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G.R. No.

166208 June 29, 2007

KING OF KINGS TRANSPORT INC., CLAIRE DELA FUENTE and MELISSA LIM, petitioners,
vs.
SANTIAGO O. MAMAC, respondent.

DECISION

VELASCO, JR., J.:

Is a verbal appraisal of the charges against the employee a breach of the procedural due process? This is the main issue to be
resolved in this plea for review under Rule 45 of the September 16, 2004 Decision 1 of the Court of Appeals (CA) in CA-GR SP No.
81961. Said judgment affirmed the dismissal of bus conductor Santiago O. Mamac from petitioner King of Kings Transport, Inc.
(KKTI), but ordered the bus company to pay full backwages for violation of the twin-notice requirement and 13th-month pay.
Likewise assailed is the December 2, 2004 CA Resolution2 rejecting KKTI’s Motion for Reconsideration.

The Facts

Petitioner KKTI is a corporation engaged in public transportation and managed by Claire Dela Fuente and Melissa Lim.

Respondent Mamac was hired as bus conductor of Don Mariano Transit Corporation (DMTC) on April 29, 1999. The DMTC
employees including respondent formed the Damayan ng mga Manggagawa, Tsuper at Conductor-Transport Workers Union and
registered it with the Department of Labor and Employment. Pending the holding of a certification election in DMTC, petitioner KKTI
was incorporated with the Securities and Exchange Commission which acquired new buses. Many DMTC employees were
subsequently transferred to KKTI and excluded from the election.

The KKTI employees later organized the Kaisahan ng mga Kawani sa King of Kings (KKKK) which was registered with DOLE.
Respondent was elected KKKK president.

Respondent was required to accomplish a "Conductor’s Trip Report" and submit it to the company after each trip. As a background,
this report indicates the ticket opening and closing for the particular day of duty. After submission, the company audits the reports.
Once an irregularity is discovered, the company issues an "Irregularity Report" against the employee, indicating the nature and
details of the irregularity. Thereafter, the concerned employee is asked to explain the incident by making a written statement or
counter-affidavit at the back of the same Irregularity Report. After considering the explanation of the employee, the company then
makes a determination of whether to accept the explanation or impose upon the employee a penalty for committing an infraction.
That decision shall be stated on said Irregularity Report and will be furnished to the employee.

Upon audit of the October 28, 2001 Conductor’s Report of respondent, KKTI noted an irregularity. It discovered that respondent
declared several sold tickets as returned tickets causing KKTI to lose an income of eight hundred and ninety pesos. While no
irregularity report was prepared on the October 28, 2001 incident, KKTI nevertheless asked respondent to explain the discrepancy.
In his letter,3 respondent said that the erroneous declaration in his October 28, 2001 Trip Report was unintentional. He explained
that during that day’s trip, the windshield of the bus assigned to them was smashed; and they had to cut short the trip in order to
immediately report the matter to the police. As a result of the incident, he got confused in making the trip report.

On November 26, 2001, respondent received a letter4 terminating his employment effective November 29, 2001. The dismissal letter
alleged that the October 28, 2001 irregularity was an act of fraud against the company. KKTI also cited as basis for respondent’s
dismissal the other offenses he allegedly committed since 1999.

On December 11, 2001, respondent filed a Complaint for illegal dismissal, illegal deductions, nonpayment of 13th-month pay, service
incentive leave, and separation pay. He denied committing any infraction and alleged that his dismissal was intended to bust union
activities. Moreover, he claimed that his dismissal was effected without due process.

In its April 3, 2002 Position Paper,5 KKTI contended that respondent was legally dismissed after his commission of a series of
misconducts and misdeeds. It claimed that respondent had violated the trust and confidence reposed upon him by KKTI. Also, it
averred that it had observed due process in dismissing respondent and maintained that respondent was not entitled to his money
claims such as service incentive leave and 13th-month pay because he was paid on commission or percentage basis.

On September 16, 2002, Labor Arbiter Ramon Valentin C. Reyes rendered judgment dismissing respondent’s Complaint for lack of
merit.6

Aggrieved, respondent appealed to the National Labor Relations Commission (NLRC). On August 29, 2003, the NLRC rendered a
Decision, the dispositive portion of which reads:

WHEREFORE, the decision dated 16 September 2002 is MODIFIED in that respondent King of Kings Transport Inc. is hereby ordered
to indemnify complainant in the amount of ten thousand pesos (P10,000) for failure to comply with due process prior to
termination.

The other findings are AFFIRMED.


SO ORDERED.7

Respondent moved for reconsideration but it was denied through the November 14, 2003 Resolution 8 of the NLRC.

Thereafter, respondent filed a Petition for Certiorari before the CA urging the nullification of the NLRC Decision and Resolution.

The Ruling of the Court of Appeals

Affirming the NLRC, the CA held that there was just cause for respondent’s dismissal. It ruled that respondent’s act in "declaring sold
tickets as returned tickets x x x constituted fraud or acts of dishonesty justifying his dismissal." 9

Also, the appellate court sustained the finding that petitioners failed to comply with the required procedural due process prior to
respondent’s termination. However, following the doctrine in Serrano v. NLRC, 10 it modified the award of PhP 10,000 as
indemnification by awarding full backwages from the time respondent’s employment was terminated until finality of the decision.

Moreover, the CA held that respondent is entitled to the 13th-month pay benefit.

Hence, we have this petition.

The Issues

Petitioner raises the following assignment of errors for our consideration:

Whether the Honorable Court of Appeals erred in awarding in favor of the complainant/private respondent, full back wages, despite
the denial of his petition for certiorari.

Whether the Honorable Court of Appeals erred in ruling that KKTI did not comply with the requirements of procedural due process
before dismissing the services of the complainant/private respondent.

Whether the Honorable Court of Appeals rendered an incorrect decision in that [sic] it awarded in favor of the complaint/private
respondent, 13th month pay benefits contrary to PD 851.11

The Court’s Ruling

The petition is partly meritorious.

The disposition of the first assigned error depends on whether petitioner KKTI complied with the due process requirements in
terminating respondent’s employment; thus, it shall be discussed secondly.

Non-compliance with the Due Process Requirements

Due process under the Labor Code involves two aspects: first, substantive––the valid and authorized causes of termination of
employment under the Labor Code; and second, procedural––the manner of dismissal.12 In the present case, the CA affirmed the
findings of the labor arbiter and the NLRC that the termination of employment of respondent was based on a "just cause." This
ruling is not at issue in this case. The question to be determined is whether the procedural requirements were complied with.

Art. 277 of the Labor Code provides the manner of termination of employment, thus:

Art. 277. Miscellaneous Provisions.––x x x

(b) Subject to the constitutional right of workers to security of tenure and their right to be protected against dismissal except for a
just and authorized cause without prejudice to the requirement of notice under Article 283 of this Code, the employer shall furnish
the worker whose employment is sought to be terminated a written notice containing a statement of the causes for termination and
shall afford the latter ample opportunity to be heard and to 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. Any decision taken by the employer shall be without prejudice to the right of the worker to contest the validity or
legality of his dismissal by filing a complaint with the regional branch of the National Labor Relations Commission. The burden of
proving that the termination was for a valid or authorized cause shall rest on the employer.

Accordingly, the implementing rule of the aforesaid provision states:

SEC. 2. Standards of due process; requirements of notice.––In all cases of termination of employment, the following standards of
due process shall be substantially observed:

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 said employee reasonable
opportunity within which to explain his side.

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

(c) A written notice of termination served on the employee, indicating that upon due consideration of all the circumstances, grounds
have been established to justify his termination. 13

In case of termination, the foregoing notices shall be served on the employee’s last known address. 14

To clarify, the following should be considered in terminating the services of employees:

(1) The first written notice to be served on the employees should contain the specific causes or grounds for termination against
them, and a directive that the employees are given the opportunity to submit their written explanation within a reasonable period.
"Reasonable opportunity" under the Omnibus Rules means every kind of assistance that management must accord to the employees
to enable them to prepare adequately for their defense. 15 This should be construed as a period of at least five (5) calendar days from
receipt of the notice to give the employees an opportunity to study the accusation against them, consult a union official or lawyer,
gather data and evidence, and decide on the defenses they will raise against the complaint. Moreover, in order to enable the
employees to intelligently prepare their explanation and defenses, the notice should contain a detailed narration of the facts and
circumstances that will serve as basis for the charge against the employees. A general description of the charge will not suffice.
Lastly, the notice should specifically mention which company rules, if any, are violated and/or which among the grounds under Art.
282 is being charged against the employees.

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

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

In the instant case, KKTI admits that it had failed to provide respondent with a "charge sheet." 16 However, it maintains that it had
substantially complied with the rules, claiming that "respondent would not have issued a written explanation had he not been
informed of the charges against him."17

We are not convinced.

First, respondent was not issued a written notice charging him of committing an infraction. The law is clear on the matter. A verbal
appraisal of the charges against an employee does not comply with the first notice requirement. In Pepsi Cola Bottling Co. v.
NLRC,18 the Court held that consultations or conferences are not a substitute for the actual observance of notice and hearing. Also,
in Loadstar Shipping Co., Inc. v. Mesano,19 the Court, sanctioning the employer for disregarding the due process requirements, held
that the employee’s written explanation did not excuse the fact that there was a complete absence of the first notice.

Second, even assuming that petitioner KKTI was able to furnish respondent an Irregularity Report notifying him of his offense, such
would not comply with the requirements of the law. We observe from the irregularity reports against respondent for his other
offenses that such contained merely a general description of the charges against him. The reports did not even state a company rule
or policy that the employee had allegedly violated. Likewise, there is no mention of any of the grounds for termination of
employment under Art. 282 of the Labor Code. Thus, KKTI’s "standard" charge sheet is not sufficient notice to the employee.

Third, no hearing was conducted. Regardless of respondent’s written explanation, a hearing was still necessary in order for him to
clarify and present evidence in support of his defense. Moreover, respondent made the letter merely to explain the circumstances
relating to the irregularity in his October 28, 2001 Conductor’s Trip Report. He was unaware that a dismissal proceeding was already
being effected. Thus, he was surprised to receive the November 26, 2001 termination letter indicating as grounds, not only his
October 28, 2001 infraction, but also his previous infractions.

Sanction for Non-compliance with Due Process Requirements

As stated earlier, after a finding that petitioners failed to comply with the due process requirements, the CA awarded full backwages
in favor of respondent in accordance with the doctrine in Serrano v. NLRC.20 However, the doctrine in Serrano had already been
abandoned in Agabon v. NLRC by ruling that if the dismissal is done without due process, the employer should indemnify the
employee with nominal damages.21

Thus, for non-compliance with the due process requirements in the termination of respondent’s employment, petitioner KKTI is
sanctioned to pay respondent the amount of thirty thousand pesos (PhP 30,000) as damages.
Thirteenth (13th)-Month Pay

Section 3 of the Rules Implementing Presidential Decree No. 85122 provides the exceptions in the coverage of the payment of the
13th-month benefit. The provision states:

SEC. 3. Employers covered.––The Decree shall apply to all employers except to:

xxxx

e) Employers of those who are paid on purely commission, boundary, or task basis, and those who are paid a fixed amount for
performing a specific work, irrespective of the time consumed in the performance thereof, except where the workers are paid on
piece-rate basis in which case the employer shall be covered by this issuance insofar as such workers are concerned.

Petitioner KKTI maintains that respondent was paid on purely commission basis; thus, the latter is not entitled to receive the 13th-
month pay benefit. However, applying the ruling in Philippine Agricultural Commercial and Industrial Workers Union v. NLRC, 23 the
CA held that respondent is entitled to the said benefit.

It was erroneous for the CA to apply the case of Philippine Agricultural Commercial and Industrial Workers Union. Notably in the said
case, it was established that the drivers and conductors praying for 13th- month pay were not paid purely on commission. Instead,
they were receiving a commission in addition to a fixed or guaranteed wage or salary. Thus, the Court held that bus drivers and
conductors who are paid a fixed or guaranteed minimum wage in case their commission be less than the statutory minimum, and
commissions only in case where they are over and above the statutory minimum, are entitled to a 13th-month pay equivalent to
one-twelfth of their total earnings during the calendar year.

On the other hand, in his Complaint,24 respondent admitted that he was paid on commission only. Moreover, this fact is supported
by his pay slips25 which indicated the varying amount of commissions he was receiving each trip. Thus, he was excluded from
receiving the 13th-month pay benefit.

WHEREFORE, the petition is PARTLY GRANTED and the September 16, 2004 Decision of the CA is MODIFIED by deleting the award of
backwages and 13th-month pay. Instead, petitioner KKTI is ordered to indemnify respondent the amount of thirty thousand pesos
(PhP 30,000) as nominal damages for failure to comply with the due process requirements in terminating the employment of
respondent.

No costs.

SO ORDERED.

PRESBITERO J. VELASCO, JR.


Associate Justice
[G.R. NO. 166096 : September 11, 2008]

PHILIPPINE NATIONAL BANK, Petitioner, v. RAMON BRIGIDO L. VELASCO, Respondent.

DECISION

REYES, R.T., J.:

THIS is a tale of a bank officer-depositor clinging to his position after violating bank regulations and falsifying his passbook to
cover up a false transaction.

Before the Court is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure seeking the reversal of the
Decision1 and Resolution2 of the Court of Appeals (CA). The appealed decision reversed those of the National Labor Relations
Commission (NLRC)3 and the Labor Arbiter4 which dismissed the complaint for illegal dismissal and damages of Ramon Brigido L.
Velasco against Philippine National Bank (PNB).

The Facts

Ramon Brigido L. Velasco, a PNB audit officer, and his wife, Belen Amparo E. Velasco, maintained Dollar Savings Account No. 010-
714698-95 at PNB Escolta Branch. On June 30, 1995, while on official business at the Legazpi Branch, he went to the
PNB Ligao, Albay Branch and withdrew US$15,000.00 from the dollar savings account. At that time, the account had a
balance of US$15,486.07. The Ligao Branch is an off-line branch, i.e., one with no network connection or computer linkage with
other PNB branches and the head office. The transaction was evidenced by an Interoffice Savings Account Withdrawal Slip, also
known as the Ticket Exchange Center (TEC). 6

On July 10, 1995, PNB Escolta Branch received the TEC covering the withdrawal. It was included among the proofsheet entries of
Cashier IV Ruben Francisco, Jr. The withdrawal was not, however, posted in the computer of the Escolta Branch when it received
said advice. This means that the withdrawal was not recorded. Thus, the account of Velasco had an overstatement of
US$15,000.00.

Sometime in September 1995, while Velasco was on a provincial audit, he claimed calling through phone a kin in Manila
who just arrived from abroad. This kin allegedly told him that his New York-based brother, Gregorio Velasco, sent him various
checks through his kin totaling US$15,000.00 and that the checks would just be deposited in time in Velasco's account.

On October 6, 1995, Velasco updated his dollar savings account by depositing US$12.78, reflecting a balance of US$15,486.01. He
was allegedly satisfied with the updated balance, as he thought that the US$15,000.00 in his account was the amount given by his
brother.

On different dates, Velasco made several inter-branch withdrawals from the dollar savings account, to wit:
PNB Branch Date Amount

PNB Legaspi November 7, 1995 US $2,000.00

PNB Legaspi November 13, 1995 3,329.97

Cash Dept. November 23, 1995 4,000.00

Total US $9,329.97
Mrs. Belen Velasco also withdrew several amounts on the dollar account, viz.:
PNB Branch Date Amount

PNB CEPZ December 6, 1995 US$11,494.00

PNB Frisco January 2, 1996 1,292.32

Total US$12,786.32
Subsequently, the dollar savings account of the spouses was closed.

On February 6, 1996, in the course of conducting an audit at PNB Escolta Branch, Molina D. Salvador, a member of the Internal
Audit Department (IAD) of PNB, discovered that the inter-branch withdrawal made on June 30, 1995 by Velasco at PNB Ligao, Albay
Branch in the amount of US$15,000.00 was not posted; and that no deposit of said amount had been credited to the dollar savings
account.

On February 7, 1996, Velasco was notified of the glitch when he reported at the IAD. He said it was only in the evening that he was
able to verify from his kin that the latter was not able to deposit in his account the US$15,000.00. 7

The following day, or on February 8, 1996, Velasco went to Dolorita Donado, assistant vice president of the Internal Audit
Department and team leader of the Escolta Task Force, and delivered three (3) checks in the amount of US$5,000.00 each or a total
of US$15,000.00. However, Donato returned the checks to Velasco and instructed him that he should personally deposit the
checks.

On February 14, 1996, he deposited the checks and the amount was consequently applied to his unposted withdrawal of
US$15,000.00.

Meanwhile, on February 9, 1996, PNB vice president, B.C. Hermoso, required 8 Velasco to submit a written explanation concerning
the incident.

On February 12, 1996, he submitted his sworn letter-explanation.9 He described the inter-branch withdrawal at PNB Ligao, Albay
Branch on June 30, 1995 as "no-book," i.e., without the corresponding presentation to the bank teller of the savings passbook. He
stated, among others, that his withdrawal was accommodated as the statement of account showed a balance of US$15,486.01, and
that he is personally known to the officers and staff, being a former colleague at the PNB Ligao, Albay Branch.

On February 27, 1996, PNB Ligao, Albay Branch division chief III, Rexor Quiambao, financial specialist II, Emma Gacer, and division
chief II, Renato M. Letada, confirmed the "no-book" withdrawal.10

On March 5, 1996, PNB formally charged Velasco with "Dishonesty, Grave Misconduct, and/or Conduct Grossly Prejudicial to the Best
Interest of the Service for the irregular handling of Dollar Savings Account No. 010-714698-9"11 The administrative charge alleged
that: (1) he transacted a no-book withdrawal against his Dollar Savings Account No. 010-714698-9 at PNB Ligao, Albay Branch in
violation of Section 1216 of the Manual of Regulations for Banks; (2) in transacting the no-book withdrawal, he failed to present
any letter of introduction as required under General Circular 3-72/92; (3) the irregular inter-branch withdrawal was aggravated by
the failure of Escolta Branch to post/enter the withdrawal into the computer upon receipt of the TEC advice, resulting in the
overstatement of the account balance by US$15,000.00; and (4) since he was presumed to be fully aware that neither the deposit
nor withdrawal of the US$15,000.00 was reflected on the passbook, he was able to appropriate the amount for his personal benefit,
free of interest, to the damage and prejudice of PNB.12

On April 8, 1996, PNB withheld his rice and sugar subsidy, dental/optical/outpatient medical benefits, consolidated medical benefits,
commutation of hospitalization benefits, clothing allowance, longevity pay, anniversary bonus, Christmas bonus and cash gift,
performance incentive award, and mid-year financial assistance.13 On April 10, 1996, he was placed under preventive suspension
for a period of ninety (90) days.14

On May 2, 1996, Velasco submitted his sworn Answer 15 to the administrative charge against him. Unlike his previous answer, he
here claimed that his withdrawal on June 30, 1995 was "with passbook." As proof, he attached a copy of his passbook16 bearing the
withdrawal entry of US$15,000.00 on June 30, 1995. Explaining the inconsistency with his sworn letter-explanation on February 12,
1996, he said his initial answer was made under pressing circumstances. He was unable to find his passbook which was then
kept by his wife who could not be contacted at that moment.

On October 2, 1996, the Administrative Adjudication Office (AAO) of PNB composed of Fernando R. Mangubat, Jr., Wilfredo S.
Verzosa, Celso D. Benologa, and Jesse L. Figueroa exonerated Velasco of the charges of dishonesty and conduct prejudicial to the
best interest of service. However, he was found guilty of grave misconduct, mitigated by length of service and absence of actual
loss to PNB. Thus, he was meted the penalty of forced resignation with benefits.17

On October 31, 1996, Velasco was formally notified of the findings of the AAO after its approval by the management. As of that
time, he had been employed with PNB for eighteen (18) years, holding the position of Manager 1 of the IAD. He was earning
P14,932.00 per month plus a monthly allowance of P3,940.00 or a total salary of P18,872.00 per month.

On December 22, 1997, he filed a Complaint18 against PNB for illegal suspension, illegal dismissal, and damages before the NLRC.

Labor Arbiter, NLRC, and CA Dispositions

On July 9, 1999, Labor Arbiter Pablo C. Espiritu gave judgment, the dispositive portion of which reads:
WHEREFORE,judgment is hereby rendered as follows:

1. Dismissing the complaint for illegal dismissal against respondents for want of merit.

2. Ordering PNB to pay complainant unpaid wages for the period May 12, 1996 to October 31, 1996 in the amount of
P103,796.00.

3. Dismissing complainant's claims for damages and other monetary claims for lack of merit.

SO ORDERED.19
In his ruling, the Labor Arbiter opined that as an employee and officer of PNB for eighteen (18) years, Velasco is expected to know
bank procedures, including the expected entries in a savings passbook. Even if it should be assumed that he presented his passbook
when he withdrew US$15,000.00 at the PNB Ligao Branch on June 30, 1995, he should have known that there was something wrong
with the amounts credited to his account when he made an update on October 6, 1995. Being an audit officer, and fully aware of his
withdrawal of US$15,000.00, he should have made inquiries on the inconsistency of the entries in his passbook. 20

The Labor Arbiter also found as flimsy the argument that the additional US$15,000.00 was the amount given to Velasco
by his brother from the United States. As early as October 6, 1995, when he updated his passbook, Velasco should have known
that (1) his brother's checks in the amount of US$15,000.00 have not been deposited in his dollar savings account and (2) he appears
to have been improperly credited with US$15,000.00.21

Moreover, the Labor Arbiter held that the entry in the passbook purportedly reflecting the withdrawal of US$15,000.00 is a
forgery. It was done to conform to the defense of Velasco that he presented his passbook on June 30, 1995. 22

On the charge of illegal suspension, the Labor Arbiter held that the preventive suspension of Velasco was reasonable in view of the
sensitive nature of his position. It was also necessary to protect the records of PNB. 23 It follows that the withholding of his company
benefits is reasonable.24 Nonetheless, he should be paid his salary from May 12, 1996 up to October 31, 1996. 25

His claim for damages and attorney's fees must be denied because PNB did not violate his rights. 26

Dissatisfied with the decision of the Labor Arbiter, both Velasco27 and PNB28 appealed to the NLRC.

On July 31, 2000, the NLRC affirmed with modification the Labor Arbiter decision, disposing, thus:
WHEREFORE, the decision appealed from is hereby MODIFIED to the extent that the award of unpaid salaries is hereby REDUCED to
the complainant's salaries from May 27, 1996 to July 31, 1996. Other dispositions in the appealed decision stands (sic) affirmed.29
In sustaining the Labor Arbiter, the NLRC held that Velasco's lack of knowledge of the non-posting of his withdrawal is not
credible. Even a cursory look at his passbook shows that no deposit of US$15,000.00 was ever made. That there was still a
balance of more than US$15,000.00 in his account after the withdrawal he made on June 30, 1995 could only mean that the
withdrawal was never posted. Worse, based also on the entries in his passbook, it is clear that the withdrawal on June 30, 1995 was
a "no-book" transaction. The withdrawal of US$15,000.00 was not taken into consideration in the determination of the balance of
June 30, 1995 and the succeeding dates. Thus, it is clear that the entry in question was falsified. It was made merely to bolster his
subsequent claim that he presented his passbook when he withdrew on June 30, 1995. 30

The NLRC concluded that the falsification of the passbook shows deceit on the part of Velasco. He took advantage of his
position. The posting of the falsified entry could not have been made without, or was at least facilitated by, his being an employee
of the bank. Thus, his subsequent withdrawals amounted to losses on the part of the bank. He made those
withdrawals from his account with full knowledge that the balance of his passbook of more than US$15,000.00 was attributed
to the non-posting of the June 30, 1995 withdrawal. 31

The NLRC also held that he had been preventively suspended for more than thirty (30) days as of May 27, 1996. Since he
was paid his salaries from August 1, 1996 to October 31, 1996, he may recover only his salary from May 27, 1996 to July 31, 1996.32

Like the Labor Arbiter, the NLRC held that Velasco may not recover damages. His dismissal was not done oppressively or in bad
faith. Neither was he subjected to unnecessary embarrassment or humiliation.33

His motion for reconsideration having been denied, Velasco elevated the matter to the CA by way of petition for review
on certiorari under Rule 43 of the Rules of Court.34 On April 22, 2004, the CA rendered the assailed decision, the fallo stating, thus:
WHEREFORE, for the foregoing discussions, We REVERSE and SET ASIDE the findings of public respondent NLRC and Labor Arbiter
and hereby enter a decision ordering PNB to pay petitioner a separation pay equivalent to half-month salary for every year of
service, plus backwages from the time of his illegal termination up to the finality of this decision.

SO ORDERED.35
According to the CA, the failure of Velasco to present his passbook and a letter of introduction does not constitute
misconduct. Assuming for the sake of argument that he committed a serious misconduct in not properly monitoring his account
with ordinary diligence and prudence, the same may be said of PNB when it failed to make the necessary posting of his
withdrawal.36 Lastly, the alleged offense of Velasco is not work-related to constitute just cause for his dismissal.37

Issues

PNB has filed the instant petition for review on certiorari, putting forth the following issues for Our resolution, viz.:

I. WHETHER OR NOT THE COURT OF APPEALS ERRED AND GRAVELY ABUSED ITS DISCRETION IN FINDING THAT
RESPONDENT HAS BEEN ILLEGALLY DISMISSED BY THE PETITIONERS.

II. WHETHER OR NOT THE COURT OF APPEALS ERRED AND GRAVELY ABUSED ITS DISCRETION IN DIRECTING PNB TO
PAY RESPONDENT SEPARATION PAY AND BACKWAGES.38 (Underscoring supplied)

We add a third issue which was raised by PNB before the CA but was, however, left unresolved: whether Velasco took the correct
recourse when he elevated the decision of the NLRC to the CA by way of petition for review on certiorari under Rule 43.

Our Ruling

I. Appeal does not lie from the decision of the NLRC.

We first address the procedural question on the propriety of the Rule 43 petition. Rule 43 provides for appeal from quasi-judicial
agencies to the CA by way of petition for review. Petition for review on certiorari or appeal by certiorari is a recourse to the
Supreme Court under Rule 45.
The mode of appeal resorted to by Velasco is wrong because appeal is not the proper remedy in elevating to the CA the decision of
the NLRC. Section 2, Rule 43 of the 1997 Rules of Civil Procedure is explicit that Rule 43 "shall not apply to judgments or final orders
issued under the Labor Code of the Philippines."

The correct remedy that should have been availed of is the special civil action of certiorari under Rule 65. As this Court held in the
case of Pure Foods Corporation v. NLRC,39 "the party may also seasonably avail of the special civil action for certiorari, where
the tribunal, board or officer exercising judicial functions has acted without or in excess of its jurisdiction, or with grave abuse of
discretion, and praying that judgment be rendered annulling or modifying the proceedings, as the law requires, of such tribunal,
board or officer"40 In any case, St. Martin Funeral Homes v. National Labor Relations Commission 41 settled any doubt as to the
manner of elevating decisions of the NLRC to the CA by holding that "the legislative intendment was that the special civil action
ofcertiorari was and still is the proper vehicle for judicial review of decisions of the NLRC"42

That the decision of the NLRC is not subject to appeal could have been a ground for the CA to dismiss the appeal of
Velasco.43 But even assuming, arguendo, that his petition could be liberally treated as one for certiorari under Rule 65, the recourse
should not have prospered.

II. Velasco committed serious misconduct, hence, his dismissal is justified.

Article 282 of the Labor Code enumerates the just causes where an employer may terminate the services of an employee, 44 to wit:
a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in
connection with his work;

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

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

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

e) Other causes analogous to the foregoing.


In Austria v. National Labor Relations Commission,45 the Court defined misconduct as "improper and wrongful conduct. It is the
transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, willful in character, and implies
wrongful intent and not mere error in judgment"46 In Camusv. Civil Service Board of Appeals,47 misconduct was described as "wrong
or improper conduct"48 It implies a wrongful intention and not a mere error of judgment. 49

Of course, ordinary misconduct would not justify the termination of the services of an employee. The law is explicit that the
misconduct should be serious. It is settled that in order for misconduct to be serious, "it must be of such grave and aggravated
character and not merely trivial or unimportant"50 As amplified by jurisprudence, the misconduct must (1) be serious; (2) relate to
the performance of the employee's duties; and (3) show that the employee has become unfit to continue working for the
employer.51

Measured by the foregoing yardstick, We rule that Velasco committed serious misconduct that warrants termination from
employment.

A. The misconduct is serious. Velasco violated bank rules when he transacted a "no-book" withdrawal by his failure to present his
passbook to the PNB Ligao, Albay Branch on June 30, 1995. Section 1216 of the Manual of Regulations for Banks and Other
Financial Intermediaries state that "[b]anks are prohibited from issuing/accepting `withdrawal authority slips' or any other similar
instruments designed to effect withdrawals of savings deposits without following the usual practice of requiring the depositors
concerned to present their passbooks and accomplishing the necessary withdrawal slips."

Further, he failed to present any letter of introduction as mandated under General Circular 3-72-92 which requires that "[b]efore
going out-of-town, the Depositor secures a Letter of Introduction from the branch/office where his Peso Savings Account is
maintained."

The presentation of passbook and letter of introduction is not without a valid reason. As aptly stated by the IAD of PNB:
Considering that the PNB Ligao, Albay Branch is an offline branch, it is a must that an LOI and the passbook be presented by the
depositor before any withdrawal is allowed. This procedure is required in order for the negotiating branch to determine or
ascertain the available balance and the specimen signature of the withdrawing party. Moreover, the maintaining branch upon
issuance of the LOI shall place a "hold" on the account in the computer as an internal control procedure. 52
True, a strict reading of General Circular 3-72-92 would lead one to conclude that only persons with peso savings account are
required to secure a letter of introduction. However, simple logic dictates that those maintaining dollar savings account are also
included. No cogent reason would be served by the rule if only persons with peso savings account are required to get a letter of
introduction. Otherwise, there can be a circumvention of the rule. Nemo potest facere per alium qud non potest facere per
directum. No one is allowed to do indirectly what he is prohibited to do directly. Sinuman ay hindi pinapayagang gawin nang
hindi tuwiran ang ipinagbabawal gawin nang tuwiran.

As an audit officer, Velasco should be the first to ensure that banking laws, policies, rules and regulations, are strictly observed and
applied by its officers in the day-to-day transactions. The banking system is an indispensable institution in the modern world. It
plays a vital role in the economic life of every civilized nation. Whether banks act as mere passive entities for the safekeeping and
saving of money, or as active instruments of business and commerce, they have become an ubiquitous presence among the
citizenry, who have come to regard them with respect and even gratitude and, most of all, confidence. 53

The CA, however, opined that the failure of Velasco to abide by the rules is not serious misconduct because (1) from the admission
of PNB itself, allowing bank personnel who are out-of-town to make a "no-book" transaction without a letter of introduction is
considered acommon practice, and (2) the approving officers of PNB Ligao Branch should have also been administratively charged
considering that the "no-book" transaction could not have pushed through without their approval. 54

In Santos v. San Miguel Corporation,55Petitioner, in his defense, cited the prolonged practice of payroll personnel, including persons
in managerial levels, of encashing personal checks. Finding this argument unmeritorious, the Court held that "[p]rolonged practice
of encashing personal checks among respondent's payroll personnel does not excuse or justify petitioner's misdeeds. Her willful
and deliberate acts were in gross violation of respondent's policy against encashment of personal checks of its personnel, embodied
in its Cash Department Memorandum dated September 6, 1989" 56 The Court even added that petitioner "cannot feign ignorance of
such memorandum as she is duty-bound to keep abreast of company policies related to financial matters within the
corporation"57 We apply the same principle here.

Suffice it to state that the option of who to charge or punish belongs to PNB. As an employer, PNB is given the latitude to
determine who among its erring employees should be punished, to what extent and what penalty to impose. 58 Too, by charging
Velasco, PNB is not estopped from charging its other employees who might as well have been remiss with their job.

Of course, We are not unaware that Velasco had a change of heart. In his sworn Letter-Explanation February 12, 1996, he admitted
that his June 30, 1995 withdrawal of US$15,000.00 was a "no-book" transaction. However, in his sworn Answer dated April 30,
1996, he claimed that he actually presented his passbook when he withdrew on June 30, 1995.

To recall, he was charged with dishonesty, grave misconduct, and/or conduct grossly prejudicial to the best interest of the service
for irregularly handling his dollar savings account. Thus, it is safe to assume that when he prepared his February 12, 1996 sworn
Letter-Explanation, the circumstances surrounding his June 30, 1995 withdrawal at PNB Ligao, Albay Branch were still fresh on his
mind. The allegations against him were serious, which should have put him on guard from preparing a haphazard
explanation. He should have been mindful that dire consequences would surely befall him should the charges against him be
proven. Lest it be forgotten, the no-book withdrawal was confirmed by the concerned officers of PNB Ligao, Albay Branch, namely,
Quiambao, Gacer, and Letada. These circumstances, taken together, lead to no other conclusion than that Velasco changed his
explanation from "no-book" to "with book" transaction after realizing that he violated bank rules and regulations.

Perez v. People,59 is illustrative on this score. Perez, an acting municipal treasurer, submitted two contradicting answers explaining
the location of the missing funds under his custody and control: the first, reiterating his previous verbal admission before the audit
team that part of the money was used to pay for the loan of his late brother, another portion was spent for the food of his family,
and the rest for his medicine; and the second, claiming that the alleged missing amount was in the possession and custody of his
accountable personnel at the time of the audit examination.

This Court held that the sudden turnaround of Perez was merely an afterthought. He "only changed his story to exonerate himself,
after realizing that his first Answer put him in a hole, so to speak"60 Neither did the Court believe that his alleged sickness affected
the preparation of his first Answer. Perez "presented no convincing evidence that his disease at the time he formulated that
Answer diminished his capacity to formulate a true, clear and coherent response to any query. In fact, its contents merely
reiterated his verbal explanation to the auditing team on January 5, 1989 on how he disposed of the missing funds" 61

We find no cogent reason to depart from Our ruling in Perez. The claim of Velasco that his initial answer was made under pressing
circumstances is too flimsy an excuse. It partakes of the nature of an alibi. As such, it constitutes a self-serving negative evidence
which cannot he accorded greater evidentiary weight than the declaration of credible witnesses who testified on affirmative
matters.62 The Court has consistently frowned upon the defense of alibi, and received it with caution, not only because it is
inherently weak and unreliable but also because it can be easily fabricated.63

Also worth noting is that Velasco never imputed any ill motive on the part of Rexor, Gacer, and Letada who collectively narrated that
the June 30, 1995 withdrawal was a no-book transaction. They confirmed his earlier version that he did not present his passbook
when he withdrew the US$15,000.00 on June 30, 1995. In any case, the fact that he changed his stance puts his credibility in
doubt. Was he lying when he submitted his sworn letter-explanation of February 12, 1996, or when he submitted his sworn Answer
dated April 30, 1996? Allegans contraria non est audiendus. He is not to be heard who alleges things contradictory to each
other. Hindi dapat pakinggan ang nagsasabi ng mga bagay na salungat sa isa't-isa.

Velasco did not only violate bank rules and regulations. What compounds his offense was his unusual silence. He never informed
PNB about the huge overstatement of US$15,000.00 in his account. He updated his passbook on October 6, 1995 by depositing
US$12.78. Thus, as early as that date, he should have known that something was wrong with the credited balance in his passbook
and reported it immediately to the concerned officers of PNB. What he did, instead, was to keep mum until PNB discovered the
incident and notified him on February 7, 1996, or almost eight (8) months after his no-book withdrawal on June 30, 1995.

With his silence, he clearly intended to gain at the expense of PNB. The omission to report is not trivial or inconsequential because it
gave him the opportunity to withdraw from his dollar savings account more than its real balance, as what he actually did. He took
advantage of the overstatement of his account, instead of protecting the interest of the bank. It would be impossible for him not to
detect the error at the time he deposited US$12.78 on October 6, 1995, because his account had a big balance despite the fact that
no large amount of money was deposited.

His claim that he was satisfied with the updated balance of US$15,486.01 on October 6, 1995, as he thought that the US$15,000.00
in his account was the amount given by his brother, is simply unbelievable. It is a desperate attempt at exculpation. The deposit of
the money from his brother should have been reflected in the on-line computer of PNB. The deposit would have also been
posted for update upon the presentation of the passbook on October 6, 1995. No deposit of US$15,000.00 was, however, reflected
in the passbook.

In Aboitiz Shipping Corporation v. Dela Serna,64Tiu v. National Labor Relations Commission,65Five J Taxi v. National Labor Relations
Commission,66 and Falguera v. Linsangan,67 among other cases, this Court consistently held that factual findings of quasi-judicial
agencies, which have acquired expertise in matters entrusted to their jurisdiction, are accorded not only respect but also finality if
they are supported by substantial evidence.68 Thus, in the absence of proof that the Labor Arbiter or the NLRC had
gravely abused their discretion, this Court shall deem conclusive and will not overturn their particular factual findings.69

The Labor Arbiter and the NLRC are in unison that Velasco transacted a no-book withdrawal and failed to present a letter of
introduction at PNB Ligao, Albay Branch on June 30, 1995. He also forged his passbook to cover up his offense. Being duly
supported by substantial evidence, We sustain said finding. Fitness for continued employment cannot be compartmentalized into
tight little cubicles of aspects of character, conduct, and ability separate and independent of each other. A service of irregularities,
when combined, may constitute serious misconduct which is a just cause for dismissal. 70

B. The serious misconduct relates to the performance of duties. The CA ruled that the offense of Velasco was not work-related
and does not warrant dismissal. It likewise held that there is no proof that his failure to be a good depositor affected his duties or
performance as an employee of PNB.71

At first glance, the acts committed by Velasco pertain only to his being a depositor of PNB. But he has a dual personality. He was a
depositor and, at the same time, an officer of the bank.

On one hand, he failed to present his passbook and a letter of introduction when he withdrew US$15,000.00 at PNB Ligao, Albay
Branch on June 30, 1995. This serious misconduct was aggravated when he presented a falsified passbook to make it appear that
he did not commit any misdeed. On the other hand, he worked for PNB for eighteen (18) long years, his last position having been as
Manager 1 of the IAD. As such, he was involved in the examination of the books of account of PNB. Thus,

when he violated bank rules and regulations and tried to cover up his infractions by falsifying his passbook, he was not only
committing them as a depositor but also, or rather more so, as an officer of the bank. It is akin to falsification of time cards,72 and
circulation of fake meal tickets,73 which this Court held as a just cause for terminating the services of an employee.

C. Velasco has become unfit to continue working at PNB. Taken together, his acts render him unfit to remain in the employ of the
bank. That it is his first offense is of no moment because he holds a managerial position. Employers are allowed wide latitude of
discretion in terminating managerial employees who, by virtue of their position, require full trust and confidence in the performance
of their duties.74 Managerial employees like Velasco are tasked to perform key and sensitive functions and are bound by more
exacting work ethics.75 Indeed, not even his eighteen (18) years of service could exonerate him. As this Court held in Equitable
PCIBank v. Caguioa:76
The leniency sought by respondent on the basis of her 35 years of service to the bank must be weighed in conjunction with the other
considerations raised by petitioners. As that service has been amply compensated, her plea for leniency cannot offset her
dishonesty. Even government employees who are validly dismissed from the service by reason of timely discovered offenses are
deprived of retirement benefits. Treating respondent in the same manner as the loyal and code-abiding employees, despite the
timely discovery of her Code violations, may indeed have a demoralizing effect on the entire bank. Be it remembered that banks
thrive on and endeavor to retain public trust and confidence, every violation of which must thus be accompanied by appropriate
sanctions.77
III. The CA erred in directing PNB to pay Velasco separation pay and backwages. PNB has no other liability to Velasco, except
his unpaid wages from May 27, 1996 to July 31, 1996.

PNB was registered under the Corporation Code under SEC Reg. No. ASO 96-005555 dated May 27, 1996.78 Thus, on that day,
employees of

PNB came under the jurisdiction of the Labor Code, whose Sections 8 and 9 of Rule XXIII, Book V of the Implementing Rules state:
Section 8. Preventive Suspension. - The employer may place the worker concerned under preventive suspension if his continued
employment poses a serious and imminent threat to the life or property of the employer or his co-workers.

Section 9. No preventive suspension shall last longer than thirty (30) days. The employer shall thereafter reinstate the worker in
his former or in a substantially equivalent position or the employer may extend the period of suspension provided that during the
period of extension, he pays the wages and other benefits due to the worker. In such case, the worker shall not be bound to
reimburse the amount paid to him during the extension if the employer decides, after completion of the hearing, to dismiss the
worker.
PNB has the right to preventively suspend Velasco during the pendency of the administrative case against him. It was obviously
done as a measure of self-protection. It was necessary to secure the vital records of PNB which, in view of the position of Velasco as
internal auditor, are easily accessible to him.

Velasco was preventively suspended for more than thirty (30) days as of May 27, 1996, while the records bear that Velasco was paid
his salaries from August 1, 1996 to October 31, 1996.79 Thus, the NLRC is correct in its holding that he may recover his salaries from
May 27, 1996 to July 31, 1996.
He is not entitled to separation and backwages because he was not illegally dismissed.80 We note though that PNB was not at
all insensitive to his plight, considering (1) his restitution of the amount akin to no actual loss to the bank, and (2) his length of
service of eighteen (18) years.81 As stated earlier, PNB imposed on Velasco the penalty of forced resignation with benefits, instead
of dismissal. The records bear out that he was granted P542,110.75 as separation benefits 82 which was used to offset his loan in the
bank, leaving an outstanding balance of P167,625.82 as of May 27, 1997. 83 We find that PNB acted humanely under the
circumstances.

One last word.

The law imposes great burdens on the employer. One needs only to look at the varied provisions of the Labor Code. Indeed, the
law is tilted towards the plight of the working man. The Labor Code is titled that way and not as "Employer Code." As one
American ruling puts it, the protection of labor is the highest office of our laws.84

Corollary to this, however, is the right of the employer to expect from the employee no less than adequate work, diligence and good
conduct.85 As Mr. Justice Joseph McKenna of the United States Supreme Court said in Arizona Copper Co. v. Hammer,86 "[t]he
difference between the position of the employer and the employee, simply considering the latter as economically weaker, is not a
justification for the violation of the rights of the former"87

WHEREFORE, the petition is GRANTED and the appealed Decision REVERSED and SET ASIDE. The Decision of the National Labor
Relations Commission is REINSTATED.

SO ORDERED.
G.R. No. 114307 July 8, 1998

PHILIPPINE AIRLINES, INC., Petitioner, -versus-

NATIONAL LABOR RELATIONS COMMISSION (2nd Division), LABOR ARBITER JOSE DE VERA, and EDILBERTO CASTRO

ROMERO, J.:

The central issue in the case at bar is whether or not an employee who has been preventively suspended beyond the maximum 30-
day period is entitled to backwages and salary increases granted under the Collective Bargaining Agreement (CBA) during his period
of suspension. Private respondent Edilberto Castro was hired as manifesting clerk by petitioner Philippine Airlines Inc. (PAL) on July
18, 1977. It appears that on March 12, 1984, respondent, together with co-employee Arnaldo Olfindo, were apprehended by
government authorities while about to board a flight en route to Hongkong in possession of P39,850.00 and P6,000.00 respectively,
in violation of Central Bank (CB) Circular 265, as amended by CB Circular 383,[1] in relation to Section 34 of Republic Act 265, as
amended. When informed of the incident, PAL required respondent “to explain within 24 hours why he should not be charged
administratively.”[2]

Upon failure of the latter to submit his explanation thereto, he was placed on preventive suspension effective March 27, 1984 for
grave misconduct. On May 28, 1984, an investigation was conducted wherein respondent admitted ownership of the confiscated sum
of money but denying any knowledge of CB Circular 265. No further inquiry was conducted. On August 13, 1985, respondent, through
the Philippine Airlines Employees Association (PALEA), sought not only the dismissal of his case but likewise prayed for his
reinstatement, to which appeal, PAL failed to make a reply thereto. He reiterated the same appeal in his letter dated August 13, 1987.

On September 18, 1987 or three (3) years and six (6) months after his suspension, PAL issued a resolution finding respondent guilty of
the offense charged but nonetheless reinstated the latter explaining that the period within which he was out of work shall serve as his
penalty for suspension. The said resolution likewise required respondent to affix his signature therein to signify his full conformity to
the action taken by PAL. Upon his reinstatement, respondent filed a claim against PAL for backwages and salary increases granted
under the collective bargaining agreement (CBA) covering the period of his suspension which the latter, however, denied on account
that under the existing CBA, “an employee under suspension is not entitled to the CBA salary increases granted during the period
covered by his penalty.”[3] On March 22, 1991 Labor Arbiter Jose G. de Vera rendered a decision, the decretal portion of which reads
as follows:

“WHEREFORE, all the foregoing premises being considered, judgment is hereby rendered limiting the suspension imposed upon the
complainant to one (1) month, and the respondent to pay complainant his salaries, benefits, and other privileges from April 26, 1984
up to September 18, 1987 and to grant complainant his salary increases accruing during the period aforesaid. Further, the respondent
is hereby ordered to pay complainant P50,000.00 in moral damages and P10,000.00 in exemplary damages. SO ORDERED.”[4]

On appeal, this decision was affirmed by the National Labor Relations Commission (NLRC) in its decision dated December 29, 1993
with the deletion of the award of moral and exemplary damages. Hence, the instant petition. We resolve to dismiss the petition.
Preventive suspension is a disciplinary measure for the protection of the company’s property pending investigation of any alleged
malfeasance or misfeasance committed by the employee.[5] The employer may place the worker concerned under preventive
suspension if his continued employment poses a serious and imminent threat to the life or property of the employer or of his
coworkers.[6] Sections 3 and 4, Rule XIV of the Omnibus Rules Implementing the Labor Code provides:

“Sec. 3. Preventive suspension. — The employer can place the worker concerned under preventive suspension if his continued
employment poses a serious and imminent threat to the life or property of the employer or of his co-workers.

Sec. 4. Period of suspension. — No preventive suspension shall last longer than 30 days. The employer shall thereafter reinstate the
worker in his former or in a substantially equivalent position or the employer may extend the period of suspension provided that
during the period of extension, he pays the wages and other benefits due to the workers. In such case, the worker, shall not be bound
to reimburse the amount paid to him during the extension if the employer decides, after completion of the hearing, to dismiss the
worker.” (Emphasis supplied)

It is undisputed that the period of suspension of respondent lasted for three (3) years and six (6) months. PAL, therefore, committed
a serious transgression when it manifestly delayed the determination of respondent’s culpability in the offense charged. PAL stated
lamely in its petition that “due to numerous administrative cases pending at that time, the Committee inadvertently failed to submit
its recommendation to (the) management.”[7] This is specious reasoning. The rules clearly provide that a preventive suspension shall
not exceed a maximum period of 30 days, after which period, the employee must be reinstated to his former position. If the suspension
is otherwise extended, the employee shall be entitled to his salaries and other benefits that may accrue to him during the period of
such suspension.

The provisions of the rules are explicit and direct; hence, there is no reason to further elaborate on the same. PAL faults the Labor
Arbiter and the NLRC for allegedly equating preventive suspension as remedial measure with suspension as penalty for administrative
offenses. The argument though cogent is, however, inaccurate. A distinction between the two measures was clearly elucidated by the
Court in the case of Beja Sr. vs. CA,[8] thus:
“Imposed during the pendency of an administrative investigation, preventive suspension is not a penalty in itself. It is merely a measure
of precaution so that the employee who is charged may be separated, for obvious reasons, from the scene of his alleged misfeasance
while the same is being investigated. While the former may be imposed on a respondent during the investigation of the charges against
him, the latter is the penalty which may only be meted upon him at the termination of the investigation or the final disposition of the
case.”

A cursory reading of the records reveals no reason to ascribe grave abuse of discretion against the NLRC. Simply put, its decision was
grounded upon petitioner’s manifest indifference to the plight of its suspended employee and its consequent violation of the
Implementing Rules of the Labor Code. As correctly ruled by the NLRC:

“In fact, the long period of complainant’s preventive suspension could even be considered constructive dismissal because were it not
his letter dated September 12, 1985 and followed by another on September 18, 1987 demanding his reinstatement, respondent by its
inaction appears to have no plan to employ him back to work. The manifest inaction of respondent over the pendency of the
administrative charge is indeed violative of complainant’s security of tenure because without any justifiable cause and due process
complainant’s employment would have gone into oblivion.”[9] (Emphasis supplied)

PAL contends that when respondent consented to the resolution that the entire period of suspension shall constitute his penalty for
the offense charged, the latter is thereby estopped to question the validity of said suspension. We concur with the labor arbiter when
he ruled that the ensuing conformity by respondent does not cure petitioner’s blatant violation of the law, and the same is therefore
null and void.

Thus, “to uphold the validity of the subsequent agreement between complainant and respondent regarding the imposition of the
suspension would be repulsive to the avowed policy of the State enshrined not only in the Constitution but also in the Labor Code.”[10]
In fine, we do not question the right of the petitioner to discipline its erring employees and to impose reasonable penalties pursuant
to law and company rules and regulations. “Having this right, however, should not be confused with the manner in which that right
must be exercised.”[11]

Thus, the exercise by an employer of its rights to regulate all aspects of employment must be in keeping with good faith and not be
used as a pretext for defeating the rights of employees under the laws and applicable contracts.[12] Petitioner utterly failed in this
respect.

WHEREFORE, premises considered, the Petition is DISMISSED for lack of merit and the assailed Decision is AFFIRMED. No costs. SO
ORDERED.
G.R. No. 132837 - June 28, 2001

JO CINEMA CORPORATION and MICHAEL JO, Petitioners, v. LOLITA C. ABELLANA and NATIONAL LABOR RELATIONS COMMISSION,
respondents.

BUENA, J.:

The Decision1 dated November 26, 1997 of respondent National Labor Relations Commission (NLRC) in NLRC Case No. V-0170-97, is
being impugned in this present petition for certiorari. The assailed decision affirmed the findings of the Labor Arbiter that private
respondent Lolita Abellana was illegally dismissed from the service and ordered petitioner to pay complainant the amount of
P115,420.79 representing separation pay and full backwages.

Petitioner is a duly organized corporation engaged in the movie business. Sometime in September 1997, private respondent was
employed as theater porter.

On November 11, 1994, petitioner issued a memorandum2 reminding all ticket sellers not to encash any check from their cash
collections and to turn-over all cash collections to the petitioner.

On August 4, 5, 6 and 7, 1995, private respondent encashed, on behalf of her friend Luzviminda Silva, four (4) Banco del Norte
Checks3 amounting to P66,000.00, with Emperatriz Ynrig, ticket seller of petitioner, assigned at Ultra Vistarama and Seven Arts
Theater. When the said checks were deposited to the account of the petitioner, they were dishonored for insufficiency of funds.

Consequently, on August 15, 1995, private respondent was sent a show-cause memorandum requiring her to explain why no
disciplinary action should be taken against her relative to the checks in question, 4 which she failed to comply. She was likewise
placed under preventive suspension for a period of twenty (20) days or until September 4, 1995. 5

On August 22, 1995, petitioner directed private respondent to appear and present her side at the administrative investigation
scheduled on August 26, 1995.6 Private respondent attended the said investigation where she admitted to have encashed the checks
without petitioners' permission.7

While the case was being deliberated upon by the petitioners, private respondent on September 1, 1995, filed a pro
forma complaint8 for illegal dismissal and non-payment of benefits before the Regional Arbitration Board No. VII of the NLRC, Cebu
City, which was docketed as RAB-VII-09-0938-95. Private respondent claims that on the day she was suspended, Atty. Tito Pintor, Jr.,
original counsel for petitioners, summoned her to his office and was advised to resign and pay the bounced checks' amount which
respondent vehemently protested. On that very same day she was told that she was dismissed from the service. 9

Petitioners denied the allegations and argued that private respondent was not dismissed but merely preventively suspended for
twenty (20) days. It added that even assuming that private respondent was dismissed, the dismissal was for a valid cause. Private
respondent violated a company policy prohibiting the encashment of checks without her employer's permission. 10

On February 15, 1997, Labor Arbiter Dominador A. Almirante rendered judgment in favor of private respondent, the dispositive
portion of which reads:

"WHEREFORE, premises considered, judgment is hereby rendered ordering respondent Jo Cinema Corporation to pay complainant
the total amount of One Hundred Fifteen Thousand Four Hundred Twenty Pesos and 79/100 (P115,420.79) representing separation
pay and full backwages, as hereinbelow computed by our Labor Arbitration Associate, to wit:

"C O M P U T A T I O N
"I.- Separation Pay: Sept. 1979- Aug. 15, 1995
(15 yrs. 11 mos. & 15 days)
P119.60/day x 26 days =
P3,109.60/mo. x 16 yrs.--------------- P49,753.60
"II.- Backwages: Aug. 15, 1995- Feb. 15, 1997
(1 yr. & 6 mos.)
"a - Aug. 15, 1995 to Dec. 31, 1995 = 4 mos. and 15 days
P3,109.60/mo. x 4mos. ---------- P12,438.40
P 119.60/day x 15 days ------ 14,232.40
"b - Jan. 1/96- June 30/96
P131.00/day x 26 days =
P 3,406.00/mo. x 6 mos. --------- 20,436.00
"c - July 1/96 - Sept. 30/96
P136.00/day x 26 days =
P3,536.00/mo. x 3 mos. ---------- 10,608.00
"d - Oct. 1/96 - Feb. 15, 1997
P141.00/day x 26 =
P3,666.00/mo. x 4 = P14,664.00
P141.00/day x 15/day = 2,115.00 -- 16,779.00
"Total Salary (backwages) ----------- P62,055.40
"SERVICE INCENTIVE PAY: 1 YEAR
P141.00/day x 5 days ---------- P705.00
"13th MONTH PAY: Aug. 15, 1995- Feb. 15, 1997
"a - Aug. 15/95 - Dec. 31/95
(4 mos. & 15 days)
P3,109.60/yr. 12 =
P283.87/mo. x 6 mos. --- 1,036.52
"b - Jan. 1/96- June 30/96 (6 mos.)
P3,406.00/yr. 12 =
P 259.13/mo. x 4 mos. --------- 1,703.04
"c - July 1/96 - Sept. 30/96
P3,536.00/mo. 12 =
P 294.66/mo. x 3 mos. ---------- 883.98
"d - Oct. 1/96 - Feb. 15, 1997 =
(4 mos. & 15 days)
P3,666.00/yr. 12 =
P305.50/mo. x 4 mos. -------------- P1,222.00
P 11.75/day x 15 days------------- 176.25
P1,398.25
"Total 13th month pay -------------------------- 5,021.79
"Total Backwages: -------------------------------- P115,420.79

"SO ORDERED."11

In ruling for the private respondent, the labor arbiter ratiocinated in this wise:

"No matter if complainant was not actually told that she was dismissed from the service the environmental circumstances of this
case would establish that at the very least complainant was already constructively dismissed at the time she filed her complaint on
September 1, 1995. While there may be no outright or open termination from the service of the complainant there is no reason to
believe that respondent did not want her to continue in the service anymore. Such is the obiter in Valiant Machinery and Metal
Corporation vs. NLRC, G.R. No. 105677, January 25, 1996.

"xxx - xxx - xxx

"In the case at bench, the evidence on record shows that respondents were decided on making complainant pay the face value of
the four (4) checks of Luzviminda Silva that bounced totaling the amount of P66,000.00. For the complainant to continue in the
service with respondents under the prevailing situation would be impossible, unreasonable and unlikely. Hence, she was compelled
to file this case."12

On appeal, respondent NLRC affirmed the aforesaid decision notwithstanding its findings that at the time the complaint was
instituted, private respondent has no cause of action against petitioner as she was merely placed on preventive suspension. 13 Worse
still is its affirmance of the benefits awarded by the Labor Arbiter to private respondent based on obviously erroneous computations.
Petitioner moved for a reconsideration but was denied on February12, 1998. 14

Petitioners now come to this Court arguing that the NLRC committed grave abuse of discretion -

I
..IN HOLDING THAT THE RESPONDENT WAS ILLEGALLY DISMISSED DESPITE OF ITS OWN FINDING THAT RESPONDENT WAS ONLY
PLACED UNDER PREVENTIVE SUSPENSION;

II

..IN GRANTING FULL SEPARATION PAY AND BACKWAGES TO THE RESPONDENT WHO IS NOT IN ANYWAY FAULTLESS;

III

..IN NOT HOLDING THAT THERE IS SUFFICIENT BASIS FOR THE COMPANY TO LOSE TRUST AND CONFIDENCE WITH THE RESPONDENT
ASSUMING THAT THE RESPONDENT WAS DISMISSED;

IV

..IN NOT DEDUCTING FROM THE SEPARATION PAY AND BACKWAGES ASSUMING THAT RESPONDENT IS ENTITLED THERETO, HER
OUTSTANDING VALE AND THE AMOUNT SHE FRAUDULENTLY OBTAINED FROM THE COMPANY.

The first issue to which we shall first address ourselves, and which is really the vital point in the case, is whether or not private
respondent was illegally dismissed from the service.

Dismissal connotes a permanent severance or complete separation of the worker from the service on the initiative of the employer
regardless of the reasons therefor.15

Based on the aforesaid definition, it is clear that private respondent was not dismissed from the service but was merely placed under
preventive suspension. Her suspension cannot be construed as a dismissal since the cessation from work is only temporary.
Moreover, private respondent could not have been dismissed on August 15, 1995 because a formal investigation was still being
conducted. In fact, she even attended said investigation on August 26, 1995 where she admitted having encashed the checks. If she
was indeed dismissed on said date, as she claims, petitioners would not have continued with the investigation. Undoubtedly, private
respondent pre-empted the outcome of the investigation by filing a complaint for illegal dismissal. The observation of respondent
NLRC is worth stressing:

"x x x (F)rom the foregoing circumstance, We could not readily decipher whether the complainant had pre-empted the respondent's
dismissing her, among others, or is it the other way around?

"It would seem from the foregoing that at the time she filed the complaint, there is (sic) as yet no cause of action against the
respondent a she was merely placed on preventive suspension. And, looking at the evidence submitted by the respondents at first
glance, the same would be sufficient to establish the just and legal ground for the complainant's termination considering that the
position paper of the complainant is bereft of any statement of factual circumstances relative to her alleged dismissal." 16 (Italics
Supplied)

The findings of the labor arbiter that private respondent was constructively dismissed by the petitioner is likewise erroneous.

A constructive discharge is defined as a quitting because continued employment is rendered impossible, unreasonable or unlikely; as
an offer involving demotion in rank and a diminution in pay.17

Private respondent was not demoted nor suffered any diminution of pay, neither was she prevented from returning for work. As
discussed earlier, private respondent was suspended from work for twenty (20) days for violating company rules. Petitioners stance
to oblige private respondent to pay the amount of the checks is just fair and reasonable considering that she indorsed the subject
checks. As an endorser, private respondent undertook to pay the amount of the dishonored checks. 18 The payment of said amount is
not discriminatory, impossible, and unreasonable to foreclose any choice on the part of the private respondent to forego her
continued employment. It was private respondent who signified her intention not to report for work when she filed the instant case.

Having thus determined that private respondent was not dismissed from the service, the payment of separation pay and backwages
are not in order. It must be emphasized that the right of an employee to demand for separation pay and backwages is always
premised on the fact that the employee was terminated either legally or illegally. The award of backwages belongs to an illegally
dismissed employee by direct provision of law and it is awarded on grounds of equity for earnings which a worker or employee has
lost due to illegal dismissal. Separation pay, on the other hand, is awarded as an alternative to illegally dismissed employees where
reinstatement is no longer possible.19

In fine, based on the foregoing discussion, it is clear that respondent NLRC gravely abused its discretion when it affirmed the
decision of the labor arbiter.

WHEREFORE, the assailed decision of respondent National Labor Relations Commission is hereby REVERSED and SET ASIDE.

SO ORDERED.
THIRD DIVISION

[ G.R. Nos. 169965-66, December 15, 2010 ]

CARLOS V. VALENZUELA, PETITIONER, VS. CALTEX PHILIPPINES, INC., RESPONDENT.

DECISION

VILLARAMA, JR., J.:

This petition for review on certiorari assails the Decision [1] dated July 20, 2005 of the Court of Appeals (CA) in CA-G.R. SP Nos. 80494
and 80638. The appellate court had reversed and set aside the Decision[2] of the National Labor Relations Commission (NLRC) and
reinstated the Decision[3] of the Labor Arbiter which dismissed petitioner's complaint for illegal dismissal for lack of merit.

The facts follow.

Petitioner was hired by respondent Caltex Philippines, Inc. sometime in March 1965 as Laborer and assigned in the Lube Oil Section
of its Pandacan Terminal in Manila. After three years, he was designated as Machine Operator A. [4]

Sometime in 1970, petitioner requested that he be transferred to respondent's main office. Since the position available then was
that of a messenger, he accepted the same. One year later, petitioner was given a new assignment as Aviation Attendant of
respondent's Manila Aviation Service.[5]

After twenty-two (22) years at the Manila Aviation Service, petitioner was moved to respondent's Lapu-Lapu Terminal in Lapu-Lapu
City. The transfer was part of the penalty for the charge of not servicing an aircraft's fuel needs, which petitioner denied.
Reluctantly, petitioner acceded to the transfer.[6]

Petitioner was initially designated as Gauger but he also handled Bulk Receiving, Tank Truck Loading and Bunkering. In 1996, the
Warehouseman retired and the functions of the warehouseman were given to petitioner. [7] As warehouseman, petitioner's duties
included, among others, the maintenance of stock cards for storehouse materials and supplies, the conduct of physical inventory of
the company's merchandise stocks and monitoring the movement of said stocks. [8]

On November 23, 1999, a spot operational audit was conducted on the Lapu-Lapu City District Office, and several irregularities in the
handling of respondent's merchandise were discovered. A net inventory shortage amounting to P823,100.49 was discovered. [9]

Petitioner was required to explain within forty-eight (48) hours such shortage and the other irregularities discovered during the spot
audit. He was further informed[10] that an administrative investigation will be conducted on the matter and because of the nature of
his offense and his position in the Company, he was preventively suspended to prevent further losses and/or possible tampering of
the documents and other evidence.[11]

The administrative investigation was conducted with two hearings held on December 15, 1999 and January 18, 2000. On both dates,
petitioner was present, together with his counsel and/or union officer. Thereafter, based on the findings from the administrative
investigation, respondent found cause to terminate petitioner's employment. [12] Specifically, respondent found petitioner liable for
(1) Gross and Habitual neglect of duties and responsibilities as warehouse clerk, (2) Not performing month-end inventory duties, (3)
Not investigating the shortages of stocks under his custody and (4) Commission of Fraud.[13]

Aggrieved by the respondent's decision to terminate his employment, petitioner filed a complaint [14] for illegal dismissal with the
NLRC Regional Arbitration Branch No. VII in Cebu City. He also claimed salary differentials representing his pay increases pursuant to
the existing Collective Bargaining Agreement[15] (CBA) between the parties, which were not given to him by respondent. [16]

On May 19, 2000, Labor Arbiter Ernesto F. Carreon rendered a Decision [17] declaring the claim for illegal dismissal unmeritorious.
The Labor Arbiter held,

WHEREFORE, premises considered, judgment is hereby rendered dismissing the claim for illegal dismissal for lack of merit and the
other monetary claims are referred to the grievance machinery and/or voluntary arbitrator as provided under the CBA.

So Ordered.[18]

On appeal to the NLRC, the NLRC set aside the decision of the Labor Arbiter and declared that petitioner was illegally dimissed. The
dispositive portion of the NLRC decision states:
WHEREFORE, the Labor Arbiter's Decision dated May 19, 2000 is hereby SET ASIDE and a new one is rendered declaring CALTEX
PHILIPPINES, INC. and LEODEGARIO W. JACINTO to have illegally dismissed the complainant, CARLOS V. VALENZUELA. Instead of
reinstatement, the same respondents are ORDERED to pay, jointly and severally, the same complainant a separation pay computed
at one (1) month salary for every year of service, a fraction of at least six (6) months being considered one (1) year, multiplied by the
number of years from his date of employment until full separation pay shall have been paid, which is tentatively computed below as
of the date of this Decision:

Salary per month P 25,800.00


Number of years in service x 38
Separation Pay P 980,400.00

Other benefits covered by the CBA may be claimed by the complainant in the Grievance Machinery in accordance with the CBA.

All other claims are dismissed for lack of merit.

SO ORDERED.[19]

Both parties went to the CA by way of petition for certiorari under Rule 65 of the 1997 Rules of Civil Procedure, as amended. On July
20, 2005, the CA, 20th Division, Cebu City issued the challenged Decision[20] reinstating the Labor Arbiter's decision, as follows:

WHEREFORE, in view of the foregoing premises, judgment is hereby rendered by us GRANTING the petition in CA-G.R. SP NO. 80638
and DENYING the petition in CA-G.R. SP NO. 80494. The assailed decision of the NLRC, Fourth Division dated September 10, 2002 is
hereby REVERSED and SET ASIDE and the Decision dated May 19, 2000 rendered by Labor Arbiter Ernesto F. Carreon in RAB Case No.
7-01-0135-2000 is hereby REINSTATED.

SO ORDERED.[21]

On September 20, 2005, the CA denied the motion for reconsideration. Hence, this petition.

Petitioner argues that there were several procedural lapses in the Petition for Certiorari [22] respondent filed with the CA. In
particular, petitioner points out that the petitioners therein were respondent and Leodegario Jacinto, but only the latter submitted a
verification and certification against forum shopping. There was no board resolution from respondent authorizing Leodegario Jacinto
to sign the verification and certification against forum shopping in its behalf, thereby making the petition ineffectual.

Further, petitioner mentions the failure of herein respondent to accompany said petition with copies of all pleadings and documents
relevant and pertinent to the petition as required by Section 1 of Rule 65. This allegation is based on the Resolution[23] dated
February 26, 2004 of the CA directing respondent and Jacinto to submit a copy of the May 19, 2000 Decision of the Labor Arbiter,
the Motions for Reconsideration dated November 7, 2002 and November 11, 2002 filed by the parties and other pleadings and
documents filed before the Labor Arbiter. According to the petitioner, the CA would not have ordered respondent to submit those
documents if they were not relevant and pertinent to the case. Hence, failure to submit them together with the Petition for
Certiorari was a violation of the Rules which warranted dismissal of the petition.

On the merits, petitioner argues that there was no basis in law to support petitioner's dismissal, contrary to the finding of the
CA. Petitioner relies on the fact that he had previously brought to respondent's attention that he was overworked and that his
duties were too cumbersome for one person.

Respondent for its part counters by first denying petitioner's claim that there was no certification and verification against forum
shopping. Respondent points out that there were two certifications and verifications against forum shopping: one from Alejandro
Rey C. Pardo, Jr. in behalf of respondent and one from Leodegario Jacinto in behalf of himself. Records would also show that there
was a board resolution authorizing Alejandro Rey C. Pardo, Jr. to sign a certification and verification against forum shopping in behalf
of respondent.

As to the resolution of the CA requiring the submission of additional documents, respondent argues that the issuance of the
resolution did not mean that the appellate court committed grave abuse of discretion in eventually giving due course to the petition
for certiorari. The Resolution simply meant that the appellate court, in the exercise of its sound discretion, wanted to review the
documents. Such order to submit particular documents did not mean that the petition filed was procedurally defective.

On the merits, respondent argues that the termination of petitioner's employment was sufficiently supported by evidence and the
law. The CA categorically stated that petitioner was guilty of habitual and gross neglect of his duties and performed various acts that
directly caused the loss of trust and confidence reposed by the company in him.

Respondent also argues that the present petition raises questions of fact which are beyond the ambit of a petition for review on
certiorari under Rule 45. Respondent points out that unless for compelling reasons, which are absent in this case, a review of the
factual milieu of a case is not in order under Rule 45.

Essentially, the two issues for our resolution are: (1) Whether the CA erred in giving due course to the petition for certiorari filed by
herein respondent despite the alleged procedural defects; and (2) Whether the CA correctly ruled that petitioner was validly
dismissed.
We deny the petition.

On the first issue, the claim of the petitioner that there was only one certification and verification against forum shopping filed by
the respondents therein is utterly incorrect. Records show that there were two certifications and verifications against forum
shopping submitted together with the questioned petition for certiorari: one signed by Alejandro Rey C. Pardo, Jr. [24] in behalf of
therein petitioner Caltex Philippines, Inc., and another one signed by Leodegario W. Jacinto in behalf of himself as petitioner, also in
the same petition for certiorari. Records show that a Secretary's Certificate[25] dated October 9, 2003 was issued by then Corporate
Secretary Ariel F. Abonal certifying that a Board Resolution was duly passed on January 28, 2002 approving a Revised Approvals
Manual, on the basis of which, Alejandro Rey C. Pardo, Jr. was authorized to sign, verify and cause the filing of the petition for
certiorari before the CA in the case entitled "Caltex (Philippines), Inc. v. Carlos Valenzuela, et al.," and to sign, verify and cause the
filing of other necessary pleadings. Thus, it is clear that the respondent submitted a proper verification and certification against
forum shopping.

Equally without merit is petitioner's contention that the failure of respondent to submit certain documents together with its petition
for certiorari warrants the dismissal thereof. In Quintano v. National Labor Relations Commission,[26] we held,

x x x The Rules do not specify the precise documents, pleadings or parts of the records that should be appended to the petition
other than the judgment, final order, or resolution being assailed. The Rules only state that such documents, pleadings or records
should be relevant or pertinent to the assailed resolution, judgment or orders; as such, the initial determination of which pleading,
document or parts of the records are relevant to the assailed order, resolution, or judgment, falls upon the petitioner. The CA will
ultimately determine if the supporting documents are sufficient to even make out a prima facie case. If the CA was of the view that
the petitioner should have submitted other pleadings, documents or portions of the records to enable it to determine whether the
petition was sufficient in substance, it should have accorded the petitioner, in the interest of substantial justice, a chance to submit
the same instead of dismissing the petition outright. Clearly, this is the better policy. x x x (Emphasis supplied.)

Thus, the failure to submit certain documents, assuming there was such a failure on respondent's part, does not automatically
warrant outright dismissal of its petition.

On the merits, we likewise find that the petition fails. There is no compelling reason in this case for us to reverse the ruling of the CA
sustaining the finding of the Labor Arbiter that petitioner's dismissal was effected with just cause. The findings of the Labor Arbiter
are supported by more than substantial evidence and even petitioner's admissions during the administrative hearings. [27] As the CA
correctly held,

Evidence overwhelmingly shows that petitioner Valenzuela was indeed guilty of habitual and gross neglect of his duties. It was not
the first time that there occurred a shortage of the merchandise stocks but apparently petitioner Valenzuela did nothing about it
and, instead, manipulated documents and records, i.e., stock cards, to create the illusion that all merchandise stocks were
accounted for, when in fact a lot of these merchandise were already missing from petitioner Company's Lapu-Lapu terminal. x x x[28]

xxxx

Furthermore, petitioner Valenzuela likewise committed fraud and willful breach of the trust reposed in him by petitioner Caltex. He
was in-charge of the custody and monitoring of the merchandise stocks, and, as found by the Labor Arbiter, was entrusted with
confidence on delicate matters, i.e., the handling and care and protection of the employer's property. Considering that the
merchandise stocks are the lifeblood of petitioner Caltex, petitioner Valenzuela's act of allowing the loss of merchandise stocks and
concealing these from the employer is reason enough for his termination from his employment. [29]

Under Article 282 of the Labor Code, as amended, gross and habitual neglect by the employee of his duties is a sufficient and legal
ground to terminate employment. Jurisprudence provides that serious misconduct and habitual neglect of duties are among the just
causes for terminating an employee. Gross negligence connotes want of care in the performance of one's duties. Habitual neglect
implies repeated failure to perform one's duties for a period of time, depending upon the circumstances. [30]

Further, Article 282 of the Labor Code, as amended, also provides fraud or willful breach by employee of the trust reposed in him by
his employer as a just cause for termination. It is always a serious issue for the employer when an employee performs acts which
diminish or break the trust and confidence reposed in him. The Labor Code, as amended, although sympathetic to the working class,
is aware of this scenario and in pursuit of fairness, included fraud or willful breach of trust as a just cause for termination of
employment.

One last point on the preventive suspension imposed by the respondents.

Sections 8 and 9 of Rule XXIII, Implementing Book V of the Omnibus Rules Implementing the Labor Code provides:

SEC. 8. Preventive suspension. - The employer may place the worker concerned under preventive suspension if his continued
employment poses a serious and imminent threat to the life or property of the employer or of his co-workers.

SEC. 9. Period of suspension. - No preventive suspension shall last longer than thirty (30) days. The employer shall thereafter
reinstate the worker in his former or in a substantially equivalent position or the employer may extend the period of suspension
provided that during the period of extension, he pays the wages and other benefits due to the worker. In such case, the worker
shall not be bound to reimburse the amount paid to him during the extension if the employer decides, after completion of the
hearing, to dismiss the worker. (Emphasis supplied.)

In this case, petitioner was preventively suspended from November 26, 1999 to December 25, 1999. Respondents extended his
preventive suspension for thirty days, from December 26, 1999 to January 24, 2000. [31] After the conclusion of the administrative
investigation, he was finally terminated on January 21, 2000.[32] There is no showing that petitioner was paid his wages and benefits
during the additional period of suspension. Clearly, petitioner is entitled to his salary and other benefits prior to his dismissal, from
December 26, 1999 to January 21, 2000.

WHEREFORE, the petition is DENIED. The assailed Decision dated July 20, 2005 of the Court of Appeals in the consolidated cases of
CA-G.R. SP Nos. 80494 and 80638 is hereby AFFIRMED with MODIFICATION in that respondents are hereby ORDERED to pay
petitioner Carlos V. Valenzuela his corresponding salary, allowances and other benefits for the period December 26, 1999 to January
21, 2000.

No costs.

SO ORDERED.
G.R. No. 197763, December 07, 2015

SMART COMMUNICATIONS, INC., MR. NAPOLEON L. NAZARENO, AND MR. RICKY P. ISLA, Petitioners, v. JOSE LENI Z. SOLIDUM,
Respondent.

G.R. No. 197836

JOSE LENI Z. SOLIDUM, Petitioner, v. SMART COMMUNICATIONS, INC., MR. NAPOLEON L. NAZARENO, AND MR. RICKY P.
ISLA, Respondent.

DECISION

VELASCO JR., J.:

The Case

These are consolidated petitions filed under Rule 45 of the Rules of Court assailing the Decision dated April 4, 2011 1 and Resolution
dated July 14, 20112 of the Court of Appeals (CA) in CA-G.R. SP No. 109765 entitled Jose Leni Z. Solidum v. National Labor Relations
Commission (First Division), Smart Communications, Inc., Napoleon L. Nazareno and Ricky P. Isla. The CA Decision affirmed with
modification the Resolution dated January 26, 2009 and Decision dated May 29, 2009 of the National Labor Relations Commission
(NLRC) in NLRC Case No. 00-11-09564-05.

The Facts

The facts as found by the CA are as follows:chanRoblesvirtualLawlibrary

In an Employment Contract dated April 26, 2004,3 Smart Communications, Inc. (Smart) hired Jose Leni Solidum (Solidum) as
Department Head of Smart Prepaid/Buddy Activations under the Product Marketing Group. Existing company procedures provide
that a department head shall approve project proposals coming from his marketing assistants and product managers/officers. Once
approved, a finance officer will assign a reference number to the project with a stated budget allocation. If the Company decides to
engage the services of a duly accredited creative agency, the department head will coordinate with it to discuss the details of the
project. The implementation details and total amount of the project will then be included in a Cost Estimate (CE) submitted to the
Company, routed for approval, and returned to the selected agency for implementation. After the project is carried out, the agency
will bill the Company by sending the CE with attached invoices and other supporting documents.

On September 21, 2005, Solidum received a Notice to Explain of even date4 from the Company charging him with acts of dishonesty
and breach of trust and confidence. In summary, he was charged with violating "various company policies by misrepresenting and
using his position and influence in his grant plot to defraud Smart by conceptualizing fictitious marketing events, appointing fictitious
advertising agencies to supposedly carry out marketing events and submitting fictitious documents to make it appear that the
marketing events transpired."5 He was charged with the following infractions: (1) falsification and/or knowingly submitting falsified
contents of reports/documents relative to his duties and responsibilities; (2) obtaining through fraudulent means materials, goods or
services from the Company; (3) failing or refusing to disclose to the Company any existing or future dealings, transactions,
relationships, etc. posing or would pose possible conflict of interest; (4) other forms of deceit, fraud, swindling, and
misrepresentation committed by an employee against the company or its representative; and (5) fraud or willful breach of trust in
relation to transactions covered by Invoice No. 2921 and CE No. 2005-533 as well as CE Nos. 2005-413, 2005-459, 2005-461, 2005-
526, 2005-460, 2005-552 and 2005-527 that were approved/noted by him. Solidum received a copy of the Notice on the same date.
Pending administrative investigation, Solidum was placed under preventive suspension without pay for a period of thirty (30) days.

In a letter dated September 26, 2005,6 Solidum denied the charges and claimed that he never defrauded nor deceived the Company
in his transactions.

Continued audit investigation, however, revealed that Solidum approved/noted several CEs covering activities for which payments
were made but did not actually carried out. Unaccredited third parties were also engaged in the implementation of the projects.
Thus, the Company issued another Notice to Explain dated October 21, 2005 7 to Solidum, this time covering the following additional
CEs: 2005-416, 2005-480, 2005-481, 2005-479, 2005-512, 2005-513, and 2005-533. Solidum was again preventively suspended for
another ten (10) days. Further, the Company scheduled the administrative investigation of the case on October 26, 2005.

Solidum then sent a letter dated October 24, 20058 to the Company requesting copies of the pertinent documents so he can prepare
an intelligible explanation. In another letter dated October 26, 2005, 9 Solidum stated that the investigation is highly suspicious and
his extended suspension imposed undue burden. He also reserved his right to present evidence. In his last letter dated October 28,
2005,10 Solidum declared that he shall no longer receive or entertain notices or memorandum, except the final decision resolving the
administrative charges against him.
Thereafter, the Company issued a letter dated November 2, 2005, alleging that Solidum refused to accept the documents that he
had requested. Using this allegation, the Company imposed an additional preventive suspension often (10) days on Solidum.

Based on the available evidence, the Company decided to dismiss Solidum for breach of trust in a Notice of Decision dated
November 9, 2005.11 Corollarily, a Notice of Termination was served on him on November 11, 2005.

Aggrieved, Solidum filed a complaint dated November 19, 2005 for illegal suspension and dismissal with money claims before the
Arbitration Branch of the NLRC claiming that his extended suspension and subsequent termination were without just cause and due
process.

In a Decision dated July 3, 2006,12 the labor arbiter declared that the extended period of suspension without pay was illegal and that
Solidum was unjustly dismissed from work without observance of procedural due process. He was ordered reinstated and was
awarded backwages and monetary claims. The labor arbiter ratiocinated that the ground of breach of trust and confidence is
restricted to managerial employees; however, no substantial evidence was presented to prove that Solidum has the prerogatives
akin to a manager other than his titular designation as department head.

The Company appealed the adverse decision of the labor arbiter to the NLRC but was denied for having been filed out of time and/or
for non-perfection, thus:
Records show that respondents received a copy of the Decision on "July 10, 2006" (See Registry Return Receipt, p. 561, Record)
However, respondents filed their appeal only on "July 25, 2006" x x x already beyond the reglementary ten (10) calendar day period
for filing an appeal to the Commission. x x x

Moreover, perusal of the appeal shows that the appeal bond attached to it is not accompanied by a security deposit or collateral.
The CERTIFICATE OF NO COLLATERAL x x x that was submitted by the bonding company stating that the bond was issued on (sic)
behalf of respondent SMART "without collateral because they are our valued client" and that "[t]he company declares its
commitment to honor the validity of the foregoing bond notwithstanding the absence of collateral" does not serve any purpose
other than an admission that the security deposit or collateral requirement under Section 6, Rule VI of the Revised Rules of
[Procedure of the NLRC for perfecting an appeal was not complied with. Needless to state, the absence of a security deposit or
collateral securing the bond renders the appeal legally infirm.13ChanRoblesVirtualawlibrary
In its motion for reconsideration, the Company insisted that the appeal was filed within the reglementary period considering that it
received the labor arbiter's decision only on July 13, 2006 and not July 10, 2006. It presented among others the Certification from
Makati Central Post Office, the pertinent page of the letter carrier's Registry Book, and the respective affidavit of the letter carrier
and the Company's receiving clerk. It added that in case of conflict between the registry receipt and the postmaster's certification,
the latter should prevail. Likewise, the Company maintained that the surety bond was secured by its goodwill and the alleged lack of
collateral or security will not render the bond invalid in view of the surety's unequivocal commitment to pay the monetary award.

Finding merit in the motion, the NLRC issued a Resolution dated January 26, 2009 14 reversing its earlier ruling and giving due course
to the appeal. It upheld the certification of the postmaster over the registry receipt and found that there was substantial compliance
with the bond requirement, viz:
Given the factual milieu, the Commission rules that respondents' appeal was indeed filed within the ten (10) day period x x x. Since
the Decision [of the Labor Arbiter] dated July 3, 2006 was received by respondents on July 13, 2006, respondents have (sic)
effectively until July 25, 2006 (considering that July 23 was a Sunday, and July 24 was a declared nonworking day) x x x.

xxxx

As to the absence of security deposit or collateral, the Commission x x x finds that respondents were able to comply substantially
with the pre-requisite for the perfection of appeal.

x x x While the appeal bond was posted without security or collateral, the Certification dated July 20, 2006, issued by the bonding
company attests to the latter's "commitment to honor the validity of the foregoing bond notwithstanding the absence of collateral."
Otherwise stated, the very purpose of a security or collateral should be deemed served considering the guarantee of the bonding
company to pay the entire amount of the bond in the event respondents suffer an adverse disposition of their appeal. It matters not
that the bond was issued on behalf of respondents without collateral for after all, the bond is accompanied by a declaration under
oath bearing the bonding company's commitment to honor the validity of the surety bond and attesting that the surety bond is
genuine and shall be in effect until the final disposition of the case.
The NLRC likewise reversed the labor arbiter's decision. It ruled that the seriousness of Solidum's infractions justified the additional
period of suspension. It added that the labor arbiter erred in declaring Solidum's dismissal illegal and without just cause on the basis
that he is not a managerial employee. On the contrary, overwhelming evidence showed that Solidum holds a position of trust and
has violated various company policies. Finally, the NLRC found that Solidum was accorded procedural due process. The dispositive
portion of the Resolution thus reads:
WHEREFORE, the foregoing considered, the Commission hereby resolves as follows:

1. complainant's Motion to Inhibit dated June 13, 2008 is DENIED for lack of merit.

2. respondents' Motion for Reconsideration dated July 27, 2007 is GRANTED and their instant appeal dated July 25,
2006 is given DUE COURSE.

3. the Commission's Resolution dated July 4, 2007 is SET ASIDE and VACATED.
4. the appealed Decision a quo dated July 3, 2006 is SET ASIDE and new one is ENTERED dismissing the complaint
below for lack of merit.

SO ORDERED.
Thus, Solidum appealed to the CA. The CA then rendered the assailed Decision dated April 4, 2011 affirming with modification the
Decision of the NLRC. The dispositive portion of the CA Decision reads:
FOR THESE REASONS, the Court AFFIRMS the NLRC Resolution dated January 26, 2009 with the MODIFICATION that petitioner Jose
Leni Solidum be paid his salaries and benefits which accrued during the period of his extended preventive suspension.

SO ORDERED.
From such Decision both parties moved for reconsideration. The CA denied such Motions in a Resolution dated July 14, 2011. From
such ruling of the appellate court, both parties appealed. Hence, the instant petitions.

The Issues

In G.R. No. 197763, Smart raises the following issues:


(A)

The Court of Appeals gravely erred in declaring illegal the second preventive suspension imposed by petitioner Smart upon the
respondent.

(B)

The Court of Appeals gravely erred in declaring that petitioner Smart may not place the respondent under another preventive
suspension after discovery of additional offenses notwithstanding that the offenses committed by the respondent warrant another
preventive suspension.15ChanRoblesVirtualawlibrary
In G.R. No. 197836, Solidum raises the following issues, to wit:
A.

Whether or not the public respondent Court of Appeal's Decision dated April 4, 2011 and Resolution dated July 14, 2011, ruling that
the appeal of private respondent Smart filed with public respondent NLRC was well taken within the reglementary period, is in
accordance with law, rules and prevailing jurisprudence.

B.

Whether or not the public respondent Court of Appeal's Decision dated April 4, 2011 and Resolution dated July 14, 2011, considering
private respondent Smart's appeal with the NLRC as perfected by upholding the validity of the appeal bond posted by said private
respondent Smart even if there was no security deposit or collateral, is in accordance with Section 4 and 6, Rule VI of the 2005 NLRC
Revised Rules of Procedure, NLRC Memorandum Circular 1-01, series of 2004, and prevailing jurisprudence.

C.

Whether or not the public respondent Court of Appeals gravely erred in failing to consider the evidence petitioner showing that
even up to the present, or more than five (5) years after the expiration of the 10-day reglementary period to file a perfected appeal
with the NLRC on July 20, 2006, private respondent Smart still fails to provide petitioner with a certified true copy of the surety bond
and copy of the security deposit required for the perfection of the appeal under Section 6, Rule VI of the 2005 NLRC Revised Rules of
Procedure.

D.

Whether or not the public respondent Court of Appeals committed grave abuse of discretion in upholding the validity of the appeal
bond filed by private respondent Smart despite the fact that both the appeal bond and collateral securing the said bond had long
expired.

E.

Whether or not the public respondent Court of Appeals gravely erred in ruling that the technical rules are not controlling in any
proceeding before the NLRC.

F.

Whether or not the public respondent Court of Appeals gravely erred in affirming the Resolution of public respondent NLRC dated
January 26, 2009 which set aside the decision of the labor arbiter dated July 3, 2006 declaring that petitioner's preventive
suspension for more than 30 days without pay is illegal and tantamount to constructive dismissal.

G.

Whether or not the public respondent Court of Appeals gravely erred in finding that petitioner was afforded procedural due process
by private respondent under the Two-Notice Rule.
H.

Whether or not the public respondent Court of Appeals gravely erred in finding that those irregularities committed by petitioner
were proven by documentary evidence and testimonies of his product managers and marketing assistants despite the fact that none
of those product managers and marketing assistants appeared and testified during the hearings and, most importantly, during the
hearing for cross-examination on their submitted affidavits and documentary evidence as scheduled by the labor arbiter upon
specific request and manifestation by the petitioner invoking his constitutional right to cross-examine.

I.

Whether or not the public respondent Court of Appeals gravely erred in finding that herein petitioner is a fiduciary employee and is
therefore covered by the trust and confidence rule to a wider latitude.

J.

Whether or not the public respondent Court of Appeals gravely erred in finding that petitioner is a managerial employee.

K.

Whether or not the public respondent Court of Appeals gravely erred in finding that there was just and valid cause to terminate the
petitioner from the service.16ChanRoblesVirtualawlibrary
The Court's Ruling

The petitions must be denied.

Solidum's 2nd preventive suspension is valid

In G.R. No. 197763, Smart contended:


On the same vein, the respondent was validly placed under second preventive suspension for the reason that pending investigation
of separate and distinct set of offenses committed by the respondent as contained in the second Notice to Explain dated 21 October
2005 (Annex F hereof), his continued presence in the company premises during the investigation poses serious and imminent threat
to the life or property of the employer and co-workers.17ChanRoblesVirtualawlibrary
On the other hand, Solidum claims that his preventive suspension of 20 days is an extension of his initial 30-day suspension and,
hence, illegal and constitutes constructive dismissal.

Smart's position is impressed with merit.

The relevant provisions regarding preventive suspensions are found in Sections 8 and 9 of Rule XXIII, Book V of the Omnibus Rules
Implementing the Labor Code (Omnibus Rules), as amended by Department Order No. 9, Series of 1997, which read as follows:
Section 8. Preventive suspension. The employer may place the worker concerned under preventive suspension only if his continued
employment poses a serious and imminent threat to the life or property of the employer or of his co-workers.

Section 9. Period of suspension. No preventive suspension shall last longer than thirty (30) days. The employer shall thereafter
reinstate the worker in his former or in a substantially equivalent position or the employer may extend the period of suspension
provided that during the period of extension, he pays the wages and other benefits due to the worker. In such case, the worker shall
not be bound to reimburse the amount paid to him during the extension if the employer decides, after completion of the hearing, to
dismiss the worker, (Emphasis supplied)
By a preventive suspension an employer protects itself from further harm or losses because of the erring employee. This concept
was explained by the Court in Gatbonton v. National Labor Relations Commission:18
Preventive suspension is a disciplinary measure for the protection of the company's property pending investigation of any alleged
malfeasance or misfeasance committed by the employee. The employer may place the worker concerned under preventive
suspension if his continued employment poses a serious and imminent threat to the life or property of the employer or of his co-
workers. However, when it is determined that there is no sufficient basis lo justify an employee's preventive suspension, the latter is
entitled to the payment of salaries during the time of preventive suspension. (Emphasis supplied)
Such principle was applied by the Court in Bluer Than Blue Joint Ventures/Mary Ann Dela Vega v. Esteban,19 where it was ruled:
Preventive suspension is a measure allowed by law and afforded to the employer if an employee's continued employment poses a
serious and imminent threat to the employer's life or property or of his co-workers. It may be legally imposed against an employee
whose alleged violation is the subject of an investigation.

In this case, the petitioner was acting well within its rights when it imposed a 10-day preventive suspension on Esteban. While it
may be that the acts complained of were committed by Esteban almost a year before the investigation was conducted, still, it
should be pointed out that Esteban was performing functions that involve handling of the petitioner's property and funds, and
the petitioner had every right to protect its assets and operations pending Esteban's investigation. (Emphasis supplied)
While the Omnibus Rules limits the period of preventive suspension to thirty (30) days, such time frame pertains only to one offense
by the employee. For an offense, it cannot go beyond 30 days. However, if the employee is charged with another offense, then the
employer is entitled to impose a preventive suspension not to exceed 30 days specifically for the new infraction. Indeed, a fresh
preventive suspension can be imposed for a separate or distinct offense. Thus, an employer is well within its rights to preventively
suspend an employee for other wrongdoings that may be later discovered while the first investigation is ongoing.
As in this case, Smart was able to uncover other wrongdoings committed by Solidum during the investigation for the initial charges
against him. These newly discovered transgressions would, thus, require an additional period to investigate. The first batch of
offenses was captured in the September 21, 2005 Notice to Explain issued by Smart. The notice covers fraud or willful breach of trust
in relation to transactions covered by Invoice No. 2921 and CE No. 2005-533 as well as CE Nos. 2005-413, 2005-459, 2005-461, 2005-
526, 2005-460, 2005-552 and 2005-527 that were noted by him. For these offenses, Solidum was issued a preventive suspension
without pay for 30 days.

On October 21, 2005, Smart, however, issued another notice to explain to Solidum this time involving additional CEs: 2005-416,
2005-480, 2005-481, 2005-479, 2005-512, and 2005-513. Solidum was again preventively suspended for twenty (20) days. The
preventive suspension of 20 days is not an extension of the suspension issued in relation to the September 21, 2005 Notice to
Explain but is a totally separate preventive suspension for the October 21, 2005 Notice to Explain. As earlier pointed out, the
transactions covered by the 30-day preventive suspension are different from that covered by the 20-day preventive suspension.
Such being the case the court a quo was incorrect when it treated said suspension as an "extension" and, consequently, it is a miscue
to award Solidum the payment of back salaries and benefits corresponding to the 20-day preventive suspension of Solidum.

As to the issues raised by Solidum in G.R. No. 197836, the same are bereft of merit.

Smart's appeal from the Decision of the labor arbiter was filed within the reglementary period

Solidum contends that Smart's motion for reconsideration of the labor arbiter's Decision was filed out of time. The issue here is:
When did Smart receive a copy of the Decision? The confusion originated from the date stamped by the receiving clerk of Smart on
the receiving copy of the Decision as July 10, 2006. Smart claims that the stamped date was erroneous as it actually received a copy
of the Decision only on July 13, 2006. Such claim is supported by the certification from the postmaster of the Makati Central Post
Office, the letter carrier's Registry Book, and the affidavits of the letter carrier and Smart's receiving clerk. With such overwhelming
evidence, there can be no other conclusion except that Smart received a copy of the Decision on July 13, 2006 and filed their motion
for reconsideration within the prescribed 10-day period on July 25, 2006, as July 24, 2006 fell on a Sunday. Thus, Smart's Motion was
timely filed.

Smart substantially complied with the requirements of an appeal bond

Next, Solidum questions the validity of the appeal bond filed by Smart, pointing out the lack of a proof of security deposit or
collateral necessary to perfect its appeal to the NLRC. To recall, Section 6, Rule VI of the 2005 NLRC Revised Rules of Procedure
states:
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 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 or the Supreme
Court, and shall be accompanied by original or certified true copies of the following:
xxxx

c) proof of security deposit or collateral securing the bond: provided, that a check shall not be considered as an acceptable security.
(Emphasis supplied)
Thus, Solidum claims that the lack of proof of security deposit or collateral securing the bond renders the bond irregular and the
appeal legally infirm.

We disagree.

As aptly found by the NLRC, substantial compliance with the rules on appeal bonds has been repeatedly held by this Court to be
sufficient for the perfection of an appeal:
The perfection of an appeal within the reglementary period and in the manner prescribed by law is jurisdictional, and
noncompliance with such legal requirement is fatal and effectively renders the judgment final and executory. As provided in Article
223 of the Labor Code, as amended, 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.

However, not only in one case has this Court relaxed this requirement in order to bring about the immediate and appropriate
resolution of cases on the merits. In Quiambao v. National Labor Relations Commission, this Court allowed the relaxation of the
requirement when there is substantial compliance with the rule. Likewise, in Ong v. Court of Appeals, the Court held that the bond
requirement on appeals may be relaxed when there is substantial compliance with the Rules of Procedure of the NLRC or when the
appellant shows willingness to post a partial bond. The Court held that "while the bond requirement on appeals involving monetary
awards has been relaxed in certain cases, this can only be done where there was substantial compliance of the Rules or where the
appellants, at the very least, exhibited willingness to pay by posting a partial bond."20ChanRoblesVirtualawlibrary
Furthermore, considering that it is the NLRC that has interpreted its own rules on this matter, the Court is inclined to accept such
interpretation. The Court has held, "By reason of the special knowledge and expertise of administrative agencies over matters falling
under their jurisdiction, they are in a better position to pass judgment on those matters." 21 Moreover, the NLRC properly relaxed the
rules on appeal bonds.
The NLRC has the power and authority to promulgate rules of procedure under Article 218(a) of the Labor Code. As such, it can
suspend the rules if it finds that the interests of justice will be better served if the strict compliance with the rules should be relaxed.
In short, a substantial compliance may be allowed by the NLRC especially in this case where the party which submitted the bond is a
multibillion company which can easily pay whatever monetary award may be adjudged against it. Even if there is no proof of security
deposit or collateral, the surety bond issued by an accredited company is adequate to answer for the liability if any to be incurred by
Smart.

Solidum is not entitled to reinstatement

Next, Solidum claims that due to the extension of his period of preventive suspension, he must be considered as having been
constructively dismissed and entitled to reinstatement and backwages. To support his claim, Solidum cites Maricalum Mining
Corporation v. Decorion22 Such case, however, is not factually on all fours with the instant case. In Maricalum, the Court ruled that
Decorion was illegally constructively dismissed, which is why he was entitled to reinstatement. Here, Solidum was validly dismissed
for loss of trust and confidence. Thus, his reliance on Maricalum is misplaced and will not justify his reinstatement.

As to Solidum's claim of denial of due process, such issues are factual in nature. This Court, not being a trier of facts, will not pass
upon such issues, as ruled in Nahas v. Olarte:23
The Court is not a trier of facts; factual findings of the labor tribunals when affirmed by the CA are generally accorded not only
respect, but even finality, and are binding on this Court.
Notably, Solidum's allegation that he was denied his right to counsel was passed upon the NLRC in this wise:
Similarly, the Commission is not convinced with Labor Arbiter Pati's finding that the complainant was deprived on his right to
counsel when he was not allowed to be assisted by his counsel at the alleged investigation held on September 21, 2005. Other than
his bare claim, there is no evidence on record buttressing complainant's claim. 24 x x x (Emphasis supplied)
Similarly, Solidum contends that he did not receive other documents necessary for him to be apprised of the charges against him.
Such are also issues of fact. The NLRC ruled on this matter in this wise:
The Commission is likewise not convinced with the finding of Labor Arbiter Pati that complainant was deprived of due process when
he was not furnished copies of the documents he referred to in his letter dated October 24, 2005 thereby prompting him not to
attend the hearings on October 26 and 28, 2005. There is evidence to show that respondents furnished copies of the documents
requested by complainant but which the latter refused to received when they were sent to his residence. 25 x x x (Emphasis
supplied)
It is not necessary that witnesses be cross-examined by counsel of the adverse party in proceedings before the labor arbiter

Solidum further alleges that he was denied the right to cross-examine the witnesses who submitted affidavits in favor of Smart; thus,
the affidavits must be considered hearsay and inadmissible. In support of such contention, Solidum cites Naguit v. National Labor
Relations Commission26

Such contention is misplaced.

The controlling jurisprudence on the matter is the ruling in the more recent Philippine Long Distance Telephone Company v.
Honrado,27 where the Court ruled:
It is hornbook in employee dismissal cases that "[t]he essence of due process is an opportunity to be heard, or as applied to
administrative proceedings, an opportunity to explain one's side x x x. A formal or trial type hearing is not at all times and in all
instances essential to due process, the requirements of which are satisfied where the parties are afforded fair and reasonable
opportunity to explain their side of the controversy." Neither is it necessary that the witnesses be cross-examined by counsel for
the adverse party. (Emphasis supplied)
The Court explained the reason why cross-examination is not required in the proceedings before the labor arbiter in Reyno v. Manila
Electric Company,28 citing Rabago v. National Labor Relations Commission 29 where the Court ruled:
x x x The argument that the affidavit is hearsay because the affiants were not presented for cross-examination is not persuasive
because the rules of evidence are not strictly observed in proceedings before administrative bodies like the NLRC where decisions
may be reached on the basis of position papers only. x x x
Clearly, the alleged denial of Solidum's request to cross-examine the witnesses of Smart does not render their affidavits hearsay.
Thus, these pieces of evidence were properly considered by the labor tribunal.

Solidum was a managerial employee of Smart

Next, Solidum argues that he is not a fiduciary or managerial employee and, therefore, cannot be legally dismissed on the ground of
loss of trust and confidence. Article 212(m) of the Labor Code defines a Managerial Employee as:
(m) 'Managerial employee' is one who is vested with powers or prerogatives to lay down and execute management policies and/or
to hire, transfer, suspend, lay-off recall, discharged, assign or discipline employees. x x x
The NLRC found that Solidum was a managerial employee in this wise:
The facts on hand indubitably show that complainant occupied the position of Department Mead and held the same with trust and
confidence as required him under his employment contract. As Department Head of the Smart Buddy Activations and Usage Group,
complainant led and directed his subordinates composed of product managers, product officers, and senior marketing assistants to
achieving the company's marketing goals. Moreover, complainant appears to have the authority to devise, implement and control
strategic and operational policies of the Department he was then heading. Likewise, it cannot be denied that complainant's
Department has a budget of millions of pesos over which he exercises the power to allocate to different marketing projects
conceptualized by him and/or his subordinates. The records would also show that for complainant's services, he received a monthly
salary in the hefty amount of P233,910.00, monthly allowance of P19,000.00, and bonuses and incentives of more than P7 Million.
Under the foregoing facts, complainant's duties and responsibilities, coupled with the amount of salaries he is receiving and other
benefits he is entitled to, certainly show that his position of Department Head is managerial in nature. 30 (Emphasis supplied)
Solidum denies that he is a managerial employee by stating that just because he directed subordinates, he should be considered a
managerial employee. He also argues that just because he had a large salary does not mean that he was a managerial employee.
Finally, Solidum denies having the power to lay down and execute management policies.

Notably, however, Solidum does not deny having "the authority to devise, implement and control strategic and operational policies
of the Department he was then heading." This is clearly the authority to lay down and execute management policies. Consequently,
the CA affirmed these findings. Thus, the NLRC and the CA correctly found that Solidum was a managerial employee. As such, he may
be validly dismissed for loss of trust and confidence.

The rulings of trial court in criminal cases generally do not bind the labor tribunals

Further, Solidum alleges that he did not commit any dishonesty-related offense that would justify Smart's loss of confidence in him.
He supports such allegation with the rulings of two (2) trial courts of Makati City that ruled that Solidum did not commit any fraud in
the subject transactions.

Solidum's reliance on the rulings of the trial courts is misplaced. His acquittal before such courts cannot bind the labor tribunal.

In Amadeo Fishing Corporation v. Nierra,31 the Court ruled that "an acquittal in criminal prosecution does not have the effect of
extinguishing liability for dismissal on the ground of breach of trust and confidence." While in Vergara v. National Labor Relations
Commission,32 the Court was even more succinct and ruled that the filing of the complaint by. the public prosecutor is a sufficient
ground for a dismissal of an employee for loss of trust and confidence, to wit:
The Court finds adequate basis for private respondent's loss of trust and confidence in petitioner, x x x Besides, the evidence
supporting the criminal charge, found after preliminary investigation as sufficient to show prima facie guilt, constitutes just cause
for his termination based on loss of trust and confidence. To constitute just cause, petitioner's malfeasance did not require criminal
conviction. Verily, petitioner was dismissed not because he was convicted of theft, but because his dishonest acts were substantially
proven, (Emphasis supplied)
In the instant case, both the NLRC and the CA found Solidum guilty of the alleged acts that constituted grounds for his dismissal for
loss of trust and confidence, which were summarized by the CA as follows:
First, Solidum noted two versions of CE No. 2005-533 with description "Buy SIM Download All You Can" but containing different
particulars. Specifically, the second CE included charges from various radio stations which are not found in the first CE. However, the
Company discovered that the only projects with approved radio components were the "Mindanao Kolek Mo To Promo" which ended
on July 15, 2005; the "Visayas Kolek Mo To Promo" which ended on August 15, 2005, and the "Smart Download and Win" with
promo period from August 22 to October 22, 2005. The "Buy SIM Download All You Can" has no approved radio component.
Moreover, Solidum submitted certificates of performance from various radio stations which are outside of the promo periods.

Second, in the implementation of several projects, Solidum endorsed unaccredited third parties, which is already a violation of
established company policies. One of these corporations is M&M Events, Inc., which turned out as a non-existing corporation. The
Smart Senior Product Officer Ma. Luisa Suguitan even testified that she has not worked with an agency such as M&M Events, Inc.
Worse, the said entity cannot be found in its declared business address and the VAT registration number appearing on its sales
invoice is registered under a different company. Moreover, Solidum approved CE No. 2005-459 and CE No. 2005-460, pertaining to
different projects, but with attached invoices from M&M Events, Inc. bearing the same date and amount. Finally, Solidum deviated
from the existing company procedures. He presented CEs to his subordinate product manager for signature with his approval
already affixed. Later, it was discovered that the duly signed CEs were altered without the knowledge of the product manager. He
even dictated to the agency the title to be used and the details that should be included in the CEs. The CEs were then forwarded
directly to him instead of the Smart marketing point person. Solidum also charged certain projects against the budget of another
approved program.
Such findings of the NLRC and affirmed by the CA are binding on this Court. Thus, Solidum's petition must also fail on this point.

WHEREFORE, the petition of Jose Leni Z. Solidum in G.R. No. 197836 is hereby DENIED. The petition of petitioners Smart
Communications, Inc, et al. in G.R. No. 197763 is PARTIALLY GRANTED. The Court of Appeals Decision dated April 4, 2011 is
hereby AFFIRMED with MODIFICATION that the award of salaries and benefits that accrued during the period of extended
preventive suspension is DELETED.

No costs.

SO ORDERED.