Notes: Right of Employer (Management Prerogative) to dismiss an erring employee is recognized under the Labor

Law, so long as it is done in good faith to advance the interest of the company and not to circumvent the rights of
the Employees under the law or valid agreements. Social Justice is not intended to countenance wrongdoing
simpley because it is committed by the underprivileged. Those who invoke it must do so only if they are faultless
and not just because they are poor.

NO illegal dismissal. There is a substantial compliance with due process. Hearing is not required. Dismissal is valid
due to loss of confidence. (Motorpool Supervisor used company equipment to repair his private car in the house
provided by the company without authority from the company).

LA: No Illegal Dismissal, NLRC: Reversed LA. There is illegal dismissal -no hearing, no willful disobedience, penalty
of dismissal is too harsh. CA: Affirmed NLRC’s decision.

CENTRAL AZUCARERA DE BAIS AND ANTONIO STEVEN L. CHAN, PETITIONERS, VS. HEIRS OF ZUELO APOSTOL

G.R. No. 215314, March 14, 2018

REYES, JR., J:

Time and again, the Court has put emphasis on the right of an employer to exercise its management prerogative in
dealing with its company‘s affairs, including the right to dismiss erring employees. It is a general principle of labor
law to discourage interference with an employer's judgment in the conduct of his business. Even as the law is
solicitous of the welfare of the employees, it also recognizes employers exercise of management prerogatives. As long
as the company's exercise of judgment is in good faith to advance its interest and not for the purpose of defeating or
circumventing the rights of employees under the laws or valid agreements, such exercise will be upheld.[1]

The Case

Challenged before the Court via this Petition for Review on Certiorari under Rule 45 of the Rules of Court is the
Decision[2] of the Court of Appeals (CA) in CA G.R. SP No. 06906, promulgated on May 22, 2013, which affirmed the
Decision[3] and Resolution[4] of the National Labor Relations Commission (NLRC) in NLRC Case No. V-000451-2002,
dated October 28, 2011 and February 27, 2012, respectively. Likewise challenged is the subsequent Resolution[5] of
the CA promulgated on October 29, 2014, which upheld the earlier decision.

The Antecedent Facts

The respondent Zuelo Apostol, now deceased and represented herein by his heirs, commenced his 20 years of
employment with petitioner Central Azucarera de Bais (CAB) on March 1, 1982 when he was hired as the latter's
Motor Pool Over-All Repairs Supervisor.[6] According to the petitioners, the respondent, as a supervisor, was in
charge of repairing company vehicles, which necessarily included the responsibilities of (a) assigning the personnel
and equipment for each and every repair job, and (b) taking custody of all repair equipment and materials owned by
CAB.[7] Likewise, as a supervisor, one of the pre-requisites accorded to the respondent was the enjoyment of a
company house where the respondent could live so long as he remains as a CAB employee.

On February 2, 2002, the parties' harmonious working relationship was disturbed when, during the inspection of
Tomasito A. Rosel (Rosel), one of CAB's security guards, it was discovered that the respondent "was using his
company house, as well as other company equipment to repair privately owned vehicles."[8] As reported by Rosel, he
saw:
That the right side of the house was brightly lighted (sic) and the light came from an electrical line (trouble light with
a 100W bulb) extension coming from the house. The lighting connection was hanging some distance from the house
to the left side of the LANCER car, color white, which was parked after a pick-up vehicle, color black. The LANCER
CAR was undergoing repairs on its left side. That Mr. Francisco Sabanal whom 1 personally know to be one of the
regular workers of C.A.B. MOTOR POOL DEPARTMENT, hired as automotive mechanic, was the one actually doing
the repair work on the LANCER CAR mentioned above. During the twenty minutes that I stayed in the premises of
the house assigned to Mr. Apostol, I saw Mr. Sabanal cutting with scissors metal sheets from the sheets that were
there at the place, to repair the LANCER CAR. He had with him on site, flattening tools and there was also an oxygen-
acetylene outfit, which he also used.[9]
This then triggered the CAB management, through its resident manager, Roberty Y. Dela Rosa, to issue a
memorandum addressed to the respondent for violating Rule 9 of CAB's Rules of Discipline, viz:
You will submit to this Office within 24 hours from receipt hereof your explanation in writing (to be placed on the
space indicated at the bottom of the enclosed duplicate hereof) why you should not be subjected to our Rules of
Discipline for the following acts:

For violating Rule 9 of the Rules of Discipline — for Utilizing material or equipment of the Company, including power
for doing private work without permission. Inspection by Security has disclosed that you were having repairs done in
CAB housing unit area assigned to you in Paper Village one car and one pick-up for body repairs using oxygen and
acetylene tanks with cutting accessories as well as steel plates for the repairs, all of which are assumed to be
company property there being no clearance or permit obtained form the Company to bring in personal equipment to
undertake repairs in CAB village.

Bais Central, February 4, 2002

Note: While giving you a chance to explain your side, within 24 hours from receipt hereof, you are put on preventive
suspension effective immediately.

(Sgd.)
ROBERTO Y. DELA ROSA
Resident Manager[10]
In response, the respondent submitted a handwritten explanation in the local dialect, which when translated reads:
Dear Nonoy Steven,

First of all, I am asking for a thousand apologies because I undertook the repair of my personal vehicle without
securing your permission.

Noy, I did not use electric welding, compressor and grinder. What I used was a trouble light and my personal
acetylene and oxygen.

Noy, I am reiterating my asking for apology and excuse from you and I am really sorry that I have violated your rules.

Sincerely yours,
Sgd. Zuelo Apostol[11]
On February 9, 2002, the respondent received a copy of the termination letter dated February 8, 2002, which was
signed by CAB's president, herein petitioner Antonio Steven L. Tan.

Thereafter, the respondent vacated the company house assigned to him, and on February 12, 2002, filed a
Complaint before the Sub-Regional Arbitration Branch No. VII of Dumaguete City against the petitioners for
constructive dismissal, illegal suspension, unfair labor practice, underpayment of overtime pay, premium pay for
holiday, separation pay, holiday pay, service incentive leave, vacation/sick leave, recovery of actual, moral, and
exemplary damages, and attorney's fees.

The Ruling of the Labor Arbiter

On May 30, 2002, the Labor Arbiter dismissed the respondent's submissions on the following ratiocinations: (1) the
allegations of unfair labor practice was not discussed in the respondent's position paper, let alone substantiated; (2)
CAB was well within its rights to impose preventive suspension upon the respondent; (3) on the substantive aspect,
CAB has reasonably shown that the complainant violated company rules for utilizing company-owned materials and
equipment; and (4) on the procedural aspect, CAB complied with the twin requirements of notice.[12] Thus,
the fallo of the decision states:
WHEREFORE, the complaint dated February 12, 2002 is dismissed for lack of merit.

SO ORDERED.[13]
The Ruling of the National Labor Relations Commission
Aggrieved, the respondent appealed the Labor Arbiter decision to the NLRC, which, after proper consideration,
reversed the same. The NLRC ruled that: (1) the respondent should have been given the opportunity to be heard and
to defend himself through a hearing;[14] (2) the respondent did not commit serious misconduct because his "contrite
and remorseful explanation belies any willfulness and wrongful intent to violate the rules;"[15] and (3) while the
respondent did indeed violate the company rules, the ultimate penalty of dismissal should not have been meted out
to him.[16]

The dispositive portion of the NLRC decision reads:

WHEREFORE, PREMISES CONSIDERED, the decision of the Labor Arbiter is, hereby, SET ASIDE and VACATED and a
new one entered finding [herein respondent] to have been illegally dismissed. [Herein petitioner] Central Azucarera
de Bais is, hereby, ordered to pay complainant the following:

BackwagesP323,784.95
Separation
P230,345.00
Pay
TOTAL P554,129.00

SO ORDERED.[17]
The Ruling of the Court of Appeals

From the NLRC's reversal of the Labor Arbiter's decision, the petitioners elevated the case to the CA, which later on
denied the petition and affirmed the NLRC decision. The CA averred that, while CAB was compliant with the twin
notice requirement, the respondent's violation "cannot be considered as so grave as to be characterized either as
serious misconduct or could lead to a loss of trust and confidence."[18] Thus, the CA concluded:
WHEREFORE, in view of the foregoing premises, the Petition for Certiorari is DENIED. The NLRC's Decision dated
October 28. 2011 and its Resolution dated February 27, 2012, respectively, are hereby AFFIRMED. Costs on
petitioners.

SO ORDERED.[19]
The Issues

After the CA's denial of the petitioners' motion for reconsideration, the latter now comes before the Court seeking
the reversal of the assailed CA decision and resolution on the following grounds:

I. CONTRARY TO LAW AND JURISPRUDENCE, THE [CA] SERIOUSLY ERRED IN FINDING CAB GUILTY OF
ILLEGAL DISMISSAL BECAUSE SUBSTANTIVE AND PROCEDURAL DUE PROCESS REQUIREMENTS WERE
DULY COMPLIED WHEN MR. APOSTOL WAS TERMINATED.

II. CONTRARY TO LAW AND JURISPRUDENCE, THE [CA] USURPED PETITIONERS' MANAGEMENT
PREROGATIVE TO DETERMINE THE PENALTY COMMENSURATE TO THE OFFENSE COMMITTED,
WHICH HAD BEEN THE SUBJECT OF PRIOR NOTICE TO MR. APOSTOL, WHO KNEW THE
CONSEQUENCES OF HIS VIOLATION.

III. SINCE MR. APOSTOL WAS DISMISSED FOR JUST CAUSE AND IN COMPLIANCE WITH THE
REQUIREMENTS OF PROCEDURAL DUE PROCESS HE IS NOT ENTITLED TO BACKWAGES AND
SEPARATION PAY. IN ANY CASE, JURISPRUDENCE PROVIDES THAT IN A WRONGFUL TERMINATION,
GOOD FAITH MAY MITIGATE OR ABSOLVE THE PAYMENT OF BACKWAGES.[20]

In sum, the petitioners put forth the following issues for the resolution of the Court: (1) whether or not procedural
and substantive due process was observed in the termination of the respondent's employment with CAB; (2)
whether or not the penalty meted out was commensurate to the violation; and consequently, (3) whether or not the
respondent is entitled to the payment of backwages and separation pay.
The Court's Ruling

After a careful perusal of the arguments presented and the evidence submitted, the Court finds merit in the petition.

The general rule is that only questions of law are revievvable by the Court. This is because it is not a trier of
facts;[21] it is not duty-bound to analyze, review, and weigh the evidence all over again in the absence of any showing
of any arbitrariness, capriciousness, or palpable error.[22] Thus, factual findings of administrative or quasi-judicial
bodies, including labor tribunals, are accorded much respect by the Court as they are specialized to rule on matters
falling within their jurisdiction especially when these are supported by substantial evidence.[23] In labor cases, this
doctrine applies with greater force as questions of fact presented therein are for the labor tribunals to resolve.[24]

The Court, however, permitted a relaxation of this rule whenever any of the following circumstances is present:
(1) [W]hen the findings are grounded entirely on speculations, surmises or conjectures;

(2) when the inference made is manifestly mistaken, absurd or impossible;

(3) when there is grave abuse of discretion;

(4) when the judgment is based on a misapprehension of facts;

(5) when the findings of fact are conflicting;

(6) when in making its findings, the Court of Appeals went beyond the issues of the case, or its findings are contrary
to the admissions of both the appellant and the appellee;

(7) when the findings are contrary to that of the trial court;

(8) when the findings are conclusions without citation of specific evidence on which they are based;

(9) when the facts set forth in the petition, as well as in the petitioner's main and reply briefs, are not disputed by
the respondent;

(10) when the findings of fact are premised on the supposed absence of evidence and contradicted by the evidence
on record; or

(11) when the Court of Appeals manifestly overlooked certain relevant facts not disputed by the parties, which, if
properly considered, would justify a different conclusion.[25]
Thus, in instances when the Labor Arbiter, the NLRC, and the CA made conflicting findings of fact, the Court is
justified—nay, the Court is compelled—to issue its own determination.

The case at hand calls for the resolution of several issues concerning the factual determination of the court a quo.

First, on the matter of procedural due process, the Labor Arbiter and the CA were one in asseverating that CAB
complied with the procedure required of it by the Labor Code, its implementing rules and regulations, and relevant
jurisprudence. According to the Labor Arbiter,
[T]he documents which are admitted by both parties clearly show that CAB complied with the twin requirements of
due process by furnishing the [respondent] two written notices: first, a notice apprising the complainant of the
particular acts for which his dismissal is sought xxx and second, a subsequent notice informing the complainant of
the decision to dismiss him.[26] (Emphasis and underscoring supplied)
Likewise, the CA was categorical when it asserted that CAB complied with the twin notice requirement. It said:
Here, the twin notice requirement was substantially complied with by the petitioners. It is undisputed that Apostol
received two notices. The first notice informed him of his violation and required him to submit his written
explanation on the matter. Thereafter, he received another notice communicating to him that his employment with
CAB was being severed by the company due to his violation of its company's Rules of Discipline.[27] (Emphasis and
underscoring supplied)
On the other hand, and contrary to the findings of both the Labor Arbiter and the CA, the NLRC found that
procedural due process was not properly observed when CAB terminated the respondent. In ruling thus, the NLRC
emphasized that, while there were actually two notices sent to the respondent, the lack of actual hearing on the
violations of the latter prior to his termination constituted a ground by which the dismissal should be reversed. Thus,
[W]hile as a general rule a hearing is not required to satisfy the demands of procedural due process, we feel that the
circumstances of this case required that a hearing should have been conducted to determine the ownership of the
materials and equipment used. That to us is vital in determining the gravity of [respondent's] violation. That would
have been more in accord with the employer's duty "to afford the worker ample opportunity to be heard and defend
himself with the assistance of his representative if he so desires, in accordance with company rules and regulations
promulgated pursuant to guidelines set by the Department of Labor and Employment."[28] (Emphasis and
underscoring supplied)
In the backdrop of this contradiction among the decisions, the Court is of the opinion that the Labor Arbiter and the
CA's findings are more in accord with established jurisprudence. The rights of the respondent to procedural due
process was observed by CAB.

As early as 2009, in the case of Perez vs. Philippine Telegraph and Telephone Company,[29] the Court has already laid
down the guidelines in complying with the proper procedure in instances when termination of employees is called
for. In reconciling the Labor Code and its Implementing Rules and Regulations, and in concluding that actual or
formal hearing is not an absolute requirement, the Court interpreted and directed that:
The test for the fair procedure guaranteed under Article 277(b) [now, Article 292(b)] cannot be whether there has
been a formal pretermination confrontation between the employer and the employee. The "ample opportunity to
be heard" standard is neither synonymous nor similar to a formal hearing. To confine the employee's right to be
heard to a solitary form narrows down that right. It deprives him of other equally effective forms of adducing
evidence in his defense. Certainly, such an exclusivist and absolutist interpretation is overly restrictive. The "very
nature of due process negates any concept of inflexible procedures universally applicable to every imaginable
situation."

xxxx

An employee's right to be heard in termination cases under Article 277(b) [now, Article 292(b)] as implemented by
Section 2(d), Rule I of the Implementing Rules of Book VI of the Labor Code should be interpreted in broad strokes. It
is satisfied not only by a formal face to face confrontation but by any meaningful opportunity to controvert the
charges against him and to submit evidence in support thereof.[30](Emphasis and underscoring supplied)
Thus, in Perez, the Court formulated the following guiding principles in connection with the hearing requirement in
dismissal cases:
(a) "ample opportunity to be heard" means any meaningful opportunity (verbal or written) given to the employee
to answer the charges against him and submit evidence in support of his defense, whether in a hearing, conference
or some other fair, just and reasonable way.

(b) a formal hearing or conference becomes mandatory only when requested by the employee in writing or
substantial evidentiary disputes exist or a company rule or practice requires it, or when similar circumstances justify
it.

(c) the "ample opportunity to be heard" standard in the Labor Code prevails over the "hearing or conference"
requirement in the implementing rules and regulations.[31] (Emphasis and underscoring supplied)
In the present case, the petitioners furnished the respondent with two notices: one, the memorandum dated
February 4, 2002 issued by CAB's resident manager[32] which informed the respondent of the charges against him;
and two, the letter of termination which, this time, notified the respondent of CAB's decision to dismiss him.[33] In
the interim, CAB, through the memorandum issued by its resident manager, sought the respondent's explanation on
the incident.

The confluence of these facts, in the Court's opinion, sufficiently complies with the respondent's right to be accorded
ample opportunity to be heard.

Second, on the matter of substantive due process, the Court accedes to the uniform findings of the Labor Arbiter,
NLRC, and CA that the respondent did indeed violate company rules and regulations when he used company
equipment and materials for his personal vehicles. According to the records of this case, this much is undisputed.

In ruling this way, the Labor Arbiter averred that "'the [respondent] violated CAB's company rules for utilizing
material or equipment of the company as well as the housing unit assigned to him in an improper manner, i.e., for
the repair of privately owned vehicles to the expense and damage of the company."[34] The NLRC itself affirmed this
finding by categorically saying that "it is not disputed that the complainant did violate the company rules."[35] More,
interspersed in the CA decision are statements revealing this violation by the respondent. Hence, the certainty by
which the Labor Arbiter, NLRC, and CA pronounced this fact requires no further disturbance—not even by the Court.

What is disputed, however, which the Court must rule upon, concerns the crux of the current controversy: whether
or not the respondent's act, which is violative of CAB's rules and regulations, warrants the imposition of the ultimate
penalty of dismissal. In this regard, the Court scoured once again the records of the case, and after a judicious study
thereof, favors the submission of the petitioners.

Article 297(c) [formerly Article 282(c)] of the Labor Code provides that an employer may terminate the services of an
employee for fraud or willful breach of the trust reposed in him.[36] According to the case of Top Form Mfg. Co., Inc.
vs. NLRC,[37] an employer has a distinct prerogative to dismiss an employee if the former has ample reason to distrust
the latter or if there is sufficient evidence to show that the employee has been guilty of breach of trust. This
authority of the employer to dismiss an employee cannot be denied whenever acts of violation are noted by the
employer.[38]

In ruling that employers have a right to impose a penalty of dismissal on supervisors or personnel occupying
positions of responsibility on the basis of loss of trust and confidence, the case of Moya vs. First Solid Rubber
Industries, Inc.[39] stated thus:
Following the ruling in The Coca-Cola Export Corporation v. Gacayan, the employers have a right to impose a penalty
of dismissal on employees by reason of loss of trust and confidence. More so, in the case of supervisors or
personnel occupying positions of responsibility, loss of trust, justifies termination of employment. Loss of
confidence as a just cause for termination of employment is premised on the fact that an employee concerned holds
a position of trust and confidence. This situation holds where a person is entrusted with confidence on delicate
matters, such as the custody, handling, or care and protection of the employer's property.[40] (Emphasis and
underscoring supplied, citations omitted)
This discourse is further clarified in the recent case of Alaska Milk Corporation, and the Estate of Wilfred Uytengsu
vs. Ernesto L. Ponce[41] where the Court ruled that, in order to invoke this cause, certain requirements must be
complied with, namely: (1) the employee concerned must be holding a position of trust and confidence; and (2)
there must be an act that would justify the loss of trust and confidence.[42] In addition to these, the case of Juliet B.
Sta. Ana vs. Manila Jockey Club, Inc.[43] included, as a requirement, that such loss of trust relates to the employee's
performance of duties.

In the case at hand, a perusal of the entirety of the records would reveal that all the requirements for the valid
dismissal of the respondent exist.

To begin with, there is no doubt that the respondent, as CAB's motor pool over-all repairs supervisor, is in a position
of trust and confidence. He was in charge of repairing company vehicles, and was designated with the responsibility
of (a) assigning the personnel and equipment for each and every repair job, and (b) taking custody of all repair
equipment and materials owned by CAB.[44] In the language of Moya, the respondent herein occupies a position of
responsibility, where he is entrusted with confidence on delicate matters, such as the custody, handling, or care and
protection of CAB's properties.

Secondly, the respondent's violation of CAB's rules and regulations relating to the use of company property for
personal purposes was consistently held and upheld not only by the Labor Arbiter and the NLRC, respectively, but
also by the CA itself. That the respondent committed this act could not be denied. What's more is that the
respondent himself admitted to it.[45]

Finally, the respondent's action was successfully conducted precisely because of his position in the company. As
CAB's motor pool over-all repairs supervisor, he was in the position to effect the repairs of his personal property in the
company house which was assigned to him. It could not be emphasized further that this violation of company rules—
from a supervisor no less—carries with it an impact to the operations and management of a company, and a
company's decision to terminate an employee for these purposes is a decision that should be respected.

To be sure, the petitioners herein validly dismissed their erring employee.

Having thus ruled on the validity of the dismissal of the respondent, then it necessarily follows that he is not entitled
to both backwages and separation pay.

The Court has reiterated that 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.[46]

WHEREFORE, premises considered, the Decision of the Court of Appeals in CA G.R. SP No. 06906, dated May 22, 2013 and the subsequent Resolution dated
October 29, 2014, as well as the Decision and Resolution of the National Labor Relations Commission in NLRC Case No. V-000451-2002, dated October 28, 2011
and February 27, 2012 respectively, are hereby REVERSED and SET ASIDE. The Decision of the Labor Arbiter dated May 30, 2002 in SUB-RAB- VII-02-003 9-2002-
D is hereby REINSTATED.
Notes: The cause of termination, to be lawful, must be a serious and grave malfeasance to justify the deprivation
of a means of livelihood. This requirement is in keeping with the spirit of our Constitution and laws to lean over
backwards in favor of the working class, and with the mandate that every doubt must be resolved in their favor.
The employer should exercise the prerogative to discipline humanely and considerately, and that the sanction
imposed is commensurate to the offense involved and to the degree of the infraction. The discipline exacted by the
employer should further consider the employee's length of service and the number of infractions during his
employment. Keeping in mind that what’s at stake is the employee’s livelihood.

Malcaba (President) – corporate officer, complaint should have been filed with RTC (intra corporate dispute)

Nepomuceno (Sales) – NO WILLFUL BREACH OF TRUST. 1st infraction for 9 yrs. of service – did not file correct dates
of leave of absence but he turned over everything to a reliever and even reached high target of sales prior to his
leave.

Palit- Ang (Finance Officer) – NO SERIOUS MISCONDUCT/WILLFUL DISOBEDIENCE. Palit-Ang instructed by

respondent Del Castillo to give a cash advance of P3,000.00 to District Branch Manager Gamboa on November 26,
2007. When Gamboa went to collect the money from petitioner Palit-Ang, he was told to return the next day as
she was still busy. When petitioner Palit-Ang found out that the money was to be used for a car tune-up, she
suggested to Gamboa to just get the money from his mobilization fund and that she just would reimburse it after.

NICANOR F. MALCABA, CHRISTIAN C. NEPOMUCENO, AND LAURA MAE FATIMA F. PALIT-ANG, PETITIONERS, V.
PROHEALTH PHARMA PHILIPPINES, INC., GENEROSO R. DEL CASTILLO, JR., AND DANTE M. BUSTO, RESPONDENTS.

G.R. No. 209085, June 06, 2018

DECISION

LEONEN, J.:

This case involves fundamental principles in labor cases.

First, in appeals of illegal dismissal cases, employers are strictly mandated to file an appeal bond to perfect their
appeals. Substantial compliance, however, may merit liberality in its application.

Second, before any labor tribunal takes cognizance of termination disputes, it must first have jurisdiction over the
action. The Labor Arbiter and the National Labor Relations Commission only exercise jurisdiction over termination
disputes between an employer and an employee. They do not exercise jurisdiction over termination disputes
between a corporation and a corporate officer.

Third, while this Court recognizes the inherent right of employers to discipline their employees, the penalties
imposed must be commensurate to the infractions committed. Dismissal of employees for minor and negligible
offenses may be considered as illegal dismissal.

This is a Petition for Review on Certiorari[1] assailing the Court of Appeals February 19, 2013 Decision[2] and
September 10, 2013 Resolution[3] in CA-G.R. SP No. 119093, which reversed the judgments of the Labor Arbiter and
of the National Labor Relations Commission. The Court of Appeals found that Nicanor F. Malcaba (Malcaba), a
corporate officer, should have questioned his dismissal before the Regional Trial Court, not before the Labor Arbiter.
It likewise held that Christian C. Nepomuceno (Nepomuceno) and Laura Mae Fatima F. Palit-Ang (Palit-Ang) were
validly dismissed from service for loss of trust and confidence, and insubordination, respective1y.

ProHealth Pharma Philippines, Inc. (ProHealth) is a corporation engaged in the sale of pharmaceutical products and
health food on a wholesale and retail basis. Generoso Del Castillo (Del Castillo) is the Chair of the Board of Directors
and Chief Executive Officer while Dante Busto (Busto) is the Executive Vice President. Malcaba, Tomas Adona, Jr.
(Adona), Nepomuceno, and Palit-Ang were employed as its President, Marketing Manager, Business Manager, and
Finance Officer, respectively. [4]
Malcaba had been employed with ProHealth since it started in 1997. He was one of its incorporators together with
Del Castillo and Busto, and they were all members of the Board of Directors in 2004. He held 1,000,000 shares in the
corporation. He was initially the Vice President for Sales then became President in 2005.[5]

Malcaba alleged that Del Castillo did acts that made his job difficult. He asked to take a leave on October 23, 2007.
When he attempted to return on November 5, 2007, Del Castillo insisted that he had already resigned and had his
things removed from his office. He attested that he was paid a lower salary in December 2007 and his benefits were
withheld.[6] On January 7, 2008, Malcaba tendered his resignation effective February 1, 2008.[7]

Nepomuceno, for his part, alleged that he was initially hired as a medical representative in 1999 but was eventually
promoted to District Business Manager for South Luzon. On March 24, 2008, he applied for vacation leave for the
dates April 24, 25, and 28, 2008, which Busto approved. When he left for Malaysia on April 23, 2008, ProHealth sent
him a Memorandum dated April 24, 2008 asking him to explain his absence. He replied through email that he tried
to call ProHealth to inform them that his flight was on April 22, 2008 at 9:00p.m. and not on April 23, 2008 but was
unable to connect on the phone. He tried to explain again on May 2, 2008 and requested for a personal dialogue
with Del Castillo.[8]

On May 7, 2008, Nepomuceno was given a notice of termination, which was effective May 5, 2008, on the ground of
fraud and willful breach of trust.[9]

Palit-Ang, on the other hand, was hired to join ProHealth's audit team in 2007. She was later promoted to Finance
Officer.[10] On November 26, 2007, Del Castillo instructed Palit-Ang to give P3,000.00 from the training funds to
Johnmer Gamboa (Gamboa), a District Business Manager, to serve as cash advance. [11]

On November 27, 2007, Busto issued a show cause memorandum for Palit-Ang's failure to release the cash advance.
Palit-Ang was also relieved of her duties and reassigned to the Office of the Personnel and Administration
Manager. [12]

In her explanation, Palit-Ang alleged that when Gamboa saw that she was busy receiving cash sales from another
District Business Manager, he told her that he would just return the next day to collect his cash advance.[13] When he
told her that the cash advance was for car repairs, Palit-Ang told him to get the cash from his revolving fund, which
she would reimburse after the repairs were done. Del Castillo was dissatisfied with her explanation and transferred
her to another office.[14]

On December 3, 2007, Palit-Ang was invited to a fact-finding investigation,[15] which was held on December 10, 2007,
where Palit-Ang was again asked to explain her actions.[16]

On December 17, 2007, she was handed a notice of termination effective December 31, 2007, for disobeying the
order of ProHealth's highest official.[17]

Malcaba, Nepomuceno, Palit-Ang, and Adona separately filed Complaints[18] before the Labor Arbiter for illegal
dismissal, nonpayment of salaries and 13th month pay, damages, and attorney's fees.

The Labor Arbiter found that Malcaba was constructively dismissed. He found that ProHealth never controverted the
allegation that Del Castillo made it difficult for Malcaba to effectively fulfill his duties. He likewise ruled that
ProHealth's insistence that Malcaba's leave of absence in October 2007 was an act of resignation was false since
Malcaba continued to perform his duties as President through December 2007.[19]

The Labor Arbiter declared that Nepomuceno's failure to state the actual date of his flight was an excusable mistake
on his part, considering that this was his first infraction in his nine (9) years of service. He noted that no
administrative proceedings were conducted before Nepomuceno's dismissal, thereby violating his right to due
process.[20]

Palit-Ang's dismissal was also found to have been illegal as delay in complying with a lawful order was not
tantamount to disobedience. The Labor Arbiter further noted that delay in giving a cash advance for car
maintenance would not have affected the company's operations. He declared that Palit-Ang's dismissal was too
harsh of a penalty.[21]

The dispositive portion of the Labor Arbiter's April 5, 2009 Decision[22] read:

WHEREFORE, premises considered, judgment is hereby rendered declaring that complainants were illegally
dismissed by respondents. Accordingly, respondents are directed solidarily to pay complainants the following:

1. Complainant Nicanor F. Malcaba:

- Separation pay of P1,800,000.00;
- Full backwages from the time of his illegal dismissal [o]n 11 November 2007 until the finality of this decision, which
as of this date amounts to P2,810,795.40;
- 13th month pay for the years 2007 and 2008 amounting to P126,625.00;

2. Complainant Christian C. Nepomuceno:

- Separation pay of P190,000.00;
- Full backwages from the time of his illegal dismissal [i]n May 2007 until the finality of this decision, which as of this
date amounts to P568,827.45;
- 13th month pay for 2008 amounting to P6,333.33;

3. Complainant Laura Mae Fatima F. Palit-Ang:

- Separation pay of P30,000.00;

- Full backwages from the time of her illegal dismissal on 1 January 2008 until the finality of this decision, which as of
[t]his date amounts to P266,694.63;
- 13th month pay for 2008 of P18,000.00; and

4. Complainant Tomas C. Adona, Jr.:

-Separation pay of P75,000.00;

-Full backwages from time of his illegal dismissal [i]n June 2007 until the finality of this decision, which as of this date
amounts to P609,832.37;
-13th month pay for 2008 of P10,416.66.

Complainants are further awarded moral damages of Php100,000.00 each and exemplary damages of
Php100,000.00 each.

Finally, respondents are assessed the sum equivalent to ten percent (10%) of the total monetary award as and for
attorney's fees.

All other claims are dismissed for lack of merit.

SO ORDERED.[23]

ProHealth appealed to the National Labor Relations Commission.[24] On September 29, 2010, the National Labor
Relations Commission rendered its Decision,[25] affirming the Labor Arbiter's April 5, 2009 Decision with
modifications. The dispositive portion of this Decision read:

WHEREFORE, premises considered, the appeal is partially granted. The assailed Decision is modified in that: a)
complainant Adona is declared to have voluntarily resigned and is entitled only to his 13th month pay; b) the award
of moral and, exemplary damages in favor of complainants Nepomuceno and Palit-Ang are deleted; and c)
respondents del Castillo and Busto are held jointly and severally liable with ProHealth for the claims of complainant
Malcaba.

All dispositions not affected by the modifications stay.

SO ORDERED.[26]

ProHealth moved for reconsideration[27] but was denied by the National Labor Relations Commission in its January
31, 2011 Resolution.[28]Thus, ProHealth, Del Castillo, and Busto filed a Petition for Certiorari[29] before the Court of
Appeals.

On February 19, 2013, the Court of Appeals rendered its Decision[30] reversing and setting aside the National Labor
Relations Commission September 29, 2010 Decision.

On the procedural issues, the Court of Appeals found that ProHealth substantially complied with the requirement of
an appeal bond despite it not appearing in the records of the surety company since ProHealth believed in good faith
that the bond it secured was genuine.[31]

On the substantive issues, the Court of Appeals held that there was no employer-employee relationship between
Malcaba and ProHealth since he was a corporate officer. Thus, he should have filed his complaint with the Regional
Trial Court, not with the Labor Arbiter, since his dismissal from service was an intra-corporate dispute.[32]

The Court of Appeals likewise concluded that ProHealth was justified in dismissing Nepomuceno and Palit-Ang since
both were given opportunities to fully explain their sides.[33] It found that Nepomuceno's failure to diligently check
the true schedule of his flight abroad and his subsequent lack of effort to inform his superiors were enough for his
employer to lose its trust and confidence in him.[34] It likewise found that Palit-Ang displayed "arrogance and
hostility" when she defied the lawful orders of the company's highest ranking officer; thus, her insubordination was
just cause to terminate her services.[35]

While the Court of Appeals ordered the return of the amounts given to Malcaba, it allowed Nepomuceno and Palit-
Ang to keep the amounts given considering that even if the finding of illegal dismissal were reversed on appeal, the
employer was still obliged to reinstate and pay the wages of a dismissed employee during the period of
appeal.[36] The dispositive portion of the Court of Appeals February 19, 2013 Decision read:

WHEREFORE, premises considered, it is hereby ruled:

(a) that the September 29, 2010 Decision and January 31, 2011 Resolution of the National Labor Relations
Commission are REVERSED and SET ASIDE for being issued with grave abuse of discretion;

(b) that Our Decision is without prejudice to Mr. Nicanor F. Malcaba's available recourse for relief through the
appropriate remedy in the proper forum;

(c) that all the amounts released in favor of Mr. Nicanor F. Malcaba amounting to Four Million Nine Hundred
Thirty[-]Seven Thousand Four Hundred Twenty pesos and 40/100 (P4,937,420.[40]) be RETURNED to herein
petitioners;

(d) that NO REFUND will be ordered by this Court against Mr. Christian Nepomuceno and Ms. Laura Mae Fatima
Palit-Ang.

SO ORDERED.[37]

Malcaba, Nepomuceno, and Palit-Ang moved for reconsideration but were denied in a Resolution[38] dated
September 10, 2013. Hence, this Petition[39] was filed before this Court.

Petitioners argue that the Court of Appeals should have dismissed outright the Petition for Certiorari since
respondents failed to post a genuine appeal bond before the National Labor Relations Commission. They allege that
when Sheriff Ramon Nonato P. Dayao attempted to enforce the judgment award against the appeal bond, he was
informed that the appeal bond procured by respondents did not appear in the records of Alpha Insurance and Surety
Company, Inc. (Alpha Insurance). They also claim that respondents were notified by the National Labor Relations
Commission four (4) times that their appeal bond was not genuine, showing that respondents did not comply with
the requirement in good faith.[40]

Petitioners contend that petitioner Malcaba properly filed his Complaint before the Labor Arbiter since he was an
employee of respondent ProHealth, albeit a high-ranking one. They argue that respondents merely alleged that
petitioner Malcaba is a corporate officer but failed to substantiate this allegation.[41] They maintain that petitioner
Malcaba did not resign on September 24, 2007 considering that the General Information Sheet for 2007 submitted
on October 11, 2007 listed him as respondent ProHealth's President. They submit that respondent Del Castillo's
action took a toll on petitioner Malcaba's well-being; hence, the latter merely took a leave of absence and returned
to work in November 2007. They claim that respondents made it difficult for petitioner Malcaba to continue his work
upon his return, resulting in his resignation in January 2008. Thus, they argue that petitioner Malcaba was
constructively dismissed.[42]

Petitioners likewise argue that petitioners Nepomuceno and Palit-Ang were illegally dismissed. They claim that
petitioner Nepomuceno committed an "honest and negligible mistake"[43] that should not have warranted dismissal
considering his loyal service for nine (9) years. They contend that petitioner Nepomuceno's absence did not injure
respondent ProHealth's business since he turned over all pending work to a reliever before he left and even
surpassed his sales quota for the month.[44] They likewise claim that his dismissal was done in violation of his right to
due process since he was not given any opportunity to explain his side and was only given a notice of termination
two (2) days after he was actually dismissed.[45]

Petitioners maintain that petitioner Palit-Ang believed in good faith that Gamboa would just claim his cash advance
the day after he tried to claim it and that there was nothing in her actions that would prove that she intended to
disobey or defy respondent Del Castillo's instructions. They insist that delay in complying with orders is not
tantamount to disobedience and would not constitute just cause for petitioner Palit-Ang's dismissal. They likewise
submit that while petitioner Palit-Ang was subjected to a fact-finding investigation, respondents failed to inform her
of her right to be assisted by counsel.[46]

Respondents, on the other hand, counter that a liberal application of the procedural rules was necessary in their
case since they acted in good faith in posting their appeal bond.[47] They likewise contend that the issue should have
already been considered moot since petitioners "were able to garnish and collect the amounts allegedly due to
them."[48]

Respondents likewise insist that petitioner Malcaba was a corporate officer considering that he was not only an
incorporator and stockholder, but also an elected Director and President of respondent ProHealth.[49] They also point
out that he filed his labor complaint seven (7) months after his resignation and that his voluntary resignation already
disproves his claim of constructive dismissal.[50]

Respondents argue that they were justified in dismissing petitioners Nepomuceno and Palit-Ang. They contend that
petitioner Nepomuceno's abandonment of his duties at a critical sales period and his failure to immediately advise
his superiors of his whereabouts was ground for respondents to lose their trust and confidence in him.[51] They
likewise maintain that petitioner Palit-Ang was correctly found by the Court of Appeals to have defied the lawful
instructions of respondent Del Castillo and illustrated her "grave disrespect towards authority."[52]

From the arguments and allegations of the parties, it is clear that this case involves three (3) different illegal
dismissal complaints, with three (3) different complainants in three (3) different factual situations during three (3)
different time periods. The only commonality is that they involve the same respondents.

While this Court commends the economy by which the National Labor Relations Commission resolved these cases,
the three (3) complaints should have been resolved separately since the three (3) petitioners raise vastly different
substantive issues. This leaves this Court with the predicament of having to resolve three (3) different cases of illegal
dismissal in one (1) Petition for Review. Thus, each petitioner's case will have to be resolved separately within this
Decision. This Court's ruling over one (1) petitioner may not necessarily affect the other co-petitioners. The National
Labor Relations Commission's zeal for economy and convenience should never prejudice the individual rights of each
party. The National Labor Relations Commission should know the rule that joinder of parties[53] or causes of
action[54] applies suppletorily in appeals[55] and for good reason.[56]
Petitioners raise the common procedural issue of whether or not respondents failed to perfect their appeal when it
was discovered that their appeal bond was a forged bond, which this Court will address before proceeding with the
substantive issues. The substantive issues raised, however, are dependent on the factual circumstances applicable to
each petitioner. This Court tackles these substantive issues in order:

First, whether or not the Labor Arbiter and National Labor Relations Commission had jurisdiction over petitioner
Nicanor F. Malcaba's termination dispute considering the allegation that he was a corporate officer, and not a mere
employee;

Second, whether or not petitioner Christian C. Nepomuceno was validly dismissed for willful breach of trust when he
failed to inform respondents ProHealth Pharma Philippines, Inc., Generoso R. Del Castillo, Jr., and Dante M. Busto of
the actual dates of his vacation leave; and

Finally, whether or not petitioner Laura Mae Fatima F. Palit-Ang was validly dismissed for willful disobedience when
she failed to immediately comply with an order of her superior.

Appeal is not a matter of right.[57] Courts and tribunals have the discretion whether to give due course to an appeal
or to dismiss it outright. The perfection of an appeal is, thus, jurisdictional. Non-compliance with the manner in
which to file an appeal renders the judgment final and executory.[58]

In labor cases, an appeal by an employer is perfected only by filing a bond equivalent to the monetary award. Thus,
Article 229 [223][59] of the Labor Code provides:

Article 229. [223] Appeal.

...

In case of a judgment involving a monetary award, an appeal by the employer may be perfected only upon the
posting of a cash or surety bond issued by a reputable bonding company duly accredited by the Commission in the
amount equivalent to the monetary award in the judgment appealed from.

This requirement is again repeated m the 2011 National Labor Relations Commission Rules of Procedure:

Section 4. Requisites for Perfection of Appeal. — (a) The appeal shall be:
....
(5) accompanied by:
....
(ii) posting of a cash or surety bond as provided in Section 6 of this Rule[.]

....

Section 6. Bond. — In case the decision of the Labor Arbiter or the Regional Director involves a monetary award, an
appeal by the employer may be perfected only upon the posting of a bond, which shall either be in the form of cash
deposit or surety bond equivalent in the amount to the monetary award, exclusive of damages and attorney's fees.

In case of surety bond, the same shall be issued by a reputable bonding company duly accredited by the Commission
and shall be accompanied by original or certified true copies of the following:

(a) a joint declaration under oath by the employer, his/her counsel, and the bonding company, attesting that the
bond posted is genuine, and shall be in effect until final disposition of the case;

(b) an indemnity agreement between the employer appellant and bonding company;

(c) proof of security deposit or collateral securing the bond: provided, that a check shall not be considered as an
acceptable security; and,
(d) notarized board resolution or secretary's certificate from the bonding company showing its authorized
signatories and their specimen signatures.

The Commission through the Chairman may on justifiable grounds blacklist an accredited bonding company.

A cash or surety bond shall be valid and effective from the date of deposit or posting, until the case is finally decided,
resolved or terminated, or the award satisfied. This condition shall be deemed incorporated in the terms and
conditions of the surety bond, and shall be binding on the appellants and the bonding company.

The appellant shall furnish the appellee with a certified true copy of the said surety bond with all the above-
mentioned supporting documents. The appellee shall verify the regularity and genuineness thereof and immediately
report any irregularity to the Commission.

Upon verification by the Commission that the bond is irregular or not genuine, the Commission shall cause the
immediate dismissal of the appeal, and censure the responsible parties and their counsels, or subject them to
reasonable fine or penalty, and the bonding company may be blacklisted.

No motion to reduce bond shall be entertained except on meritorious grounds, and only upon the posting of a bond
in a reasonable amount in relation to the monetary award.

The mere filing of a motion to reduce bond without complying with the requisites in the preceding paragraphs shall
not stop the running of the period to perfect an appeal.[60]

The purpose of requiring an appeal bond is "to guarantee the payment of valid and legal claims against the
employer."[61] It is a measure of financial security granted to an illegally dismissed employee since the resolution of
the employer's appeal may take an indeterminable amount of time. In particular:

The requirement that the employer post a cash or surety bond to perfect its/his appeal is apparently intended to
assure the workers that if they prevail in the case, they will receive the money judgment in their favor upon the
dismissal of the employer's appeal. It was intended to discourage employers from using an appeal to delay, or even
evade, their obligation to satisfy their employees' just and lawful claims.[62]

Procedural rules require that the appeal bond filed be "genuine." An appeal bond determined by the National Labor
Relations Commission to be "irregular or not genuine" shall cause the immediate dismissal of the appeal.[63]

In this case, petitioners allege that respondents' appeal should not have been given due course by the National Labor
Relations Commission since the appeal bond they filed "[did] not appear in the records of [Alpha Insurance]"[64] and
was, therefore, not genuine. As evidence, they presented a certification from Alpha Insurance, which read:

This is to certify that the bond being presented by MR. JOSEPH D. DE JESUS is allegedly a Surety Bond filed with the
NATIONAL LABOR RELATIONS COMMISSION, identified as Bond No. G(16)00358/2009 on an alleged case NLRC NCR
Case No. 08-12090-08, is a faked and forged bond, and it was not issued by ALPHA INSURANCE & SURETY COMPANY,
INC.[65]

This Court in Navarro v. National Labor Relations Commission[66] found that an employer failed to perfect its appeal
as it submitted an appeal bond that was "bogus[,] having been issued by an officer no longer connected for a long
time with the bonding company."[67] The mere fictitiousness of the bond, however, was not the only factor taken
into consideration. This Court likewise took note of the employer's failure to sufficiently explain this irregularity and
its failure to file the bond within the reglementary period.

In Quiambao v. National Labor Relations Commission,[68] this Court held that the mandatory and jurisdictional
requirement of the filing of an appeal bond could be relaxed if there was substantial
compliance. Quiambao proceeded to outline situations that could be considered as substantial compliance, such as
late payment, failure of the Labor Arbiter to state the exact amount of money judgment due, and reliance on a
notice of judgment that failed to state that a bond must first be filed in order to appeal.[69] Rosewood Processing v.
National Labor Relations Commission[70] likewise enumerated other instances where there would be a liberal
application of the procedural rules:

Some of these cases include: (a) counsel's reliance on the footnote of the notice of the decision of the labor arbiter
that the aggrieved party may appeal . . . within ten (10) working days; (b) fundamental consideration of substantial
justice; (c) prevention of miscarriage of justice or of unjust enrichment, as where the tardy appeal is from a decision
granting separation pay which was already granted in an earlier final decision; and (d) special circumstances of the
case combined with its legal merits or the amount and the issue involved.[71]

Thus, while the procedural rules strictly require the employer to submit a genuine bond, an appeal could still be
perfected if there was substantial compliance with the requirement.

In this instance, the National Labor Relations Commission certified that respondents filed a security deposit in the
amount of P6,512,524.84 under Security Bank check no. 0000045245,[72] showing that the premium for the appeal
bond was duly paid and that there was willingness to post it.[73] Respondents likewise attached documents proving
that Alpha Insurance was a legitimate and accredited bonding company.[74]

Despite their failure to collect on the appeal bond, petitioners do not deny that they were eventually able to garnish
the amount from respondents' bank deposits.[75] This fulfills the purpose of the bond, that is, "to guarantee the
payment of valid and legal claims against the employer[.]"[76] Respondents are considered to have substantially
complied with the requirements on the posting of an appeal bond.

II

Under the Labor Code, the Labor Arbiter exercises original and exclusive jurisdiction over termination disputes
between an employer and an employee while the National Labor Relations Commission exercises exclusive appellate
jurisdiction over these cases:

Article 224. [217] Jurisdiction of the Labor Arbiters and the Commission. — (a) Except as otherwise provided under this
Code, the Labor Arbiters shall have original and exclusive jurisdiction to hear and decide, within thirty (30) calendar
days after the submission of the case by the parties for decision without extension, even in the absence of
stenographic notes, the following cases involving all workers, whether agricultural or non-agricultural:
...

(2) Termination disputes;

...

(b) The Commission shall have exclusive appellate jurisdiction over all cases decided by Labor Arbiters.[77]

The presumption under this provision is that the parties have an employer-employee relationship. Otherwise, the
case would be cognizable in different tribunals even if the action involves a termination dispute.

Petitioner Malcaba alleges that the Court of Appeals erred m dismissing his complaint for lack of jurisdiction,
insisting that he was an employee of respondent, not a corporate officer.

At the time of his alleged dismissal, petitioner Malcaba was the President of respondent corporation. Strangely, this
same petitioner disputes this position as respondents' bare assertion,[78] yet he also insists that his name appears as
President in the corporation's General Information Sheet for 2007.[79]

Under Section 25 of the Corporation Code,[80] the President of a corporation is considered a corporate officer. The
dismissal of a corporate officer is considered an intra-corporate dispute, not a labor dispute. Thus, in Tabang v.
National Labor Relations Commission:[81]

A corporate officer's dismissal is always a corporate act, or an intra-corporate controversy, and the nature is not
altered by the reason or wisdom with which the Board of Directors may have in taking such action. Also, an intra-
corporate controversy is one which arises between a stockholder and. the corporation. There is no distinction,
qualification, nor any exemption whatsoever. The provision is broad and covers all kinds of controversies between
stockholders and corporations.[82]

Further, in Matling Industrial and Commercial Corporation v. Coros,[83] this Court stated that jurisdiction over intra-
corporate disputes involving the illegal dismissal of corporate officers was with the Regional Trial Court, not with the
Labor Arbiter:

Where the complaint for illegal dismissal concerns a corporate officer, however, the controversy falls under the
jurisdiction of the Securities and Exchange Commission (SEC), because the controversy arises out of intra-corporate
or partnership relations between and among stockholders, members, or associates, or between any or all of them
and the corporation, partnership, or association of which they are stockholders, members, or associates,
respectively; and between such corporation, partnership, or association and the State insofar as the controversy
concerns their individual franchise or right to exist as such entity; or because the controversy involves the election or
appointment of a director, trustee, officer, or manager of such corporation, partnership, or association. Such
controversy, among others, is known as an intra-corporate dispute.

Effective on August 8, 2000, upon the passage of Republic Act No. 8799, otherwise known as The Securities
Regulation Code, the SEC's jurisdiction over all intra-corporate disputes was transferred to the RTC, pursuant to
Section 5.2 of RA No. 8799, to wit:

5.2. The Commission's jurisdiction over all cases enumerated under Section 5 of Presidential Decree No. 902-A is
hereby transferred to the Courts of general jurisdiction or the appropriate Regional Trial Court: Provided, that the
Supreme Court in the exercise of its authority may designate the Regional Trial Court branches that shall exercise
jurisdiction over these cases. The Commission shall retain jurisdiction over pending cases involving intra-corporate
disputes submitted for final resolution which should be resolved within one (1) year from the enactment of this
Code. The Commission shall retain jurisdiction over pending suspension of payments/rehabilitation cases filed as of
30 June 2000 until finally disposed.[84]

The mere designation as a high-ranking employee, however, is not enough to consider one as a corporate officer. In
Tabang, this Court discussed the distinction between an employee and a corporate officer, regardless of designation:

The president, vice-president, secretary and treasurer are commonly regarded as the principal or executive officers
of a corporation, and modern corporation statutes usually designate them as the officers of the corporation.
However, other offices are sometimes created by the charter or by-laws of a corporation, or the board of directors
may be empowered under the by-laws of a corporation to create additional offices as may be necessary.

It has been held that an "office" is created by the charter of the corporation and the officer is elected by the
directors or stockholders. On the other hand, an "employee" usually occupies no office and generally is employed
not by action of the directors or stockholders but by the managing officer of the corporation who also determines
the compensation to be paid to such employee.[85]

The clear weight of jurisprudence clarifies that to be considered a corporate officer, first, the office must be created
by the charter of the corporation, and second, the officer must be elected by the board of directors or by the
stockholders.

Petitioner Malcaba was an incorporator of the corporation and a member of the Board of Directors.[86] Respondent
corporation's By-Laws creates the office of the President. That foundational document also states that the President
is elected by the Board of Directors:

ARTICLE IV
OFFICER

Section 1. Election/Appointment — Immediately after their election, the Board of Directors shall formally organize
by electing the President, the Vice President, the Treasurer, and the Secretary at said meeting.[87]

This case is similar to Locsin v. Nissan Lease Philippines:[88]

Locsin was undeniably Chairman and President, and was elected to these positions by the Nissan board pursuant to
its By-laws. As such, he was a corporate officer, not an employee. The CA reached this conclusion by relying on the
submitted facts and on Presidential Decree 902-A, which defines corporate officers as "those officers of a
corporation who are given that character either by the Corporation Code or by the corporation's by-laws." Likewise,
Section 25 of Batas Pambansa Blg. 69, or the Corporation Code of the Philippines (Corporation Code) provides that
corporate officers are the president, secretary, treasurer and such other officers as may be provided for in the by-
laws.[89] (Emphasis in the original)

Petitioners cite Prudential Bank and Trust Company v. Reyes[90] as basis that even high-ranking officers may be
considered regular employees, not corporate officers.[91] Prudential Bank, however, is not applicable to this case.

In Prudential Bank, an employer was considered estopped from raising the argument of an intra-corporate dispute
since this was only raised when the case was filed with this Court. This Court also noted that an employee rose from
the ranks and was regularly performing tasks integral to the business of the employer throughout the length of her
tenure, thus:

It appears that private respondent was appointed Accounting Clerk by the Bank on July 14, 1963. From that position
she rose to become supervisor. Then in 1982, she was appointed Assistant Vice-President which she occupied until
her illegal dismissal on July 19, 1991. The bank's contention that she merely holds an elective position and that in
effect she is not a regular employee is belied by the nature of her work and her length of service with the Bank. As
earlier stated, she rose from the ranks and has been employed with the Bank since 1963 until the termination of her
employment in 1991. As Assistant Vice President of the foreign department of the Bank, she is tasked, among others,
to collect checks drawn against overseas banks payable in foreign currency and to ensure the collection of foreign
bills or checks purchased, including the signing of transmittal letters covering the same. It has been stated that "the
primary standard of determining regular employment is the reasonable connection between the particular activity
performed by the employee in relation to the usual trade or business of the employer.["] Additionally, "an employee
is regular because of the nature of work and the length of service, not because of the mode or even the reason for
hiring them." As Assistant Vice-President of the Foreign Department of the Bank she performs tasks integral to the
operations of the bank and her length of service with the bank totaling 28 years speaks volumes of her status as a
regular employee of the bank. In fine, as a regular employee, she is entitled to security of tenure; that is, her services
may be terminated only for a just or authorized cause. This being in truth a case of illegal dismissal, it is no wonder
then that the Bank endeavored to the very end to establish loss of trust and confidence and serious misconduct on
the part of private respondent but, as will be discussed later, to no avail.[92]

An "Assistant Vice President" is not among the officers stated in Section 25 of the Corporation Code.[93] A
corporation's President, however, is explicitly stated as a corporate officer.

Finding that petitioner Malcaba is the President of respondent corporation and a corporate officer, any issue on his
alleged dismissal is beyond the jurisdiction of the Labor Arbiter or the National Labor Relations Commission. Their
adjudication on his money claims is void for lack of jurisdiction. As a matter of equity, petitioner Malcaba must,
therefore, return all amounts received as judgment award pending final adjudication of his claims. This Court's
dismissal of petitioner Malcaba's claims, however, is without prejudice to his filing of the appropriate case in the
proper forum.

III

Article 294 [279]] of the Labor Code provides that an employer may terminate the services of an employee only upon
just or authorized causes.[94] Article 297 [282] enumerates the just causes for termination, among which is "[f]raud or
willful breach by the employee of the trust reposed in him by his employer or duly authorized representative[.]"

Loss of trust and confidence is a just cause to terminate either managerial employees or rank-and-file employees
who regularly handle large amounts of money or property in the regular exercise of their functions.[95]

For an act to be considered a loss of trust and confidence, it must be first, work-related, and second, founded on
clearly established facts:
The complained act must be work related such as would show the employee concerned to be unfit to continue
working for the employer and it must be based on a willful breach of trust and founded on clearly established facts.
The basis for the dismissal must be clearly and convincingly established but proof beyond reasonable doubt is not
necessary.[96]

The breach of trust must likewise be willful, that is, "it is done intentionally, knowingly and purposely, without
justifiable excuse, as distinguished from an act done carelessly, thoughtlessly, heedlessly or inadvertently."[97]

Petitioner Nepomuceno alleges that he was illegally dismissed merely for his failure to inform his superiors of the
actual dates of his vacation leave. Respondents, however, contend that as District Business Manager, petitioner
Nepomuceno lost the corporation's trust and confidence by failing to report for work during a crucial sales period.

As found by the National Labor Relations Commission, petitioner Nepomuceno had filed for leave, which was
approved, for April 24, 25, and 28, 2008 to go on vacation in Malaysia. However, he left for Malaysia on the evening
of April 22, 2008, and thus, failed to report for work on April 23, 2008.

Petitioner Nepomuceno claims that he only knew that his flight was for the evening of April 22, 2008 on the day of
his flight. Respondents, however, insist that he "deliberately concealed the actual date of departure as he knows
that he would be out of the country on a crucial period of sales generation and bookings . . . [and] therefore knew
that his application for leave would be denied."[98] Otherwise stated, respondents contend that his dismissal was a
valid exercise of their management prerogative to discipline and dismiss managerial employees unworthy of their
trust and confidence.

The concept of a management prerogative was already passed upon by this Court in San Miguel Brewery Sales Force
Union v. Ople:[99]

Except as limited by special laws, an employer is free to regulate, according to his own discretion and judgment, all
aspects of employment, including hiring, work assignments, working methods, time, place and manner of work, tools
to be used, processes to be followed, supervision of workers, working regulations, transfer of employees, work
supervision, lay-off of workers and the discipline, dismissal and recall of work. . . .

Every business enterprise endeavors to increase its profits. In the process, it may adopt or devise means designed
towards that goal. In Abott Laboratories vs. NLRC, . . . We ruled:

. . . Even as the law is solicitous of the welfare of the employees, it must also protect the right of an employer to
exercise what are clearly management prerogatives. The free will of management to conduct its own business affairs
to achieve its purpose cannot be denied.

So long as a company's management prerogatives are exercised in good faith for the advancement of the employer's
interest and not for the purpose of defeating or circumventing the rights of the employees under special laws or
under valid agreements, this Court will uphold them.[100]

While an employer is free to regulate all aspects of employment, the exercise of management prerogatives must be
in good faith and must not defeat or circumvent the rights of its employees.

In industries that mainly rely on sales, employers are free to discipline errant employees who deliberately fail to
report for work during a crucial sales period. It would have been reasonable for respondents to discipline petitioner
Nepomuceno had he been a problematic employee who unceremoniously refused to do his work.

However, as found by the Labor Arbiter and the National Labor Relations Commission, petitioner Nepomuceno
turned over all of his pending work to a reliever before he left for Malaysia. He was able to reach his sales quota and
surpass his sales target even before taking his vacation leave. Respondents did not suffer any financial damage as a
result of his absence. This was also petitioner Nepomuceno's first infraction in his nine (9) years of service with
respondents.[101] None of these circumstances constitutes a willful breach of trust on his part. The penalty of
dismissal, thus, was too severe for this kind of infraction.
The manner of petitioner Nepomuceno's dismissal was likewise suspicious. In all cases of employment termination,
the employee must be granted due process. The manner by which this is accomplished is stated in Book V, Rule XXIII,
Section 2 of the Rules Implementing the Labor Code:

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.

Here, petitioner Nepomuceno received a memorandum on April 23, 2008, asking him to explain why no
administrative investigation should be held against him. He submitted an explanation on the same day and another
explanation on May 2, 2008. On May 7, 2008, he was given his notice of termination, which had already taken effect
two (2) days earlier, or on May 5, 2008.[102]

It is true that "[t]he essence of due process is simply an opportunity to be heard."[103] Petitioner Nepomuceno had
two (2) opportunities within which to explain his actions. This would have been sufficient to satisfy the requirement.
The delay in handing him his notice of termination, however, appears to have been an afterthought. While strictly
not a violation of procedural due process, respondents should have been more circumspect in complying with the
due process requirements under the law.

Considering that petitioner Nepomuceno's dismissal was done without just cause, he is entitled to reinstatement
and full backwages.[104] If reinstatement is not possible due to strained relations between the parties, he shall be
awarded separation pay at the rate of one (1) month for every year of service. [105]

IV

Under Article 297 [282] of the Labor Code, an employer may terminate the services of an employee who commits
willful disobedience of the lawful orders of the employer:

Article 297. [282] Termination by Employer. — An employer may terminate an employment for any of the following
causes:

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

For disobedience to be considered as just cause for termination, two (2) requisites must concur: first, "the
employee's assailed conduct must have been wilful or intentional," and second, "the order violated must have
been reasonable, lawful, made known to the employee and must pertain to the duties which he [or she] had been
engaged to discharge."[106] For disobedience to be willful, it must be "characterized by a wrongful and perverse
mental attitude rendering the employee's act inconsistent with proper subordination."[107]

The conduct complained of must also constitute "harmful behavior against the business interest or person of his [or
her] employer."[108]Thus, it is implied in every case of willful disobedience that "the erring employee obtains undue
advantage detrimental to the business interest of the employer."[109]
Petitioner Palit-Ang, as Finance Officer, was instructed by respondent Del Castillo to give a cash advance of
P3,000.00 to District Branch Manager Gamboa on November 26, 2007. This order was reasonable, lawful, made
known to petitioner Palit-Ang, and pertains to her duties.[110] What is left to be determined, therefore, is whether
petitioner Palit-Ang intentionally and willfully violated it as to amount to insubordination.

When Gamboa went to collect the money from petitioner Palit-Ang, he was told to return the next day as she was still
busy. When petitioner Palit-Ang found out that the money was to be used for a car tune-up, she suggested to
Gamboa to just get the money from his mobilization fund and that she just would reimburse it after.[111] The Court of
Appeals found that these circumstances characterized petitioner Palit-Ang's "arrogance and hostility,"[112] in failing to
comply with respondent Del Castillo's order, and thus, warranted her dismissal.

On the contrary, there was no ill will between Gamboa and petitioner Palit-Ang. Petitioner Palit-Ang's failure to
immediately give the money to Gamboa was not the result of a perverse mental attitude but was merely because
she was busy at the time. Neither did she profit from her failure to immediately give the cash advance for the car
tune-up nor did respondents suffer financial damage by her failure to comply. The severe penalty of dismissal was
not commensurate to her infraction. In Dongon v. Rapid Movers and Forwarders:[113]

To us, dismissal should only be a last resort, a penalty to be meted only after all the relevant circumstances have
been appreciated and evaluated with the goal of ensuring that the ground for dismissal was not only serious but
true. The cause of termination, to be lawful, must be a serious and grave malfeasance to justify the deprivation of a
means of livelihood. This requirement is in keeping with the spirit of our Constitution and laws to lean over
backwards in favor of the working class, and with the mandate that every doubt must be resolved in their favor.

Although we recognize the inherent right of the employer to discipline its employees, we should still ensure that the
employer exercises the prerogative to discipline humanely and considerately, and that the sanction imposed is
commensurate to the offense involved and to the degree of the infraction. The discipline exacted by the employer
should further consider the employee's length of service and the number of infractions during his employment.
The employer should never forget that always at stake in disciplining its employee are not only his position but also
his livelihood, and that he may also have a family entirely dependent on his earnings.[114]

Petitioner Palit-Ang likewise assails the failure of respondents to inform her of her right to counsel when she was
being investigated for her infraction. As previously discussed, "[t]he essence of due process is simply an opportunity
to be heard,"[115] not that the employee must be accompanied by counsel at all times. A hearing was conducted and
she was furnished a notice of termination explaining the grounds for her dismissa1.[116] She was not denied due
process.

Petitioner Palit-Ang, nonetheless, is considered to have been illegally dismissed, her penalty not having been
proportionate to the infraction committed. Thus, she is entitled to reinstatement and full backwages.[117] If
reinstatement is not possible due to strained relations between the parties, she shall be awarded separation pay at
the rate of one (1) month for every year of service.[118]

WHEREFORE, the Petition is PARTIALLY GRANTED. Petitioner Christian C. Nepomuceno and petitioner Laura Mae
Fatima F. Palit-Ang are DECLARED to have been illegally dismissed. They are, therefore, entitled to reinstatement
without loss of seniority rights, or in lieu thereof, separation pay; and the payment of backwages from the filing of
their Complaints until finality of this Decision.

The Court of Appeals February 19, 2013 Decision and September 10, 2013 Resolution in CA-G.R. SP No. 119093, finding that the National Labor Relations
Commission had no jurisdiction to adjudicate petitioner Nicanor F. Malcaba's claims is SUSTAINED. Petitioner Malcaba is further ordered to RETURN the amount
of P4,937,420.40 to respondents for having been erroneously awarded. This shall be without prejudice to the filing of petitioner Malcaba's claims in the proper
forum.

This case is hereby REMANDED to the Labor Arbiter for the proper computation of petitioners Christian C. Nepomuceno's and Laura Mae Fatima F. Palit-Ang's
money claims.
Notes: The provisions of the Constitution as well as the Labor Code which afford protection to labor apply to
Filipino employees whether working within the Philippines or abroad. Moreover, the principle of lex loci contractus
(the law of the place where the contract is made) governs in this jurisdiction. An employee's right to security of
tenure, protected by the Constitution and statutes, means that no employee shall be dismissed unless there are
just or authorized causes and only after compliance with procedural and substantive due process. By our laws,
overseas Filipino workers (OFWs) may only be terminated for a just or authorized cause and after compliance with
procedural due process requirements.

Respondent is an OFW-Singer in Korea, Petitioner-PTCPI is the recruitment agency, Moldes is a corporate officer of
PTCPI. The original contract of Employment signed and approved by the POEA is only 6 months (renewable for
another 6 months). However, Respondent extended for another 3 months, so she stayed in Korea for a total of 9
months until she was repatriated in the Philippines due to “overstaying and doing immoral conduct in the Pub.”
Respondent filed a case for Illegal Dismissal. LA- Dismissed in favor of PTCPI, NLRC reversed the decision of LA and
ruled in favor of Respondent but in a Motion for reconsideration, set aside their prior ruling and upheld the
decision of the LA. In a Petition for Review with the CA, the CA ruled in favor of Respondent that there is Illegal
Dismissal.

ISSUES: (1) WON there is illegal dismissal, (2) Is PTCPI and Moldes is jointly liable with the Principal.

SC HELD: (1) There is Illegal Dismissal on the ground that the Due process both procedural and substantive were
not followed. Also, since the contract was made in the Philippines (Lex Loci Contractus), Philippine Labor law shall
govern which protects the rights of the Employees in terms of Security of Tenure as per the Constitution. (2) PTCPI
is jointly and severally liable together with SAENCO. Moldes is also liable as corporate officer who acted in bad
faith.

PRINCESS TALENT CENTER PRODUCTION, INC., AND/OR LUCHI SINGH MOLDES, PETITIONERS, VS. DESIREE T.
MASAGCA, RESPONDENT.
G.R. No. 191310, April 11, 2018

Before the Court is a Petition for Review on Certiorari under Rule 45 of the Revised Rules of Court filed by petitioners
Princess Talent Center Production, Inc. (PTCPI) and Luchi Singh Moldes (Moldes) assailing: (1) the Decision[1] dated
November 27, 2009 of the Court of Appeals in CA-G.R. SP No. 110277, which annulled and set aside the Resolutions
dated November 11, 2008[2] and January 30, 2009[3] of the National Labor Relations Commission (NLRC) in NLRC NCR
CA No. 049990-06, and ordered petitioners and their foreign principal, Saem Entertainment Company, Ltd.
(SAENCO), to jointly and severally pay respondent Desiree T. Masagca her unpaid salaries for one year, plus
attorney's fees; and (2) the Resolution[4] dated February 16, 2010 of the appellate court in the same case, which
denied the Motion for Reconsideration of petitioners and SAENCO.

I
FACTUAL ANTECEDENTS

Sometime in November 2002, respondent auditioned for a singing contest at ABC-Channel 5 in Novaliches, Quezon
City when a talent manager approached her to discuss her show business potential. Enticed by thoughts of a future
in the entertainment industry, respondent went to the office of petitioner PTCPI, a domestic corporation engaged in
the business of training and development of actors, singers, dancers, and musicians in the movie and entertainment
industry.[5] At the office, respondent met petitioner Moldes, President of petitioner PTCPI, who persuaded
respondent to apply for a job as a singer/entertainer in South Korea.

A Model Employment Contract for Filipino Overseas Performing Artists (OPAS) To Korea[6] (Employment Contract)
was executed on February 3, 2003 between respondent and petitioner PTCPI as the Philippine agent of SAENCO, the
Korean principal/promoter. Important provisions of the Employment Contract are reproduced below:

1. DURATION AND PERIOD OF EFFECTIVITY OF THE CONTRACT

 1.1 Duration: This contract shall be enforced for the period of six months, Extendible by another six months
by mutual agreement of the parties.

Affectivity (sic): The contract shall commence upon the Talent's departure from The Philippines (Date 6)
and shall remain in force as Stipulated in the duration, unless sooner terminated by the mutual consent
of The parties or due to circumstances beyond their control. Booking of Talent Shall be effected within
three (3) days upon arrival in Korea, But only after Undergoing Mandatory Post-Arrival Briefing at the
Philippine Embassy Overseas Labor Office (POLO), Philippine Embassy in Seoul.

2. NAME OF PERFORMANCE VENUE:

Siheung Tourist Hotel Night Club

NAME OF OWNER:

Cho Kang Hyung

ADDRESS:

1622-6 (B2) Jung Wang Dons Siheung Kyung Ki Do

xxxx

(Subject to ocular inspection, Verification, and approval by the POLO)

3. COMPENSATION: The Talent shall receive a monthly compensation of a Minimum of U.S.D. $600, (Ranging
from U.S.D. 500 to 800 based on The categories of the ARB, skill and experience of the Talent, and of the
Performance Venue) which shall accrue beginning on the day of the Talent's Departure from the Philippines
and shall be paid every end of the month directly To The Talent. By the Employer, minus the authorized fees of
the Philippine Agent and The Talent Manager, which shall be deducted at a maximum monthly Rates of U.S.
$100 and U.S. $100 for the Philippine Agent and Talent Manager, respectively. Deductions of $200/month is
good for three (3) months only.

4. HOURS OF WORK, RESTDAY AND OVERTIME PAY

4.1 Hours of work: Maximum of Five (5) hours per day.

4.2 Rest day: One (1) day a week

4.3 Overtime Rate: (100) percent of regular rate or the prevailing rate in Korea as Required by the Labor
Standard Act.

xxxx

9. The services of the Talents as provided in this contract shall only be rendered at the Performance Venue
identified in this contract. Should there be a need and mutual agreement of the parties for the talent to
 transfer to another Performance Venue There shall be executed a new contract. The new contract shall be
subject of Verification requirement of the Philippine Overseas Labor Office, Philippine Embassy.

xxxx

12. TERMINATION:

A. Termination by the Employer: The Employer may terminate the Contract of Employment for any of the
following just causes: serious misconduct or Willful disobedience of the lawful orders of the employer,
gross or habitual Neglect of duties, violation of the laws of the host country. When the Termination of
the contract is due to the foregoing causes, the Talent shall Bear the cost of repatriation. In addition, the
Talent may be liable to Blacklisting and/or other penalties in case of serious offense.

B. Termination by the Talent: The Talent may terminate the contract for any of The following just causes:
when the Talent is maltreated by the Employer or Any of his/her associates, or when the employer
commits of (sic) the following — Non-payment of Talent salary, underpayment of salary in violation of
this Contract, non-booking of the Talent, physical molestation, assault or Subjecting the talent to
inhumane treatment or shame. Inhumane treatment Shall be understood to include forcing or letting the
talent to be used in Indecent performance or in prostitution. In any of the foregoing case, the Employer
shall pay the cost of repatriation and be liable to garnishment of The escrow deposit, aside from other
penalties that may arise from a case.

C. Termination due to illness: Any of the parties may terminate the contract on The ground of illness,
disease, or injury suffered by the Talent, where the Latter's continuing employment is prohibited by law
or prejudicial to his/her Health, or to the health of the employer, or to others. The cost of the
Repatriation of the Talent for any of the foregoing reasons shall be for the Account of the employer.[7]

Respondent left for South Korea on September 6, 2003 and worked there as a singer for nine months, until her
repatriation to the Philippines sometime in June 2004. Believing that the termination of her contract was unlawful
and premature, respondent filed a complaint against petitioners and SAENCO with the NLRC.

Respondent's Allegations

Respondent alleged that she was made to sign two Employment Contracts but she was not given the chance to read
any of them despite her requests. Respondent had to rely on petitioner Moldes's representations that: (a) her visa
was valid for one year with an option to renew; (b) SAENCO would be her employer; (c) she would be singing in a
group with four other Filipinas[8] at Seaman's Seven Pub at 82-8 Okkyo-Dong, Jung-Gu, Ulsan, South Korea; (d) her
Employment Contract had a minimum term of one year, which was extendible for two years; and (e) she would be
paid a monthly salary of US$400.00, less US$100.00 as monthly commission of petitioners. Petitioner Moldes also
made respondent sign several spurious loan documents by threatening the latter that she would not be deployed if
she refused to do so.

For nine months, respondent worked at Seaman's Seven Pub in Ulsan, South Korea - not at Siheung Tourist Hotel
Night Club in Siheung, South Korea as stated in her Employment Contract - without receiving any salary from
SAENCO. Respondent subsisted on the 20% commission that she received for every lady's drink the customers
purchased for her. Worse, respondent had to remit half of her commission to petitioner Moldes for the payment of
the fictitious loan. When respondent failed to remit any amount to petitioner Moldes in May 2004, petitioner
Moldes demanded that respondent pay the balance of the loan supposedly amounting to US$10,600.00. To dispute
the loan, respondent engaged the legal services of Fortun, Narvasa & Salazar, a Philippine law firm, which managed
to obtain copies of respondent's Employment Contract and Overseas Filipino Worker Information Sheet. It was only
then when respondent discovered that her employment was just for six months and that her monthly compensation
was US$600.00, not just US$400.00.

Respondent further narrated that on June 13, 2004, petitioner Moldes went to South Korea and paid the salaries of
all the performers, except respondent. Petitioner Moldes personally handed respondent a copy of the loan
document for US$10,600.00 and demanded that respondent terminate the services of her legal counsel in the
Philippines. When respondent refused to do as petitioner Moldes directed, petitioner Moldes withheld respondent's
salary. On June 24, 2004, Park Sun Na (Park), President of SAENCO,[9] went to the club where respondent worked,
dragged respondent outside, and brought respondent to his office in Seoul where he tried to intimidate respondent
into apologizing to petitioner Moldes and dismissing her counsel in the Philippines. However, respondent did not
relent. Subsequently, Park turned respondent over to the South Korean immigration authorities for deportation on
the ground of overstaying in South Korea with an expired visa. It was only at that moment when respondent found
out that petitioner Moldes did not renew her visa.

Respondent filed the complaint against petitioners and SAENCO praying that a decision be rendered declaring them
guilty of illegal dismissal and ordering them to pay her unpaid salaries for one year, inclusive of her salaries for the
unexpired portion of her Employment Contract, backwages, moral and exemplary damages, and attorney's fees.

Petitioners' Allegations

Petitioners countered that respondent signed only one Employment Contract, and that respondent read its contents
before affixing her signature on the same. Respondent understood that her Employment Contract was only for six
months since she underwent the mandatory post-arrival briefing before the Philippine Labor Office in South Korea,
during which, the details of her Employment Contract were explained to her. Respondent eventually completed the
full term of her Employment Contract, which negated her claim that she was illegally dismissed.

Petitioners additionally contended that respondent, on her own, extended her Employment Contract with SAENCO,
and so petitioners' liability should not extend beyond the original six-month term of the Employment Contract
because the extension was made without their participation or consent.

Petitioners likewise averred that they received complaints that respondent violated the club policies of SAENCO
against wearing skimpy and revealing dresses, dancing in a provocative and immoral manner, and going out with
customers after working hours. Respondent was repatriated to the Philippines on account of her illegal or immoral
activities. Petitioners also insisted that respondent's salaries were paid in full as evidenced by the nine cash
vouchers[10] dated October 5, 2003 to June 5, 2004. Petitioners submitted the Magkasamang Sinumpaang
Salaysay[11] of respondent's co-workers, Sheila Marie V. Tiatco (Tiatco) and Carolina Flores (Flores), who confirmed
that respondent violated the club policies of SAENCO and that respondent received her salaries.

Petitioners submitted as well the Sworn Statement[12] dated November 9, 2004 of Baltazar D. Fuentes (Baltazar),
respondent's husband, to prove that respondent obtained a loan from petitioner PTCPI. Baltazar affirmed that
petitioner PTCPI lent them some money which respondent used for her job application, training, and processing of
documents so that she could work abroad. A portion of the loan proceeds was also used to pay for their land in
Lagrimas Village, Tiaong, Quezon, and respondent's other personal expenses.

Petitioner Moldes, for her part, disavowed personal liability, stating that she merely acted in her capacity as a
corporate officer of petitioner PTCPI.

Petitioners thus prayed that the complaint against them be dismissed and that respondent be ordered to pay them
moral and exemplary damages for their besmirched reputation, and attorney's fees for they were compelled to
litigate and defend their interests against respondent's baseless suit.
Labor Arbiter's Ruling

On May 4, 2006, Labor Arbiter Antonio R. Macam rendered a Decision[13] dismissing respondent's complaint, based
on the following findings:

The facts of the case and the documentary evidence submitted by both parties would show that herein [respondent]
was not illegally dismissed. This Office has noted that the POEA approved contract declares that the duration of
[respondent's] employment was for six (6) months only. The fact that the duration of [respondent's] employment
was for six (6) months only is substantiated by the documentary evidence submitted by both parties. Attached is
[respondent's] Position Paper as Annex "D" is a Model Employment Contract for Filipino Overseas Performing Artist
to Korea signed by the parties and approved by the POEA. Also attached to the Position Paper of the [petitioners] as
Annex "1" is a copy of the Employment Contract signed by the parties and approved by POEA. We readily noted that
the common evidence submitted by the parties would prove that [respondent's] employment was for six (6) months
only. The deploying agency, Princess. Talent Center Production, Inc. processed the [respondent] for a six-month
contract only and there is no showing that the deploying agency participated in the extension of the contract made
by the [respondent] herself. There is likewise no evidence on record which would show that the POEA approved such
an extension. As matters now stand, this Office has no choice but to honor the six months duration of the contract as
approved by the POEA. The conclusion therefore is that the [respondent] was not illegally dismissed since she was
able to finish the duration of the contract as approved by the POEA.

Following the above ruling, the [respondent] is likewise not entitled to the payment of the unexpired portion of the
employment contract. This Office could not exactly determine what [respondent] means when she refers to the
unexpired portion of the contract. The [respondent] comes to this Office alleging that [petitioners] are still liable to
the new extended contract of the employment without however presenting the said contract binding the
recruitment agency as jointly and solidarily liable with the principal employer. Such a document is vital as this will
prove the participation of the [petitioners] and the latter's assumption of responsibility. Without the presentation of
the "extended" contract, the "unexpired portion" could not be determined. [Respondent's] claim therefore for the
payment of the unexpired portion of the contract must also fail.

The crux of the present controversy is whether or not [respondent] was paid her salaries during the period she
worked in Korea. [Respondent] claims that she was not paid her salaries during the time she worked in Korea.
[Petitioners] presented an Affidavit executed by Filipino workers who worked with [respondent] in Korea declaring
that they, together with the [respondent], were paid by the foreign employer all their salaries and wages.
[Petitioners and SAENCO] likewise presented vouchers showing that the [respondent] received full payment of her
salaries during the time that she worked in Korea. In the pleading submitted by the [respondent], she never denied
the fact that she indeed signed the vouchers showing full payment of her salaries.

It becomes clear therefore that [respondent] miserably failed to destroy the evidentiary value of the vouchers
presented by the [petitioners]. This Office will not dare to declare as void or incompetent the vouchers signed by the
[respondent] in the absence of any evidence showing any irregularity so much so that this Office did not fail to notice
the inconsistencies in the [respondent's] position paper.

[Respondent's] claim for the payment of overtime pay likewise lacks merit. There was no showing that [respondent]
actually rendered overtime work. Mere allegation is not sufficient to establish [respondent's] entitlement to
overtime pay. It is [respondent's] obligation to prove that she actually rendered overtime work to entitle her for the
payment of overtime pay.[14]

In the end, the Labor Arbiter dismissed for lack of merit respondent's complaint, as well as all other claims of the
parties.[15]

Ruling of the NLRC

Respondent appealed the Labor Arbiter's Decision before the NLRC.[16] In a Decision[17] dated May 22, 2008, the NLRC
ruled in respondent's favor, reasoning that:
There is sufficient evidence to establish the fact that [respondent] was not paid her regular salaries. A scrutiny of the
vouchers presented shows that it bears the peso sign when in fact the salaries of [respondent] were to be received
in Korea. Furthermore, it appears that the vouchers were signed in one instance due to similarities as to how they
were
written.

Despite the fact that We find the vouchers questionable, they prove that [respondent] was allowed to work beyond
the effectivity of her visa. [Petitioners], wanting to prove that they paid [respondent's] salary, presented vouchers
for the period starting October 2003 up to June 2004. It covers nine (9) months which implies that, despite having a
visa good for six months, they consented to [respondent] working up to nine months. Otherwise, if they were
against [respondent's] overstaying in Korea, they could have asked for her deportation earlier. Also, if [respondent]
was misbehaving and went against their policy, they could have taken disciplinary action against her earlier.

The "Magkasamang Sinumpaang Salaysay" of Ms. Tiatco and Ms. Flores, which was presented by [petitioners] to
prove the alleged immoral acts of [respondent] and that they received their salaries on time, is self-serving and
deserves scant weight as the affiants are beholden to [petitioners and SAENCO] from whom they depended their
employment.

We find as more credible [respondent's] allegations that she was made to believe that her contract was for one year
and that her overstaying in Korea was with the consent of [petitioners and SAENCO], and that when she refused to
surrender the 50% of her commission, that was the only time they questioned her stay and alleged that she
committed immoral and illegal acts.

Further, the zealousness of [respondent] in filing a case against [petitioners and SAENCO] in different government
agencies for different causes of action manifests the intensity of her desire to seek justice for the sufferings she
experienced.

There is sufficient evidence to establish that [petitioners and SAENCO] misrepresented to [respondent] the details of
her employment and that she was not paid her salaries. Hence, she is entitled to be paid her salaries for one year at
the rate of $600 per month as this was what [petitioners and SAENCO] represented to her.

For lack of proof, however, [respondent] is not entitled to her claim for overtime pay.[18]

Based on the foregoing, the NLRC ruled:

WHEREFORE, premises considered, the Decision of Labor Arbiter Antonio R. Macam dated 4 May 2006 is hereby
REVERSED and SET ASIDE and a NEW ONE entered ordering [petitioners and SAENCO] to jointly and severally pay
[respondent] her salaries for one year at a rate of $600 per month, or a total of US$7,200. The claim for overtime
pay is DENIED for lack of sufficient basis.[19]

Acting on the Motion for Reconsideration[20] of petitioners, however, the NLRC issued a Resolution[21] on November
11, 2008, reversing its previous Decision. According to the NLRC, respondent's appeal was dismissible for several
fatal procedural defects, to wit:

Perusal of the records show that [respondent's] new counsel filed on May 31, 2006 a Motion for Extension of Time
to File a Motion for Reconsideration due to lack of material time in preparing a Motion for Reconsideration.
However, [respondent's] counsel filed a Memorandum of Appeal through registered mail on June 1, 2006 x x x and
paid the appeal fee on July 17, 2006 x x x.

Rule VI, Section 4 of the 2005 Revised Rules and Procedures of the National Labor Relations Commission provides
that:

Section 4, requisites for Perfection of Appeal. - a) The appeal shall be: 1) filed within the reglementary
period provided in Section 1 of this Rule; 2) verified by the appellant himself in accordance with Section 4, Rule 7 of
the Rules of Court, as amended; 3) in the form of a memorandum of appeal which shall state the grounds relied
upon and the arguments in support thereof, the relief prayed for, and with a statement of the date the appellant
received the appealed decision, resolution or order; 4) in three (3) legibly typewritten or printed copies; and 5)
accompanied by i) proof of payment of the required appeal fee, ii) posting of a cash or surety bond as provided in
Section 6 of this Rule; iii) a certificate of non-forum shopping; and iv) proof of service upon the other parties.

The above-quoted Rules explicitly provides for the requisites for perfecting an appeal, which [respondent] miserably
failed to comply. [Respondent's] Memorandum of Appeal contains no averments as to the date [respondent] or her
counsel received the Decision of the Labor Arbiter. The appeal is unverified. No certificate of non-forum shopping
was attached to the appeal. The appeal fee was paid only on July 17, 2006, or after more than forty-six (46) days
from the filing of the Memorandum of Appeal on June 1, 2006. Lacking these mandatory requirements,
[respondent's] appeal is fatally defective, and no appeal was perfected within the reglementary period.
Consequently, the Decision of the Labor Arbiter had become final and executory. The belated filing of the verification
and certification on non-forum shopping will not cure its defect and it only proves that indeed [respondent's] appeal
was not perfected at all.[22]

Nonetheless, the NLRC set technicalities aside and still proceeded to resolve the case on the merits, ultimately
finding that respondent failed to present evidence to prove she had been illegally dismissed:

We cannot subscribe to [respondent's] contention that she was illegally dismissed from her employment. Records
show that the Model Employment Contract presented as evidence by both [respondent] and [petitioners and
SAENCO] would prove that [respondent's] employment was for a period of six (6) months only. Aside from
[respondent's] allegation that [petitioners and SAENCO] misrepresented to her that her contract is for a period of
one (1) year, there is no other evidence on record which will corroborate and strengthen such allegation. We took
note of the fact that [respondent's] Model Employment Contract was verified by the Labor Attache of the Philippine
Embassy in Korea and duly approved by the Philippines Overseas Employment Administration (POEA). There is no
showing that her contract was extended by [petitioners and SAENCO], or that an extension was approved by the
POEA. All the pieces of documentary evidence on record prove otherwise.

We agree with [petitioners and SAENCO's] argument that [respondent] was given a copy of her employment
contract prior to her departure for Korea because [respondent] was required to submit a copy thereof to the
Philippine Labor Office upon her arrival in Korea. We are also convinced that [respondent] read and understood the
terms and conditions of her Model Employment Contract because of the following reasons: First, [respondent] was
informed thereof when a post arrival briefing was conducted at the Philippine Embassy Overseas Labor Office. This
procedure is mandatory, and the booking of the talent shall be effective only within three (3) days after her arrival in
Korea. Second, [respondent's] passport shows that her visa is valid only for six (6) months x x x. Third, the Model
Employment Contract has been signed by [respondent] on the left hand margin on each and every page and on the
bottom of the last page thereof x x x. Fourth, [respondent's] claim that [petitioners and SAENCO] forced her in
signing two (2) employment contracts appears to be doubtful considering that she avers that she was not able to
read the terms and conditions of her employment contract. It is amazing how she was able to differentiate the
contents of the two (2) contracts she allegedly signed without first reading it.

On the basis of the foregoing, [respondent's] contention that she did not know the terms and conditions of her
Model Employment Contract, in particular the provision which states that her contract and her visa is valid only for
six (6) months, lacks credence. Thus, it can be concluded that she was not dismissed at all by [petitioners and
SAENCO] as her employment contract merely expired.

As to [respondent's] allegation that she was not paid her salaries during her stay in Korea, [petitioners and SAENCO]
presented cash vouchers and affidavits of co-employees showing that [respondent] was paid US$600 per month by
her Korean employer. [Respondent] failed to prove that the vouchers were faked, or her signatures appearing
thereon were falsified. Hence, [respondent] is not entitled to her claim for unpaid salaries.

On her claim for the payment of her salary for the unexpired portion of her contract, We agree with the findings of
the Labor Arbiter that the same lacks merit considering that she was able to finish her six (6) month employment
contract.[23]
Consequently, the NLRC granted the Motion for Reconsideration of petitioners and reinstated the Labor Arbiter's
Decision dated May 4, 2006 dismissing respondent's complaint against petitioners and SAENCO.[24]

In a subsequent Resolution dated January 30, 2009, the NLRC denied respondent's Motion for Reconsideration[25] as
it raised no new matters of substance which would warrant reconsideration of the NLRC Resolution dated November
11, 2008.

Ruling of the Court of Appeals

Respondent sought remedy from the Court of Appeals by filing a Petition for Certiorari,[26] alleging that the NLRC
acted with grave abuse of discretion amounting to excess or lack of jurisdiction in reinstating the Labor Arbiter's
Decision.

The Court of Appeals, in its Decision dated November 27, 2009, took a liberal approach by excusing the technical
lapses of respondent's appeal before the NLRC for the sake of substantial justice:

The requisites for perfecting an appeal before the NLRC are laid down in Rule VI of the 2005 Revised Rules of
Procedure of the NLRC. Section 4 of the said Rule requires that the appeal shall be verified by the appellant,
accompanied by a certification of non-forum shopping and with proof of payment of appeal fee. As a general rule,
these requirements are mandatory and non-compliance therewith would render the appealed judgment final and
executory. Be that as it may, jurisprudence is replete that courts have adopted a relaxed and liberal interpretation of
the rules on perfection of appeal so as to give way to the more prudent policy of deciding cases on their merits and
not on technicality, especially if there was substantial compliance with the rules.

In the case of Manila Downtown YMCA vs. Remington Steel Corp., the Supreme Court held that non-compliance
with [the] verification does not necessarily render the pleading fatally defective, hence, the court may order its
correction if verification is lacking, or act on the pleading although it is not verified, if the attending circumstances
are such that strict compliance with the Rules may be dispensed with in order that the ends of justice may thereby
served. Moreover, in Roadway Express, Inc. vs. CA, the High Court allowed the filing of the certification against
forum shopping fourteen (14) days before the dismissal of the petition. In Uy v. LandBank, the petition was
reinstated on the ground of substantial compliance even though the verification and certification were submitted
only after the petition had already been originally dismissed.

Here, the records show that [respondent] had no intent to delay, or prolong the proceedings before the NLRC. In
fact, the NLRC, in its Resolution dated November 11, 2008 took note that [respondent] belatedly filed her
verification and certification on non-forum shopping. Such belated filing should be considered as substantial
compliance with the requirements of the law for perfecting her appeal to the NLRC. Moreover, the appeal fee was
eventually paid on July 17, 2006. Clearly, [respondent] had demonstrated willingness to comply with the
requirements set by the rules. Besides, in its earlier Decision dated May 22, 2008, the First Division of the NLRC
brushed aside these technicalities and gave due course to [respondent's] appeal.

Verily, We deem it prudent to give a liberal interpretation of the technical rules on appeal, taking into account the
merits of [respondent's] case. After all, technical rules of procedure in labor cases are not to be strictly applied in
order to serve the demands of substantial justice.[27] (Citations omitted.)

The appellate court then held that respondent was dismissed from employment without just cause and without
procedural due process and that petitioners and SAENCO were solidarity liable to pay respondent her unpaid salaries
for one year and attorney's fees:

Time and again, it has been ruled that the onus probandi to prove the lawfulness of the dismissal rests with the
employer. In termination cases, the burden of proof rests upon the employer to show that the dismissal was for just
and valid cause. Failure to do so would necessarily mean that the dismissal was not justified and, therefore, was
illegal. In Royal Crown Internationale vs. National Labor Relations Commission and Nacionales, the Supreme Court
held that where termination cases involve a Filipino worker recruited and deployed for overseas employment, the
burden to show the validity of the dismissal naturally devolves upon both the foreign-based employer and the
employment agency or recruitment entity which recruited the worker, for the latter is not only the agent of the
former, but is also solidarity liable with its foreign principal for any claims or liabilities arising from the dismissal of
the worker.

In the case at bar, [petitioners] failed to discharge the burden of proving that [respondent] was terminated from
employment for a just and valid cause.

[Petitioners'] claim that [respondent] was deported because her employment contract has already expired, was
without any basis. Before being deployed to South Korea, [petitioners] made [respondent] believe that her contract
of employment was for one (1) year. [Respondent] relied on such misrepresentation and continuously worked from
September 11, 2003 up [to] June 24, 2004 or for more than nine (9) months. [Petitioners] never questioned her stay
beyond the six-month period. If [petitioners] were really against her overstaying in Korea, they could have easily
asked their principal, [SAENCO], to facilitate her immediate deportation. Even when [petitioner] Moldes sent the
demand letter to [respondent] in May 2004 or when she came to Korea to pay the salaries of the performers in June
2004, she never mentioned that [respondent's] contract has already expired.

Moreover, in the Model Employment Contract for Filipino Overseas Performing Artists (OPAS) to Korea filed with the
POEA which was entered into between [respondent] and [petitioners], it was categorically stated therein that the
name of her performance venue was Si Heung Tourist Hotel Night Club, owned by Cho Kang Hyung and with address
at Jung Wang Dong Siheung Kuyng Ki Do. However, [respondent] was made to work at Seaman's Seven Pub located
at Ulsan, South Korea owned by a certain Lee Young-Gun. [Respondent's] employment contract also states that she
should be receiving a monthly salary of US$600.00 and not US$400.00 as represented to her by [petitioner] Moldes.

The Court cannot likewise adhere to [petitioners'] claim that [respondent] committed serious misconduct and willful
disobedience to the lawful orders of her employer when she allegedly danced in an immoral manner, wore skimpy
costumes, and went out with clients. This Court is convinced from the records and pictures submitted by
[respondent] that her Korean employer, Lee Young-Gun, ordered them to wear provocative skirts while dancing and
singing to make the pub more attractive to their customers. Even the Seaman's Seven Pub poster itself was
advertising its singers and dancers wearing provocative dresses. [Respondent] was not even hired as a dancer, but
only as a singer as shown by her Overseas Filipino Worker Information. Besides, if [respondent] was misbehaving
offensively as early as September 2003, her employer could have likewise terminated her employment at the earliest
opportunity to protect its interest. Instead, [respondent] was allowed to work even beyond the period of her
contract. Thus, [petitioners'] defenses appear to be more of an afterthought which could not be given any weight.

Furthermore, [respondent] was not afforded her right to procedural due process of notice and hearing before she
was terminated. In the same case of Royal Crown Internationale vs. National Labor Relations Commission and
Nacionales, the Supreme Court ruled that all Filipino workers, whether employed locally or overseas, enjoy the
protective mantle of Philippine labor and social legislation, contract stipulations to the contrary notwithstanding.
This pronouncement is in keeping with the basic policy of the State to afford full protection to labor, promote full
employment, ensure equal work opportunities regardless of sex, race or creed, and regulate the relations between
workers and employers.

In the instant case, the records show that [respondent] was publicly accosted and humiliated by one Park Sun Na,
the President of [SAENCO], and was brought to its office in Seoul, Korea, which was a six (6) hour drive from the pub.
Such acts were witnessed and narrated by Wolfgang Pelzer, a Professor in the School of English, University of Ulsan,
South Korea and a frequent client of Seaman's Seven Pub, in his Affidavit dated August 16, 2004. When it became
apparent that [respondent] would not be apologizing to [petitioner] Moldes nor would she dismiss her lawyer in the
Philippines, Park Sun Na turned her over to the local authorities of South Korea. [Respondent] was then deported to
the Philippines allegedly for expiration of her visa. Worst, she was not allowed to get her personal belongings which
she left at the pub.

It may also be noted that [respondent] went to all the trouble of filing cases against [petitioners] in different
government agencies for different causes of action. Such zealousness of [respondent] manifests the intensity of her
desire to seek justice for the wrong done to her.[28] (Citations omitted.)

The Court of Appeals determined the respective liabilities of petitioners and SAENCO for respondent's illegal
dismissal to be as follows:

For being illegally dismissed, [respondent] is rightfully entitled to her unpaid salaries for one (1) year at the rate of
US$600.00 per month or a total of US$7,200.00. The US$600.00 per month was based on the rate indicated in her
contract [of] employment filed with the POEA. [Petitioners] also failed to present convincing evidence that
[respondent's] salaries were actually paid. The cash vouchers presented by [petitioners] were of doubtful character
considering that they do not bear [SAENCO's] name and tax identification numbers. The vouchers also appear to
have been signed in one instance due to the similarities as to how they were written.

[Petitioner PTCPI and SAENCO] should be held solidarity liable for the payment of [respondent's] salaries.
In Datuman vs. First Cosmopolitan Manpower and Promotion Services, Inc., the Supreme Court ruled that private
employment agencies are held jointly and severally liable with the foreign-based employer for any violation of the
recruitment agreement or contract of employment. This joint and solidary liability imposed by law against
recruitment agencies and foreign employers is meant to assure the aggrieved worker of immediate and sufficient
payment of what is due him. This is in line with the policy of the state to protect and alleviate the plight of the
working class.

We likewise rule that [petitioner] Moldes should be held solidarity liable with [petitioner PTCPI and SAENCO] for
[respondent's] unpaid salaries for one year. Well settled is the rule that officers of the company are solidarily liable
with the corporation for the termination of employees if they acted with malice or bad faith. Here, [petitioner]
Moldes was privy to [respondent's] contract of employment by taking an active part in the latter's recruitment and
deployment abroad. [Petitioner] Moldes also denied [respondent's] salary for a considerable period of time and
misrepresented to her the duration of her contract of employment.

[Respondent] should also be awarded attorney's fees equivalent to ten percent (10%) of the total monetary awards.
In Asian International Manpower Services, Inc., (AIMS) vs. Court of Appeals and Lacerna, the Supreme Court held
that in actions for recovery of wages or where an employee was forced to litigate and thus incurred expenses to
protect his rights and interests, a maximum often percent (10%) of the total monetary award by way of attorney's
fees is justified under Article 111 of the Labor Code, Section 8, Rule VIII, Book III of its Implementing Rules, and
paragraph 7, Article 2208 of the Civil Code.[29] (Citations omitted.)

The dispositive portion of the judgment of the appellate court reads:

WHEREFORE, premises considered, the instant petition for is hereby GRANTED. The assailed Resolutions of public
respondent NLRC, First Division, dated November 11, 2008 and January 30, 2009 are ANNULLED AND SET ASIDE.
Accordingly, [petitioner PTCPI, SAENCO, and petitioner Moldes] are ORDERED to jointly and severally pay
[respondent's] unpaid salaries for one (1) year at a rate of US$600.00 per month or a total of US$7,200.00. In
addition, [petitioners and SAENCO] are ORDERED to jointly and severally pay [respondent] attorney's fees equivalent
to ten percent (10%) of the total monetary award.[30]

The Motion for Reconsideration[31] of petitioners was denied by the Court of Appeals in a Resolution dated February
16, 2010 because the issues raised therein were already judiciously evaluated and passed upon by the appellate
court in its previous Decision, and there was no compelling reason to modify or reverse the same.

II
THE RULING OF THE COURT

Petitioners filed the instant Petition for Review on Certiorari under Rule 45 of the Rules of Court assigning a sole
error on the part of the Court of Appeals:

The Honorable Court of Appeals erred and abused its action when it ruled that private respondent is entitled to
recover from the petitioners her alleged unpaid salaries during her employment in South Korea despite of (sic) the
abundance of proof that she was fully paid of (sic) her salaries while working as [an] overseas contract worker in
South Korea.[32]

Petitioners maintain that respondent initially worked at Siheung Tourist Hotel Night Club (Siheung Night Club). After
completing her six-month employment contract in Siheung Night Club, respondent decided to continue working at
Ulsan Seaman's Seven Pub without the consent of petitioners. Throughout her employment in South Korea,
respondent's salaries were paid as evidenced by the cash vouchers and Entertainer Wage Roster,[33] which were
signed by respondent and attached to the "Reply"[34] dated January 11, 2010 of Park, Chief Executive Officer (CEO) of
SAENCO, duly notarized per the Certificate of Authentication[35] dated January 25, 2010 issued by Consul General
Sylvia M. Marasigan of the Philippine Embassy in Seoul, South Korea and the Notarial Certificate of Sang Rock Law
and Notary Office, Inc.[36]

Petitioners contend that respondent totally failed to discharge the burden of proving nonpayment of her salaries,
yet, the Court of Appeals still ordered petitioners to pay the same on the basis of respondent's bare allegations.

Petitioners also argue that SAENCO would not risk its status as a reputable entertainment and promotional entity by
violating South Korean labor law. Petitioners assert that in the absence of any showing that SAENCO was at anytime
charged with nonpayment of its employee's salaries before the Labor Ministry of South Korea, petitioners could not
be deemed to have breached the Employment Contract with respondent. Petitioners describe respondent's
complaint as plain harassment.

Thus, petitioners pray that the Court nullify the Decision dated November 27, 2009 and Resolution dated February
16, 2010 of the Court of Appeals.

The Petition is partly meritorious.

Questions of Fact

It is apparent from a perusal of the Petition at bar that it essentially raises questions of fact. Petitioners assail the
findings of the Court of Appeals on the ground that the evidence on record does not support respondent's claims of
illegal dismissal and nonpayment of salaries. In effect, petitioners would have the Court sift through, calibrate, and
re-examine the credibility and probative value of the evidence on record so as to ultimately decide whether or not
there is sufficient basis to hold petitioners liable for the payment of respondent's salaries for one year, plus
attorney's fees.[37]

Normally, it is not the task of the Court to re-examine the facts and weigh the evidence on record, for basic is the
rule that the Court is not a trier of facts, and this rule applies with greater force in labor cases. Questions of fact are
for the labor tribunals to resolve. It is elementary that the scope of this Court's judicial review under Rule 45 of the
Rules of Court is confined only to errors of law and does not extend to questions of fact. However, the present case
falls under one of the recognized exceptions to the rule, i.e., when the findings of the Labor Arbiter, the NLRC,
and/or the Court of Appeals are in conflict with one another. The conflicting findings of the Labor Arbiter, the NLRC,
and the Court of Appeals pave the way for this Court to review factual issues even if it is exercising its function of
judicial review under Rule 45.[38]

As the Court reviews the evidence on record, it notes at the outset that petitioners are presenting new evidence
herein never presented in the previous proceedings, particularly, Park's notarized "Reply" dated January 11, 2010
and the attached Entertainer Wage Roster. The Court is precluded from considering and giving weight to said
evidence which are presented for the first time on appeal. Fairness and due process dictate that evidence and issues
not presented below cannot be taken up for the first time on appeal.[39]

It is true that the Court had declared in previous cases that strict adherence to the technical rules of procedure is not
required in labor cases. However, the Court also highlights that in such cases, it had allowed the submission of
evidence for the first time on appeal with the NLRC in the interest of substantial justice, and had further required for
the liberal application of procedural rules that the party should adequately explain the delay in the submission of
evidence and should sufficiently prove the allegations sought to be proven.[40] In the instant case, petitioners did not
submit the evidence during the administrative proceedings before the Labor Arbiter and NLRC or even during the
proceedings before the Court of Appeals, and petitioners did not offer any explanation at all as to why they are
submitting the evidence only on appeal before this Court. Hence, the Court is not inclined to relax the rules in the
present case in petitioners' favor.

Moreover, in its review of the evidence on record, the Court bears in mind the settled rule that in administrative and
quasi-judicial proceedings, substantial evidence is considered sufficient. Substantial evidence is more than a mere
scintilla of evidence or relevant evidence as a reasonable mind might accept as adequate to support a conclusion,
even if other minds, equally reasonable, might conceivably opine otherwise.[41] It is also a basic rule in evidence
that each party must prove his/her affirmative allegations. Since the burden of evidence lies with the party who
asserts an affirmative allegation, the plaintiff or complainant has to prove his/her affirmative allegation in the
complaint and the defendant or the respondent has to prove the affirmative allegations in his/her affirmative
defenses and counterclaim.[42]

Petitioner's Illegal Dismissal

The Constitutional guarantee of security of tenure extends to Filipino overseas contract workers as the Court
declared in Sameer Overseas Placement Agency, Inc. v. Cabiles[43]:

Security of tenure for labor is guaranteed by our Constitution.

Employees are not stripped of their security of tenure when they move to work in a different jurisdiction. With
respect to the rights of overseas Filipino workers, we follow the principle of lex loci contractus.

Thus, in Triple Eight Integrated Services, Inc. v. NLRC, this court noted:

Petitioner likewise attempts to sidestep the medical certificate requirement by contending that since Osdana was
working in Saudi Arabia, her employment was subject to the laws of the host country. Apparently, petitioner hopes to
make it appear that the labor laws of Saudi Arabia do not require any certification by a competent public health
authority in the dismissal of employees due to illness.

Again, petitioner's argument is without merit.

First, established is the rule that lex loci contractus (the law of the place where the contract is made) governs in this
jurisdiction. There is no question that the contract of employment in this case was perfected here in the
Philippines. Therefore, the Labor Code, its implementing rules and regulations, and other laws affecting labor
apply in this case. Furthermore, settled is the rule that the courts of the forum will not enforce any foreign claim
obnoxious to the forum's public policy. Here in the Philippines, employment agreements are more than contractual
in nature. The Constitution itself, in Article XIII, Section 3, guarantees the special protection of workers, to wit:

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.

xxxx
This public policy should be borne in mind in this case because to allow foreign employers to determine for and by
themselves whether an overseas contract worker may be dismissed on the ground of illness would encourage illegal
or arbitrary pre-termination of employment contracts, x x x.

Even with respect to fundamental procedural rights, this court emphasized in PCL Shipping Philippines, Inc. v. NLRC,
to wit:

Petitioners admit that they did not inform private respondent in writing of the charges against him and that they
failed to conduct a formal investigation to give him opportunity to air his side. However, petitioners contend that the
twin requirements of notice and hearing applies strictly only when the employment is within the Philippines and that
these need not be strictly observed in cases of international maritime or overseas employment.

The Court does not agree. The provisions of the Constitution as well as the Labor Code which afford protection to
labor apply to Filipino employees whether working within the Philippines or abroad. Moreover, the principle of lex
loci contractus (the law of the place where the contract is made) governs in this jurisdiction. In the present case, it
is not disputed that the Contract of Employment entered into by and between petitioners and private respondent
was executed here in the Philippines with the approval of the Philippine Overseas Employment Administration
(POEA). Hence, the Labor Code together with its implementing rules and regulations and other laws affecting labor
apply in this case. x x x.

By our laws, overseas Filipino workers (OFWs) may only be terminated for a just or authorized cause and after
compliance with procedural due process requirements. (Citations omitted.)

Since respondent's Employment Contract was executed in the Philippines on February 3, 2003, Philippine
Constitution and labor laws governed respondent's employment with petitioners and SAENCO. An employee's right
to security of tenure, protected by the Constitution and statutes, means that no employee shall be dismissed unless
there are just or authorized causes and only after compliance with procedural and substantive due process. A lawful
dismissal by an employer must meet both substantive and procedural requirements; in fine, the dismissal must be
for a just or authorized cause and must comply with the rudimentary due process of notice and hearing.[44]

It is undisputed that when respondent was dismissed from employment and repatriated to the Philippines in June
2004, her original six-month Employment Contract with SAENCO had already expired.

Per the plain language of respondent's Employment Contract with SAENCO, her employment would be enforced for
the period of six months commencing on the date respondent departed from the Philippines, and extendible by
another six months by mutual agreement of the parties. Since respondent left for South Korea on September 6,
2003, the original six-month period of her Employment Contract ended on March 5, 2004.

Although respondent's employment with SAENCO was good for six months only (i.e., September 6, 2003 to March 5,
2004) as stated in the Employment Contract, the Court is convinced that it was extended under the same terms and
conditions for another six months (i.e., March 6, 2004 to September 5, 2004). Respondent and petitioners submitted
evidence establishing that respondent continued to work for SAENCO in Ulsan, South Korea even after the original
six-month period under respondent's Employment Contract expired on March 5, 2004. Ideally, the extension of
respondent's employment should have also been reduced into writing and submitted/reported to the appropriate
Philippine labor authorities. Nonetheless, even in the absence of a written contract evidencing the six-month
extension of respondent's employment, the same is practically admitted by petitioners, subject only to the defense
that there is no proof of their knowledge of or participation in said extension and so they cannot be held liable for
the events that transpired between respondent and SAENCO during the extension period. Petitioners presented nine
vouchers to prove that respondent received her salaries from SAENCO for nine months. Petitioners also did not deny
that petitioner Moldes, President of petitioner PTCPI, went to confront respondent about the latter's outstanding
loan at the Seaman's Seven Club in Ulsan, South Korea in June 2004, thus, revealing that petitioners were aware that
respondent was still working for SAENCO up to that time.

Hence, respondent had been working for SAENCO in Ulsan, South Korea, pursuant to her Employment Contract,
extended for another six-month period or until September 5, 2004, when she was dismissed and repatriated to the
Philippines by SAENCO in June 2004. With this finding, it is unnecessary for the Court to still consider and address
respondent's allegations that she had been misled into believing that her Employment Contract and visa was good
for one year.

Respondent decries that she was illegally dismissed, while petitioners assert that respondent was validly dismissed
because of her expired work visa and her provocative and immoral conduct in violation of the club policies.

The Court finds that respondent was illegally dismissed.

Dismissal from employment has two facets: first, the legality of the act of dismissal, which constitutes substantive
due process; and, second, the legality of the manner of dismissal, which constitutes procedural due process. The
burden of proof rests upon the employer to show that the disciplinary action was made for lawful cause or that the
termination of employment was valid. Unsubstantiated suspicions, accusations, and conclusions of the employer do
not provide legal justification for dismissing the employee. When in doubt, the case should be resolved in favor of
labor pursuant to the social justice policy of our labor laws and the 1987 Constitution.[45]

As previously discussed herein, SAENCO extended respondent's Employment Contract for another six months even
after the latter's work visa already expired. Even though it is true that respondent could not legitimately continue to
work in South Korea without a work visa, petitioners cannot invoke said reason alone to justify the premature
termination of respondent's extended employment. Neither petitioners nor SAENCO can feign ignorance of the
expiration of respondent's work visa at the same time as her original six-month employment period as they were the
ones who facilitated and processed the requirements for respondent's employment in South Korea. Petitioners and
SAENCO should also have been responsible for securing respondent's work visa for the extended period of her
employment. Petitioners and SAENCO should not be allowed to escape liability for a wrong they themselves
participated in or were responsible for.

Petitioners additionally charge respondent with serious misconduct and willful disobedience, contending that
respondent violated club policies by engaging in illegal activities such as wearing skimpy and revealing dresses,
dancing in an immoral or provocative manner, and going out with customers after working hours. As evidence of
respondent's purported club policy violations, petitioners submitted the joint affidavit of Tiatco and Flores,
respondent's co-workers at the club.

The Court, however, is not swayed. Aside from their bare allegations, petitioners failed to present concrete proof of
the club policies allegedly violated by respondent. The club policies were not written down. There is no allegation,
much less, evidence, that respondent was at least verbally apprised of the said club policies during her employment.

To refute petitioners' assertions against her, respondent submitted a poster promoting the club and pictures[46] of
respondent with her co-workers at the said club. Based on said poster and pictures, respondent did not appear to be
wearing dresses that were skimpier or more revealing than those of the other women working at the club.
Respondent also presented the Affidavit[47] dated August 16, 2004 of Wolfgang Pelzer (Pelzer), a Canadian citizen
who was a regular patron of the club. According to Pelzer, respondent was appropriately dressed for the songs she
sang, and while respondent was employed as a singer, she was also pressured into dancing onstage and she
appeared hesitant and uncomfortable as she danced. As between the allegations of Pelzer, on one hand, and those
of Tiatco and Flores, on the other hand, as regards respondent's behavior at the club, the Court accords more weight
to the former as Pelzer can be deemed a disinterested witness who had no apparent gain in executing his Affidavit,
as opposed to Tiatco and Flores who were still employed by SAENCO when they executed their joint affidavit.

Lastly, as the Court of Appeals pertinently observed, if respondent was truly misbehaving as early as September 2003
as petitioners alleged, SAENCO would have terminated her employment at the earliest opportunity to protect its
interest. Instead, SAENCO even extended respondent's employment beyond the original six-month period. The Court
likewise points out that there is absolutely no showing that SAENCO, at any time during the course of respondent's
employment, gave respondent a reminder and/or warning that she was violating club policies.
This leads to another finding of the Court in this case, that petitioners also failed to afford respondent procedural
due process.

Article 277(b) of the Labor Code, as amended, mandates that the employer shall furnish the worker whose
employment is sought to be terminated a written notice stating the causes for termination and shall afford the latter
ample opportunity to be heard and to defend himself/herself with the assistance of his/her representative, if he/she
so desires. Per said provision, the employer is actually required to give the employee two notices: the first is the
notice which apprises the employee of the particular acts or omissions for which his/her dismissal is being sought
along with the opportunity for the employee to air his/her side, while the second is the subsequent notice of the
employer's decision to dismiss him/her.[48]

Again, the Court stresses that the burden of proving compliance with the requirements of notice and hearing prior
to respondent's dismissal from employment falls on petitioners and SAENCO, but there had been no attempt at all
by petitioners and/or SAENCO to submit such proof. Neither petitioners nor SAENCO described the circumstances
how respondent was informed of the causes for her dismissal from employment and/or the fact of her dismissal.

In contrast, respondent was able to recount in detail the events which led to her dismissal from employment and
subsequent repatriation to the Philippines, corroborated in part by Pelzer. It appears that on June 13, 2004,
petitioner Moldes personally went to see respondent in Ulsan, South Korea to demand that respondent pay the loan
and dismiss the counsel respondent hired in the Philippines to contest the same; respondent, however, refused. On
June 24, 2004, Park confronted respondent while she was working at the club, forcibly took her away from the club in
Ulsan, and brought her to his office in Seoul. Park tried to intimidate respondent into agreeing to Moldes's demands.
When his efforts failed, Park surrendered respondent to the South Korean authorities and she was deported back to
the Philippines on account of her expired work visa.

To reiterate, respondent could only be dismissed for just and authorized cause, and after affording her notice and
hearing prior to her termination. SAENCO had no valid cause to terminate respondent's employment. Neither did
SAENCO serve two written notices upon respondent informing her of her alleged club policy violations and of her
dismissal from employment, nor afforded her a hearing to defend herself. The lack of valid cause, together with the
failure of SAENCO to comply with the twin-notice and hearing requirements, underscored the illegality surrounding
respondent's dismissal.[49]

The Liabilities of Petitioners and SAENCO

From its findings herein that (1) respondent's Employment Contract had been extended for another six months,
ending on September 5, 2004; and (2) respondent was illegally dismissed and repatriated to the Philippines in June
2004, the Court next proceeds to rule on the liabilities of petitioners and SAENCO to respondent.

Respondent's monetary claims against petitioners and SAENCO is governed by Section 10 of Republic Act No. 8042,
otherwise known as The Migrant Workers and Overseas Filipinos Act of 1995, which provides:

Section 10. Money Claims. — Notwithstanding any provision of law to the contrary, the Labor Arbiters of the
National Labor Relations Commission (NLRC) shall have the original and exclusive jurisdiction to hear and decide,
within ninety (90) calendar days after the filing of the complaint, the claims arising out of an employer-employee
relationship or by virtue of any law or contract involving Filipino workers for overseas deployment including claims
for actual, moral, exemplary and other forms of damages.

The liability of the principal/employer and the recruitment/placement agency for any and all claims under this
section shall be joint and several. This provision shall be incorporated in the contract for overseas employment
and shall be a condition precedent for its approval. The performance bond to be filed by the
recruitment/placement agency, as provided by law, shall be answerable for all monetary claims or damages that
may be awarded to the workers. If the recruitment/placement agency is a juridical being, the corporate officers
and directors and partners as the case may be, shall themselves be jointly and solidarily liable with the
corporation or partnership for the aforesaid claims and damages.

Such liabilities shall continue during the entire period or duration of the employment contract and shall not be
affected by any substitution, amendment or modification made locally or in a foreign country of the said contract.

Any compromise/amicable settlement or voluntary agreement on monetary claims inclusive of damages under this
section shall be paid within four (4) months from the approval of the settlement by the appropriate authority.

In case of termination of overseas employment without just, valid or authorized cause as defined by law or
contract, the worker shall be entitled to the full reimbursement of his placement fee with interest at twelve
percent (12%) per annum, plus his salaries for the unexpired portion of his employment contract or for three (3)
months for every year of the unexpired term, whichever is less. (Emphases supplied.)

The Court finds that respondent had been paid her salaries for the nine months she worked in Ulsan, South Korea, so
she is no longer entitled to an award of the same.

It is a settled rule of evidence that the one who pleads payment has the burden of proving it. Even where the plaintiff
must allege nonpayment, the general rule is that the burden rests on the defendant to prove payment, rather than on
the plaintiff to prove nonpayment.[50]

In the case at bar, petitioners submitted nine cash vouchers with respondent's signature. That the nine cash
vouchers did not bear the name of SAENCO and its Tax Identification Number is insignificant as there is no legal basis
for requiring such. The vouchers clearly state that these were "salary full payment" for the months of October 5,
2003 to June 5, 2004 for US$600.00 to respondent and each of the vouchers was signed received by respondent.
After carefully examining respondent's signatures on the nine cash vouchers, and even comparing them to
respondent's signatures on all the pages of her Employment Contract, the Court observes that respondent's
signatures on all documents appear to be consistently the same. The consistency and similarity of respondent's
signatures on all the documents supports the genuineness of said signatures. At this point, the burden of evidence
has shifted to respondent to negate payment of her salaries.

Respondent, though, admits that the signatures on the nine cash vouchers are hers but asserts that she really had
not received her salaries and was only made to sign said vouchers all in one instance. Respondent further avers that
she was made to believe that her salaries would be deposited to her bank account, and she presents as proof the
passbook of her bank account showing that no amount equivalent to her salary was ever deposited.

The Court is not persuaded.

Absent any corroborating evidence, the Court is left only with respondent's bare allegations on the matter. Pelzer's
statements in his Affidavit concerning the nonpayment of respondent's salaries are hearsay, dependent mainly on
what respondent confided to him. It makes no sense to the Court that respondent would agree to an extension of
her Employment Contract for another six months if she had not been receiving her salaries for the original six-month
period. From her own actuations, respondent does not appear to be totally helpless and gullible. Respondent, in
fact, was quite zealous in protecting her rights, hiring one of the well-known law firms in the Philippines to represent
her against petitioner Moldes who was demanding payment of a loan which respondent insisted was fictitious.
Respondent also stood up to and refused to given in to the demands of both petitioner Moldes and Park even during
face-to-face confrontations. The Court then cannot believe that respondent would simply sign the nine cash
vouchers even when she did not receive the corresponding salaries for the same. Respondent failed to establish that
the passbook she submitted was for her bank account for payroll payments from SAENCO; it could very well just be
her personal bank account to which she had not made any deposit. The Court, unlike the Court of Appeals, is not
ready to jump to the conclusion that the vouchers were all prepared on the same occasion and disregard their
evidentiary value simply based on their physical appearance and in the total absence of any corroborating evidence.
Nonetheless, pursuant to the fifth paragraph of Section 10 of Republic Act No. 8042, respondent is entitled to an
award of her salaries for the unexpired three months of her extended Employment Contract, i.e., July to
September 2004.[51] Given that respondent's monthly salary was US$600.00, petitioners and SAENCO shall pay
respondent a total of US$1,800.00 for the remaining three months of her extended Employment Contract. The said
amount, similar to backwages, is subject to legal interest of 12% per annum from respondent's illegal dismissal in
June 2004 to June 30, 2013 and 6% per annum from July 1, 2013 to the date this Decision becomes final and
executory.[52]Respondent also has the right to the reimbursement of her placement fee with interest of 12% per
annum from her illegal dismissal in June 2004 to the date this Decision becomes final and executory.[53]

Moreover, the award of attorney's fees to respondent is likewise justified. It is settled that in actions for recovery of
wages or where an employee was forced to litigate and incur expenses to protect his/her right and interest,
he/she is entitled to an award of attorney's fees equivalent to 10% of the award.[54]

Finally, all of the foregoing monetary awards in respondent's favor shall earn legal interest of 6% per annum from
the time this Decision becomes final and executory until fully satisfied.[55]

In an attempt to escape any liability to respondent, petitioners assert that only SAENCO should be answerable for
respondent's illegal dismissal because petitioners were not privy to the extension of respondent's Employment
Contract beyond the original six-month period. Petitioner Moldes additionally argues that she should not be held
personally liable as a corporate officer of PTCPI without evidence that she had acted with malice or bad faith.

Petitioners' arguments are untenable considering the explicit language of the second paragraph of Section 10 of
Republic Act No. 8042, reproduced below for easier reference:

The liability of the principal/employer and the recruitment/placement agency for any and all claims under this
section shall be joint and several. This provision shall be incorporated in the contract for overseas employment and
shall be a condition precedent for its approval. The performance bond to be filed by the recruitment/placement
agency, as provided by law, shall be answerable for all money claims or damages that may be awarded to the
workers. If the recruitment/placement agency is a juridical being, the corporate officers and directors and partners
as the case may be, shall themselves be jointly and solidarity liable with the corporation or partnership for the
aforesaid claims and damages.

The aforequoted provision is plain and clear, the joint and several liability of the principal/employer,
recruitment/placement agency, and the corporate officers of the latter, for the money claims and damages of an
overseas Filipino worker is absolute and without qualification. It is intended to give utmost protection to the
overseas Filipino worker, who may not have the resources to pursue her money claims and damages against the
foreign principal/employer in another country. The overseas Filipino worker is given the right to seek recourse
against the only link in the country to the foreign principal/employer, i.e., the recruitment/placement agency and its
corporate officers. As a result, the liability of SAENCO, as principal/employer, and petitioner PTCPI, as
recruitment/placement agency, for the monetary awards in favor of respondent, an illegally dismissed employee, is
joint and several. In turn, since petitioner PTCPI is a juridical entity, petitioner Moldes, as its corporate officer, is
herself jointly and solidarity liable with petitioner PTCPI for respondent's monetary awards, regardless of whether
she acted with malice or bad faith in dealing with respondent.

WHEREFORE, premises considered, the Petition for Review on Certiorari is PARTIALLY GRANTED. The assailed
Decision dated November 27, 2009 of the Court of Appeals is AFFIRMED with MODIFICATIONS. For the illegal
dismissal of respondent Desiree T. Masagca, petitioners Princess Talent Center Production, Inc. and Luchi Singh
Moldes, together with Saem Entertainment Company, Ltd., are ORDERED to jointly and severally pay respondent the
following: (a) US$1,800.00, representing respondent's salaries for the unexpired portion of her extended
Employment Contract, subject to legal interest of 12% per annum from June 2004 to June 30, 2013 and 6% per
annum from July 1, 2013 to the date that this Decision becomes final and executory; (b) reimbursement of
respondent's placement fees with 12% interest per annum from June 2004 to the date that this Decision becomes
final and executory; and (c) attorney's fees equivalent to 10% of the total monetary award. The order for payment of
respondent's salaries from September 2003 to May 2004 is DELETED. All the monetary awards herein to respondent
shall earn legal interest of 6% per annum from the date that this Decision becomes final and executory until full
satisfaction thereof.

SO ORDERED.

NOTES: It was already declared a policy of the State: "(d) To promote the enlightenment of workers concerning
their rights and obligations ... as employees." This was, of course, amplified by Republic Act No. 6715 when it
decreed the "participation of workers in decision and policy making processes affecting their rights, duties and
welfare."

FACTS: PAL revised its 1966 Code of Discipline. PALEA contended that PAL, by its unilateral implementation of the
Code, was guilty of unfair labor practice, specifically Paragraphs E and G of Article 249 and Article 253 of the Labor
Code. PALEA alleged that copies of the Code had been circulated in limited numbers; that being penal in nature the
Code must conform with the requirements of sufficient publication, and that the Code was arbitrary, oppressive,
and prejudicial to the rights of the employees.

ISSUE: whether management may be compelled to share with the union or its employees its prerogative of
formulating a code of discipline.

HELD: The exercise by management of its prerogative shall be done in a just, reasonable, humane and/or lawful
manner. While such "obligation" was not yet founded in law when the Code was formulated, the attainment of a
harmonious labor-management relationship and the then already existing state policy of enlightening workers
concerning their rights as employees demand no less than the observance of transparency in managerial moves
affecting employees' rights.

PHILIPPINE AIRLINES, INC. (PAL), PETITIONER, VS. NATIONAL LABOR RELATIONS COMMISSION, LABOR ARBITER
ISABEL P. ORTIGUERRA, AND PHILIPPINE AIRLINES EMPLOYEES ASSOCIATION (PALEA), RESPONDENTS.

G.R. No. 85985, August 13, 1993

In the instant petition for certiorari, the Court is presented the issue of whether or not the formulation of a Code of
Discipline among employees is a shared responsibility of the employer and the employees.
On March 15, 1985, the Philippine Airlines, Inc. (PAL) completely revised its 1966 Code of Discipline. The Code was
circulated among the employees and was immediately implemented, and some employees were forthwith subjected
to the disciplinary measures embodied therein.

Thus, on August 20, 1985, the Philippine Airlines Employees Association (PALEA) filed a complaint before the
National Labor Relations Commission (NLRC) for unfair labor practice (Case No. NCR-7-2051-85) with the following
remarks: "ULP with arbitrary implementation of PAL's Code of Discipline without notice and prior discussion with
Union by Management" (Rollo, p. 41). In its position paper, PALEA contended that PAL, by its unilateral
implementation of the Code, was guilty of unfair labor practice, specifically Paragraphs E and G of Article 249 and
Article 253 of the Labor Code. PALEA alleged that copies of the Code had been circulated in limited numbers; that
being penal in nature the Code must conform with the requirements of sufficient publication, and that the Code was
arbitrary, oppressive, and prejudicial to the rights of the employees. It prayed that implementation of the Code be
held in abeyance; that PAL should discuss the substance of the Code with PALEA; that employees dismissed under
the Code be reinstated and their cases subjected to further hearing; and that PAL be declared guilty of unfair labor
practice and be ordered to pay damages (pp. 7-14, Record.)

PAL filed a motion to dismiss the complaint, asserting its prerogative as an employer to prescribe rules and
regulations regarding employees' conduct in carrying out their duties and functions, and alleging that by
implementing the Code, it had not violated the collective bargaining agreement (CBA) or any provision of the Labor
Code. Assailing the complaint as unsupported by evidence, PAL maintained that Article 253 of the Labor Code cited
by PALEA referred to the requirements for negotiating a CBA which was inapplicable as indeed the current CBA had
been negotiated.

In its reply to PAL's position paper, PALEA maintained that Article 249 (E) of the Labor Code was violated when PAL
unilaterally implemented the Code, and cited provisions of Articles IV and I of Chapter II of the Code as defective for,
respectively, running counter to the construction of penal laws and making punishable any offense within PAL's
contemplation. These provisions are the following:

Section 2. Non-exclusivity. - This Code does not contain the entirety of the rules and regulations of the company.
Every employee is bound to comply with all applicable rules, regulations, policies, procedures and standards,
including standards of quality, productivity, and behaviour, as issued and promulgated by the company through its
duly authorized officials. Any violations thereof shall be punishable with a penalty to be determined by the gravity
and/or frequency of the offense.

Section 7. Cumulative Record. - An employee's record of offenses shall be cumulative. The penalty for an offense shall
be determined on the basis of his past record of offenses of any nature or the absence thereof. The more habitual an
offender has been, the greater shall be the penalty for the latest offense. Thus, an employee may be dismissed if the
number of his past offenses warrants such penalty in the judgment of management even if each offense considered
separately may not warrant dismissal. Habitual offenders or recidivists have no place in PAL. On the other hand, due
regard shall be given to the length of time between commission of individual offenses to determine whether the
employee's conduct may indicate occasional lapses (which may nevertheless require sterner disciplinary action)
or a pattern of incorrigibility.

Labor Arbiter Isabel P. Ortiguerra handling the case called the parties to a conference but they failed to appear at the
scheduled date. Interpreting such failure as a waiver of the parties' right to present evidence, the labor arbiter
considered the case submitted for decision. On November 7, 1986, a decision was rendered finding no bad faith on
the part of PAL in adopting the Code and ruling that no unfair labor practice had been committed. However, the
arbiter held that PAL was "not totally fault free" considering that while the issuance of rules and regulations
governing the conduct of employees is a "legitimate management prerogative" such rules and regulations must
meet the test of "reasonableness, propriety and fairness." She found Section 1 of the Code aforequoted as "an all
embracing and all encompassing provision that makes punishable any offense one can think of in the company";
while Section 7, likewise quoted above, is "objectionable for it violates the rule against double jeopardy thereby
ushering in two or more punishment for the same misdemeanor." (pp. 38-39, Rollo.)

The labor arbiter also found that PAL "failed to prove that the new Code was amply circulated." Noting that PAL's
assertion that it had furnished all its employees copies of the Code is unsupported by documentary evidence, she
stated that such "failure" on the part of PAL resulted in the imposition of penalties on employees who thought all
the while that the 1966 Code was still being followed. Thus, the arbiter concluded that "(t)he phrase ignorance of
the law excuses no one from compliance ... finds application only after it has been conclusively shown that the law
was circulated to all the parties concerned and efforts to disseminate information regarding the new law have been
exerted." (p. 39, Rollo.) She thereupon disposed:

WHEREFORE, premises considered, respondent PAL is hereby ordered as follows:

1. Furnish all employees with the new Code of Discipline;

2. Reconsider the cases of employees meted with penalties under the New Code of Discipline and remand the same
for further hearing; and

3. Discuss with PALEA the objectionable provisions specifically tackled in the body of the decision.

All other claims of the complainant union (is) [are] hereby dismissed for lack of merit.

SO ORDERED. (p. 40, Rollo.)

PAL appealed to the NLRC. On August 19, 1988, the NLRC through Commissioner Encarnacion, with Presiding
Commissioner Bonto-Perez and Commissioner Maglaya concurring, found no evidence of unfair labor practice
committed by PAL and affirmed the dismissal of PALEA's charge. Nonetheless, the NLRC made the following
observations:

Indeed, failure of management to discuss the provisions of a contemplated code of discipline which shall govern the
conduct of its employees would result in the erosion and deterioration of an otherwise harmonious and smooth
relationship between them as did happen in the instant case. There is no dispute that adoption of rules of conduct or
discipline is a prerogative of management and is imperative and essential if an industry has to survive in a
competitive world. But labor climate has progressed, too. In the Philippine scene, at no time in our contemporary
history is the need for a cooperative, supportive and smooth relationship between labor and management more
keenly felt if we are to survive economically. Management can no longer exclude labor in the deliberation and
adoption of rules and regulations that will affect them.

The complainant union in this case has the right to feel isolated in the adoption of the New Code of Discipline. The
Code of Discipline involves security of tenure and loss of employment - a property right! It is time that management
realizes that to attain effectiveness in its conduct rules, there should be candidness and openness by Management
and participation by the union, representing its members. In fact, our Constitution has recognized the principle of
"shared responsibility" between employers and workers and has likewise recognized the right of workers to
participate in “policy and decision-making process affecting their rights …” The latter provision was interpreted by
the Constitutional Commissioners to mean participation in "management" (Record of the Constitutional
Commission, Vol. II).

In a sense, participation by the union in the adoption of the code of conduct could have accelerated and enhanced
their feelings of belonging and would have resulted in cooperation rather than resistance to the Code. In fact, labor-
management cooperation is now "the thing." (pp. 3-4, NLRC Decision ff. p. 149, Original Record.)

Respondent Commission thereupon disposed:

WHEREFORE, premises considered, we modify the appealed decision in the sense that the New Code of Discipline
should be reviewed and discussed with complainant union, particularly the disputed provisions [.] [T]hereafter,
respondent is directed to furnish each employee with a copy of the appealed Code of Discipline. The pending cases
adverted to in the appealed decision if still in the arbitral level, should be reconsidered by the respondent Philippine
Air Lines. Other dispositions of the Labor Arbiter are sustained.

SO ORDERED. (p. 5, NLRC Decision.)

PAL then filed the instant petition for certiorari charging public respondents with grave abuse of discretion in: (a)
directing PAL "to share its management prerogative of formulating a Code of Discipline"; (b) engaging in quasi-
judicial legislation in ordering PAL to share said prerogative with the union; (c) deciding beyond the issue of unfair
labor practice, and (d) requiring PAL to reconsider pending cases still in the arbitral level (p. 7, Petition; p. 8, Rollo.)

As stated above, the principal issue submitted for resolution in the instant petition is whether management may be
compelled to share with the union or its employees its prerogative of formulating a code of discipline.

PAL asserts that when it revised its Code on March 15, 1985, there was no law which mandated the sharing of
responsibility therefor between employer and employee.

Indeed, it was only on March 2, 1989, with the approval of Republic Act No. 6715, amending Article 211 of the Labor
Code, that the law explicitly considered it a State policy "(t)o ensure the participation of workers in decision and
policy-making processes affecting their rights, duties and welfare." However, even in the absence of said clear
provision of law, the exercise of management prerogatives was never considered boundless. Thus,
in Cruz vs. Medina (177 SCRA 565 [1989]), it was held that management's prerogatives must be without abuse of
discretion.

In San Miguel Brewery Sales Force Union (PTGWO) vs. Ople (170 SCRA 25 [1989]), we upheld the company's right to
implement a new system of distributing its products, but gave the following caveat:

So long as a company's management prerogatives are exercised in good faith for the advancement of the employer's
interest and not for the purpose of defeating or circumventing the rights of the employees under special laws or
under valid agreements, this Court will uphold them. (at p. 28.)

All this points to the conclusion that the exercise of managerial prerogatives is not unlimited. It is circumscribed by
limitations found in law, a collective bargaining agreement, or the general principles of fair play and justice
(University of Sto. Tomas vs. NLRC, 190 SCRA 758 [1990]). Moreover, as enunciated
in Abbott Laboratories (Phil.), Inc. vs. NLRC (154 SCRA 713 [1987]), it must be duly established that the prerogative
being invoked is clearly a managerial one.

A close scrutiny of the objectionable provisions of the Code reveals that they are not purely business-oriented nor
do they concern the management aspect of the business of the company as in the San Miguel case. The provisions
of the Code clearly have repercusions on the employees' right to security of tenure. The implementation of the
provisions may result in the deprivation of an employee's means of livelihood which, as correctly pointed out by
the NLRC, is a property right (Callanta vs. Carnation Philippines, Inc., 145 SCRA 268 [1986]). In view of these
aspects of the case which border on infringement of constitutional rights, we must uphold the constitutional
requirements for the protection of labor and the promotion of social justice, for these factors, according to Justice
Isagani Cruz, tilt "the scales of justice when there is doubt, in favor of the worker,” (Employees Assoc vs. NLRC, 199
SCRA 628.) .

Verily, a line must be drawn between management prerogatives regarding business operations per se and those
which affect the rights of the employees. In treating the latter, management should see to it that its employees are at
least properly informed of its decisions or modes of action. PAL asserts that all its employees have been furnished
copies of the Code. Public respondents found to the contrary, which finding, to say the least is entitled to great
respect.

PAL posits the view that by signing the 1989-1991 collective bargaining agreement, on June 27, 1990, PALEA in effect
recognized PAL's "exclusive right to make and enforce company rules and regulations to carry out the functions of
management without having to discuss the same with PALEA and much less, obtain the latter's conformity thereto"
(pp. 11-12, Petitioner's Memorandum; pp. 180-181, Rollo.) Petitioner's view is based on the following provision of
the agreement:

The Association recognizes the right of the Company to determine matters of management policy and Company
operations and to direct its manpower. Management of the Company includes the right to organize, plan, direct and
control operations, to hire, assign employees to work, transfer employees from one department to another, to
promote, demote, discipline, suspend or discharge employees for just cause; to lay-off employees for valid and legal
causes, to introduce new or improved methods or facilities or to change existing methods or facilities and the right
to make and enforce Company rules and regulations to carry out the functions of management.

The exercise by management of its prerogative shall be done in a just, reasonable, humane and/or lawful manner.

Such provision in the collective bargaining agreement may not be interpreted as cession of employees' rights to
participate in the deliberation of matters which may affect their rights and the formulation of policies relative
thereto. And one such matter is the formulation of a code of discipline.

Indeed, industrial peace cannot be achieved if the employees are denied their just participation in the discussion
of matters affecting their rights. Thus, even before Article 211 of the Labor Code (P.D. 442) was amended by
Republic Act No. 6715, it was already declared a policy of the State: "(d) To promote the enlightenment of workers
concerning their rights and obligations ... as employees." This was, of course, amplified by Republic Act No. 6715
when it decreed the "participation of workers in decision and policy making processes affecting their rights, duties
and welfare." PAL's position that it cannot be saddled with the "obligation" of sharing management prerogatives as
during the formulation of the Code, Republic Act No. 6715 had not yet been enacted (Petitioner's Memorandum, p.
44; Rollo, p. 212), cannot thus be sustained. While such "obligation" was not yet founded in law when the Code was
formulated, the attainment of a harmonious labor-management relationship and the then already existing state
policy of enlightening workers concerning their rights as employees demand no less than the observance of
transparency in managerial moves affecting employees' rights.

Petitioner's assertion that it needed the implementation of a new Code of Discipline considering the nature of its business
cannot be overemphasized. In fact, its being a local monopoly in the business demands the most stringent of measures to attain
safe travel for its patrons. Nonetheless, whatever disciplinary measures are adopted cannot be properly implemented in the
absence of full cooperation of the employees. Such cooperation cannot be attained if the employees are restive on account of
their being left out in the determination of cardinal and fundamental matters affecting their employment.

WHEREFORE, the petition is DISMISSED and the questioned decision AFFIRMED. No special pronouncement is made as to costs.

NOTES: Dismissal is too harsh a penalty.

FACTS: Respondent Santos began teaching at St. Michael's Institute in 1979 while respondents Magcamit and
Rosarda joined its school faculty only in 1990. On August 10, 1993, the respondents joined a public rally organized
and participated in by faculty members, parents and some students of petitioner school, was, among others,
aimed at calling the attention of the school administration to certain grievances relative to substandard school
facilities and the economic demands of teachers and other employees of St. Michael's Institute. On August 11 and
12, 1993, the respondents were sent memoranda requiring them to explain their acts. Then on September 20,
1993, respondents were terminated on the ground of serious misconduct and willful disobedience for dereliction of
duty predicated on their absence for only one day of classes for attending a public rally and denouncing the school
authority. Respondents filed case for Illegal Dismissal. LA- No Illegal Dismissal, NLRC- Reversed LA and found
illegal dismissal, CA- Illegal Dismissal.

ISSUE: WON the respondents were illegally dismissed.

HELD: Yes. The only criterion to guide the exercise of its management prerogative is that the policies, rules and
regulations on work-related activities of the employees must always be fair and reasonable and the corresponding
penalties, when prescribed, commensurate to the offense involved and to the degree of the infraction.

In the instant case, The magnitude of the infraction must be weighed and equated with the penalty prescribed and
must be commensurate thereto, in view of the gravity of the penalty of dismissal or termination from the service.
What is at stake here is not simply the job itself of the employee but also his regular income therefrom which is the
means of livelihood of his family.

ST. MICHAEL'S INSTITUTE, FR. NICANOR VICTORINO AND EUGENIA BLANCO, PETITIONERS, VS. CARMELITA A.
SANTOS, FLORENCIO M. MAGCAMIT AND ALBERT M. ROSARDA, RESPONDENTS.
G.R. No. 145280, December 04, 2001

Before us is a petition for review on certiorari of the Decision[1] and Resolution[2] of the Court of Appeals dated
March 20, 2000 and September 29, 2000, respectively, in CA-G.R. SP No. 53283 which modified the Decision[3] dated
April 17, 1996 of the National Labor Relations Commission (NLRC) in NLRC Case No. NCR CA No. 007922-94 by
ordering the payment of backwages in addition to the judgment of the NLRC directing the reinstatement of
respondents Florencio M. Magcamit and Albert M. Rosarda to their former positions as teachers and the payment of
separation benefits to respondent Carmelita A. Santos.

Petitioner St. Michael's Institute is an institute of learning located in Bacoor, Cavite with petitioner Fr. Nicanor
Victorino as Director and petitioner Eugenia Blanco as the Principal and respondents Carmelita Santos, Florencio
Magcamit and Albert Rosarda were regular classroom teachers. Respondent Santos began teaching
at St. Michael's Institute in 1979 while respondents Magcamit and Rosarda joined its school faculty only in 1990.
Their service with the school was abruptly interrupted when each of them was served a notice of termination of
employment on September 20, 1993.[4]

The termination allegedly stemmed from an incident that occurred on August 10, 1993. On said date, a public rally
was held at the town plaza of Bacoor, Cavite in the vicinity of petitioner school. The rally, organized and participated
in by faculty members, parents and some students of petitioner school, was, among others, aimed at calling the
attention of the school administration to certain grievances relative to substandard school facilities and the
economic demands of teachers and other employees of St. Michael's Institute.

Petitioner Blanco, as school principal, sent each of the respondents identical memoranda dated August 11 and 12,
1993, requiring them to explain their acts of leading the aforementioned rally of students outside the school
premises; preventing students from attending classes; and denouncing the school authority in their
speeches.[5] Responding to the individual memorandum sent to them, respondents Magcamit and Rosarda, in
separate letters dated August 13, 1993, denied all the accusations attributed to them, and explained that they were
invited by the core group of parents and merely joined them in expressing their sentiments; that they did not
denounce the school authority but, rather, the way it was being misused and abused.[6] On the other hand,
respondent Santos, in a letter dated August 16, 1993, justified her actions as having been done "on behalf of her co-
teachers with the parents' blessings" to denounce "the administration's corrupt practices more so the school
director".[7]

Expressing a need for investigation, petitioner school Principal Blanco created an investigation committee composed
of Atty. Sabino Padilla, Jr., legal counsel of the school, PNP Maj. Hermenegildo Phee, CAT Commander, and Mrs.
Zenaida Bonete, the School Registrar.[8] The Investigation Committee found that respondents had led and actively
participated in the said rally, in which they denounced the Director of the Institute, petitioner Fr. Victorino, without
justification, and consequently recommended their termination from service.[9] On September 20, 1993, each of the
respondents were sent three (3) identical letters informing them of their termination from the service "for serious
disrespect" to their superior, petitioner Fr. Victorino, and for "serious misconduct that resulted in the disruption of
classes."[10]

Respondents Magcamit and Rosarda immediately filed on September 21, 1993 a complaint for illegal dismissal
against the petitioners.[11] On October 12, 1993, a second complaint for illegal dismissal was filed by respondents
Magcamit and Rosarda, this time with respondent Santos.[12] Both complaints were consolidated. On September 30,
1994, Labor Arbiter Leandro M. Jose rendered a joint decision to dismiss the complaints for lack of merit.[13] The
Labor Arbiter found and declared that there was just cause for the dismissal of the respondents' complaints since
they were guilty of dereliction of duty and insubordination for failing to exercise the very task that they are duty-
bound to perform as teachers of petitioner school, that is, to conduct classes on August 10, 1993. In addition, the
Labor Arbiter opined that the willful conduct of private respondents in disobeying the reasonable order of the school
principal to conduct classes is a just cause for termination and falls within the ambit of Article 282 of the Labor Code.
Besides, the Labor Arbiter stated that the airing of grievances could have been done in a more acceptable way,
through the Parents-Teachers Association or any aggrupation of teachers, parents and students.

On appeal, the NLRC further found that during the early part of 1993, the high school faculty
of St. Michael's Institute formed a labor union. Among the organizers of the union were respondents Magcamit,
Santos and Rosarda, who were later elected as President, Director and PRO, respectively, of the labor union. Certain
grievances were aired in a dialogue with the school administration headed by petitioner Fr. Victorino before the
School Chancellor, Fr. Arigo. The dialogue proved futile. Sometime in March of 1993, petitioner school issued
termination letters to the respondents and three (3) other faculty members.

Because of their termination, respondents filed a complaint for illegal dismissal before the NLRC. However, the case
was settled amicably with the conditions that complainants therein would withdraw their case and that, in turn, the
school authorities would create a grievance committee. Respondents promptly complied with the condition and
withdrew their complaint for illegal dismissal. As to the creation of a grievance committee, the same had still not
materialized as of August 10, 1993 when the public rally was conducted.

The NLRC concluded that there was no sufficient reason to uphold the validity of the termination of the respondents'
employment as the August 10, 1993 rally which was purposely held to call the school's attention to the grievances of
its teachers and students, could hardly be considered as without justification. Thus, the NLRC reversed the ruling of
the Labor Arbiter and held that the respondents had been illegally dismissed.

Petitioners then brought a petition for certiorari[14] before this Court. They contend that the NLRC committed grave
abuse of discretion in (a) reversing and setting aside the appealed decision on causes of action different from that
raised by the respondents before the Labor Arbiter, (b) reversing the finding of the Labor Arbiter that the acts of
petitioners were illegal, and (c) ordering the reinstatement of respondents Magcamit and Rosarda and payment of
separation pay to respondent Santos.

The Court referred the certiorari petition to the Court of Appeals in line with the doctrine laid down in the case of St.
Martin Funeral Homes v. NLRC, promulgated on September 16, 1998, wherein the Court declared that "all appeals
from the NLRC to the Supreme Court via a petition for certiorari under Rule 65 of the 1997 Rules of Civil Procedure
should henceforth be initially filed in the Court of Appeals as the appropriate forum for relief desired in strict
observance of the doctrine on the hierarchy of courts."[15]

Acting on the petition, the Court of Appeals sustained the decision of the NLRC but further awarded backwages to
respondents. Petitioners sought reconsideration of the said decision but the same was denied in a
Resolution[16] dated September 29, 2000. Nonetheless, the appellate court modified the award of backwages to
respondent Santos in that the same shall only be up to December 11, 1998, the date when she would have
compulsorily retired from the service upon reaching sixty-five (65) years of age.

Dissatisfied, petitioners interposed this petition for review anchored on the following assignment of errors:[17]

I. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN NOT RULING THAT RESPONDENTS WERE
GUILTY OF SERIOUS MISCONDUCT; WHICH MISCONDUCT WARRANTED THEIR DISMISSAL FROM
THEIR EMPLOYMENT.

II. THE HONORABLE COURT OF APPEALS GRAVE (sic) ERRED IN IGNORING THE RULINGS OF THIS
HONORABLE COURT ON THE RIGHT AND PREROGATIVE OF THE EMPLOYER TO DISMISS ERRING
EMPLOYEES FOR VIOLATION OF WORKING RULES AND REGULATIONS.

III. THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN FAILING TO RULE THAT THE DISMISSAL
OF RESPONDENTS WAS NOT DUE TO UNION ACTIVITY OR UNFAIR LABOR PRACTICE BUT WAS DUE
RATHER TO THEIR DELIBERATE REFUSAL TO ATTEND TO THEIR CLASSES ON 10 AUGUST 1993 AND
THEIR UTTERANCE OF FOUL AND OBSCENE REMARKS DIRECTED AT THE SCHOOL DIRECTOR, FR.
NICANOR VICTORINO.

IV. THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED WHEN IT ORDERED NOT ONLY THE
REINSTATEMENT OF RESPONDENTS BUT ALSO PAYMENT TO THEM OF BACKWAGES; THIS, DESPITE
THE FACT THAT THE NATIONAL LABOR RELATIONS COMMISSION DELIBERATELY REFUSED TO AWARD
THEM BACKWAGES AND SAID RESPONDENTS UNDISPUTEDLY DID NOT APPEAL THE NLRC DECISION.
 V. ASSUMING ARGUENDO THAT RESPONDENT CARMELITA SANTOS IS ENTITLED TO BACKWAGES, THE
COMPUTATION OF HER BACKWAGES SHOULD BE UP TO 11 DECEMBER 1993, NOT UNTIL 11
DECEMBER 1998.

Petitioners take exception to the conclusion and ruling of the Court of Appeals that there was no just cause for the
dismissal of the respondents. It is the petitioners' position that the appellate court failed to properly appreciate that
the willful refusal of the respondents to perform the very task they were hired and required to do, that is to teach,
was tantamount to serious misconduct which gave the petitioners the right to terminate the employment of the
respondents. Furthermore, the dismissal of respondents for joining the public rally on August 10, 1993 was fully
justified because not only were classes disrupted on that day but the public rally was accompanied by utterances of
obscene, insulting or offensive words against their immediate superiors, more specifically petitioner Fr. Nicanor
Victorino, Director of petitioner school.[18]

The petitioners' arguments fail to persuade us.

The employer's right to conduct the affairs of his business, according to its own discretion and judgment, is well-
recognized. An employer has a free reign and enjoys wide latitude of discretion to regulate all aspects of
employment, including the prerogative to instill discipline in its employees and to impose penalties, including
dismissal, upon erring employees. This is a management prerogative, where the free will of management to
conduct its own affairs to achieve its purpose takes form. The only criterion to guide the exercise of its
management prerogative is that the policies, rules and regulations on work-related activities of the employees
must always be fair and reasonable and the corresponding penalties, when prescribed, commensurate to the
offense involved and to the degree of the infraction.[19]

In the instant case, the reason basically cited for the dismissal of respondents is serious misconduct or willful
disobedience for dereliction of duty predicated on their absence for only one day of classes for attending a public
rally and denouncing the school authority. The magnitude of the infraction must be weighed and equated with the
penalty prescribed and must be commensurate thereto, in view of the gravity of the penalty of dismissal or
termination from the service. What is at stake here is not simply the job itself of the employee but also his regular
income therefrom which is the means of livelihood of his family.

We agree with the appellate court's conclusion that, under the attendant factual antecedents, the dismissal meted
out on the respondents for dereliction of duty for one school day and denouncing school authority, appears to be
too harsh a penalty. It must be noted that the respondents are being held liable for a first time offense and, in the
case of respondent Santos, despite long years of unblemished service. Even when an employee is found to have
transgressed the employer's rules, in the actual imposition of penalties upon the erring employee, due consideration
must still be given to his length of service and the number of violations committed during his employment.[20] Where
a penalty less punitive would suffice, whatever missteps may have been committed by the employee ought not to be
visited with a consequence so severe such as dismissal from employment.[21] Moreover, the facts, as further
established on appeal in the NLRC, paint out a picture that the respondents were singled out by the petitioners
apparently for being officers of the teachers' union which they formed, despite the fact that several other teachers
also joined the August 10, 1993 rally.

We reiterate the settled doctrine in termination of employment disputes that the burden of proof is always on the
employer to prove that the dismissal was for a just and valid cause.[22] Evidence must be clear, convincing and free
from any inference that the prerogative to dismiss an employee was abused and unjustly used by the employer to
further any vindictive end.

Misconduct 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 of judgment.[23] As a just cause for termination,
the misconduct must be serious, which implies that it must be of such grave and aggravated character and not
merely trivial or unimportant. On the other hand, disobedience, as a just cause for termination, must be willful or
intentional. Willfulness is characterized by a wrongful and perverse mental attitude rendering the employee's act
inconsistent with proper subordination.[24] Not every case of insubordination or willful disobedience by an employee
of a lawful work-connected order of the employer is reasonably penalized with dismissal. As we have stated, there
must be reasonable proportionality between, on the one hand, the willful disobedience by the employee and, on the
other hand, the penalty imposed therefor.[25]In the instant case, evidence is wanting on the depravity of conduct,
and willfulness of the disobedience on the part of the respondents. Absence of one day of work to join a public rally
cannot be of such great dimension as to equate it with an offense punishable with the penalty of dismissal. The
reinstatement of the respondents is, thus, just and proper.

On the matter of the award of backwages, petitioners advance the view that by awarding backwages, the appellate
court "unwittingly reversed a time-honored 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."[26] We do not agree.

The fact that the NLRC did not award backwages to the respondents or that the respondents themselves did not
appeal the NLRC decision does not bar the Court of Appeals from awarding backwages. While as a general rule, a
party who has not appealed is not entitled to affirmative relief other than the ones granted in the decision of the
court below, the Court of Appeals is imbued with sufficient authority and discretion to review matters, not otherwise
assigned as errors on appeal, if it finds that their consideration is necessary in arriving at a complete and just
resolution of the case[27] or to serve the interests of justice or to avoid dispensing piecemeal justice.[28]

Article 279 of the Labor Code, as amended, mandates that an illegally dismissed employee is entitled to the twin
reliefs of (a) either reinstatement or separation pay, if reinstatement is no longer viable, and (b) backwages.[29] Both
are distinct reliefs given to alleviate the economic damage suffered by an illegally dismissed employee [30] and,
thus, the award of one does not bar the other. Both reliefs are rights granted by substantive law which cannot be
defeated by mere procedural lapses.[31] Substantive rights like the award of backwages resulting from illegal
dismissal must not be prejudiced by a rigid and technical application of the rules.[32] The order of the Court of
Appeals to award backwages being a mere legal consequence of the finding that respondents were illegally
dismissed by petitioners, there was no error in awarding the same.

Finally, we sustain the award of backwages to respondent Santos up to December 11, 1998, when respondent
Santos became 65 years old. We do not subscribe to the view of the petitioners that payment of backwages to
respondent Santos should be computed only up to December 11, 1993, when respondent Santos reached 60 years of
age. It is worth noting that in their motion for reconsideration before the Court of Appeals, petitioners merely
attached the Service Record and Baptismal Certificate of respondent Santos to support their contention that under
respondent school's policy teachers retire upon reaching the age of 60 and, thus, the amount of backwages to
respondent Santos should be up to December 11, 1993 only, when she reached 60 years of age. The documentary
evidence appended to the instant petition for review by the petitioners, which is not a newly discovered evidence, to
substantiate its view and belated allegation on the existence of a school policy to retire teachers upon reaching 60
years of age cannot be considered at this stage. Petitioners could have presented and offered in evidence
documents on the existence of the alleged school policy before the Labor Arbiter or the NLRC but they failed to do so
nor have they offered adequate explanation for their failure to present and offer the said documents in evidence. It
is basic that evidence not formally offered before the court below cannot be considered on appeal.[33] Thus, such
documents cannot be admitted, much less given probative value, in this appeal. To do so would be repugnant to the
demands of justice and fair play. Let it be stressed that in petitions for review on certiorari, the jurisdiction of this
Court in cases brought before it from the Court of Appeals is limited to reviewing questions of law, which involve no
examination of the probative value of the evidence presented by the litigants or any of them.[34]

WHEREFORE, the instant petition is hereby DENIED and the assailed Decision and Resolution of the Court of Appeals
dated March 20, 2000 and September 29, 2000, respectively, in CA-G.R. SP No. 53283 are AFFIRMED. Costs against
the petitioners.

SO ORDERED.