirement plan
which gives the school the option to retire a teacher who has rendered at least 20
years of service, regardless of age, with a retirement pay of one-half () month for
every year of service. At that time, Filipinas was only 58 years old and still
physically fit to work. She pleaded with GCHS to allow her to continue teaching but
her services were terminated, contrary to the provisions of Republic Act No. (RA)
7641, otherwise known as the Retirement Pay Law.

LA dismissed the illegal dismissal case but found the retirement benefits
payable under GCHS plan to be deficient. NLRC reversed LAs award and held that
 retirement pay should be computed based on her monthly salary at the time of her
retirement. CA modified NLRCs decision and ruled that the computation of one-half
month salary by equating it to22.5 days.

ISSUE:

Whether or not the multiplier 22.5 days is to be used in computing the

retirement pay differentials of Filipinas.

HELD:

YES. RA 7641, which was enacted on December 9, 1992, amended

Article 287 of the Labor Code, providing for the rules on retirement pay to qualified
private sector employees in the absence of any retirement plan in the
establishment. The said law states that an employees retirement benefits under
any collective bargaining agreement (CBA)]and other agreements shall not be less
than those provided under the same that is, at least one-half (1/2) month
salary for every year of service, a fraction of at least six (6) months being
considered as one whole year and that unless the parties provide for broader
inclusions, the term one-half (1/2) month salary shall mean fifteen (15) days plus
one-twelfth (1/12) of the 13th month pay and the cash equivalent of not more than
five (5) days of service incentive leaves.

Applicability of the 1/2 month salary provision

1. There is no CBA or other applicable agreement providing for retirement

benefits to employees, or

2. There is a CBA or other applicable agreement providing for retirement

benefits but it is below the requirement set by law.

Verily, the determining factor in choosing which retirement scheme to

apply is still superiority in terms of benefits provided.
 In the present case, GCHS has a retirement plan for its faculty and non-
faculty members, which gives it the option to retire a teacher who has rendered at
least 20 years of service, regardless of age, with a retirement pay of one-half (1/2)
month for every year of service. Considering, however, that GCHS computed
Filipinas retirement pay without including one-twelfth (1/12) of her 13th
month pay and the cash equivalent of her five (5) days SIL, both the NLRC
and the CA correctly ruled that Filipinas retirement benefits should be
computed in accordance with Article 287 of the Labor Code, as amended
by RA 7641, being the more beneficent retirement scheme. They differ,
however, in the resulting benefit differentials due to divergent interpretations of the
term one-half (1/2) month salary as used under the law.

Elegir v. Philippine Airlines, Inc.: one-half (1/2) month salary means 22.5 days:
15 days plus 2.5 days representing one-twelfth (1/12) of the 13th month pay and
the remaining 5 days for SIL.

The Court sees no reason to depart from this interpretation. GCHS

argument therefore that the 5 days SIL should be likewise pro-rated to their 1/12
equivalent must fail.

Moreover, the Court held that the award of legal interest at the rate of 6%
per annum on the amount of P68,150.00 representing the retirement pay
differentials due Filipinas should be reckoned from the rendition of the LAs
Decision on March 26, 2002 and not from the filing of the illegal dismissal
complaint.