MAXIMO CALALANG, Petitioner, v. A. D. WILLIAMS, ET AL., Respondents.

Maximo Calalang in his own behalf.

Solicitor General Ozaeta and Assistant Solicitor General Amparo for respondents Williams, Fragante and Bayan

City Fiscal Mabanag for the other respondents.

SYLLABUS

1. CONSTITUTIONAL LAW; CONSTITUTIONALITY OF COMMONWEALTH ACT No. 648; DELEGATION OF

LEGISLATIVE POWER; AUTHORITY OF DIRECTOR OF PUBLIC WORKS AND SECRETARY OF PUBLIC
WORKS AND COMMUNICATIONS TO PROMULGATE RULES AND REGULATIONS. — The provisions of
section 1 of Commonwealth Act No. 648 do not confer legislative power upon the Director of Public Works and the
Secretary of Public Works and Communications. The authority therein conferred upon them and under which they
promulgated the rules and regulations now complained of is not to determine what public policy demands but merely to
carry out the legislative policy laid down by the National Assembly in said Act, to wit, "to promote safe transit upon, and
avoid obstructions on, roads and streets designated as national roads by acts of the National Assembly or by executive
orders of the President of the Philippines" and to close them temporarily to any or all classes of traffic "whenever the
condition of the road or the traffic thereon makes such action necessary or advisable in the public convenience and
interest." The delegated power, if at all, therefore, is not the determination of what the law shall be, but merely the
ascertainment of the facts and circumstances upon which the application of said law is to be predicated. To promulgate
rules and regulations on the use of national roads and to determine when and how long a national road should be closed to
traffic, in view of the condition of the road or the traffic thereon and the requirements of public convenience and interest,
is an administrative function which cannot be directly discharged by the National Assembly. It must depend on the
discretion of some other government official to whom is confided the duty of determining whether the proper occasion
exists for executing the law. But it cannot be said that the exercise of such discretion is the making of the law.

2. ID.; ID.; POLICE POWER; PERSONAL LIBERTY; GOVERNMENTAL AUTHORITY. — Commonwealth Act No.
548 was passed by the National Assembly in the exercise of the paramount police power of the state. Said Act, by virtue
of which the rules and regulations complained of were promulgated, aims to promote safe transit upon and avoid
obstructions on national roads, in the interest and convenience of the public. In enacting said law, therefore, the National
Assembly was prompted by considerations of public convenience and welfare. It was inspired by a desire to relieve
congestion of traffic, which is, to say the least, a menace to public safety. Public welfare, then, lies at the bottom of the
enactment of said law, and the state in order to promote the general welfare may interfere with personal liberty, with
property, and with business and occupations. Persons and property may be subjected to all kinds of restraints and burdens,
in order to secure the general comfort, health, and prosperity of the state (U.S. v. Gomer Jesus, 31 Phil., 218). To this
fundamental aim of our Government the rights of the individual are subordinated. Liberty is a blessing without which life
is a misery, but liberty should not be made to prevail over authority because then society will fall into anarchy. Neither
should authority be made to prevail over liberty because then the individual will fall into slavery. The citizen should
achieve the required balance of liberty and authority in his mind through education and, personal discipline, so that there
may be established the resultant equilibrium, which means peace and order and happiness for all. The moment greater
authority is conferred upon the government, logically so much is withdrawn from the residuum of liberty which resides in
the people. The paradox lies in the fact that the apparent curtailment of liberty is precisely the very means of insuring its
preservation.

3. ID.; ID.; SOCIAL JUSTICE. — Social justice is "neither communism, nor despotism, nor atomism, nor anarchy," but
the humanization of laws and the equalization of social and economic forces by the State so that justice in its rational and
objectively secular conception may at least be approximated. Social justice means the promotion of the welfare of all the
people, the adoption by the Government of measures calculated to insure economic stability of all the competent elements
of society, through the maintenance of a proper economic and social equilibrium in the interrelations of the members of
the community, constitutionally, through the adoption of measures legally justifiable, or extra-constitutionally, through the
exercise of powers underlying the existence of all governments on the time-honored principle of salus populi est suprema
lex. Social justice, therefore, must be founded on the recognition of the necessity of interdependence among divers and
diverse units of a society and of the protection that should be equally and evenly extended to all groups as a combined
 force in our social and economic life, consistent with the fundamental and paramount objective of the state of promoting
the health, comfort, and quiet of all persons, and of bringing about "the greatest good to the greatest number."

DECISION

LAUREL, J.:

Maximo Calalang, in his capacity as a private citizen and as a taxpayer of Manila, brought before this court this petition
for a writ of prohibition against the respondents, A. D. Williams, as Chairman of the National Traffic Commission;
Vicente Fragante, as Director of Public Works; Sergio Bayan, as Acting Secretary of Public Works and Communications;
Eulogio Rodriguez, as Mayor of the City of Manila; and Juan Dominguez, as Acting Chief of Police of Manila.

It is alleged in the petition that the National Traffic Commission, in its resolution of July 17, 1940, resolved to recommend
to the Director of Public Works and to the Secretary of Public Works and Communications that animal-drawn vehicles be
prohibited from passing along Rosario Street extending from Plaza Calderon de la Barca to Dasmariñas Street, from 7:30
a.m. to 12:30 p.m. and from 1:30 p.m. to 5:30 p.m.; and along Rizal Avenue extending from the railroad crossing at
Antipolo Street to Echague Street, from 7 a.m. to 11 p.m., from a period of one year from the date of the opening of the
Colgante Bridge to traffic; that the Chairman of the National Traffic Commission, on July 18, 1940 recommended to the
Director of Public Works the adoption of the measure proposed in the resolution aforementioned, in pursuance of the
provisions of Commonwealth Act No. 548 which authorizes said Director of Public Works, with the approval of the
Secretary of Public Works and Communications, to promulgate rules and regulations to regulate and control the use of
and traffic on national roads; that on August 2, 1940, the Director of Public Works, in his first indorsement to the
Secretary of Public Works and Communications, recommended to the latter the approval of the recommendation made by
the Chairman of the National Traffic Commission as aforesaid, with the modification that the closing of Rizal Avenue to
traffic to animal-drawn vehicles be limited to the portion thereof extending from the railroad crossing at Antipolo Street to
Azcarraga Street; that on August 10, 1940, the Secretary of Public Works and Communications, in his second
indorsement addressed to the Director of Public Works, approved the recommendation of the latter that Rosario Street and
Rizal Avenue be closed to traffic of animal-drawn vehicles, between the points and during the hours as above indicated,
for a period of one year from the date of the opening of the Colgante Bridge to traffic; that the Mayor of Manila and the
Acting Chief of Police of Manila have enforced and caused to be enforced the rules and regulations thus adopted; that as a
consequence of such enforcement, all animal-drawn vehicles are not allowed to pass and pick up passengers in the places
above-mentioned to the detriment not only of their owners but of the riding public as well.

It is contended by the petitioner that Commonwealth Act No. 548 by which the Director of Public Works, with the
approval of the Secretary of Public Works and Communications, is authorized to promulgate rules and regulations for the
regulation and control of the use of and traffic on national roads and streets is unconstitutional because it constitutes an
undue delegation of legislative power. This contention is untenable. As was observed by this court in Rubi v. Provincial
Board of Mindoro (39 Phil, 660, 700), "The rule has nowhere been better stated than in the early Ohio case decided by
Judge Ranney, and since followed in a multitude of cases, namely: ’The true distinction therefore is between the
delegation of power to make the law, which necessarily involves a discretion as to what it shall be, and conferring an
authority or discretion as to its execution, to be exercised under and in pursuance of the law. The first cannot be done; to
the latter no valid objection can be made.’ (Cincinnati, W. & Z. R. Co. v. Comm’rs. Clinton County, 1 Ohio St., 88.)
Discretion, as held by Chief Justice Marshall in Wayman v. Southard (10 Wheat., 1) may be committed by the Legislature
to an executive department or official. The Legislature may make decisions of executive departments or subordinate
officials thereof, to whom it has committed the execution of certain acts, final on questions of fact. (U.S. v. Kinkead, 248
Fed., 141.) The growing tendency in the decisions is to give prominence to the ’necessity’ of the case."cralaw virtua1aw
library

Section 1 of Commonwealth Act No. 548 reads as follows:jgc:chanrobles.com.ph

"SECTION 1. To promote safe transit upon, and avoid obstructions on, roads and streets designated as national roads by
acts of the National Assembly or by executive orders of the President of the Philippines, the Director of Public Works,
with the approval of the Secretary of Public Works and Communications, shall promulgate the necessary rules and
regulations to regulate and control the use of and traffic on such roads and streets. Such rules and regulations, with the
approval of the President, may contain provisions controlling or regulating the construction of buildings or other
structures within a reasonable distance from along the national roads. Such roads may be temporarily closed to any or all
classes of traffic by the Director of Public Works and his duly authorized representatives whenever the condition of the
road or the traffic thereon makes such action necessary or advisable in the public convenience and interest, or for a
specified period, with the approval of the Secretary of Public Works and Communications."cralaw virtua1aw library

The above provisions of law do not confer legislative power upon the Director of Public Works and the Secretary of
Public Works and Communications. The authority therein conferred upon them and under which they promulgated the
rules and regulations now complained of is not to determine what public policy demands but merely to carry out the
legislative policy laid down by the National Assembly in said Act, to wit, "to promote safe transit upon and avoid
obstructions on, roads and streets designated as national roads by acts of the National Assembly or by executive orders of
the President of the Philippines" and to close them temporarily to any or all classes of traffic "whenever the condition of
the road or the traffic makes such action necessary or advisable in the public convenience and interest." The delegated
power, if at all, therefore, is not the determination of what the law shall be, but merely the ascertainment of the facts and
circumstances upon which the application of said law is to be predicated. To promulgate rules and regulations on the use
of national roads and to determine when and how long a national road should be closed to traffic, in view of the condition
of the road or the traffic thereon and the requirements of public convenience and interest, is an administrative function
which cannot be directly discharged by the National Assembly. It must depend on the discretion of some other
government official to whom is confided the duty of determining whether the proper occasion exists for executing the law.
But it cannot be said that the exercise of such discretion is the making of the law. As was said in Locke’s Appeal (72 Pa.
491): "To assert that a law is less than a law, because it is made to depend on a future event or act, is to rob the Legislature
of the power to act wisely for the public welfare whenever a law is passed relating to a state of affairs not yet developed,
or to things future and impossible to fully know." The proper distinction the court said was this: "The Legislature cannot
delegate its power to make the law; but it can make a law to delegate a power to determine some fact or state of things
upon which the law makes, or intends to make, its own action depend. To deny this would be to stop the wheels of
government. There are many things upon which wise and useful legislation must depend which cannot be known to the
law-making power, and, must, therefore, be a subject of inquiry and determination outside of the halls of legislation."
(Field v. Clark, 143 U. S. 649, 694; 36 L. Ed. 294.)

In the case of People v. Rosenthal and Osmeña, G.R. Nos. 46076 and 46077, promulgated June 12, 1939, and in
Pangasinan Transportation v. The Public Service Commission, G.R. No. 47065, promulgated June 26, 1940, this Court
had occasion to observe that the principle of separation of powers has been made to adapt itself to the complexities of
modern governments, giving rise to the adoption, within certain limits, of the principle of "subordinate legislation," not
only in the United States and England but in practically all modern governments. Accordingly, with the growing
complexity of modern life, the multiplication of the subjects of governmental regulations, and the increased difficulty of
administering the laws, the rigidity of the theory of separation of governmental powers has, to a large extent, been relaxed
by permitting the delegation of greater powers by the legislative and vesting a larger amount of discretion in
administrative and executive officials, not only in the execution of the laws, but also in the promulgation of certain rules
and regulations calculated to promote public interest.

The petitioner further contends that the rules and regulations promulgated by the respondents pursuant to the provisions of
Commonwealth Act No. 548 constitute an unlawful interference with legitimate business or trade and abridge the right to
personal liberty and freedom of locomotion. Commonwealth Act No. 548 was passed by the National Assembly in the
exercise of the paramount police power of the state.

Said Act, by virtue of which the rules and regulations complained of were promulgated, aims to promote safe transit upon
and avoid obstructions on national roads, in the interest and convenience of the public. In enacting said law, therefore, the
National Assembly was prompted by considerations of public convenience and welfare. It was inspired by a desire to
relieve congestion of traffic. which is, to say the least, a menace to public safety. Public welfare, then, lies at the bottom of
the enactment of said law, and the state in order to promote the general welfare may interfere with personal liberty, with
property, and with business and occupations. Persons and property may be subjected to all kinds of restraints and burdens,
in order to secure the general comfort, health, and prosperity of the state (U.S. v. Gomez Jesus, 31 Phil., 218). To this
fundamental aim of our Government the rights of the individual are subordinated. Liberty is a blessing without which life
is a misery, but liberty should not be made to prevail over authority because then society will fall into anarchy. Neither
should authority be made to prevail over liberty because then the individual will fall into slavery. The citizen should
achieve the required balance of liberty and authority in his mind through education and personal discipline, so that there
may be established the resultant equilibrium, which means peace and order and happiness for all. The moment greater
authority is conferred upon the government, logically so much is withdrawn from the residuum of liberty which resides in
the people. The paradox lies in the fact that the apparent curtailment of liberty is precisely the very means of insuring its
preservation.

The scope of police power keeps expanding as civilization advances. As was said in the case of Dobbins v. Los Angeles
(195 U.S. 223, 238; 49 L. ed. 169), "the right to exercise the police power is a continuing one, and a business lawful today
may in the future, because of the changed situation, the growth of population or other causes, become a menace to the
public health and welfare, and be required to yield to the public good." And in People v. Pomar (46 Phil., 440), it was
observed that "advancing civilization is bringing within the police power of the state today things which were not thought
of as being within such power yesterday. The development of civilization, the rapidly increasing population, the growth of
public opinion, with an increasing desire on the part of the masses and of the government to look after and care for the
interests of the individuals of the state, have brought within the police power many questions for regulation which
formerly were not so considered."cralaw virtua1aw library

The petitioner finally avers that the rules and regulations complained of infringe upon the constitutional precept regarding
the promotion of social justice to insure the well-being and economic security of all the people. The promotion of social
justice, however, is to be achieved not through a mistaken sympathy towards any given group. Social justice is "neither
communism, nor despotism, nor atomism, nor anarchy," but the humanization of laws and the equalization of social and
economic forces by the State so that justice in its rational and objectively secular conception may at least be
approximated. Social justice means the promotion of the welfare of all the people, the adoption by the Government of
measures calculated to insure economic stability of all the competent elements of society, through the maintenance of a
proper economic and social equilibrium in the interrelations of the members of the community, constitutionally, through
the adoption of measures legally justifiable, or extra-constitutionally, through the exercise of powers underlying the
existence of all governments on the time-honored principle of salus populi est suprema lex.

Social justice, therefore, must be founded on the recognition of the necessity of interdependence among divers and diverse
units of a society and of the protection that should be equally and evenly extended to all groups as a combined force in our
social and economic life, consistent with the fundamental and paramount objective of the state of promoting the health,
comfort, and quiet of all persons, and of bringing about "the greatest good to the greatest number."cralaw virtua1aw
library

In view of the foregoing, the writ of prohibition prayed for is hereby denied, with costs against the petitioner. So ordered.
 THIRD DIVISION

MA. WENELITA S. TIRAZONA, G.R. No. 169712

Petitioner,
Present:

YNARES-SANTIAGO, J.,
- versus - Chairperson,
AUSTRIA-MARTINEZ,
CHICO-NAZARIO,
NACHURA, and
PHILIPPINE EDS TECHNO- SERVICE LEONARDO-DE CASTRO,*JJ.
INC. (PET INC.) AND/OR KEN
KUBOTA, MAMORU ONO and
JUNICHI HIROSE, Promulgated:
Respondents.

January 20, 2009

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

RESOLUTION

CHICO-NAZARIO, J.:

Before Us is a Motion for Leave to File [a] Second Motion for Reconsideration,[1] with the Second Motion for
Reconsideration incorporated therein, where petitioner Ma. Wenelita Tirazona (Tirazona) seeks the reconsideration of the
Resolution[2] of this Court dated 23 June 2008. Said Resolution denied for lack of merit petitioners previous Motion for
Reconsideration,[3] which sought the reversal of our Decision[4] dated 14 March 2008 or, in the alternative, modification
thereof by awarding her separation pay and retirement benefits under existing laws.

In our 14 March 2008 Decision, we subscribed to the factual findings of the National Labor Relations Commission
(NLRC) and the Court of Appeals that Tirazona, being the Administrative Manager of Philippine EDS Techno-Service, Inc.
(PET), was a managerial employee who held a position of trust and confidence; that after PET officers/directors called her
attention to her improper handling of a situation involving a rank-and-file employee, she claimed that she was denied due
process for which she demanded P2,000,000.00 indemnity from PET and its officers/directors; that she admitted to reading
a confidential letter addressed to PET officers/directors containing the legal opinion of the counsel of PET regarding her
case; and that she was validly terminated from her employment on the ground that she willfully breached the trust and
confidence reposed in her by her employer. In the end, we concluded that:

Tirazona, in this case, has given PET more than enough reasons to distrust her. The arrogance and
hostility she has shown towards the company and her stubborn, uncompromising stance in almost all
instances justify the companys termination of her employment. Moreover, Tirazonas reading of what was
supposed to be a confidential letter between the counsel and directors of the PET, even if it concerns her,
only further supports her employers view that she cannot be trusted. In fine, the Court cannot fault the
actions of PET in dismissing petitioner.[5]

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

 WHEREFORE, premises considered, the instant petition is hereby DENIED for lack of merit
and the Decision of the Court of Appeals dated24 May 2005 is hereby AFFIRMED. Costs against the
petitioner.[6]

On 29 April 2008, Tirazona moved for reconsideration[7] of our afore-mentioned Decision. She argued therein that
the Court failed to consider the length of her service to PET in affirming her termination from employment. She prayed that
her dismissal be declared illegal.Alternatively, should the Court uphold the legality of her dismissal, Tirazona pleaded that
she be awarded separation pay and retirement benefits, out of humanitarian considerations.

In our Resolution[8] dated 23 June 2008, we denied Tirazonas Motion for Reconsideration, as the same did not
present any substantial arguments that would warrant a modification of our previous ruling. We thus decreed:

ACCORDINGLY, the Court resolves to DENY the motion for reconsideration

with FINALITY for lack of merit.

On 21 August 2008, Tirazona filed the instant Motion for Leave to File [a] Second Motion for Reconsideration,
with the Second Motion for Reconsideration incorporated therein, raising essentially the same arguments and prayers
contained in her first Motion for Reconsideration.

The Court thereafter required PET to comment on the above motion. On 19 November 2008, PET filed its
Comment/Opposition,[9] to which Tirazona filed her Reply[10] on 8 December 2008.

After thoroughly scrutinizing the averments of the present Motion, the Court unhesitatingly declares the same to be
completely unmeritorious.

Section 2, Rule 52 of the Rules of Court explicitly decrees that no second motion for reconsideration of a judgment
or final resolution by the same party shall be entertained. Accordingly, a second motion for reconsideration is a prohibited
pleading, which shall not be allowed, except for extraordinarily persuasive reasons and only after an express leave shall
have first been obtained.[11] In this case, we fail to find any such extraordinarily persuasive reason to allow Tirazonas Second
Motion for Reconsideration.

As a general rule, an employee who has been dismissed for any of the just causes enumerated under Article 282[12] of
the Labor Code is not entitled to separation pay.[13] In Sy v. Metropolitan Bank & Trust Company,[14] we declared that
only unjustly dismissed employeesare entitled to retirement benefits and other privileges including reinstatement and
backwages.

Although by way of exception, the grant of separation pay or some other financial assistance may be allowed to an
employee dismissed for just causes on the basis of equity,[15] in Philippine Long Distance Telephone Company v. National
Labor Relations Commission,[16] we set the limits for such a grant and gave the following ratio for the same:

[S]eparation pay shall be allowed as a measure of social justice only in those instances where the
employee is validly dismissed for causes other than serious misconduct or those reflecting on his
moral character. x x x.

A contrary rule would, as the petitioner correctly argues, have the effect, of rewarding rather than
punishing the erring employee for his offense. And we do not agree that the punishment is his dismissal
only and that the separation pay has nothing to do with the wrong he has committed. Of course it
has. Indeed, if the employee who steals from the company is granted separation pay even as he is validly
dismissed, it is not unlikely that he will commit a similar offense in his next employment because he thinks
he can expect a like leniency if he is again found out. This kind of misplaced compassion is not going to
do labor in general any good as it will encourage the infiltration of its ranks by those who do not deserve
the protection and concern of the Constitution.

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

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

Contrary to her exaggerated claims, Tirazona was not just gracelessly expelled or simply terminated from the
company on 22 April 2002. She was found to have violated the trust and confidence reposed in her by her employer when
she arrogantly and unreasonably demanded from PET and its officers/directors the exorbitant amount of P2,000,000.00 in
damages, coupled with a threat of a lawsuit if the same was not promptly paid within five days. This unwarranted imposition
on PET and its officers/directors was made after the company sent Tirazona a letter, finding her handling of the situation
involving a rank-and-file employee to be less than ideal, and merely reminding her to be more circumspect when dealing
with the more delicate concerns of their employees. To aggravate the situation, Tirazona adamantly and continually refused
to cooperate with PETs investigation of her case and to provide an adequate explanation for her actions.

Verily, the actions of Tirazona reflected an obdurate character that is arrogant, uncompromising, and hostile. By
immediately and unreasonably adopting an adverse stance against PET, she sought to impose her will on the company and
placed her own interests above those of her employer. Her motive for her actions was rendered even more questionable by
her exorbitant and arbitrary demand for P2,000,000.00 payable within five days from demand. Her attitude towards her
employer was clearly inconsistent with her position of trust and confidence.Her poor character became even more evident
when she read what was supposed to be a confidential letter of the legal counsel of PET to PET officers/directors expressing
his legal opinion on Tirazonas administrative case. PET was, therefore, fully justified in terminating Tirazonas employment
for loss of trust and confidence.

Tirazona also failed to persuade us to consider in her favor her length of service to PET.

In the Motion for Reconsideration filed on 29 April 2008 and in the instant motion, Tirazona prays for this Court
to grant her separation and other retirement benefits, should we uphold the legality of her dismissal. She anchors her claim
on the fact that she had allegedly been in the employ of PET for twenty-six (26) years and that the Court must give due
consideration to the length of her service to the company.[17]However, in her Reply to the Comment/Opposition to the instant
motion filed by PET, Tirazona retracted the above allegation and stated that the claim of twenty-six (26) years of
employment with PET was an error committed through inadvertence. She then averred that the length of her employment
with PET should indeed be counted from July 1999, which up to the present time will result in a period of eight (8) years,
more or less.

We find that the above statement is still inaccurate. As this Court ruled in our Decision dated 14 March 2008,
Tirazona was validly terminated from her employment on 22 April 2002. Therefore, counting from the time when Tirazona
was employed by PET on 19 July 1999up to the time when she was dismissed, she had only rendered a little more than two
(2) years and nine (9) months of service to PET.

Finally, the cases cited by Tirazona hardly support her cause.

In Soco v. Mercantile Corporation of Davao[18] and Firestone Tire and Rubber Company of the Philippines v.
Lariosa,[19] separation pay was granted to the dismissed employees, as they were mere rank-and-file employees who did not
have any previous derogatory record with their companies and in equitable regard for their long years of service spanning
more than ten (10) years.

In Farrol v. Court of Appeals,[20] separation pay was awarded because the penalty of dismissal was held to be harsh
and disproportionate to the offense committed and the dismissed employee had been at the service of the company for
twenty four (24) years.
 In Negros Navigation Co. Inc. v. National Labor Relations Commission,[21] separation pay was awarded to the
employee dismissed, as it was the employer itself that prayed for the award of the same, in lieu of the employees
reinstatement.

Lastly, in Philippine Commercial International Bank v. Abad,[22] separation pay was ordered granted to a dismissed
managerial employee because there was an express finding that the violation of the bank policies was not perpetrated for
the employees self-interest, nor did the employee exhibit any lack of moral depravity. The employee had also been in the
service of the company for twenty-five (25) years.

Obviously, Tirazonas reliance upon the above-cited cases is misleading, as the circumstances therein are markedly
different from those in the case at bar.

In sum, we hold that the award of separation pay or any other kind of financial assistance to Tirazona, under the
guise of compassionate justice, is not warranted in this case. To hold otherwise would only cause a disturbance of the sound
jurisprudence on the matter and a perversion of the noble dictates of social justice.
While the Court commiserates with the plight of Tirazona, who has recently manifested[23] that she has since been
suffering from her poor health condition, the Court cannot grant her plea for the award of financial benefits based solely on
this unfortunate circumstance. For all its conceded merit, equity is available only in the absence of law and not as its
replacement. Equity as an exceptional extenuating circumstance does not favor, nor may it be used to reward, the
indolent[24] or the wrongdoer, for that matter. This Court will not allow a party, in the guise of equity, to benefit from its
own fault.[25]

WHEREFORE, the Motion for Leave to File [a] Second Motion for Reconsideration is hereby DENIED for lack
of merit and the Second Motion for Reconsideration incorporated therein is NOTED WITHOUT ACTION in view of the
denial of the former.

SO ORDERED.
 FIRST DIVISION

ST. LUKES MEDICAL CENTER G.R. No. 162053

EMPLOYEES ASSOCIATION-AFW
(SLMCEA-AFW) AND MARIBEL S.
SANTOS,
Petitioners, Present:

PUNO, C.J., Chairperson,

SANDOVAL-GUTIERREZ,
CORONA,
AZCUNA, and
GARCIA, JJ.
-versus-

NATIONAL LABOR RELATIONS

COMMISSION (NLRC) AND ST. LUKES Promulgated:
MEDICAL CENTER, INC.,
Respondents. March 7, 2007
x-----------------------------------------------------------------------------------------x

DECISION

AZCUNA, J.:

Challenged in this petition for review on certiorari is the Decision[1] of the Court of Appeals (CA) dated January 29, 2004 in
CA-G.R. SP No. 75732 affirming the decision[2] dated August 23, 2002 rendered by the National Labor Relations
Commission (NLRC) in NLRC CA No. 026225-00.

The antecedent facts are as follows:

Petitioner Maribel S. Santos was hired as X-Ray Technician in the Radiology department of private
respondent St. Lukes Medical Center, Inc. (SLMC) on October 13, 1984. She is a graduate of Associate in
Radiologic Technology from The Family Clinic Incorporated School of Radiologic Technology.

On April 22, 1992, Congress passed and enacted Republic Act No. 7431 known as the Radiologic
Technology Act of 1992. Said law requires that no person shall practice or offer to practice as a radiology
and/or x-ray technologist in the Philippines without having obtained the proper certificate of registration
from the Board of Radiologic Technology.

On September 12, 1995, the Assistant Executive Director-Ancillary Services and HR Director of
private respondent SLMC issued a final notice to all practitioners of Radiologic Technology to comply with
the requirement of Republic Act No. 7431 by December 31, 1995; otherwise, the unlicensed employee will
be transferred to an area which does not require a license to practice if a slot is available.

On March 4, 1997, the Director of the Institute of Radiology issued a final notice to petitioner
Maribel S. Santos requiring the latter to comply with Republic Act. No. 7431 by taking and passing the
forthcoming examination scheduled in June 1997; otherwise, private respondent SLMC may be compelled
to retire her from employment should there be no other position available where she may be absorbed.

On May 14, 1997, the Director of the Institute of Radiology, AED-Division of Ancillary Services
issued a memorandum to petitioner Maribel S. Santos directing the latter to submit her PRC Registration
form/Examination Permit per Memorandum dated March 4, 1997.
 On March 13, 1998, the Director of the Institute of Radiology issued another memorandum to
petitioner Maribel S. Santos advising her that only a license can assure her of her continued employment at
the Institute of Radiology of the private respondent SLMC and that the latter is giving her the last chance to
take and pass the forthcoming board examination scheduled in June 1998; otherwise, private respondent
SLMC shall be constrained to take action which may include her separation from employment.

On November 23, 1998, the Director of the Institute of Radiology issued a notice to petitioner
Maribel S. Santos informing the latter that the management of private respondent SLMC has approved her
retirement in lieu of separation pay.

On November 26, 1998, the Personnel Manager of private respondent SLMC issued a Notice of
Separation from the Company to petitioner Maribel S. Santos effective December 30, 1998 in view of the
latters refusal to accept private respondent SLMCs offer for early retirement. The notice also states that
while said private respondent exerted its efforts to transfer petitioner Maribel S. Santos to other position/s,
her qualifications do not fit with any of the present vacant positions in the hospital.

In a letter dated December 18, 1998, a certain Jack C. Lappay, President of the Philippine
Association of Radiologic Technologists, Inc., wrote Ms. Judith Betita, Personnel Manager of private
respondent SLMC, requesting the latter to give due consideration to the organizations three (3) regular
members of his organization (petitioner Maribel S. Santos included) for not passing yet the Board of
Examination for X-ray Technology, by giving them an assignment in any department of your hospital
awaiting their chance to pass the future Board Exam.

On January 6, 1999, the Personnel Manager of private respondent SLMC again issued a Notice of
Separation from the Company to petitioner Maribel S. Santos effective February 5, 1999 after the latter
failed to present/ submit her appeal for rechecking to the Professional Regulation Commission (PRC) of the
recent board examination which she took and failed.

On March 2, 1999, petitioner Maribel S. Santos filed a complaint against private respondent SLMC
for illegal dismissal and non-payment of salaries, allowances and other monetary benefits. She likewise
prayed for the award of moral and exemplary damages plus attorneys fees.

In the meantime, petitioner Alliance of Filipino Workers (AFW), through its President and Legal
Counsel, in a letter dated September 22, 1999 addressed to Ms. Rita Marasigan, Human Resources Director
of private respondent SLMC, requested the latter to accommodate petitioner Maribel S. Santos and assign
her to the vacant position of CSS Aide in the hospital arising from the death of an employee more than two
(2) months earlier.

In a letter dated September 24, 1999, Ms. Rita Marasigan replied thus:

Gentlemen:
Thank you for your letter of September 22, 1999 formally requesting to fill up the vacant
regular position of a CSS Aide in Ms. Maribel Santos behalf.

The position is indeed vacant. Please refer to our Recruitment Policy for particulars
especially on minimum requirements of the job and the need to meet said requirements,
as well as other pre-employment requirements, in order to be considered for the vacant
position. As a matter of fact, Ms. Santos is welcome to apply for any vacant position on
the condition that she possesses the necessary qualifications.

As to the consensus referred to in your letter, may I correct you that the agreement is,
regardless of the vacant position Ms. Santos decides to apply, she must go through the
usual application procedures. The formal letter, I am afraid, will not suffice for purposes
of recruitment processing. As you know, the managers requesting to fill any vacancy has
 a say on the matter and correctly so. The managers inputs are necessarily factored into the
standard recruitment procedures. Hence, the need to undergo the prescribed steps.

Indeed we have gone through the mechanics to accommodate Ms. Santos transfer while
she was employed with SLMC given the prescribed period. She was given 30 days from
issuance of the notice of termination to look for appropriate openings which incidentally
she wittingly declined to utilize. She did this knowing fully well that the consequences
would be that her application beyond the 30-day period or after the effective date of her
termination from SLMC would be considered a re-application with loss of seniority and
shall be subjected to the pertinent application procedures.

Needless to mention, one of the 3 X-ray Technologists in similar circumstances as Ms.

Santos at the time successfully managed to get herself transferred to E.R. because she
opted to apply for the appropriate vacant position and qualified for it within the prescribed
30-day period. The other X-ray Technologist, on the other hand, as you may recall, was
eventually terminated not just for his failure to comply with the licensure requirement of
the law but for cause (refusal to serve a customer).

Why Ms. Santos opted to file a complaint before the Labor Courts and not to avail of the
opportunity given her, or assuming she was not qualified for any vacant position even if
she tried to look for one within the prescribed period, I simply cannot understand why she
also refused the separation pay offered by Management in an amount beyond the minimum
required by law only to re-apply at SLMC, which option would be available to her anyway
even (if she) chose to accept the separation pay!

Well, heres hoping that our Union can timely influence our employees to choose their
options well as it has in the past.

(Signed)
RITA MARASIGAN

Subsequently, in a letter dated December 27, 1999, Ms. Judith Betita, Personnel Manager of private
respondent SLMC wrote Mr. Angelito Calderon, President of petitioner union as follows:

Dear Mr. Calderon:

This is with regard to the case of Ms. Maribel Santos. Please recall that last Oct. 8, 1999,
Ms. Rita Marasigan, HR Director, discussed with you and Mr. Greg Del Prado the terms
regarding the re-hiring of Ms. Maribel Santos. Ms. Marasigan offered Ms. Santos the
position of Secretary at the Dietary Department. In that meeting, Ms. Santos replied that she
would think about the offer. To date, we still have no definite reply from her. Again, during
the conference held on Dec. 14, 1999, Atty. Martir promised to talk to Ms. Santos, and
inform us of her reply by Dec. 21, 1999. Again we failed to hear her reply through him.

Please be informed that said position is in need of immediate staffing. The Dietary
Department has already been experiencing serious backlog of work due to the said vacancy.
Please note that more than 2 months has passed since Ms. Marasigan offered this
compromise. Management cannot afford to wait for her decision while the operation of the
said department suffers from vacancy.

Therefore, Management is giving Ms. Santos until the end of this month to give her decision.
If we fail to hear from her or from you as her representatives by that time, we will consider
it as a waiver and we will be forced to offer the position to other applicants so as not to
jeopardize the Dietary Departments operation.

For your immediate action.

 (Signed)
JUDITH BETITA
Personnel Manager
On September 5, 2000, the Labor Arbiter came out with a Decision ordering private respondent SLMC to
pay petitioner Maribel S. Santos the amount of One Hundred Fifteen Thousand Five Hundred Pesos
(P115,500.00) representing her separation pay. All other claims of petitioner were dismissed for lack of
merit.

Dissatisfied, petitioner Maribel S. Santos perfected an appeal with the public respondent NLRC.

On August 23, 2002, public respondent NLRC promulgated its Decision affirming the Decision of the
Labor Arbiter. It likewise denied the Motion for Reconsideration filed by petitioners in its Resolution
promulgated on December 27, 2002.

Petitioner thereafter filed a petition for certiorari with the CA which, as previously mentioned, affirmed the decision
of the NLRC.

Hence, this petition raising the following issues:

I. Whether the CA overlooked certain material facts and circumstances on petitioners legal claim
in relation to the complaint for illegal dismissal.

II. Whether the CA committed grave abuse of discretion and erred in not resolving with clarity the
issues on the merit of petitioners constitutional right of security of tenure.[3]

For its part, private respondent St. Lukes Medical Center, Inc. (SLMC) argues in its comment[4] that: 1) the petition
should be dismissed for failure of petitioners to file a motion for reconsideration; 2) the CA did not commit grave abuse of
discretion in upholding the NLRC and the Labor Arbiters ruling that petitioner was legally dismissed; 3) petitioner was
legally and validly terminated in accordance with Republic Act Nos. 4226 and 7431; 4) private respondents decision to
terminate petitioner Santos was made in good faith and was not the result of unfair discrimination; and 5) petitioner Santos
non-transfer to another position in the SLMC was a valid exercise of management prerogative.
The petition lacks merit.

Generally, the Court has always accorded respect and finality to the findings of fact of the CA particularly if they
coincide with those of the Labor Arbiter and the NLRC and are supported by substantial evidence.[5] True this rule admits
of certain exceptions as, for example, when the judgment is based on a misapprehension of facts, or the findings of fact are
not supported by the evidence on record[6] or are so glaringly erroneous as to constitute grave abuse of discretion.[7] None
of these exceptions, however, has been convincingly shown by petitioners to apply in the present case. Hence, the Court
sees no reason to disturb such findings of fact of the CA.

Ultimately, the issue raised by the parties boils down to whether petitioner Santos was illegally dismissed by private
respondent SLMC on the basis of her inability to secure a certificate of registration from the Board of Radiologic
Technology.

The requirement for a certificate of registration is set forth under R.A. No. 7431[8] thus:
Sec. 15. Requirement for the Practice of Radiologic Technology and X-ray Technology. Unless
exempt from the examinations under Sections 16 and 17 hereof, no person shall practice or offer to practice
as a radiologic and/or x-ray technologist in the Philippines without having obtained the proper certificate of
registration from the Board.

It is significant to note that petitioners expressly concede that the sole cause for petitioner Santos separation from
work is her failure to pass the board licensure exam for X-ray technicians, a precondition for obtaining the certificate of
registration from the Board. It is argued, though, that petitioner Santos failure to comply with the certification requirement
did not constitute just cause for termination as it violated her constitutional right to security of tenure. This contention is
untenable.

While the right of workers to security of tenure is guaranteed by the Constitution, its exercise may be reasonably
regulated pursuant to the police power of the State to safeguard health, morals, peace, education, order, safety, and the
general welfare of the people. Consequently, persons who desire to engage in the learned professions requiring scientific or
technical knowledge may be required to take an examination as a prerequisite to engaging in their chosen careers.[9] The
most concrete example of this would be in the field of medicine, the practice of which in all its branches has been closely
regulated by the State. It has long been recognized that the regulation of this field is a reasonable method of protecting the
health and safety of the public to protect the public from the potentially deadly effects of incompetence and ignorance
among those who would practice medicine.[10] The same rationale applies in the regulation of the practice of radiologic and
x-ray technology. The clear and unmistakable intention of the legislature in prescribing guidelines for persons seeking to
practice in this field is embodied in Section 2 of the law:
Sec. 2. Statement of Policy. It is the policy of the State to upgrade the practice of radiologic
technology in the Philippines for the purpose of protecting the public from the hazards posed by radiation
as well as to ensure safe and proper diagnosis, treatment and research through the application of machines
and/or equipment using radiation.[11]

In this regard, the Court quotes with approval the disquisition of public respondent NLRC in its decision
dated August 23, 2002:

The enactment of R.A. (Nos.) 7431 and 4226 are recognized as an exercise of the States inherent
police power. It should be noted that the police power embraces the power to prescribe regulations to
promote the health, morals, educations, good order, safety or general welfare of the people. The state is
justified in prescribing the specific requirements for x-ray technicians and/or any other professions
connected with the health and safety of its citizens. Respondent-appellee being engaged in the hospital and
health care business, is a proper subject of the cited law; thus, having in mind the legal requirements of these
laws, the latter cannot close its eyes and [let] complainant-appellants private interest override public interest.

Indeed, complainant-appellant cannot insist on her sterling work performance without any
derogatory record to make her qualify as an x-ray technician in the absence of a proper certificate of
Registration from the Board of Radiologic Technology which can only be obtained by passing the required
examination. The law is clear that the Certificate of Registration cannot be substituted by any other
requirement to allow a person to practice as a Radiologic Technologist and/or X-ray Technologist
(Technician).[12]

No malice or ill-will can be imputed upon private respondent as the separation of petitioner Santos was undertaken
by it conformably to an existing statute. It is undeniable that her continued employment without the required Board
certification exposed the hospital to possible sanctions and even to a revocation of its license to operate. Certainly, private
respondent could not be expected to retain petitioner Santosdespite the inimical threat posed by the latter to its business.
This notwithstanding, the records bear out the fact that petitioner Santos was given ample opportunity to qualify for the
position and was sufficiently warned that her failure to do so would result in her separation from work in the event there
were no other vacant positions to which she could be transferred. Despite these warnings, petitioner Santos was still unable
to comply and pass the required exam. To reiterate, the requirement for Board certification was set by statute. Justice,
fairness and due process demand that an employer should not be penalized for situations where it had no participation or
control.[13]

It would be unreasonable to compel private respondent to wait until its license is cancelled and it is materially
injured before removing the cause of the impending evil. Neither can the courts step in to force private respondent to reassign
or transfer petitioner Santos under these circumstances. Petitioner Santos is not in the position to demand that she be given
a different work assignment when what necessitated her transfer in the first place was her own fault or failing. The
prerogative to determine the place or station where an employee is best qualified to serve the interests of the company on
the basis of the his or her qualifications, training and performance belongs solely to the employer. [14]The Labor Code and
its implementing Rules do not vest in the Labor Arbiters nor in the different Divisions of the NLRC (nor in the courts)
managerial authority.[15]

While our laws endeavor to give life to the constitutional policy on social justice and the protection of labor, it does
not mean that every labor dispute will be decided in favor of the workers. The law also recognizes that management has
rights which are also entitled to respect and enforcement in the interest of fair play.[16] Labor laws, to be sure, do not
authorize interference with the employer's judgment in the conduct of the latters business. Private respondent is free to
determine, using its own discretion and business judgment, all elements of employment, "from hiring to firing" except in
cases of unlawful discrimination or those which may be provided by law. None of these exceptions is present in the instant
case.

The fact that another employee, who likewise failed to pass the required exam, was allowed by private respondent
to apply for and transfer to another position with the hospital does not constitute unlawful discrimination. This was a valid
exercise of management prerogative, petitioners not having alleged nor proven that the reassigned employee did not qualify
for the position where she was transferred. In the past, the Court has ruled that an objection founded on the ground that one
has better credentials over the appointee is frowned upon so long as the latter possesses the minimum qualifications for the
position.[17] Furthermore, the records show that Ms. Santos did not even seriously apply for another position in the company.

WHEREFORE, the petition is DENIED for lack of merit. Costs against petitioners.

SO ORDERED.
G.R. No. 80609 August 23, 1988

PHILIPPINE LONG DISTANCE TELEPHONE COMPANY, petitioner,

vs.
THE NATIONAL LABOR RELATIONS COMMISSION and MARILYN ABUCAY, respondents.

Nicanor G. Nuevas for petitioner.

CRUZ, J.:

The only issue presented in the case at bar is the legality of the award of financial assistance to an employee who had been
dismissed for cause as found by the public respondent.

Marilyn Abucay, a traffic operator of the Philippine Long Distance Telephone Company, was accused by two
complainants of having demanded and received from them the total amount of P3,800.00 in consideration of her promise
to facilitate approval of their applications for telephone installation. 1 Investigated and heard, she was found guilty as
charged and accordingly separated from the service. 2 She went to the Ministry of Labor and Employment claiming she
had been illegally removed. After consideration of the evidence and arguments of the parties, the company was sustained
and the complaint was dismissed for lack of merit. Nevertheless, the dispositive portion of labor arbiter's decision
declared:

WHEREFORE, the instant complaint is dismissed for lack of merit.

Considering that Dr. Helen Bangayan and Mrs. Consolacion Martinez are not totally blameless in the
light of the fact that the deal happened outhide the premises of respondent company and that their act of
giving P3,800.00 without any receipt is tantamount to corruption of public officers, complainant must be
given one month pay for every year of service as financial assistance. 3

Both the petitioner and the private respondent appealed to the National Labor Relations Board, which upheld the said
decision in toto and dismissed the appeals. 4 The private respondent took no further action, thereby impliedly accepting
the validity of her dismissal. The petitioner, however, is now before us to question the affirmance of the above- quoted
award as having been made with grave abuse of discretion.

In its challenged resolution of September 22, 1987, the NLRC said:

... Anent the award of separation pay as financial assistance in complainant's favor, We find the same to
be equitable, taking into consideration her long years of service to the company whereby she had
undoubtedly contributed to the success of respondent. While we do not in any way approve of
complainants (private respondent) mal feasance, for which she is to suffer the penalty of dismissal, it is
for reasons of equity and compassion that we resolve to uphold the award of financial assistance in her
favor. 5

The position of the petitioner is simply stated: It is conceded that an employee illegally dismissed is entitled to
reinstatement and backwages as required by the labor laws. However, an employee dismissed for cause is entitled to
neither reinstatement nor backwages and is not allowed any relief at all because his dismissal is in accordance with law. In
the case of the private respondent, she has been awarded financial assistance equivalent to ten months pay corresponding
to her 10 year service in the company despite her removal for cause. She is, therefore, in effect rewarded rather than
punished for her dishonesty, and without any legal authorization or justification. The award is made on the ground of
equity and compassion, which cannot be a substitute for law. Moreover, such award puts a premium on dishonesty and
encourages instead of deterring corruption.

For its part, the public respondent claims that the employee is sufficiently punished with her dismissal. The grant of
financial assistance is not intended as a reward for her offense but merely to help her for the loss of her employment after
working faithfully with the company for ten years. In support of this position, the Solicitor General cites the cases of
Firestone Tire and Rubber Company of the Philippines v. Lariosa 6 and Soco v. Mercantile Corporation of Davao, 7 where
the employees were dismissed for cause but were nevertheless allowed separation pay on grounds of social and
compassionate justice. As the Court put it in the Firestone case:

In view of the foregoing, We rule that Firestone had valid grounds to dispense with the services of
Lariosa and that the NLRC acted with grave abuse of discretion in ordering his reinstatement. However,
considering that Lariosa had worked with the company for eleven years with no known previous bad
record, the ends of social and compassionate justice would be served if he is paid full separation pay but
not reinstatement without backwages by the NLRC.

In the said case, the employee was validly dismissed for theft but the NLRC nevertheless awarded him full separation pay
for his 11 years of service with the company. In Soco, the employee was also legally separated for unauthorized use of a
company vehicle and refusal to attend the grievance proceedings but he was just the same granted one-half month
separation pay for every year of his 18-year service.

Similar action was taken in Filipro, Inc. v. NLRC, 8 where the employee was validly dismissed for preferring certain
dealers in violation of company policy but was allowed separation pay for his 2 years of service. In Metro Drug
Corporation v. NLRC, 9 the employee was validly removed for loss of confidence because of her failure to account for
certain funds but she was awarded separation pay equivalent to one-half month's salary for every year of her service of 15
years. In Engineering Equipment, Inc. v. NLRC, 10 the dismissal of the employee was justified because he had instigated
labor unrest among the workers and had serious differences with them, among other grounds, but he was still granted
three months separation pay corresponding to his 3-year service. In New Frontier Mines, Inc. v. NLRC, 11 the employee's
3- year service was held validly terminated for lack of confidence and abandonment of work but he was nonetheless
granted three months separation pay. And in San Miguel Corporation v. Deputy Minister of Labor and Employment, et al
., 12 full separation pay for 6, 10, and 16 years service, respectively, was also allowed three employees who had been
dismissed after they were found guilty of misappropriating company funds.

The rule embodied in the Labor Code is that a person dismissed for cause as defined therein is not entitled to separation
pay. 13 The cases above cited constitute the exception, based upon considerations of equity. Equity has been defined as
justice outside law, 14 being ethical rather than jural and belonging to the sphere of morals than of law. 15 It is grounded on
the precepts of conscience and not on any sanction of positive law. 16 Hence, it cannot prevail against the expressed
provision of the labor laws allowing dismissal of employees for cause and without any provision for separation pay.

Strictly speaking, however, it is not correct to say that there is no express justification for the grant of separation pay to
lawfully dismissed employees other than the abstract consideration of equity. The reason is that our Constitution is replete
with positive commands for the promotion of social justice, and particularly the protection of the rights of the workers.
The enhancement of their welfare is one of the primary concerns of the present charter. In fact, instead of confining itself
to the general commitment to the cause of labor in Article II on the Declaration of Principles of State Policies, the new
Constitution contains a separate article devoted to the promotion of social justice and human rights with a separate sub-
topic for labor. Article XIII expressly recognizes the vital role of labor, hand in hand with management, in the
advancement of the national economy and the welfare of the people in general. The categorical mandates in the
Constitution for the improvement of the lot of the workers are more than sufficient basis to justify the award of separation
pay in proper cases even if the dismissal be for cause.

The Court notes, however, that where the exception has been applied, the decisions have not been consistent as to the
justification for the grant of separation pay and the amount or rate of such award. Thus, the employees dismissed for theft
in the Firestone case and for animosities with fellow workers in the Engineering Equipment case were both awarded
separation pay notnvithstanding that the first cause was certainly more serious than the second. No less curiously, the
employee in the Soco case was allowed only one-half month pay for every year of his 18 years of service, but in Filipro
the award was two months separation pay for 2 years service. In Firestone, the emplovee was allowed full separation pay
corresponding to his 11 years of service, but in Metro, the employee was granted only one-half month separation pay for
every year of her 15year service. It would seem then that length of service is not necessarily a criterion for the grant of
separation pay and neither apparently is the reason for the dismissal.
The Court feels that distinctions are in order. We note that heretofore the separation pay, when it was considered
warranted, was required regardless of the nature or degree of the ground proved, be it mere inefficiency or something
graver like immorality or dishonesty. The benediction of compassion was made to cover a multitude of sins, as it were,
and to justify the helping hand to the validly dismissed employee whatever the reason for his dismissal. This policy should
be re-examined. It is time we rationalized the exception, to make it fair to both labor and management, especially to labor.

There should be no question that where it comes to such valid but not iniquitous causes as failure to comply with work
standards, the grant of separation pay to the dismissed employee may be both just and compassionate, particularly if he
has worked for some time with the company. For example, a subordinate who has irreconcilable policy or personal
differences with his employer may be validly dismissed for demonstrated loss of confidence, which is an allowable
ground. A working mother who has to be frequently absent because she has also to take care of her child may also be
removed because of her poor attendance, this being another authorized ground. It is not the employee's fault if he does not
have the necessary aptitude for his work but on the other hand the company cannot be required to maintain him just the
same at the expense of the efficiency of its operations. He too may be validly replaced. Under these and similar
circumstances, however, the award to the employee of separation pay would be sustainable under the social justice policy
even if the separation is for cause.

But where the cause of the separation is more serious than mere inefficiency, the generosity of the law must be more
discerning. There is no doubt it is compassionate to give separation pay to a salesman if he is dismissed for his inability to
fill his quota but surely he does not deserve such generosity if his offense is misappropriation of the receipts of his sales.
This is no longer mere incompetence but clear dishonesty. A security guard found sleeping on the job is doubtless subject
to dismissal but may be allowed separation pay since his conduct, while inept, is not depraved. But if he was in fact not
really sleeping but sleeping with a prostitute during his tour of duty and in the company premises, the situation is changed
completely. This is not only inefficiency but immorality and the grant of separation pay would be entirely unjustified.

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

A contrary rule would, as the petitioner correctly argues, have the effect, of rewarding rather than punishing the erring
employee for his offense. And we do not agree that the punishment is his dismissal only and that the separation pay has
nothing to do with the wrong he has committed. Of course it has. Indeed, if the employee who steals from the company is
granted separation pay even as he is validly dismissed, it is not unlikely that he will commit a similar offense in his next
employment because he thinks he can expect a like leniency if he is again found out. This kind of misplaced compassion
is not going to do labor in general any good as it will encourage the infiltration of its ranks by those who do not deserve
the protection and concern of the Constitution.

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

Applying the above considerations, we hold that the grant of separation pay in the case at bar is unjustified. The private
respondent has been dismissed for dishonesty, as found by the labor arbiter and affirmed by the NLRC and as she herself
has impliedly admitted. The fact that she has worked with the PLDT for more than a decade, if it is to be considered at all,
should be taken against her as it reflects a regrettable lack of loyalty that she should have strengthened instead of
betraying during all of her 10 years of service with the company. If regarded as a justification for moderating the penalty
of dismissal, it will actually become a prize for disloyalty, perverting the meaning of social justice and undermining the
efforts of labor to cleanse its ranks of all undesirables.
The Court also rules that the separation pay, if found due under the circumstances of each case, should be computed at the
rate of one month salary for every year of service, assuming the length of such service is deemed material. This is without
prejudice to the application of special agreements between the employer and the employee stipulating a higher rate of
computation and providing for more benefits to the discharged employee. 17

WHEREFORE, the petition is GRANTED. The challenged resolution of September 22,1987, is AFFIRMED in totoexcept
for the grant of separation pay in the form of financial assistance, which is hereby DISALLOWED. The temporary
restraining order dated March 23, 1988, is LIFTED. It is so ordered.

Narvasa, Melencio-Herrera, Gutierrez, Jr., Paras, Feliciano, Gancayco, Bidin, Sarmiento, Cortes and Medialdea, JJ.,
concur.
 [G.R. No. 146650. January 13, 2003]

DOLE PHILIPPINES, INC., petitioner, vs. PAWIS NG MAKABAYANG OBRERO (PAMAO-NFL), respondent.

DECISION
CORONA, J.:

Before us is a petition for review filed under Rule 45 of the 1997 Rules of Civil Procedure, assailing the January 9,
2001 resolution of the Court of Appeals which denied petitioners motion for reconsideration of its September 22, 2000
decision[1] which in turn upheld the Order issued by the voluntary arbitrator[2] dated 12 October 1998, the dispositive portion
of which reads:

WHEREFORE, premises considered, judgment is hereby rendered in favor of the complainant. Respondent is hereby
directed to extend the free meal benefit as provided for in Article XVIII, Section 3 of the collective bargaining agreement
to those employees who have actually performed overtime works even for exactly three (3) hours only.

SO ORDERED. [3]

The core of the present controversy is the interpretation of the provision for free meals under Section 3 of Article XVIII
of the 1996-2001 Collective Bargaining Agreement (CBA) between petitioner Dole Philippines, Inc. and private respondent
labor union PAMAO-NFL. Simply put, how many hours of overtime work must a Dole employee render to be entitled to
the free meal under Section 3 of Article XVIII of the 1996-2001 CBA? Is it when he has rendered (a) exactly, or no less
than, three hours of actual overtime work or (b) more than three hours of actual overtime work?
The antecedents are as follows:
On February 22, 1996, a new five-year Collective Bargaining Agreement for the period starting February 1996 up to
February 2001, was executed by petitioner Dole Philippines, Inc., and private respondent Pawis Ng Makabayang Obrero-
NFL (PAMAO-NFL). Among the provisions of the new CBA is the disputed section on meal allowance under Section 3 of
Article XVIII on Bonuses and Allowances, which reads:

Section 3. MEAL ALLOWANCE. The COMPANY agrees to grant a MEAL ALLOWANCE of TEN PESOS (P10.00) to
all employees who render at least TWO (2) hours or more of actual overtime work on a workday, and FREE MEALS, as
presently practiced, not exceeding TWENTY FIVE PESOS (P25.00) after THREE (3) hours of actual overtime work.[4]

Pursuant to the above provision of the CBA, some departments of Dole reverted to the previous practice of granting
free meals after exactly three hours of actual overtime work. However, other departments continued the practice of granting
free meals only after more than three hours of overtime work. Thus, private respondent filed a complaint before the National
Conciliation and Mediation Board alleging that petitioner Dole refused to comply with the provisions of the 1996-2001
CBA because it granted free meals only to those who rendered overtime work for more than three hours and not to those
who rendered exactly three hours overtime work.
The parties agreed to submit the dispute to voluntary arbitration. Thereafter, the voluntary arbitrator, deciding in favor
of the respondent, issued an order directing petitioner Dole to extend the free meal benefit to those employees who actually
did overtime work even for exactly three hours only.
Petitioner sought a reconsideration of the above order but the same was denied. Hence, petitioner elevated the matter
to the Court of Appeals by way of a petition for review on certiorari.
On September 22, 2000, the Court of Appeals rendered its decision upholding the assailed order.
Thus, the instant petition.
Petitioner Dole asserts that the phrase after three hours of actual overtime work should be interpreted to mean after
more than three hours of actual overtime work.
 On the other hand, private respondent union and the voluntary arbitrator see it as meaning after exactly three hours of
actual overtime work.
The meal allowance provision in the 1996-2001 CBA is not new. It was also in the 1985-1988 CBA and the 1990-1995
CBA. The 1990-1995 CBA provision on meal allowance was amended by the parties in the 1993-1995 CBA
Supplement. The clear changes in each CBA provision on meal allowance were in the amount of the meal allowance and
free meals, and the use of the words after and after more than to qualify the amount of overtime work to be performed by
an employee to entitle him to the free meal.
To arrive at a correct interpretation of the disputed provision of the CBA, a review of the pertinent section of past
CBAs is in order.
The CBA covering the period 21 September 1985 to 20 September 1988 provided:

Section 3. MEAL ALLOWANCE. The COMPANY agrees to grant a MEAL ALLOWANCE of FOUR (P4.00) PESOS to
all employees who render at least TWO (2) hours or more of actual overtime work on a workday, and FREE MEALS, as
presently practiced, after THREE (3) hours of actual overtime work.[5]

The CBA for 14 January 1990 to 13 January 1995 likewise provided:

Section 3. MEAL ALLOWANCE. The COMPANY agrees to grant a MEAL ALLOWANCE of EIGHT PESOS (P8.00)
to all employees who render at least TWO (2) hours or more of actual overtime work on a workday, and FREE MEALS,
as presently practiced, not exceeding SIXTEEN PESOS (P16.00) after THREE (3) hours of actual overtime work.[6]

The provision above was later amended when the parties renegotiated the economic provisions of the CBA pursuant
to Article 253-A of the Labor Code. Section 3 of Article XVIII of the 14 January 1993 to 13 January 1995 Supplement to
the 1990-1995 CBA reads:

Section 3. MEAL ALLOWANCE. The COMPANY agrees to grant a MEAL SUBSIDY of NINE PESOS (P9.00) to all
employees who render at least TWO (2) hours or more of actual overtime work on a workday, and FREE MEALS, as
presently practiced, not exceeding TWENTY ONE PESOS (P21.00) after more than THREE (3) hours of actual overtime
work (Section 3, as amended).[7]

We note that the phrase more than was neither in the 1985-1988 CBA nor in the original 1990-1995 CBA. It was
inserted only in the 1993-1995 CBA Supplement. But said phrase is again absent in Section 3 of Article XVIII of the 1996-
2001 CBA, which reverted to the phrase after three (3) hours.
Petitioner asserts that the phrase after three (3) hours of actual overtime work does not mean after exactly three hours of
actual overtime work; it means after more than three hours of actual overtime work. Petitioner insists that this has been the
interpretation and practice of Dole for the past thirteen years.
Respondent, on the other hand, maintains that after three (3) hours of actual overtime work simply means after
rendering exactly, or no less than, three hours of actual overtime work.
The Court finds logic in private respondents interpretation.
The omission of the phrase more than between after and three hours in the present CBA spells a big difference.
No amount of legal semantics can convince the Court that after more than means the same as after.
Petitioner asserts that the more than in the 1993-1995 CBA Supplement was mere surplusage because, regardless of
the absence of said phrase in all the past CBAs, it had always been the policy of petitioner corporation to give the meal
allowance only after more than 3 hours of overtime work.However, if this were true, why was it included only in the 1993-
1995 CBA Supplement and the parties had to negotiate its deletion in the 1996-2001 CBA?
Clearly then, the reversion to the wording of previous CBAs can only mean that the parties intended that free meals be
given to employees after exactly, or no less than, three hours of actual overtime work.
The disputed provision of the CBA is clear and unambiguous. The terms are explicit and the language of the CBA is
not susceptible to any other interpretation. Hence, the literal meaning of free meals after three (3) hours of overtime work
shall prevail, which is simply that an employee shall be entitled to a free meal if he has rendered exactly, or no less than,
three hours of overtime work, not after more than or in excess of three hours overtime work.
Petitioner also invokes the well-entrenched principle of management prerogative that the power to grant benefits over
and beyond the minimum standards of law, or the Labor Code for that matter, belongs to the employer x x x. According to
this principle, even if the law is solicitous of the welfare of the employees, it must also protect the right of the employer to
exercise what clearly are management prerogatives.[8] Petitioner claims that, being the employer, it has the right to determine
whether it will grant a free meal benefit to its employees and, if so, under what conditions. To see it otherwise would amount
to an impairment of its rights as an employer.
We do not think so.
The exercise of management prerogative is not unlimited. It is subject to the limitations found in law, a collective
bargaining agreement or the general principles of fair play and justice. [9] This situation constitutes one of the limitations.
The CBA is the norm of conduct between petitioner and private respondent and compliance therewith is mandated by the
express policy of the law.[10]
Petitioner Dole cannot assail the voluntary arbitrators interpretation of the CBA for the supposed impairment of its
management prerogatives just because the same interpretation is contrary to its own.
WHEREFORE, petition is hereby denied.
SO ORDERED.
RICAN WIRE AND CABLE DAILY RATED EMPLOYEES UNION, petitioner, vs. AMERICAN WIRE AND
CABLE CO., INC. and THE COURT OF APPEALS, respondents.

DECISION
CHICO-NAZARIO, J.:

Before Us is a special civil action for certiorari, assailing the Decision[1] of the Special Eighth Division of the Court
of Appeals dated 06 March 2002. Said Decision upheld the Decision [2] and Order[3] of Voluntary Arbitrator Angel A.
Ancheta of the National Conciliation and Mediation Board (NCMB) dated 25 September 2001 and 05 November 2001,
respectively, which declared the private respondent herein not guilty of violating Article 100 of the Labor Code, as amended.
Assailed likewise, is the Resolution[4] of the Court of Appeals dated 12 July 2002, which denied the motion for
reconsideration of the petitioner, for lack of merit.

THE FACTS

The facts of this case are quite simple and not in dispute.
American Wire and Cable Co., Inc., is a corporation engaged in the manufacture of wires and cables. There are two
unions in this company, the American Wire and Cable Monthly-Rated Employees Union (Monthly-Rated Union) and the
American Wire and Cable Daily-Rated Employees Union (Daily-Rated Union).
On 16 February 2001, an original action was filed before the NCMB of the Department of Labor and Employment
(DOLE) by the two unions for voluntary arbitration. They alleged that the private respondent, without valid cause, suddenly
and unilaterally withdrew and denied certain benefits and entitlements which they have long enjoyed. These are the
following:

a. Service Award;

b. 35% premium pay of an employees basic pay for the work rendered during Holy Monday, Holy Tuesday,
Holy Wednesday, December 23, 26, 27, 28 and 29;

c. Christmas Party; and

d. Promotional Increase.

A promotional increase was asked by the petitioner for fifteen (15) of its members who were given or assigned new
job classifications. According to petitioner, the new job classifications were in the nature of a promotion, necessitating the
grant of an increase in the salaries of the said 15 members.
On 21 June 2001, a Submission Agreement was filed by the parties before the Office for Voluntary Arbitration.
Assigned as Voluntary Arbitrator was Angel A. Ancheta.
On 04 July 2001, the parties simultaneously filed their respective position papers with the Office of the Voluntary
Arbitrator, NCMB, and DOLE.
On 25 September 2001, a Decision[5] was rendered by Voluntary Arbitrator Angel A. Ancheta in favor of the private
respondent. The dispositive portion of the said Decision is quoted hereunder:

WHEREFORE, with all the foregoing considerations, it is hereby declared that the Company is not guilty of violating
Article 100 of the Labor Code, as amended, or specifically for withdrawing the service award, Christmas party and 35%
premium for work rendered during Holy Week and Christmas season and for not granting any promotional increase to the
alleged fifteen (15) Daily-Rated Union Members in the absence of a promotion. The Company however, is directed to
grant the service award to deserving employees in amounts and extent at its discretion, in consultation with the Unions on
grounds of equity and fairness.[6]
 A motion for reconsideration was filed by both unions[7] where they alleged that the Voluntary Arbitrator manifestly
erred in finding that the company did not violate Article 100 of the Labor Code, as amended, when it unilaterally withdrew
the subject benefits, and when no promotional increase was granted to the affected employees.
On 05 November 2001, an Order[8] was issued by Voluntary Arbitrator Angel A. Ancheta. Part of the Order is quoted
hereunder:

Considering that the issues raised in the instant case were meticulously evaluated and length[i]ly discussed and explained
based on the pleadings and documentary evidenc[e] adduced by the contending parties, we find no cogent reason to
change, modify, or disturb said decision.

WHEREFORE, let the instant MOTION[S] FOR RECONSIDERATION be, as they are hereby, denied for lack of merit.
Our decision dated 25 September 2001 is affirmed en toto.[9]

An appeal under Rule 43 of the 1997 Rules on Civil Procedure was made by the Daily-Rated Union before the Court
of Appeals[10] and docketed as CA-G.R. SP No. 68182. The petitioner averred that Voluntary Arbitrator Angel A. Ancheta
erred in finding that the company did not violate Article 100 of the Labor Code, as amended, when the subject benefits were
unilaterally withdrawn. Further, they assert, the Voluntary Arbitrator erred in adopting the companys unaudited Revenues
and Profitability Analysis for the years 1996-2000 in justifying the latters withdrawal of the questioned benefits.[11]
On 06 March 2002, a Decision in favor of herein respondent company was promulgated by the Special Eighth Division
of the Court of Appeals in CA-G.R. SP No. 68182. The decretal portion of the decision reads:

WHEREFORE, premises considered, the present petition is hereby DENIED DUE COURSE and accordingly
DISMISSED, for lack of merit. The Decision of Voluntary Arbitrator Angel A. Ancheta dated September 25, 2001 and
his Order dated November 5, 2001 in VA Case No. AAA-10-6-4-2001 are hereby AFFIRMED and UPHELD.[12]

A motion for reconsideration[13] was filed by the petitioner, contending that the Court of Appeals misappreciated the
facts of the case, and that it committed serious error when it ruled that the unaudited financial statement bears no importance
in the instant case.
The Court of Appeals denied the motion in its Resolution dated 12 July 2002[14] because it did not present any new
matter which had not been considered in arriving at the decision. The dispositive portion of the Resolution states:

WHEREFORE, the motion for reconsideration is hereby DENIED for lack of merit.[15]

Dissatisfied with the court a quos ruling, petitioner instituted the instant special civil action for certiorari,[16] citing
grave abuse of discretion amounting to lack of jurisdiction.

ASSIGNMENT OF ERRORS

The petitioner assigns as errors the following:

I

THE COURT OF APPEALS ERRED IN HOLDING THAT THE COMPANY DID NOT VIOLATE ARTICLE 100 OF
THE LABOR CODE, AS AMENDED, WHEN IT UNILATERALLY WITHDREW THE BENEFITS OF THE
MEMBERS OF PETITIONER UNION, TO WIT: 1) 35% PREMIUM PAY; 2) CHRISTMAS PARTY AND ITS
INCIDENTAL BENEFITS; AND 3) SERVICE AWARD, WHICH IN TRUTH AND IN FACT SAID
BENEFITS/ENTITLEMENTS HAVE BEEN GIVEN THEM SINCE TIME IMMEMORIAL, AS A MATTER OF
LONG ESTABLISHED COMPANY PRACTICE, WITH THE FURTHER FACT THAT THE SAME NOT BEING
DEPENDENT ON PROFITS.

II
THE COURT OF APPEALS ERRED WHEN IT JUST ACCEPTED HOOK, LINE AND SINKER, THE RESPONDENT
COMPANYS SELF SERVING AND UNAUDITED REVENUES AND PROFITABILITY ANALYSIS FOR THE
YEARS 1996-2000 WHICH THEY SUBMITTED TO FALSELY JUSTIFY THEIR UNLAWFUL ACT OF
UNILATERALLY AND SUDDENLY WITHDRAWING OR DENYING FROM THE PETITIONER THE SUBJECT
BENEFITS/ENTITLEMENTS.

III

THE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE YEARLY SERVICE AWARD IS NOT
DEPENDENT ON PROFIT BUT ON SERVICE AND THUS, CANNOT BE UNILATERALLY WITHDRAWN BY
RESPONDENT COMPANY.

ISSUE

Synthesized, the solitary issue that must be addressed by this Court is whether or not private respondent is guilty of
violating Article 100 of the Labor Code, as amended, when the benefits/entitlements given to the members of petitioner
union were withdrawn.

THE COURTS RULING

Before we address the sole issue presented in the instant case, it is best to first discuss a matter which was raised by
the private respondent in its Comment. The private respondent contends that this case should have been dismissed outright
because of petitioners error in the mode of appeal. According to it, the petitioner should have elevated the instant case to
this Court through a petition for review on certiorari under Rule 45, and not through a special civil action
for certiorari under Rule 65, of the 1997 Rules on Civil Procedure.[17]
Assuming arguendo that the mode of appeal taken by the petitioner is improper, there is no question that the Supreme
Court has the discretion to dismiss it if it is defective. However, sound policy dictates that it is far better to dispose the case
on the merits, rather than on technicality.[18]
The Supreme Court may brush aside the procedural barrier and take cognizance of the petition as it raises an issue of
paramount importance. The Court shall resolve the solitary issue on the merits for future guidance of the bench and bar. [19]
With that out of the way, we shall now resolve whether or not the respondent company is guilty of violating Article
100 of the Labor Code, as amended.
Article 100 of the Labor Code provides:

ART. 100. PROHIBITION AGAINST ELIMINATION OR DIMINUTION OF BENEFITS. Nothing in this Book
shall be construed to eliminate or in any way diminish supplements, or other employee benefits being enjoyed at the time
of promulgation of this Code.

The petitioner submits that the withdrawal of the private respondent of the 35% premium pay for selected days during
the Holy Week and Christmas season, the holding of the Christmas Party and its incidental benefits, and the giving of service
awards violated Article 100 of the Labor Code. The grant of these benefits was a customary practice that can no longer be
unilaterally withdrawn by private respondent without the tacit consent of the petitioner. The benefits in question were given
by the respondent to the petitioner consistently, deliberately, and unconditionally since time immemorial. The
benefits/entitlements were not given to petitioner due to an error in interpretation, or a construction of a difficult question
of law, but simply, the grant has been a practice over a long period of time. As such, it cannot be withdrawn from the
petitioner at respondents whim and caprice, and without the consent of the former. The benefits given by the respondent
cannot be considered as a bonus as they are not founded on profit. Even assuming that it can be treated as a bonus, the grant
of the same, by reason of its long and regular concession, may be regarded as part of regular compensation.[20]
 With respect to the fifteen (15) employees who are members of petitioner union that were given new job classifications,
it asserts that a promotional increase in their salaries was in order. Salary adjustment is a must due to their promotion. [21]
On respondent companys Revenues and Profitability Analysis for the years 1996-2000, the petitioner insists that since
the former was unaudited, it should not have justified the companys sudden withdrawal of the benefits/entitlements. The
normal and/or legal method for establishing profit and loss of a company is through a financial statement audited by an
independent auditor.[22]
The petitioner cites our ruling in the case of Saballa v. NLRC,[23] where we held that financial statements audited by
independent auditors constitute the normal method of proof of the profit and loss performance of the company. Our ruling
in the case of Bogo-Medellin Sugarcane Planters Association, Inc., et al. v. NLRC, et al.[24] was likewise invoked. In this
case, we held:

The Court has previously ruled that financial statements audited by independent external auditors constitute the normal
method of proof of the profit and loss performance of a company.

On the matter of the withdrawal of the service award, the petitioner argues that it is the employees length of service
which is taken as a factor in the grant of this benefit, and not whether the company acquired profit or not. [25]
In answer to all these, the respondent corporation avers that the grant of all subject benefits has not ripened into practice
that the employees concerned can claim a demandable right over them. The grant of these benefits was conditional based
upon the financial performance of the company and that conditions/circumstances that existed before have indeed
substantially changed thereby justifying the discontinuance of said grants. The companys financial performance was
affected by the recent political turmoil and instability that led the entire nation to a bleeding economy. Hence, it only
necessarily follows that the companys financial situation at present is already very much different from where it was three
or four years ago.[26]
On the subject of the unaudited financial statement presented by the private respondent, the latter contends that the
cases cited by the petitioner indeed uniformly ruled that financial statements audited by independent external auditors
constitute the normal method of proof of the profit and loss performance of a company. However, these cases do not require
that the only legal method to ascertain profit and loss is through an audited financial statement. The cases only provide that
an audited financial statement is the normal method.[27]
The respondent company likewise asseverates that the 15 members of petitioner union were not actually promoted.
There was only a realignment of positions.[28]
From the foregoing contentions, it appears that for the Court to resolve the issue presented, it is critical that a
determination must be first made on whether the benefits/entitlements are in the nature of a bonus or not, and assuming they
are so, whether they are demandable and enforceable obligations.
In the case of Producers Bank of the Philippines v. NLRC[29] we have characterized what a bonus is, viz:

A bonus is an amount granted and paid to an employee for his industry and loyalty which contributed to the success of the
employers business and made possible the realization of profits. It is an act of generosity granted by an enlightened
employer to spur the employee to greater efforts for the success of the business and realization of bigger profits. The
granting of a bonus is a management prerogative, something given in addition to what is ordinarily received by or strictly
due the recipient. Thus, a bonus is not a demandable and enforceable obligation, except when it is made part of the wage,
salary or compensation of the employee.

Based on the foregoing pronouncement, it is obvious that the benefits/entitlements subjects of the instant case are all
bonuses which were given by the private respondent out of its generosity and munificence. The additional 35% premium
pay for work done during selected days of the Holy Week and Christmas season, the holding of Christmas parties with
raffle, and the cash incentives given together with the service awards are all in excess of what the law requires each employer
to give its employees. Since they are above what is strictly due to the members of petitioner-union, the granting of the same
was a management prerogative, which, whenever management sees necessary, may be withdrawn, unless they have been
made a part of the wage or salary or compensation of the employees.
 The consequential question therefore that needs to be settled is if the subject benefits/entitlements, which are bonuses,
are demandable or not. Stated another way, can these bonuses be considered part of the wage or salary or compensation
making them enforceable obligations?
The Court does not believe so.
For a bonus to be enforceable, it must have been promised by the employer and expressly agreed upon by the
parties,[30] or it must have had a fixed amount[31] and had been a long and regular practice on the part of the employer.[32]
The benefits/entitlements in question were never subjects of any express agreement between the parties. They were
never incorporated in the Collective Bargaining Agreement (CBA). As observed by the Voluntary Arbitrator, the records
reveal that these benefits/entitlements have not been subjects of any express agreement between the union and the company,
and have not yet been incorporated in the CBA. In fact, the petitioner has not denied having made proposals with the private
respondent for the service award and the additional 35% premium pay to be made part of the CBA.[33]
The Christmas parties and its incidental benefits, and the giving of cash incentive together with the service award
cannot be said to have fixed amounts. What is clear from the records is that over the years, there had been a downtrend in
the amount given as service award.[34] There was also a downtrend with respect to the holding of the Christmas parties in
the sense that its location changed from paid venues to one which was free of charge, [35] evidently to cut costs. Also, the
grant of these two aforementioned bonuses cannot be considered to have been the private respondents long and regular
practice. To be considered a regular practice, the giving of the bonus should have been done over a long period of time, and
must be shown to have been consistent and deliberate.[36] The downtrend in the grant of these two bonuses over the years
demonstrates that there is nothing consistent about it. Further, as held by the Court of Appeals:

Anent the Christmas party and raffle of prizes, We agree with the Voluntary Arbitrator that the same was
merely sponsored by the respondent corporation out of generosity and that the same is dependent on the financial
performance of the company for a particular year[37]

The additional 35% premium pay for work rendered during selected days of the Holy Week and Christmas season
cannot be held to have ripened into a company practice that the petitioner herein have a right to demand. Aside from the
general averment of the petitioner that this benefit had been granted by the private respondent since time immemorial, there
had been no evidence adduced that it had been a regular practice. As propitiously observed by the Court of Appeals:

. . . [N]otwithstanding that the subject 35% premium pay was deliberately given and the same was in excess of that
provided by the law, the same however did not ripen into a company practice on account of the fact that it was only
granted for two (2) years and with the express reservation from respondent corporations owner that it cannot continue to
rant the same in view of the companys current financial situation.[38]

To hold that an employer should be forced to distribute bonuses which it granted out of kindness is to penalize him for
his past generosity.[39]
Having thus ruled that the additional 35% premium pay for work rendered during selected days of the Holy Week and
Christmas season, the holding of Christmas parties with its incidental benefits, and the grant of cash incentive together with
the service award are all bonuses which are neither demandable nor enforceable obligations of the private respondent, it is
not necessary anymore to delve into the Revenues and Profitability Analysis for the years 1996-2000 submitted by the
private respondent.
On the alleged promotion of 15 members of the petitioner union that should warrant an increase in their salaries, the
factual finding of the Voluntary Arbitrator is revealing, viz:

Considering that the Union was unable to adduce proof that a promotion indeed occur[ed] with respect to the 15
employees, the Daily Rated Unions claim for promotional increase likewise fall[s] there being no promotion established
under the records at hand.[40]

WHEREFORE, in view of all the foregoing, the assailed Decision and Resolution of the Court of Appeals dated 06
March 2002 and 12 July 2002, respectively, which affirmed and upheld the decision of the Voluntary Arbitrator, are hereby
AFFIRMED. No pronouncement as to costs.
SO ORDERED.
CHINA BANKING CORPORATION, G.R. No. 156515
Petitioner,
Present:
PUNO, J., Chairman,
AUSTRIA-MARTINEZ,
- versus - CALLEJO, SR.,
TINGA, and
CHICO-NAZARIO, JJ.*

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

DECISION

CALLEJO, SR., J.:

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

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

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

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

As a result of the DAUD/BP accommodations in favor of Maniwan, a total of ten out-of-town checks (7 PCIB
checks and 3 UCPB checks) of various dates amounting to P2,441,375 were returned unpaid from September 20, 1996 to
October 17, 1996. Each of the returned checks was stamped with the notation Payment Stopped/Account Closed.

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

1) When DAUD/BP accommodations were allowed, what efforts, if any, were made to establish
the identity and/or legitimacy of the alleged broker or drawers of the checks accommodated?

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

3) How did the accommodations reach P2,441,375.00 when our records indicate that the
borrowers B/P-DAUD line is only for P500,000.00? When did the accommodations start exceeding
the limit of P500,000.00 and under whose authority?

4) When did the accommodated checks start bouncing?

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

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

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

1. None

2. No

3. The accommodations reach P2.4 million upon the request of Mr. Edmund Ramos, surety, and
this request was subsequently approved by undersigned. The excess accommodations started in
July 96 without higher management approval.

4. Checks started bouncing on September 20, 1996.

5. Checks have remained unpaid. The branch sent demand letters to Messrs. Maniwan and
Ramos and referred the matter to our Legal Dept. for filing of appropriate legal action.

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

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

The account was personally endorsed and referred to us by Mr. Edmund Ramos, Branch Manager of
Metrobank, Divisoria Br., Cagayan de Oro City.In fact, the CASA account was opened jointly as &/or
(Maniwan &/or Ramos). Mr. Ramos gave us his full assurance that the checks that we intend to purchase
are the same drawee that Metrobank has been purchasing for the past one (1) year already. He even
disclosed that these checks were verified by his own branch accountant and that Mr. Maniwans loan account
was being co-maked by Mr. Elbert Tan Yao Tin, son of Jose Tan Yao Tin of CIFC.To show his sincerity,
Mr. Ramos signed as surety for Mr. Maniwan for P2.5MM. Corollary to this, Mr. Ramos applied for a loan
with us mortgaging his house, lot and duplex with an estimated market value of P4.508MM. The branch,
therefore, is not totally negligent as officer to officer bank checking was done. In fact, it is also for the very
 same reason that other banks granted DAUD to subject account and, likewise, the checks returned unpaid,
namely:

Solidbank P1.8 Million

Allied Bank .8
Far East Bank 2.0
MBTC 5.0

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

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

Undersigned accepts full responsibility for committing an error in judgment, lapses in control and abuse of
discretion by relying solely on the word, assurance, surety and REM of Mr. Edmund Ramos, a friend and
a co-bank officer. I am now ready to face the consequence of my action.[3]

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

In the Memorandum dated May 23, 1997 addressed to the respondent, Nancy D. Yang, the petitioner Banks Senior
Vice-President and Head-Branch Banking Group, informed the former that his approval of the DAUD/BP accommodations
in favor of Maniwan without authority and/or approval of higher management violated the petitioner Banks Code of
Ethics. As such, he was directed to restitute the amount of P1,507,736.79 representing 90% of the total loss of P1,675,263.10
incurred by the petitioner Bank. However, in view of his resignation and considering the years of service in the petitioner
Bank, the management earmarked only P836,637.08 from the respondents total separation benefits or pay. The
memorandum addressed to the respondent stated:

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

1. The branch granted various BP/DAUD accommodations to clients Joel

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

1. PCIB Cebu Check No. 86256 P251,816.00

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

2. The foregoing checks were accommodated through your approval which was in
excess of your authority.

3. The branch failed to follow the fundamental and basic procedures in handling
BP/DAUD accommodations which made the accommodations basically flawed.
 4. The accommodations were attended by lapses in control consisting of failure to report
the exception and failure to cover the account of Joel Maniwan with the required Credit
Line Agreement.

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

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

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

Your approval of the accommodations in excess of your authority without prior authority and/or approval
from higher management is a violation of the above cited Rules.

In view of these, you are directed to restitute the amount of P1,507,736.79 representing 90% of the total
loss of P1,675,263.10 incurred by the Bank as your proportionate share. However, in light of your voluntary
separation from the Bank effective May 31, 1997, in view of the years of service you have given to the
Bank, management shall earmark and segregate only the amount of P836,637.08 from your total
separation benefits/pay. The Bank further directs you to fully assist in the effort to collect from Joel
Maniwan and Edmundo Ramos the sums due to the Bank.[6]

In the Letter dated May 26, 1997 addressed to the respondent, Remedios Cruz, petitioner Banks Vice-President of the
Human Resources Division, again informed him that the management would withhold the sum of P836,637.08 from his
separation pay, mid-year bonus and profit sharing. The amount withheld represented his proportionate share in the
accountability vis--vis the DAUD/BP accommodations in favor of Maniwan. The said amount would be released upon
recovery of the sums demanded from Maniwan in Civil Case No. 97174 filed against him by the petitioner Bank with the
Regional Trial Court in Cagayan de Oro City.

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

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

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

On even date, the Labor Arbiter promulgated the Decision[8] dismissing the respondents complaint. According to
the Labor Arbiter, the respondent, an officer of the petitioner Bank, had committed a serious infraction when, in blatant
violation of the banks standard operating procedures and policies, he approved the DAUD/BP accommodations in favor of
Maniwan without authorization by senior management.Even the respondent himself had admitted this breach in the letters
that he wrote to the senior officers of the petitioner Bank.

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

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

WHEREFORE, the decision of the Labor Arbiter is Affirmed. The appeal is Dismissed for lack of
merit.

SO ORDERED.[9]

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

The respondent then filed a petition for certiorari with the Court of Appeals alleging that the NLRC committed
grave abuse of discretion when it affirmed the findings and conclusions of the Labor Arbiter. He vehemently denied having
offered to pledge his property to the bank or proposed the withholding of his separation pay and other benefits. Further, he
argued that the petitioner Bank deprived him of his right to due process because it unilaterally imposed the penalty of
restitution on him. The DAUD/BP accommodations in favor of Maniwan allegedly could not be considered as a loss to the
bank as the amounts may still be recovered. The respondent, likewise, maintained that the Labor Arbiter should not have
decided the case on the basis of the parties position papers but should have conducted a full-blown hearing thereon.
On July 19, 2002, the CA rendered the Decision[10] now being assailed by the petitioner Bank. The CA found merit
in the respondents contention that he was deprived of his right to due process by the petitioner Bank as no administrative
investigation was conducted by it prior to its act of withholding the respondents separation pay and other benefits. The
respondent was not informed of any charge against him in connection with the Maniwan DAUD/BP accommodations nor
afforded the right to a hearing or to defend himself before the penalty of restitution was imposed on him. This, according to
the appellate court, was contrary not only to the fundamental principle of due process but to the petitioner Banks Code of
Ethics as well.

The CA further held that the Labor Arbiter, likewise, failed to afford the respondent due process when it denied his
motion to set case for trial or hearing. While the authority of the Labor Arbiter to decide a case based on the parties position
papers and documents is indubitable, the CA opined that factual issues attendant to the case, including whether or not the
respondent proposed the withholding of his benefits or pledged the same to the petitioner Bank, necessitated the conduct of
a full-blown trial. The appellate court explained that:
Procedural due process, as must be remembered, has two main concerns, the prevention of
unjustified or mistaken deprivation and the promotion of participation and dialogue by affected individuals
in the decision-making process. Truly, the magnitude of the case and the withholding of Borromeos
property as well as the willingness of the parties to conciliate, make a hearing imperative. As manifested
by the bank, it did not contest Borromeos motion for hearing or trial inasmuch as the bank itself wanted to
fully ventilate its side.[11]
 Accordingly, the CA set aside the decision of the NLRC and ordered that the records of the case be remanded to
the Labor Arbiter for further hearings on the factual issues involved.

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

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

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

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

The petitioner Bank posits that the sole factual issue that remained in dispute was whether the respondent pledged his
benefits as guarantee for the losses the bank incurred resulting from the unauthorized DAUD/BP accommodations in favor
of Maniwan. On this issue, both the Labor Arbiter and the NLRC found that the respondent had indeed pledged his benefits
to
the bank. According to the petitioner Bank, this factual finding should have been accorded respect by the CA as the same is
supported by the evidence on record. By ordering the remand of the case to the Labor Arbiter, the CA allegedly unjustifiably
analyzed and weighed all over again the evidence presented.

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

The petitioner Bank takes exception to the findings of the appellate court that the respondent was not afforded the right to
a hearing or to defend himself by the petitioner Bank as it did not conduct an administrative investigation. The petitioner
Bank points out that it was poised to conduct one but was preempted by the respondents resignation. In any case, respondent
himself in his Letter dated December 5, 1996, in reply to the clarificatory queries of Chiong, admitted that the DAUD/BP
accommodations were granted without higher management approval and that he (the respondent) accepts full responsibility
for committing an error of judgment, lapses in control and abuse of discretion ... Given the respondents admission, the
holding of a formal investigation was no longer necessary.
For his part, the respondent, in his Comment, maintains that the DAUD/BP accommodations in favor of Maniwan were
approved, albeit not expressly, by the senior management of the petitioner Bank. He cites the regular reports he made to
Chiong, his superior, regarding the DAUD/BP transactions made by the branch, including that of Maniwan, and Chiong
never called his attention thereto nor stopped or reprimanded him therefor. These reports further showed that he did not
conceal these transactions to the management.

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

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

The petition is meritorious.

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

Hence, the Labor Arbiter acted well within his authority when he issued the Order dated February 26, 1999
submitting the case for resolution upon finding that he could judiciously pass on the merits without the necessity of further
hearing. On the other hand, the assailed CA decisions directive requiring him to conduct further hearings constitutes undue
interference with the Labor Arbiters discretion. Moreover, to require the conduct of hearings would be to negate the rationale
and purpose of the summary nature of the proceedings mandated by the Rules and to make mandatory the application of the
technical rules of evidence.[18] The appellate court, therefore, committed reversible error in ordering the remand of the case
to the Labor Arbiter for further hearings.
Before delving on the merits of the case, it is well to remember that factual findings of the NLRC affirming those of the
Labor Arbiter, both bodies being deemed to have acquired expertise in matters within their jurisdiction, when sufficiently
supported by evidence on record, are accorded respect, if not finality, and are considered binding on this Court.[19] As long
as their decisions are devoid of any arbitrariness in the process of their deduction from the evidence proffered by the parties,
all that is left is for the Court to stamp its affirmation.[20]

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

Indeed, it had been indubitably shown that the respondent admitted that he violated the petitioner Banks standard
operating procedures in granting the DAUD/BP accommodations in favor of Maniwan without higher management
approval. The respondents replies to the clarificatory questions propounded to him by way of the Memorandum dated
November 19, 1996 were particularly significant. When the respondent was asked whether efforts were made to establish
the identity and/or legitimacy of the drawers of the checks before the DAUD/BP accommodations were allowed, [21] he
replied in the negative.[22] To the query did the branch follow and comply with operating procedure which require that all
checks accommodated for DAUD/BP should be previously verified with the drawee bank and history, if not outright
balances, determined if enough to cover the checks?[23] again, the respondent answered no.[24] When asked under whose
authority the excess DAUD/BP accommodations were granted,[25] the respondent expressly stated that they were approved
by undersigned (referring to himself) and that the excess accommodation was granted without higher management
approval.[26] More telling, however, is the respondents statement that he accepts full responsibility for committing an error
in judgment, lapses in control and abuse of discretion by relying solely on the word, assurance, surety and REM of Mr.
Edmundo Ramos.[27] The respondent added that he was ready to face the consequence of [his] action.[28]

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

Table 6.2 COMPLIANCE WITH STANDARD OPERATING PROCEDURES

 VIOLATIONS PENALTIES
1ST 2ND 3RD 4TH
1. Infraction of Bank Written Suspension/ Dismissal*
procedures in handling any Reprimand/ Dismissal*
Bank transaction or work Suspension*
assignment which results in a
loss or probable loss

* With restitution, if warranted.

Further, the said Code states that:

7.2.5. Restitution/Forfeiture of Benefits

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

Forfeiture of benefits/privileges may also be effected in cases where infractions or violations were incurred
in connection with or arising from the application/availment thereof.

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

Contrary to the respondents contention that the petitioner Bank could not properly impose the accessory penalty of
restitution on him without imposing the principal penalty of Written Reprimand/Suspension, the latters Code of Ethics
expressly sanctions the imposition of restitution/forfeiture of benefits apart from or independent of the other
penalties. Obviously, in view of his voluntary separation from the petitioner Bank, the imposition of the penalty of
reprimand or suspension would be futile. The petitioner Bank was left with no other recourse but to impose the ancillary
penalty of restitution. It was certainly within the petitioner Banks prerogative to impose on the respondent what it considered
the appropriate penalty under the circumstances pursuant to its company rules and regulations.

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

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

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

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

Significantly, the respondent is not wholly deprived of his separation benefits. As the Labor Arbiter stressed in his
decision, the separation benefits due the complainant (the respondent herein) were merely withheld.[38] The NLRC made the
same conclusion and was even more explicit as it opined that the respondent is entitled to the benefits he claimed in
pursuance to the Collective Bargaining Agreement but, in the meantime, such benefits shall be deposited with the bank by
way of pledge.[39] Even
the petitioner Bank itself gives the assurance that as soon as the Bank has satisfied a judgment in Civil Case No. 97174, the
earmarked portion of his benefits will be released without delay.[40]

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

On the other hand, the petitioner Banks business is essentially imbued with public interest and owes great fidelity
to the public it deals with.[43] It is expected to exercise the highest degree of diligence in the selection and supervision of
their employees.[44] As a corollary, and like all other business enterprises, its prerogative to discipline its employees and to
impose appropriate penalties on erring workers pursuant to company rules and regulations must be respected.[45] The law,
in protecting the rights of labor, authorized neither oppression nor self-destruction of an employer company which itself is
possessed of rights that must be entitled to recognition and respect.[46]

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

SO ORDERED.
 SECOND DIVISION

MANOLO A. PEAFLOR, G.R. No. 177114

Petitioner,

Present:

- versus - CARPIO, J., Chairperson,

BRION,
DEL CASTILLO,
ABAD, and
OUTDOOR CLOTHING PEREZ, JJ.
MANUFACTURING
CORPORATION,NATHANIEL T.
SYFU, President, MEDYLENE M.
DEMOGENA, Finance Manager, and
PAUL U. LEE, Chairman, Promulgated:
Respondents.

January 21, 2010

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

DECISION

BRION, J.:

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

THE FACTUAL ANTECEDENTS

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

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

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

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

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

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

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

Outdoor Clothing disclaimed liability for any of Peaflors monetary claims. Since Peaflor had voluntarily resigned,
Outdoor Clothing alleged that he was not entitled to any backwages and damages. The company likewise denied making
any illegal deduction from Peaflors salary; while deductions were made, they were due to Peaflors failure to report for work
during the dates the company questioned. As a probationary employee, he was not yet entitled to any leave credit that would
offset his absences.
In his August 15, 2001 decision, the labor arbiter found that Peaflor had been illegally dismissed. [10] Outdoor Clothing was
consequently ordered to reinstate Peaflor to his former or to an equivalent position, and to pay him his illegally deducted
salary for six days, proportionate 13th month pay, attorneys fees, moral and exemplary damages.

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

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

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

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

THE PARTIES ARGUMENTS

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

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

THE ISSUE and THE COURTS RULING

The Court finds the petition meritorious.

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

We see no merit in this argument as the rule that a Rule 45 petition deals only with legal issues is not an absolute
rule; it admits of exceptions. In the labor law setting, we wade into factual issues when conflict of factual findings exists
among the labor arbiter, the NLRC, and the CA. This is the exact situation that obtains in the present case since the labor
arbiter found facts supporting the conclusion that there had been constructive dismissal, while the NLRCs and the CAs
factual findings contradicted the labor arbiters findings.[17] Under this situation, the conflicting factual findings below are
not binding on us, and we retain the authority to pass on the evidence presented and draw conclusions therefrom.[18]
The petition turns on the question of whether Peaflors undisputed resignation was a voluntary or a forced one, in
the latter case making it a constructive dismissal equivalent to an illegal dismissal. A critical fact necessary in resolving this
issue is whether Peaflor filed his letter of resignation before or after the appointment of Buenaobra as the
new/concurrent HRD manager. This question also gives rise to the side issue of when Buenaobras appointment was
made. If the resignation letter was submitted before Syfus appointment of Buenaobra as new HRD manager, little support
exists for Peaflors allegation that he had been forced to resign due to the prevailing abusive and hostile working
environment. Buenaobras appointment would then be simply intended to cover the vacancy created by Peaflors
resignation. On the other hand, if the resignation letter was submitted after the appointment of Buenaobra, then factual basis
exists indicating that Peaflor had been constructively dismissed as his resignation was a response to the unacceptable
appointment of another person to a position he still occupied.

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

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

First, we regard the Syfu memorandum of March 1, 2000 and the memorandum of Buenaobra of March 3,
2000 accepting the position of HRD Head to be highly suspect. In our view, these memoranda, while dated, do not constitute
conclusive evidence of their dates of preparation and communication. Surprisingly, Peaflor was never informed about these
memoranda when they directly concerned him, particularly the turnover of responsibilities to Buenaobra if
indeed Peaflor had resigned on March 1, 2000 and a smooth turnover to Buenaobra was intended. Even the recipients of
these communications do not appear to have signed for and dated their receipt. The AWOL memoranda, to be sure, should
have been presented with proof of service if they were to have any binding effect on Peaflor.

Second,we find it surprising that these pieces of evidence pointing to a March 1, 2000 resignation specifically,
Syfus March 1, 2000memorandum to Buenaobra about Penaflors resignation and Buenaobras own acknowledgment and
acceptance were only presented to the NLRC on appeal, not before the labor arbiter. The matter was not even mentioned in
the companys position paper filed with the labor arbiter.[20] While the presentation of evidence at the NLRC level on appeal
is not unheard of in labor cases,[21] still sufficient explanation must be adduced to explain why this irregular practice should
be allowed. In the present case, Outdoor Clothing totally failed to explain the reason for its omission. This failure, to us, is
significant, as these were the clinching pieces of evidence that allowed the NLRC to justify the reversal of the labor arbiters
decision.
Third, the circumstances and other evidence surrounding Peaflors resignation support his claim that he was
practically compelled to resign from the company.

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

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

Peaflors own service with the company deserves close scrutiny. He started working for the company on September
2, 1999 so that byMarch 1, 2000, his probationary period would have ended and he would have become a regular employee.
We find it highly unlikely that Peaflor would resign on March 1, 2000 and would then simply leave given his undisputed
record of having successfully worked within his probationary period on the companys Policy Manual, Personnel Handbook,
Job Expectations, and Organizational Set-up. It does not appear sound and logical to us that an employee would tender his
resignation on the very same day he was entitled by law to be considered a regular employee, especially when a downsizing
was taking place and he could have availed of its benefits if he would be separated from the service as a regular employee. It
was strange, too, that he would submit his resignation on March 1, 2000 and keep completely quiet about this development
until its effective date on March 15, 2000. In the usual course, the turnover alone of responsibilities and work loads to the
successor in a small company would have prevented the matter from being completely under wraps for 10 days before any
announcement was ever made. That Peaflor was caught by surprise by the turnover of his post to Buenaobra is in fact
indicated by the companys own evidence that Peaflor still submitted a security report on March 13, 2000. On the whole,
Peaflors record with the company is not that of a company official who would simply and voluntarily tender a precipitate
resignation on the excuse that he would devote his time to teaching a lame excuse at best considering that March is the
month the semester usually ends and is two or three months away from the start of another school year.
 In our view, it is more consistent with human experience that Peaflor indeed learned of the appointment of
Buenaobra only on March 13, 2000 and reacted to this development through his resignation letter after realizing that he
would only face hostility and frustration in his working environment. Three very basic labor law principles support this
conclusion and militate against the companys case.

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

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

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

Costs against the respondents.

SO ORDERED.
G.R. No. 198357 December 10, 2012

BUILDING CARE CORPORATION / LEOPARD SECURITY & INVESTIGATION AGENCY and/or

RUPERTO PROTACIO, Petitioners,
vs.
MYRNA MACARAEG, Respondent.

DECISION

PERALTA, J.:

This resolves the Petition for Review on Certiorari under Rule 45 of the Rules of Court, praying that the Decision1of the
Court of Appeals (CA) promulgated on March 24, 2011, and its Resolution2 dated August 19, 2011, denying petitioner's
Motion for Reconsideration be reversed and set aside.

Petitioners are in the business of providing security services to their clients. They hired respondent as a security guard
beginning August 25, 1996, assigning her at Genato Building in Caloocan City. However, on March 9, 2008, respondent
was relieved of her post. She was re-assigned to Bayview Park Hotel from March 9-13, 2008, but after said period, she
was allegedly no longer given any assignment. Thus, on September 9, 2008, respondent filed a complaint against
petitioners for illegal dismissal, underpayment of salaries, non-payment of separation pay and refund of cash bond.
Conciliation and mediation proceedings failed, so the parties were ordered to submit their respective position papers. 3

Respondent claimed that petitioners failed to give her an assignment for more than nine months, amounting to
constructive dismissal, and this compelled her to file the complaint for illegal dismissal.4

On the other hand, petitioners alleged in their position paper that respondent was relieved from her post as requested by
the client because of her habitual tardiness, persistent borrowing of money from employees and tenants of the client, and
sleeping on the job. Petitioners allegedly directed respondent to explain why she committed such infractions, but
respondent failed to heed such order. Respondent was nevertheless temporarily assigned to Bayview Park Hotel from
March 9-13, 2008, but she also failed to meet said client's standards and her posting thereat was not extended.5

Respondent then filed an administrative complaint for illegal dismissal with the PNP-Security Agencies and Guard
Supervision Division on June 18, 2008, but she did not attend the conference hearings for said case. Petitioners brought to
the conference hearings a new assignment order detailing respondent at the Ateneo de Manila University but, due to her
absence, petitioners failed to personally serve respondent said assignment order. Petitioners then sent respondent a letter
ordering her to report to headquarters for work assignment, but respondent did not comply with said order. Instead,
respondent filed a complaint for illegal dismissal with the Labor Arbiter.6

On May 13, 2009, the Labor Arbiter rendered a Decision, the dispositive portion of which reads as follows:

WHEREFORE, judgment is hereby made dismissing the charge of illegal dismissal as wanting in merit but, as explained
above, ordering the Respondents Leopard Security and Investigation Agency and Rupert Protacio to pay complainant a
financial assistance in the amount of P5,000.00.

Other claims are DISMISSED for lack of merit.

SO ORDERED.7

Respondent then filed a Notice of Appeal with the National Labor Relations Commission (NLRC), but in a Decision dated
October 23, 2009, the NLRC dismissed the appeal for having been filed out of time, thereby declaring that the Labor
Arbiter's Decision had become final and executory on June 16, 2009.8

Respondent elevated the case to the CA via a petition for certiorari, and on March 24, 2011, the CA promulgated its
Decision, the dispositive portion of which reads as follows:
WHEREFORE, the petition for certiorari is GRANTED. The Decision dated October 23, 2009 and Resolution dated
March 2, 2010 rendered by public respondent in NLRC LAC No. 07-001892-09 (NLRC Case No. NCR-09-12628-08) are
REVERSED and SET ASIDE, and in lieu thereof, a new judgment is ENTERED declaring petitioner to have been
illegally dismissed and DIRECTING private respondents to reinstate petitioner without loss of seniority rights, benefits
and privileges; and to pay her backwages and other monetary benefits during the period of her illegal dismissal up to
actual reinstatement.

Public respondent NLRC is DIRECTED to conduct further proceedings, for the sole purpose of determining the amount
of private respondent's monetary liabilities in accordance with this decision.

SO ORDERED.9

Petitioners' motion for reconsideration of the aforequoted Decision was denied per Resolution dated August 19, 2011.
Hence, the present petition, where the main issue for resolution is whether the CA erred in liberally applying the rules of
procedure and ruling that respondent's appeal should be allowed and resolved on the merits despite having been filed out
of time.

The Court cannot sustain the CA's Decision.

It should be emphasized that the resort to a liberal application, or suspension of the application of procedural rules, must
remain as the exception to the well-settled principle that rules must be complied with for the orderly administration of
justice. In Marohomsalic v. Cole,10 the Court stated:

While procedural rules may be relaxed in the interest of justice, it is well-settled that these are tools designed to facilitate
the adjudication of cases. The relaxation of procedural rules in the interest of justice was never intended to be a license for
erring litigants to violate the rules with impunity. Liberality in the interpretation and application of the rules can be
invoked only in proper cases and under justifiable causes and circumstances. While litigation is not a game of
technicalities, every case must be prosecuted in accordance with the prescribed procedure to ensure an orderly and speedy
administration of justice.11

The later case of Daikoku Electronics Phils., Inc. v. Raza,12 further explained that:

To be sure, the relaxation of procedural rules cannot be made without any valid reasons proffered for or underpinning it.
To merit liberality, petitioner must show reasonable cause justifying its non-compliance with the rules and must convince
the Court that the outright dismissal of the petition would defeat the administration of substantial justice. x x x The desired
leniency cannot be accorded absent valid and compelling reasons for such a procedural lapse. x x x

We must stress that the bare invocation of "the interest of substantial justice" line is not some magic want that will
automatically compel this Court to suspend procedural rules. Procedural rules are not to be belittled, let alone dismissed
simply because their non-observance may have resulted in prejudice to a party's substantial rights. Utter disregard of the
rules cannot be justly rationalized by harping on the policy of liberal construction.13

In this case, the justifications given by the CA for its liberality by choosing to overlook the belated filing of the appeal are,
the importance of the issue raised, i.e., whether respondent was illegally dismissed; and the belief that respondent should
be "afforded the amplest opportunity for the proper and just determination of his cause, free from the constraints of
technicalities,"14 considering that the belated filing of respondent's appeal before the NLRC was the fault of respondent's
former counsel. Note, however, that neither respondent nor her former counsel gave any explanation or reason citing
extraordinary circumstances for her lawyer's failure to abide by the rules for filing an appeal. Respondent merely insisted
that she had not been remiss in following up her case with said lawyer.

It is, however, an oft-repeated ruling that the negligence and mistakes of counsel bind the client. A departure from this
rule would bring about never-ending suits, so long as lawyers could allege their own fault or negligence to support the
client’s case and obtain remedies and reliefs already lost by the operation of law.15 The only exception would be, where
the lawyer's gross negligence would result in the grave injustice of depriving his client of the due process of law.16 In this
case, there was no such deprivation of due process. Respondent was able to fully present and argue her case before the
Labor Arbiter. She was accorded the opportunity to be heard. Her failure to appeal the Labor Arbiter's Decision cannot,
therefore, be deemed as a deprivation of her right to due process. In Heirs of Teofilo Gaudiano v. Benemerito,17 the Court
ruled, thus:

The perfection of an appeal within the period and in the manner prescribed by law is jurisdictional and non-compliance
with such legal requirements is fatal and has the effect of rendering the judgment final and executory. The limitation on
the period of appeal is not without reason. They must be strictly followed as they are considered indispensable to forestall
or avoid unreasonable delays in the administration of justice, to ensure an orderly discharge of judicial business, and to
put an end to controversies. x x x

xxxx

The right to appeal is not a natural right or part of due process; it is merely a statutory privilege and may be exercised only
in the manner and in accordance with the provisions of law. Thus, one who seeks to avail of the right to appeal must
strictly comply with the requirements of the rules, and failure to do so leads to the loss of the right to appeal." 18

In Ocampo v. Court of Appeals (Former Second Division),19 the Court declared that:

x x x we cannot condone the practice of parties who, either by their own or their counsel's inadvertence, have allowed a
judgment to become final and executory and, after the same has become immutable, seek iniquitous ways to assail it. The
finality of a decision is a jurisdictional event which cannot be made to depend on the convenience of the parties.20

Clearly, allowing an appeal, even if belatedly filed, should never be taken lightly.1âwphi1 The judgment attains finality
by the lapse of the period for taking an appeal without such appeal or motion for reconsideration being filed. 21 In Ocampo
v. Court of Appeals (Former Second Division),22 the Court reiterated the basic rule that "when a party to an original action
fails to question an adverse judgment or decision by not filing the proper remedy within the period prescribed by law, he
loses the right to do so, and the judgment or decision, as to him, becomes final and binding."23 The Decision of the Labor
Arbiter, therefore, became final and executory as to respondent when she failed to file a timely appeal therefrom. The
importance of the concept of finality of judgment cannot be gainsaid. As elucidated in Pasiona, Jr. v. Court of
Appeals,24 to wit:

The Court re-emphasizes the doctrine of finality of judgment. In Alcantara v. Ponce, the Court, citing its much earlier
ruling in Arnedo v. Llorente, stressed the importance of said doctrine, to wit:

x x x controlling and irresistible reasons of public policy and of sound practice in the courts demand that at the risk of
occasional error, judgments of courts determining controversies submitted to them should become final at some definite
time fixed by law, or by a rule of practice recognized by law, so as to be thereafter beyond the control even of the court
which rendered them for the purpose of correcting errors of fact or of law, into which, in the opinion of the court it may
have fallen. The very purpose for which the courts are organized is to put an end to controversy, to decide the questions
submitted to the litigants, and to determine the respective rights of the parties. With the full knowledge that courts are not
infallible, the litigants submit their respective claims for judgment, and they have a right at some time or other to have
final judgment on which they can rely as a final disposition of the issue submitted, and to know that there is an end to the
litigation.

xxxx

It should also be borne in mind that the right of the winning party to enjoy the finality of the resolution of the case is also
an essential part of public policy and the orderly administration of justice. Hence, such right is just as weighty or equally
important as the right of the losing party to appeal or seek reconsideration within the prescribed period. 25

When the Labor Arbiter's Decision became final, petitioners attained a vested right to said judgment. They had the right to
fully rely on the immutability of said Decision. In Sofio v. Valenzuela,26 it was amply stressed that:
The Court will not override the finality and immutability of a judgment based only on the negligence of a party’s counsel
in timely taking all the proper recourses from the judgment. To justify an override, the counsel’s negligence must not only
be gross but must also be shown to have deprived the party the right to due process.

In sum, the Court cannot countenance relaxation of the rules absent the showing of extraordinary circumstances to justify
the same. In this case, no compelling reasons can be found to convince this Court that the CA acted correctly by according
respondent such liberality.

IN VIEW OF THE FOREGOING, the Petition is GRANTED. The Decision of the Court of Appeals dated March 24,
2011, and its Resolution dated August 19, 2011 in CA-G.R. SP No. 114822 are hereby SET ASIDE, and the Decision of
the National Labor Relations Commission in NLRC-LAC No. 07-001892-09 (NLRC Case No. NCR-09-12628-08), ruling
that the Decision of the Labor Arbiter has become final and executory, is REINSTATED.

SO ORDERED.
AUL C. COSARE, Petitioner,
vs.
BROADCOM ASIA, INC. and DANTE AREVALO, Respondents.

DECISION

REYES, J.:

Before the Court is a petition for review on certiorari1 under Rule 45 of the Rules of Court, which assails the
Decision2 dated November 24, 2011 and Resolution3 dated March 26, 2012 of the Court of Appeals (CA) in CA-G.R. SP.
No. 117356, wherein the CA ruled that the Regional Trial Court (RTC), and not the Labor Arbiter (LA), had the
jurisdiction over petitioner Raul C. Cosare's (Cosare) complaint for illegal dismissal against Broadcom Asia, Inc.
(Broadcom) and Dante Arevalo (Arevalo), the President of Broadcom (respondents).

The Antecedents

The case stems from a complaint4 for constructive dismissal, illegal suspension and monetary claims filed with the
National Capital Region Arbitration Branch of the National Labor Relations Commission (NLRC) by Cosare against the
respondents.

Cosare claimed that sometime in April 1993, he was employed as a salesman by Arevalo, who was then in the business of
selling broadcast equipment needed by television networks and production houses. In December 2000, Arevalo set up the
company Broadcom, still to continue the business of trading communication and broadcast equipment. Cosare was named
an incorporator of Broadcom, having been assigned 100 shares of stock with par value of P1.00 per share.5 In October
2001, Cosare was promoted to the position of Assistant Vice President for Sales (AVP for Sales) and Head of the
Technical Coordination, having a monthly basic net salary and average commissions of P18,000.00 and P37,000.00,
respectively.6

Sometime in 2003, Alex F. Abiog (Abiog) was appointed as Broadcom’s Vice President for Sales and thus, became
Cosare’s immediate superior. On March 23, 2009, Cosare sent a confidential memo7 to Arevalo to inform him of the
following anomalies which were allegedly being committed by Abiog against the company: (a) he failed to report to work
on time, and would immediately leave the office on the pretext of client visits; (b) he advised the clients of Broadcom to
purchase camera units from its competitors, and received commissions therefor; (c) he shared in the "under the-table
dealings" or "confidential commissions" which Broadcom extended to its clients’ personnel and engineers; and (d) he
expressed his complaints and disgust over Broadcom’s uncompetitive salaries and wages and delay in the payment of
other benefits, even in the presence of office staff. Cosare ended his memo by clarifying that he was not interested in
Abiog’s position, but only wanted Arevalo to know of the irregularities for the corporation’s sake.

Apparently, Arevalo failed to act on Cosare’s accusations. Cosare claimed that he was instead called for a meeting by
Arevalo on March 25, 2009, wherein he was asked to tender his resignation in exchange for "financial assistance" in the
amount of P300,000.00.8 Cosare refused to comply with the directive, as signified in a letter9dated March 26, 2009 which
he sent to Arevalo.

On March 30, 2009, Cosare received from Roselyn Villareal (Villareal), Broadcom’s Manager for Finance and
Administration, a memo10 signed by Arevalo, charging him of serious misconduct and willful breach of trust, and
providing in part:

1. A confidential memo was received from the VP for Sales informing me that you had directed, or at the very
least tried to persuade, a customer to purchase a camera from another supplier. Clearly, this action is a gross and
willful violation of the trust and confidence this company has given to you being its AVP for Sales and is an
attempt to deprive the company of income from which you, along with the other employees of this company,
derive your salaries and other benefits. x x x.

2. A company vehicle assigned to you with plate no. UNV 402 was found abandoned in another place outside of
the office without proper turnover from you to this office which had assigned said vehicle to you. The vehicle was
 found to be inoperable and in very bad condition, which required that the vehicle be towed to a nearby auto repair
shop for extensive repairs.

3. You have repeatedly failed to submit regular sales reports informing the company of your activities within and
outside of company premises despite repeated reminders. However, it has been observed that you have been both
frequently absent and/or tardy without proper information to this office or your direct supervisor, the VP for Sales
Mr. Alex Abiog, of your whereabouts.

4. You have been remiss in the performance of your duties as a Sales officer as evidenced by the fact that you
have not recorded any sales for the past immediate twelve (12) months. This was inspite of the fact that my office
decided to relieve you of your duties as technical coordinator between Engineering and Sales since June last year
so that you could focus and concentrate [on] your activities in sales.11

Cosare was given forty-eight (48) hours from the date of the memo within which to present his explanation on the
charges. He was also "suspended from having access to any and all company files/records and use of company assets
effective immediately."12 Thus, Cosare claimed that he was precluded from reporting for work on March 31, 2009, and
was instead instructed to wait at the office’s receiving section. Upon the specific instructions of Arevalo, he was also
prevented by Villareal from retrieving even his personal belongings from the office.

On April 1, 2009, Cosare was totally barred from entering the company premises, and was told to merely wait outside the
office building for further instructions. When no such instructions were given by 8:00 p.m., Cosare was impelled to seek
the assistance of the officials of Barangay San Antonio, Pasig City, and had the incident reported in the barangay blotter.13

On April 2, 2009, Cosare attempted to furnish the company with a Memo14 by which he addressed and denied the
accusations cited in Arevalo’s memo dated March 30, 2009. The respondents refused to receive the memo on the ground
of late filing, prompting Cosare to serve a copy thereof by registered mail. The following day, April 3, 2009, Cosare filed
the subject labor complaint, claiming that he was constructively dismissed from employment by the respondents. He
further argued that he was illegally suspended, as he placed no serious and imminent threat to the life or property of his
employer and co-employees.15

In refuting Cosare’s complaint, the respondents argued that Cosare was neither illegally suspended nor dismissed from
employment. They also contended that Cosare committed the following acts inimical to the interests of Broadcom: (a) he
failed to sell any broadcast equipment since the year 2007; (b) he attempted to sell a Panasonic HMC 150 Camera which
was to be sourced from a competitor; and (c) he made an unauthorized request in Broadcom’s name for its principal,
Panasonic USA, to issue an invitation for Cosare’s friend, one Alex Paredes, to attend the National Association of
Broadcasters’ Conference in Las Vegas, USA.16 Furthermore, they contended that Cosare abandoned his job17 by
continually failing to report for work beginning April 1, 2009, prompting them to issue on April 14, 2009 a
memorandum18 accusing Cosare of absence without leave beginning April 1, 2009.

The Ruling of the LA

On January 6, 2010, LA Napoleon M. Menese (LA Menese) rendered his Decision19 dismissing the complaint on the
ground of Cosare’s failure to establish that he was dismissed, constructively or otherwise, from his employment. For the
LA, what transpired on March 30, 2009 was merely the respondents’ issuance to Cosare of a show-cause memo, giving
him a chance to present his side on the charges against him. He explained:

It is obvious that [Cosare] DID NOT wait for respondents’ action regarding the charges leveled against him in the show-
cause memo. What he did was to pre-empt that action by filing this complaint just a day after he submitted his written
explanation. Moreover, by specifically seeking payment of "Separation Pay" instead of reinstatement, [Cosare’s] motive
for filing this case becomes more evident.20

It was also held that Cosare failed to substantiate by documentary evidence his allegations of illegal suspension and non-
payment of allowances and commissions.

Unyielding, Cosare appealed the LA decision to the NLRC.

The Ruling of the NLRC

On August 24, 2010, the NLRC rendered its Decision21 reversing the Decision of LA Menese. The dispositive portion of
the NLRC Decision reads:

WHEREFORE, premises considered, the DECISION is REVERSED and the Respondents are found guilty of Illegal
Constructive Dismissal. Respondents BROADCOM ASIA, INC. and Dante Arevalo are ordered to pay [Cosare’s]
backwages, and separation pay, as well as damages, in the total amount of P1,915,458.33, per attached Computation.

SO ORDERED.22

In ruling in favor of Cosare, the NLRC explained that "due weight and credence is accorded to [Cosare’s] contention that
he was constructively dismissed by Respondent Arevalo when he was asked to resign from his employment."23 The fact
that Cosare was suspended from using the assets of Broadcom was also inconsistent with the respondents’ claim that
Cosare opted to abandon his employment.

Exemplary damages in the amount of P100,000.00 was awarded, given the NLRC’s finding that the termination of
Cosare’s employment was effected by the respondents in bad faith and in a wanton, oppressive and malevolent manner.
The claim for unpaid commissions was denied on the ground of the failure to include it in the prayer of pleadings filed
with the LA and in the appeal.

The respondents’ motion for reconsideration was denied.24 Dissatisfied, they filed a petition for certiorari with the CA
founded on the following arguments: (1) the respondents did not have to prove just cause for terminating the employment
of Cosare because the latter’s complaint was based on an alleged constructive dismissal; (2) Cosare resigned and was thus
not dismissed from employment; (3) the respondents should not be declared liable for the payment of Cosare’s monetary
claims; and (4) Arevalo should not be held solidarily liable for the judgment award.

In a manifestation filed by the respondents during the pendency of the CA appeal, they raised a new argument, i.e., the
case involved an intra-corporate controversy which was within the jurisdiction of the RTC, instead of the LA.25 They
argued that the case involved a complaint against a corporation filed by a stockholder, who, at the same time, was a
corporate officer.

The Ruling of the CA

On November 24, 2011, the CA rendered the assailed Decision26 granting the respondents’ petition. It agreed with the
respondents’ contention that the case involved an intra-corporate controversy which, pursuant to Presidential Decree No.
902-A, as amended, was within the exclusive jurisdiction of the RTC. It reasoned:

Record shows that [Cosare] was indeed a stockholder of [Broadcom], and that he was listed as one of its directors.
Moreover, he held the position of [AVP] for Sales which is listed as a corporate office. Generally, the president, vice-
president, secretary or treasurer are commonly regarded as the principal or executive officers of a corporation, and modern
corporation statutes usually designate them as the officers of the corporation. However, it bears mentioning that under
Section 25 of the Corporation Code, the Board of Directors of [Broadcom] is allowed to appoint such other officers as it
may deem necessary. Indeed, [Broadcom’s] By-Laws provides:

Article IV
Officer

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

The Board, may, from time to time, appoint such other officers as it may determine to be necessary or proper. x x x
We hold that [the respondents] were able to present substantial evidence that [Cosare] indeed held a corporate office, as
evidenced by the General Information Sheet which was submitted to the Securities and Exchange Commission (SEC) on
October 22, 2009.27 (Citations omitted and emphasis supplied)

Thus, the CA reversed the NLRC decision and resolution, and then entered a new one dismissing the labor complaint on
the ground of lack of jurisdiction, finding it unnecessary to resolve the main issues that were raised in the petition. Cosare
filed a motion for reconsideration, but this was denied by the CA via the Resolution28 dated March 26, 2012. Hence, this
petition.

The Present Petition

The pivotal issues for the petition’s full resolution are as follows: (1) whether or not the case instituted by Cosare was an
intra-corporate dispute that was within the original jurisdiction of the RTC, and not of the LAs; and (2) whether or not
Cosare was constructively and illegally dismissed from employment by the respondents.

The Court’s Ruling

The petition is impressed with merit.

Jurisdiction over the controversy

As regards the issue of jurisdiction, the Court has determined that contrary to the ruling of the CA, it is the LA, and not
the regular courts, which has the original jurisdiction over the subject controversy. An intra-corporate controversy, which
falls within the jurisdiction of regular courts, has been regarded in its broad sense to pertain to disputes that involve any of
the following relationships: (1) between the corporation, partnership or association and the public; (2) between the
corporation, partnership or association and the state in so far as its franchise, permit or license to operate is concerned; (3)
between the corporation, partnership or association and its stockholders, partners, members or officers; and (4) among the
stockholders, partners or associates, themselves.29 Settled jurisprudence, however, qualifies that when the dispute involves
a charge of illegal dismissal, the action may fall under the jurisdiction of the LAs upon whose jurisdiction, as a rule, falls
termination disputes and claims for damages arising from employer-employee relations as provided in Article 217 of the
Labor Code. Consistent with this jurisprudence, the mere fact that Cosare was a stockholder and an officer of Broadcom at
the time the subject controversy developed failed to necessarily make the case an intra-corporate dispute.

In Matling Industrial and Commercial Corporation v. Coros,30 the Court distinguished between a "regular employee" and
a "corporate officer" for purposes of establishing the true nature of a dispute or complaint for illegal dismissal and
determining which body has jurisdiction over it. Succinctly, it was explained that "[t]he determination of whether the
dismissed officer was a regular employee or corporate officer unravels the conundrum" of whether a complaint for illegal
dismissal is cognizable by the LA or by the RTC. "In case of the regular employee, the LA has jurisdiction; otherwise, the
RTC exercises the legal authority to adjudicate.31

Applying the foregoing to the present case, the LA had the original jurisdiction over the complaint for illegal dismissal
because Cosare, although an officer of Broadcom for being its AVP for Sales, was not a "corporate officer" as the term is
defined by law. We emphasized in Real v. Sangu Philippines, Inc.32 the definition of corporate officers for the purpose of
identifying an intra-corporate controversy. Citing Garcia v. Eastern Telecommunications Philippines, Inc.,33 we held:

" ‘Corporate officers’ in the context of Presidential Decree No. 902-A are those officers of the corporation who are given
that character by the Corporation Code or by the corporation’s by-laws. There are three specific officers whom a
corporation must have under Section 25 of the Corporation Code. These are the president, secretary and the treasurer. The
number of officers is not limited to these three. A corporation may have such other officers as may be provided for by its
by-laws like, but not limited to, the vice-president, cashier, auditor or general manager. The number of corporate officers
is thus limited by law and by the corporation’s by-laws."34 (Emphasis ours)

In Tabang v. NLRC,35 the Court also made the following pronouncement on the nature of corporate offices:
It has been held that an "office" is created by the charter of the corporation and the officer is elected by the directors and
stockholders. On the other hand, an "employee" usually occupies no office and generally is employed not by action of the
directors or stockholders but by the managing officer of the corporation who also determines the compensation to be paid
to such employee.36 (Citations omitted)

As may be deduced from the foregoing, there are two circumstances which must concur in order for an individual to be
considered a corporate officer, as against an ordinary employee or officer, namely: (1) the creation of the position is under
the corporation’s charter or by-laws; and (2) the election of the officer is by the directors or stockholders. It is only when
the officer claiming to have been illegally dismissed is classified as such corporate officer that the issue is deemed an
intra-corporate dispute which falls within the jurisdiction of the trial courts.

To support their argument that Cosare was a corporate officer, the respondents referred to Section 1, Article IV of
Broadcom’s by-laws, which reads:

ARTICLE IV
OFFICER

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

The Board may, from time to time, appoint such other officers as it may determine to be necessary or proper. Any two (2)
or more compatible positions may be held concurrently by the same person, except that no one shall act as President and
Treasurer or Secretary at the same time.37 (Emphasis ours)

This was also the CA’s main basis in ruling that the matter was an intra-corporate dispute that was within the trial courts’
jurisdiction.

The Court disagrees with the respondents and the CA. As may be gleaned from the aforequoted provision, the only
officers who are specifically listed, and thus with offices that are created under Broadcom’s by-laws are the following: the
President, Vice-President, Treasurer and Secretary. Although a blanket authority provides for the Board’s appointment of
such other officers as it may deem necessary and proper, the respondents failed to sufficiently establish that the position of
AVP for Sales was created by virtue of an act of Broadcom’s board, and that Cosare was specifically elected or appointed
to such position by the directors. No board resolutions to establish such facts form part of the case records. Further, it was
held in Marc II Marketing, Inc. v. Joson38 that an enabling clause in a corporation’s by-laws empowering its board of
directors to create additional officers, even with the subsequent passage of a board resolution to that effect, cannot make
such position a corporate office. The board of directors has no power to create other corporate offices without first
amending the corporate by-laws so as to include therein the newly created corporate office.39 "To allow the creation of a
corporate officer position by a simple inclusion in the corporate by-laws of an enabling clause empowering the board of
directors to do so can result in the circumvention of that constitutionally well-protected right [of every employee to
security of tenure]."40

The CA’s heavy reliance on the contents of the General Information Sheets41, which were submitted by the respondents
during the appeal proceedings and which plainly provided that Cosare was an "officer" of Broadcom, was clearly
misplaced. The said documents could neither govern nor establish the nature of the office held by Cosare and his
appointment thereto. Furthermore, although Cosare could indeed be classified as an officer as provided in the General
Information Sheets, his position could only be deemed a regular office, and not a corporate office as it is defined under the
Corporation Code. Incidentally, the Court noticed that although the Corporate Secretary of Broadcom, Atty. Efren L.
Cordero, declared under oath the truth of the matters set forth in the General Information Sheets, the respondents failed to
explain why the General Information Sheet officially filed with the Securities and Exchange Commission in 2011 and
submitted to the CA by the respondents still indicated Cosare as an AVP for Sales, when among their defenses in the
charge of illegal dismissal, they asserted that Cosare had severed his relationship with the corporation since the year 2009.

Finally, the mere fact that Cosare was a stockholder of Broadcom at the time of the case’s filing did not necessarily make
the action an intra- corporate controversy. "Not all conflicts between the stockholders and the corporation are classified as
intra-corporate. There are other facts to consider in determining whether the dispute involves corporate matters as to
consider them as intra-corporate controversies."42 Time and again, the Court has ruled that in determining the existence of
an intra-corporate dispute, the status or relationship of the parties and the nature of the question that is the subject of the
controversy must be taken into account.43 Considering that the pending dispute particularly relates to Cosare’s rights and
obligations as a regular officer of Broadcom, instead of as a stockholder of the corporation, the controversy cannot be
deemed intra-corporate. This is consistent with the "controversy test" explained by the Court in Reyes v. Hon. RTC, Br.
142,44 to wit:

Under the nature of the controversy test, the incidents of that relationship must also be considered for the purpose of
ascertaining whether the controversy itself is intra-corporate. The controversy must not only be rooted in the existence of
an intra-corporate relationship, but must as well pertain to the enforcement of the parties’ correlative rights and
obligations under the Corporation Code and the internal and intra-corporate regulatory rules of the corporation. If the
relationship and its incidents are merely incidental to the controversy or if there will still be conflict even if the
relationship does not exist, then no intra-corporate controversy exists.45 (Citation omitted)

It bears mentioning that even the CA’s finding46 that Cosare was a director of Broadcom when the dispute commenced
was unsupported by the case records, as even the General Information Sheet of 2009 referred to in the CA decision to
support such finding failed to provide such detail.

All told, it is then evident that the CA erred in reversing the NLRC’s ruling that favored Cosare solely on the ground that
the dispute was an intra-corporate controversy within the jurisdiction of the regular courts.

The charge of constructive dismissal

Towards a full resolution of the instant case, the Court finds it appropriate to rule on the correctness of the NLRC’s ruling
finding Cosare to have been illegally dismissed from employment.

In filing his labor complaint, Cosare maintained that he was constructively dismissed, citing among other circumstances
the charges that were hurled and the suspension that was imposed against him via Arevalo’s memo dated March 30, 2009.
Even prior to such charge, he claimed to have been subjected to mental torture, having been locked out of his files and
records and disallowed use of his office computer and access to personal belongings.47 While Cosare attempted to furnish
the respondents with his reply to the charges, the latter refused to accept the same on the ground that it was filed beyond
the 48-hour period which they provided in the memo.

Cosare further referred to the circumstances that allegedly transpired subsequent to the service of the memo, particularly
the continued refusal of the respondents to allow Cosare’s entry into the company’s premises. These incidents were cited
in the CA decision as follows:

On March 31, 2009, [Cosare] reported back to work again. He asked Villareal if he could retrieve his personal belongings,
but the latter said that x x x Arevalo directed her to deny his request, so [Cosare] again waited at the receiving section of
the office. On April 1, 2009, [Cosare] was not allowed to enter the office premises. He was asked to just wait outside of
the Tektite (PSE) Towers, where [Broadcom] had its offices, for further instructions on how and when he could get his
personal belongings. [Cosare] waited until 8 p.m. for instructions but none were given. Thus, [Cosare] sought the
assistance of the officials of Barangay San Antonio, Pasig who advised him to file a labor or replevin case to recover his
personal belongings. x x x.48 (Citation omitted)

It is also worth mentioning that a few days before the issuance of the memo dated March 30, 2009, Cosare was allegedly
summoned to Arevalo’s office and was asked to tender his immediate resignation from the company, in exchange for a
financial assistance of P300,000.00.49 The directive was said to be founded on Arevalo’s choice to retain Abiog’s
employment with the company.50 The respondents failed to refute these claims.

Given the circumstances, the Court agrees with Cosare’s claim of constructive and illegal dismissal. "[C]onstructive
dismissal occurs when there is cessation of work because continued employment is rendered impossible, unreasonable, or
unlikely as when there is a demotion in rank or diminution in pay or when a clear discrimination, insensibility, or disdain
by an employer becomes unbearable to the employee leaving the latter with no other option but to quit."51 In Dimagan v.
Dacworks United, Incorporated,52 it was explained:
The test of constructive dismissal is whether a reasonable person in the employee’s position would have felt compelled to
give up his position under the circumstances. It is an act amounting to dismissal but is made to appear as if it were not.
Constructive dismissal is therefore a dismissal in disguise. The law recognizes and resolves this situation in favor of
employees in order to protect their rights and interests from the coercive acts of the employer.53 (Citation omitted)

It is clear from the cited circumstances that the respondents already rejected Cosare’s continued involvement with the
company. Even their refusal to accept the explanation which Cosare tried to tender on April 2, 2009 further evidenced the
resolve to deny Cosare of the opportunity to be heard prior to any decision on the termination of his employment. The
respondents allegedly refused acceptance of the explanation as it was filed beyond the mere 48-hour period which they
granted to Cosare under the memo dated March 30, 2009. However, even this limitation was a flaw in the memo or notice
to explain which only further signified the respondents’ discrimination, disdain and insensibility towards Cosare,
apparently resorted to by the respondents in order to deny their employee of the opportunity to fully explain his defenses
and ultimately, retain his employment. The Court emphasized in King of Kings Transport, Inc. v. Mamac54 the standards
to be observed by employers in complying with the service of notices prior to termination:

[T]he first written notice to be served on the employees should contain the specific causes or grounds for termination
against them, and a directive that the employees are given the opportunity to submit their written explanation within a
reasonable period. "Reasonable opportunity" under the Omnibus Rules means every kind of assistance that management
must accord to the employees to enable them to prepare adequately for their defense. This should be construed as a period
of at least five (5) calendar days from receipt of the notice to give the employees an opportunity to study the accusation
against them, consult a union official or lawyer, gather data and evidence, and decide on the defenses they will raise
against the complaint. Moreover, in order to enable the employees to intelligently prepare their explanation and defenses,
the notice should contain a detailed narration of the facts and circumstances that will serve as basis for the charge against
the employees. A general description of the charge will not suffice. Lastly, the notice should specifically mention which
company rules, if any, are violated and/or which among the grounds under Art. 282 is being charged against the
employees.55 (Citation omitted, underscoring ours, and emphasis supplied)

In sum, the respondents were already resolute on a severance of their working relationship with Cosare, notwithstanding
the facts which could have been established by his explanations and the respondents’ full investigation on the matter. In
addition to this, the fact that no further investigation and final disposition appeared to have been made by the respondents
on Cosare’s case only negated the claim that they actually intended to first look into the matter before making a final
determination as to the guilt or innocence of their employee. This also manifested from the fact that even before Cosare
was required to present his side on the charges of serious misconduct and willful breach of trust, he was summoned to
Arevalo’s office and was asked to tender his immediate resignation in exchange for financial assistance.

The clear intent of the respondents to find fault in Cosare was also manifested by their persistent accusation that Cosare
abandoned his post, allegedly signified by his failure to report to work or file a leave of absence beginning April 1, 2009.
This was even the subject of a memo56 issued by Arevalo to Cosare on April 14, 2009, asking him to explain his absence
within 48 hours from the date of the memo. As the records clearly indicated, however, Arevalo placed Cosare under
suspension beginning March 30, 2009. The suspension covered access to any and all company files/records and the use of
the assets of the company, with warning that his failure to comply with the memo would be dealt with drastic management
action. The charge of abandonment was inconsistent with this imposed suspension. "Abandonment is the deliberate and
unjustified refusal of an employee to resume his employment. To constitute abandonment of work, two elements must
concur: ‘(1) the employee must have failed to report for work or must have been absent without valid or justifiable reason;
and (2) there must have been a clear intention on the part of the employee to sever the employer- employee relationship
manifested by some overt act.’"57 Cosare’s failure to report to work beginning April 1, 2009 was neither voluntary nor
indicative of an intention to sever his employment with Broadcom. It was illogical to be requiring him to report for work,
and imputing fault when he failed to do so after he was specifically denied access to all of the company’s assets. As
correctly observed by the NLRC:

[T]he Respondent[s] had charged [Cosare] of abandoning his employment beginning on April 1, 2009. However[,] the
show-cause letter dated March 3[0], 2009 (Annex "F", ibid) suspended [Cosare] from using not only the equipment but
the "assets" of Respondent [Broadcom]. This insults rational thinking because the Respondents tried to mislead us and
make [it appear] that [Cosare] failed to report for work when they had in fact had [sic] placed him on suspension. x x x.58
Following a finding of constructive dismissal, the Court finds no cogent reason to modify the NLRC's monetary awards in
Cosare's favor. In Robinsons Galleria/Robinsons Supermarket Corporation v. Ranchez,59 the Court reiterated that an
illegally or constructively dismissed employee is entitled to: (1) either reinstatement, if viable, or separation pay, if
reinstatement is no longer viable; and (2) backwages.60 The award of exemplary damages was also justified given the
NLRC's finding that the respondents acted in bad faith and in a wanton, oppressive and malevolent manner when they
dismissed Cosare. It is also by reason of such bad faith that Arevalo was correctly declared solidarily liable for the
monetary awards.

WHEREFORE, the petition is GRANTED. The Decision dated November 24, 2011 and Resolution dated March 26, 2012
of the Court of Appeals in CA-G.R. SP. No. 117356 are SET ASIDE. The Decision dated August 24, 2010 of the National
Labor Relations Commission in favor of petitioner Raul C. Cosare is AFFIRMED.

SO ORDERED.
G.R. No. 186621 March 12, 2014

SOUTH EAST INTERNATIONAL RATTAN, INC. and/or ESTANISLAO1 AGBAY, Petitioners,

vs.
JESUS J. COMING, Respondent.

DECISION

VILLARAMA, JR., J.:

Before the Court is a petition for review on certiorari under Rule 45 to reverse and set aside the Decision2 dated February
21, 2008 and Resolution3 dated February 9, 2009 of the Court of Appeals (CA) in CA-GR. CEB-SP No. 02113.

Petitioner South East International Rattan, Inc. (SEIRI) is a domestic corporation engaged in the business of
manufacturing and exporting furniture to various countries with principal place of business at Paknaan, Mandaue City,
while petitioner Estanislao Agbay, as per records, is the President and General Manager of SEIRI.4

On November 3, 2003, respondent Jesus J. Coming filed a complaint5 for illegal dismissal, underpayment of wages, non-
payment of holiday pay, 13th month pay and service incentive leave pay, with prayer for reinstatement, back wages,
damages and attorney’s fees.

Respondent alleged that he was hired by petitioners as Sizing Machine Operator on March 17, 1984. His work schedule is
from 8:00 a.m. to 5:00 p.m. Initially, his compensation was on "pakiao" basis but sometime in June 1984, it was fixed
at P150.00 per day which was paid weekly. In 1990, without any apparent reason, his employment was interrupted as he
was told by petitioners to resume work in two months time. Being an uneducated person, respondent was persuaded by the
management as well as his brother not to complain, as otherwise petitioners might decide not to call him back for work.
Fearing such consequence, respondent accepted his fate. Nonetheless, after two months he reported back to work upon
order of management.6

Despite being an employee for many years with his work performance never questioned by petitioners, respondent was
dismissed on January 1, 2002 without lawful cause. He was told that he will be terminated because the company is not
doing well financially and that he would be called back to work only if they need his services again. Respondent waited
for almost a year but petitioners did not call him back to work. When he finally filed the complaint before the regional
arbitration branch, his brother Vicente was used by management to persuade him to withdraw the case.7

On their part, petitioners denied having hired respondent asserting that SEIRI was incorporated only in 1986, and that
respondent actually worked for SEIRI’s furniture suppliers because when the company started in 1987 it was engaged
purely in buying and exporting furniture and its business operations were suspended from the last quarter of 1989 to
August 1992. They stressed that respondent was not included in the list of employees submitted to the Social Security
System (SSS). Moreover, respondent’s brother, Vicente Coming, executed an affidavit8 in support of petitioners’ position
while Allan Mayol and Faustino Apondar issued notarized certifications9that respondent worked for them instead.10

With the denial of petitioners that respondent was their employee, the latter submitted an affidavit 11 signed by five former
co-workers stating that respondent was one of the pioneer employees who worked in SEIRI for almost twenty years.

In his Decision12 dated April 30, 2004, Labor Arbiter Ernesto F. Carreon ruled that respondent is a regular employee of
SEIRI and that the termination of his employment was illegal. The dispositive portion of the decision reads:

WHEREFORE, premises considered, judgment is hereby rendered ordering the respondent South East (Int’l.) Rattan, Inc.
to pay complainant Jesus J. Coming the following:

1. Separation pay P114,400.00

2. Backwages P 30,400.00
 3. Wage differential P 15,015.00
4. 13th month pay P 5,958.00
5. Holiday pay P 4,000.00
6. Service incentive leave pay P 2,000.00

Total award P171,773.00

The other claims and the case against respondent Estanislao Agbay are dismissed for lack of merit.

SO ORDERED.13

Petitioners appealed to the National Labor Relations Commission (NLRC)-Cebu City where they submitted the following
additional evidence: (1) copies of SEIRI’s payrolls and individual pay records of employees; 14 (2) affidavit15 of SEIRI’s
Treasurer, Angelina Agbay; and (3) second affidavit16 of Vicente Coming.

On July 28, 2005, the NLRC’s Fourth Division rendered its Decision,17 the dispositive portion of which states:

WHEREFORE, premises considered, the decision of the Labor Arbiter is hereby SET ASIDE and VACATED and a new
one entered DISMISSING the complaint.

SO ORDERED.18

The NLRC likewise denied respondent’s motion for reconsideration.19

Respondent elevated the case to the CA via a petition for certiorari under Rule 65.

By Decision dated February 21, 2008, the CA reversed the NLRC and ruled that there existed an employer-employee
relationship between petitioners and respondent who was dismissed without just and valid cause.

The CA thus decreed:

WHEREFORE, in view of the foregoing, the petition is hereby GRANTED. The assailed Decision dated July 28, 2005
issued by the National Labor Relations Commission (NLRC), Fourth Division, Cebu City in NLRC Case No. V-000625-
2004 is REVERSED and SET ASIDE. The Decision of the Labor Arbiter dated April 30, 2004 is REINSTATED with
MODIFICATION on the computation of backwages which should be computed from the time of illegal termination until
the finality of this decision.

Further, the Labor Arbiter is directed to make the proper adjustment in the computation of the award of separation pay as
well as the monetary awards of wage differential, 13th month pay, holiday pay and service incentive leave pay.

SO ORDERED.20

Petitioners filed a motion for reconsideration but the CA denied it under Resolution dated February 9, 2009.

Hence, this petition raising the following issues:

6.1
WHETHER UNDER THE FACTS AND EVIDENCE ON RECORD, THE FINDING OF THE HONORABLE COURT
OF APPEALS THAT THERE EXISTS EMPLOYER-EMPLOYEE RELATIONSHIP BETWEEN PETITIONERS AND
RESPONDENT IS IN ACCORD WITH LAW AND APPLICABLE DECISIONS OF THIS HONORABLE COURT.

6.2

WHETHER THE HONORABLE COURT OF APPEALS CORRECTLY APPRECIATED IN ACCORDANCE WITH

APPLICABLE LAW AND JURISPRUDENCE THE EVIDENCE PRESENTED BY BOTH PARTIES.

6.3

WHETHER UNDER THE FACTS AND EVIDENCE PRESENTED, THE FINDING OF THE HONORABLE COURT
OF APPEALS THAT PETITIONERS ARE LIABLE FOR ILLEGAL DISMISSAL OF RESPONDENT IS IN ACCORD
WITH APPLICABLE LAW AND JURISPRUDENCE.

6.4

WHETHER UNDER THE FACTS PRESENTED, THE RULING OF THE HONORABLE COURT OF APPEALS
THAT THE BACKWAGES DUE THE RESPONDENT SHOULD BE COMPUTED FROM THE TIME OF ILLEGAL
TERMINATION UNTIL THE FINALITY OF THE DECISION IS SUPPORTED BY PREVAILING
JURISPRUDENCE.21

Resolution of the first issue is paramount in view of petitioners’ denial of the existence of employer-employee
relationship.

The issue of whether or not an employer-employee relationship exists in a given case is essentially a question of fact. As a
rule, this Court is not a trier of facts and this applies with greater force in labor cases.22 Only errors of law are generally
reviewed by this Court.23 This rule is not absolute, however, and admits of exceptions. For one, the Court may look into
factual issues in labor cases when the factual findings of the Labor Arbiter, the NLRC, and the CA are conflicting. 24 Here,
the findings of the NLRC differed from those of the Labor Arbiter and the CA, which compels the Court’s exercise of its
authority to review and pass upon the evidence presented and to draw its own conclusions therefrom.25

To ascertain the existence of an employer-employee relationship jurisprudence has invariably adhered to the four-fold
test, to wit: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and
(4) the power to control the employee’s conduct, or the so-called "control test."26 In resolving the issue of whether such
relationship exists in a given case, substantial evidence – that amount of relevant evidence which a reasonable mind might
accept as adequate to justify a conclusion – is sufficient. Although no particular form of evidence is required to prove the
existence of the relationship, and any competent and relevant evidence to prove the relationship may be admitted, a
finding that the relationship exists must nonetheless rest on substantial evidence.27

In support of their claim that respondent was not their employee, petitioners presented Employment Reports to the SSS
from 1987 to 2002, the Certifications issued by Mayol and Apondar, two affidavits of Vicente Coming, payroll sheets
(1999-2000), individual pay envelopes and employee earnings records (1999-2000) and affidavit of Angelina Agbay
(Treasurer and Human Resources Officer). The payroll and pay records did not include the name of respondent. The
affidavit of Ms. Agbay stated that after SEIRI started its business in 1986 purely on export trading, it ceased operations in
1989 as evidenced by Certification dated January 18, 1994 from the Securities and Exchange Commission (SEC); that
when business resumed in 1992, SEIRI undertook only a little of manufacturing; that the company never hired any
workers for varnishing and pole sizing because it bought the same from various suppliers, including Faustino Apondar;
respondent was never hired by SEIRI; and while it is true that Mr. Estanislao Agbay is the company President, he never
dispensed the salaries of workers.28

In his first affidavit, Vicente Coming averred that:

6. [Jesus Coming] is a furniture factory worker. In 1982 to 1986, he was working with Ben Mayol as round core
maker/splitter.
 7. Thereafter, we joined Okay Okay Yard owned by Amelito Montececillo. This is a rattan trader with business
address near Cebu Rattan Factory on a "Pakiao" basis.

8. However, Jesus and I did not stay long at Okay Okay Yard and instead we joined Eleuterio Agbay in Labogon,
Cebu in 1989. In 1991, we went back to Okay Okay located near the residence of Atty. Vicente de la Serna in
Mandaue City. We were on a "pakiao" basis. We stayed put until 1993 when we resigned and joined Dodoy Luna
in Labogon, Mandaue City as classifier until 1995. In 1996[,] Jesus rested. It was only in 1997 that he worked
back. He replaced me, as a classifier in Rattan Traders owned by Allan Mayol. But then, towards the end of the
year, he left the factory and relaxed in our place of birth, in Sogod, Cebu.

9. It was only towards the end of 1999 that Jesus was taken back by Allan Mayol as sizing machine operator.
However, the work was off and on basis. Not regular in nature, he was harping a side line job with me knowing
that I am now working with Faustino Apondar that supplies rattan furniture’s [sic] to South East (Int’l) Rattan,
Inc. As a brother, I allowed Jesus to work with me and collect the proceeds of his services as part of my
collectibles from Faustino Apondar since I was on a "pakiao" basis. He was working at his pleasure. Which
means, he works if he likes to? That will be until 10:00 o’clock in the evening.

x x x x29

The Certification dated January 20, 2004 of Allan Mayol reads:

This is to certify that I personally know Jesus Coming, the brother of Vicente Coming. Jesus is a rattan factory worker and
he was working with me as rattan pole sizing/classifier of my business from 1997 up to part of 1998 when he left my
factory at will. I took him back towards the end of 1999, this time as a sizing machine operator. In all these years, his
services are not regular. He works only if he likes to.30

Faustino Apondar likewise issued a Certification which states:

This is to certify that I am a maker/supplier of finished Rattan Furniture. As such, I have several rattan furniture workers
under me, one of whom is Vicente Coming, the brother of Jesus Coming.

That sometime in 1999, Vicente pleaded to me for a side line job of his brother, Jesus who was already connected with
Allan Mayol. Having vouched for the integrity of his brother and knowing that the job is temporary in character, I allowed
Jesus to work with his brother Vicente. However, the proceeds will be collected together with his brother Vicente since it
was the latter who was working with me. He renders services to his brother work only after the regular working hours but
off and on basis.31

On the other hand, respondent submitted the affidavit executed by Eleoterio Brigoli, Pedro Brigoli, Napoleon Coming,
Efren Coming and Gil Coming who all attested that respondent was their co-worker at SEIRI.

Their affidavit reads:

We, the undersigned, all of legal ages, Filipino, and resident[s] of Cebu, after having been duly sworn to in accordance
with law, depose and say:

That we are former employees of SOUTH EAST RATTAN which is owned by Estan Eslao Agbay;

That we personally know JESUS COMING considering that we worked together in one company SOUTH EAST
RATTANT [sic];

That we together with JESUS COMING are all under the employ of ESTAN ESLAO AGBAY considering that the latter
is the one directly paying us and holds the absolute control of all aspects of our employment;

That it is not true that JESUS COMING is under the employ of one person other than ESTAN ESLAO AGBAY OF
SOUTH EAST RATTAN;
That Jesus Coming is one of the pioneer employees of SOUTH EAST RATTAN and had been employed therein for
almost twenty years;

That we executed this affidavit to attest to the truth of the foregoing facts and to deny any contrary allegation made by the
company against his employment with SOUTH EAST RATTAN.32

In his decision, Labor Arbiter Carreon found that respondent’s work as sizing machine operator is usually necessary and
desirable to the rattan furniture business of petitioners and their failure to include respondent in the employment report to
SSS is not conclusive proof that respondent is not their employee. As to the affidavit of Vicente Coming, Labor Arbiter
Carreon did not give weight to his statement that respondent is not petitioners’ employee but that of one Faustino
Apondar. Labor Arbiter Carreon was not convinced that Faustino Apondar is an independent contractor who has a
contractual relationship with petitioners.

In reversing the Labor Arbiter, the NLRC reasoned as follows:

First complainant alleged that he worked continuously from March 17, 1984 up to January 21, 2002.1âwphi1 Records
reveal however that South East (Int’l.) Rattan, Inc. was incorporated only last July 18, 1986 (p. 55 records)[.] Moreover,
when they started to actually operate in 1987, the company was engaged purely on "buying and exporting rattan furniture"
hence no manufacturing employees were hired. Furthermore, from the last quarter of 1989 up to August of 1992, the
company suspended operations due to economic reverses as per Certification issued by the Securities and Exchange
Commission (p. 56 records)[.]

Second, for all his insistence that he was a regular employee, complainant failed to present a single payslip, voucher or a
copy of a company payroll showing that he rendered service during the period indicated therein. x x x

From the above established facts we are inclined to give weight and credence to the Certifications of Allan Mayol and
Faustino Apondar, both suppliers of finished Rattan Furniture (pp. 442-43, records). It appears that complainant first
worked with Allan Mayol and later with Faustino Apondar upon the proddings of his brother Vicente. Vicente’s affidavit
as to complainant’s employment history was more detailed and forthright. x x x

xxxx

In the case at bar, there is likewise substantial evidence to support our findings that complainant was not an employee of
respondents. Thus:

1. Complainant’s name does not appear in the list of employees reported to the SSS.

2. His name does not also appear in the sample payrolls of respondents’ employees.

3. The certification of Allan Mayol and Fasutino Apondar[,] supplier of finished rattan products[,] that
complainant had at one time or another worked with them.

4. The Affidavit of Vicente Coming, complainant’s full brother[,] attesting that complainant had never been an
employee of respondent. The only connection was that their employer Faustino Apondar supplies finished rattan
products to respondents.33

On the other hand, the CA gave more credence to the declarations of the five former employees of petitioners that
respondent was their co-worker in SEIRI. One of said affiants is Vicente Coming’s own son, Gil Coming. Vicente averred
in his second affidavit that when he confronted his son, the latter explained that he was merely told by their Pastor to sign
the affidavit as it will put an end to the controversy. Vicente insisted that his son did not know the contents and
implications of the document he signed. As to the absence of respondent’s name in the payroll and SSS employment
report, the CA observed that the payrolls submitted were only from January 1, 1999 to December 29, 2000 and not the
entire period of eighteen years when respondent claimed he worked for SEIRI. It further noted that the names of the five
affiants, whom petitioners admitted to be their former employees, likewise do not appear in the aforesaid documents.
According to the CA, it is apparent that petitioners maintained a separate payroll for certain employees or willfully
retained a portion of the payroll.

x x x As to the "control test", the following facts indubitably reveal that respondents wielded control over the work
performance of petitioner, to wit: (1) they required him to work within the company premises; (2) they obliged petitioner
to report every day of the week and tasked him to usually perform the same job; (3) they enforced the observance of
definite hours of work from 8 o’clock in the morning to 5 o’clock in the afternoon; (4) the mode of payment of
petitioner’s salary was under their discretion, at first paying him on pakiao basis and thereafter, on daily basis; (5) they
implemented company rules and regulations; (6) [Estanislao] Agbay directly paid petitioner’s salaries and controlled all
aspects of his employment and (7) petitioner rendered work necessary and desirable in the business of the respondent
company.34

We affirm the CA.

In Tan v. Lagrama,35 the Court held that the fact that a worker was not reported as an employee to the SSS is not
conclusive proof of the absence of employer-employee relationship. Otherwise, an employer would be rewarded for his
failure or even neglect to perform his obligation.36

Nor does the fact that respondent’s name does not appear in the payrolls and pay envelope records submitted by
petitioners negate the existence of employer-employee relationship. For a payroll to be utilized to disprove the
employment of a person, it must contain a true and complete list of the employee.37 In this case, the exhibits offered by
petitioners before the NLRC consisting of copies of payrolls and pay earnings records are only for the years 1999 and
2000; they do not cover the entire 18-year period during which respondent supposedly worked for SEIRI.

In their comment to the petition filed by respondent in the CA, petitioners emphasized that in the certifications issued by
Mayol and Apondar, it was shown that respondent was employed and working for them in those years he claimed to be
working for SEIRI. However, a reading of the certification by Mayol would show that while the latter claims to have
respondent under his employ in 1997, 1998 and 1999, respondent’s services were not regular and that he works only if he
wants to. Apondar’s certification likewise stated that respondent worked for him since 1999 through his brother Vicente
as "sideline" but only after regular working hours and "off and on" basis. Even assuming the truth of the foregoing
statements, these do not foreclose respondent’s regular or full-time employment with SEIRI. In effect, petitioners suggest
that respondent was employed by SEIRI’s suppliers, Mayol and Apondar but no competent proof was presented as to the
latter’s status as independent contractors.

In the same comment, petitioners further admitted that the five affiants who attested to respondent’s employment with
SEIRI are its former workers whom they describe as "disgruntled workers of SEIRI" with an axe to grind against
petitioners, and that their execution of affidavit in support of respondent’s claim is "their very way of hitting back the
management of SEIRI after disciplinary measures were meted against them."38 This allegation though was not
substantiated by petitioners. Instead, after the CA rendered its decision reversing the NLRC’s ruling, petitioners
subsequently changed their theory by denying the employment relationship with the five affiants in their motion for
reconsideration, thus:

x x x Since the five workers were occupying and working on a leased premises of the private respondent, they were called
workers of SEIRI (private respondent). Such admission however, does not connote employment. For the truth of the
matter, all of the five employees of the supplier assigned at the leased premises of the private respondent. Because of the
recommendation of the private respondent with regards to the disciplinary measures meted on the five workers, they
wanted to hit back against the private respondent. Their motive to implicate private respondent was to vindicate.
Definitely, they have an axe to grind against the private respondent. Mention has to be made that despite the dismissal of
these five (5) witnesses from their service, none of them ever went to the National Labor [Relations] Commission and
invoked their rights, if any, against their employer or at the very least against the respondent. The reason is obvious, since
they knew pretty well that they were not employees of SEIRI but rather under the employ of Allan Mayol and Faustino
Apondar, working on a leased premise of respondent. x x x39

Petitioners’ admission that the five affiants were their former employees is binding upon them. While they claim that
respondent was the employee of their suppliers Mayol and Apondar, they did not submit proof that the latter were indeed
independent contractors; clearly, petitioners failed to discharge their burden of proving their own affirmative
allegation.40 There is thus no showing that the five former employees of SEIRI were motivated by malice, bad faith or any
ill-motive in executing their affidavit supporting the claims of respondent.

In any controversy between a laborer and his master, doubts reasonably arising from the evidence are resolved in favor of
the laborer.41

As a regular employee, respondent enjoys the right to security of tenure under Article 27942 of the Labor Code and may
only be dismissed for a just43 or authorized44 cause, otherwise the dismissal becomes illegal.

Respondent, whose employment was terminated without valid cause by petitioners, is entitled to reinstatement without
loss of seniority rights and other privileges and to his full back wages, inclusive of allowances and other benefits or their
monetary equivalent, computed from the time his compensation was withheld from him up to the time of his actual
reinstatement. Where reinstatement is no longer viable as an option, back wages shall be computed from the time of the
illegal termination up to the finality of the decision. Separation pay equivalent to one month salary for every year of
service should likewise be awarded as an alternative in case reinstatement in not possible.45

WHEREFORE, the petition for review on certiorari is DENIED. The Decision dated February 21, 2008 and Resolution
dated February 9, 2009 of the Court of Appeals in CA-G.R. No. CEB-SP No. 02113 are hereby AFFIRMED and
UPHELD.

Petitioners to pay the costs of suit.

SO ORDERED.
BERNARD A. TENAZAS, JAIME M. FRANCISCO and ISIDRO G. ENDRACA, Petitioners,
vs.
R. VILLEGAS TAXI TRANSPORT and ROMUALDO VILLEGAS, Respondents.

DECISION

REYES, J.:

This is a petition for review on certiorari1 filed under Rule 45 of the Rules of Court, assailing the Decision2 dated March
11, 2010 and Resolution3 dated June 28, 2010 of the Court of Appeals (CA) in CA-G.R. SP No. 111150, which affirmed
with modification the Decision4 dated June 23, 2009 of the National Labor Relations Commission (NLRC) in NLRC LAC
Case No. 07-002648-08.

The Antecedent Facts

On July 4, 2007, Bernard A. Tenazas (Tenazas) and Jaime M. Francisco (Francisco) filed a complaint for illegal dismissal
against R. Villegas Taxi Transport and/or Romualdo Villegas (Romualdo) and Andy Villegas (Andy) (respondents). At
that time, a similar case had already been filed by Isidro G. Endraca (Endraca) against the same respondents. The two (2)
cases were subsequently consolidated.5

In their position paper,6 Tenazas, Francisco and Endraca (petitioners) alleged that they were hired and dismissed by the
respondents on the following dates:

Name Date of Hiring Date of Dismissal Salary

Bernard A. Tenazas 10/1997 07/03/07 Boundary System
Jaime M. Francisco 04/10/04 06/04/07 Boundary System
Isidro G. Endraca 04/2000 03/06/06 Boundary System7

Relaying the circumstances of his dismissal, Tenazas alleged that on July 1, 2007, the taxi unit assigned to him was
sideswiped by another vehicle, causing a dent on the left fender near the driver seat. The cost of repair for the damage was
estimated at P500.00. Upon reporting the incident to the company, he was scolded by respondents Romualdo and Andy
and was told to leave the garage for he is already fired. He was even threatened with physical harm should he ever be seen
in the company’s premises again. Despite the warning, Tenazas reported for work on the following day but was told that
he can no longer drive any of the company’s units as he is already fired.8

Francisco, on the other hand, averred that his dismissal was brought about by the company’s unfounded suspicion that he
was organizing a labor union. He was instantaneously terminated, without the benefit of procedural due process, on June
4, 2007.9

Endraca, for his part, alleged that his dismissal was instigated by an occasion when he fell short of the required boundary
for his taxi unit. He related that before he was dismissed, he brought his taxi unit to an auto shop for an urgent repair. He
was charged the amount of P700.00 for the repair services and the replacement parts. As a result, he was not able to meet
his boundary for the day. Upon returning to the company garage and informing the management of the incident, his
driver’s license was confiscated and was told to settle the deficiency in his boundary first before his license will be
returned to him. He was no longer allowed to drive a taxi unit despite his persistent pleas.10

For their part, the respondents admitted that Tenazas and Endraca were employees of the company, the former being a
regular driver and the latter a spare driver. The respondents, however, denied that Francisco was an employee of the
company or that he was able to drive one of the company’s units at any point in time.11

The respondents further alleged that Tenazas was never terminated by the company. They claimed that on July 3, 2007,
Tenazas went to the company garage to get his taxi unit but was informed that it is due for overhaul because of some
mechanical defects reported by the other driver who takes turns with him in using the same. He was thus advised to wait
for further notice from the company if his unit has already been fixed. On July 8, 2007, however, upon being informed
that his unit is ready for release, Tenazas failed to report back to work for no apparent reason.12

As regards Endraca, the respondents alleged that they hired him as a spare driver in February 2001. They allow him to
drive a taxi unit whenever their regular driver will not be able to report for work. In July 2003, however, Endraca stopped
reporting for work without informing the company of his reason. Subsequently, the respondents learned that a complaint
for illegal dismissal was filed by Endraca against them. They strongly maintained, however, that they could never have
terminated Endraca in March 2006 since he already stopped reporting for work as early as July 2003. Even then, they
expressed willingness to accommodate Endraca should he wish to work as a spare driver for the company again since he
was never really dismissed from employment anyway.13

On May 29, 2008, the petitioners, by registered mail, filed a Motion to Admit Additional Evidence.14 They alleged that
after diligent efforts, they were able to discover new pieces of evidence that will substantiate the allegations in their
position paper. Attached with the motion are the following: (a) Joint Affidavit of the petitioners; 15 (2) Affidavit of Good
Faith of Aloney Rivera, a co-driver;16 (3) pictures of the petitioners wearing company shirts;17 and (4) Tenazas’
Certification/Record of Social Security System (SSS) contributions.18

The Ruling of the Labor Arbiter

On May 30, 2008, the Labor Arbiter (LA) rendered a Decision,19 which pertinently states, thus:

In the case of complainant Jaime Francisco, respondents categorically denied the existence of an employer-employee
relationship. In this situation, the burden of proof shifts to the complainant to prove the existence of a regular
employment. Complainant Francisco failed to present evidence of regular employment available to all regular employees,
such as an employment contract, company ID, SSS, withholding tax certificates, SSS membership and the like.

In the case of complainant Isidro Endraca, respondents claim that he was only an extra driver who stopped reporting to
queue for available taxi units which he could drive. In fact, respondents offered him in their Position Paper on record,
immediate reinstatement as extra taxi driver which offer he refused.

In case of Bernard Tenazas, he was told to wait while his taxi was under repair but he did not report for work after the taxi
was repaired. Respondents[,] in their Position Paper, on record likewise, offered him immediate reinstatement, which
offer he refused.

We must bear in mind that the complaint herein is one of actual dismissal. But there was no formal investigations, no
show cause memos, suspension memos or termination memos were never issued. Otherwise stated, there is no proof of
overt act of dismissal committed by herein respondents.

We are therefore constrained to rule that there was no illegal dismissal in the case at bar.

The situations contemplated by law for entitlement to separation pay does [sic] not apply.

WHEREFORE, premises considered, instant consolidated complaints are hereby dismissed for lack of merit.

SO ORDERED.20

The Ruling of the NLRC

Unyielding, the petitioners appealed the decision of the LA to the NLRC. Subsequently, on June 23, 2009, the NLRC
rendered a Decision,21 reversing the appealed decision of the LA, holding that the additional pieces of evidence belatedly
submitted by the petitioners sufficed to establish the existence of employer-employee relationship and their illegal
dismissal. It held, thus:
In the challenged decision, the Labor Arbiter found that it cannot be said that the complainants were illegally dismissed,
there being no showing, in the first place, that the respondent [sic] terminated their services. A portion thereof reads:

"We must bear in mind that the complaint herein is one of actual dismissal. But there were no formal investigations, no
show cause memos, suspension memos or termination memos were never issued. Otherwise stated, there is no proof of
overt act of dismissal committed by herein respondents.

We are therefore constrained to rule that there was no illegal dismissal in the case at bar."

Issue: [W]hether or not the complainants were illegally dismissed from employment.

It is possible that the complainants’ Motion to Admit Additional Evidence did not reach the Labor Arbiter’s attention
because he had drafted the challenged decision even before they submitted it, and thereafter, his staff attended only to
clerical matters, and failed to bring the motion in question to his attention. It is now up to this Commission to consider the
complainants’ additional evidence. Anyway, if this Commission must consider evidence submitted for the first time on
appeal (Andaya vs. NLRC, G.R. No. 157371, July 15, 2005), much more so must it consider evidence that was simply
overlooked by the Labor Arbiter.

Among the additional pieces of evidence submitted by the complainants are the following: (1) joint affidavit (records, p.
51-52) of the three (3) complainants; (2) affidavit (records, p. 53) of Aloney Rivera y Aldo; and (3) three (3) pictures
(records, p. 54) referred to by the complainant in their joint affidavit showing them wearing t-shirts bearing the name and
logo of the respondent’s company.

xxxx

WHEREFORE, the decision appealed from is hereby REVERSED. Respondent Rom[u]aldo Villegas doing business
under the name and style Villegas Taxi Transport is hereby ordered to pay the complainants the following (1) full
backwages from the date of their dismissal (July 3, 2007 for Tena[z]as, June 4, 2004 for Francisco, and March 6, 2006 for
Endraca[)] up to the date of the finality of this decision[;] (2) separation pay equivalent to one month for every year of
service; and (3) attorney’s fees equivalent to ten percent (10%) of the total judgment awards.

SO ORDERED.22

On July 24, 2009, the respondents filed a motion for reconsideration but the NLRC denied the same in its
Resolution23 dated September 23, 2009.

The Ruling of the CA

Unperturbed, the respondents filed a petition for certiorari with the CA. On March 11, 2010, the CA rendered a
Decision,24 affirming with modification the Decision dated June 23, 2009 of the NLRC. The CA agreed with the NLRC’s
finding that Tenazas and Endraca were employees of the company, but ruled otherwise in the case of Francisco for failing
to establish his relationship with the company. It also deleted the award of separation pay and ordered for reinstatement of
Tenazas and Endraca. The pertinent portions of the decision read as follows:

At the outset, We declare that respondent Francisco failed to prove that an employer-employee relationship exists between
him and R. Transport. If there is no employer-employee relationship in the first place, the duty of R. Transport to adhere
to the labor standards provisions of the Labor Code with respect to Francisco is questionable.

xxxx

Although substantial evidence is not a function of quantity but rather of quality, the peculiar environmental circumstances
of the instant case demand that something more should have been proffered. Had there been other proofs of employment,
such as Francisco’s inclusion in R.R.
Transport’s payroll, this Court would have affirmed the finding of employer-employee relationship.1âwphi1 The NLRC,
therefore, committed grievous error in ordering R. Transport to answer for Francisco’s claims.

We now tackle R. Transport’s petition with respect to Tenazas and Endraca, who are both admitted to be R. Transport’s
employees. In its petition, R. Transport puts forth the theory that it did not terminate the services of respondents but that
the latter deliberately abandoned their work. We cannot subscribe to this theory.

xxxx

Considering that the complaints for illegal dismissal were filed soon after the alleged dates of dismissal, it cannot be
inferred that respondents Tenazas and Endraca intended to abandon their employment. The complainants for dismissal
are, in themselves, pleas for the continuance of employment. They are incompatible with the allegation of abandonment. x
x x.

For R. Transport’s failure to discharge the burden of proving that the dismissal of respondents Tenazas and Endraca was
for a just cause, We are constrained to uphold the NLRC’s conclusion that their dismissal was not justified and that they
are entitled to back wages. Because they were illegally dismissed, private respondents Tenazas and Endraca are entitled to
reinstatement and back wages x x x.

xxxx

However, R. Transport is correct in its contention that separation pay should not be awarded because reinstatement is still
possible and has been offered. It is well[-]settled that separation pay is granted only in instances where reinstatement is no
longer feasible or appropriate, which is not the case here.

xxxx

WHEREFORE, the Decision of the National Labor Relations Commission dated 23 June 2009, in NLRC LAC Case No.
07-002648-08, and its Resolution dated 23 September 2009 denying reconsideration thereof are AFFIRMED with
MODIFICATION in that the award of Jaime Francisco’s claims is DELETED. The separation pay granted in favor of
Bernard Tenazas and Isidro Endraca is, likewise, DELETED and their reinstatement is ordered instead.

SO ORDERED.25 (Citations omitted)

On March 19, 2010, the petitioners filed a motion for reconsideration but the same was denied by the CA in its
Resolution26 dated June 28, 2010.

Undeterred, the petitioners filed the instant petition for review on certiorari before this Court on July 15, 2010.

The Ruling of this Court

The petition lacks merit.

Pivotal to the resolution of the instant case is the determination of the existence of employer-employee relationship and
whether there was an illegal dismissal. Remarkably, the LA, NLRC and the CA had varying assessment on the matters at
hand. The LA believed that, with the admission of the respondents, there is no longer any question regarding the status of
both Tenazas and Endraca being employees of the company. However, he ruled that the same conclusion does not hold
with respect to Francisco whom the respondents denied to have ever employed or known. With the respondents’ denial,
the burden of proof shifts to Francisco to establish his regular employment. Unfortunately, the LA found that Francisco
failed to present sufficient evidence to prove regular employment such as company ID, SSS membership, withholding tax
certificates or similar articles. Thus, he was not considered an employee of the company. Even then, the LA held that
Tenazas and Endraca could not have been illegally dismissed since there was no overt act of dismissal committed by the
respondents.27
On appeal, the NLRC reversed the ruling of the LA and ruled that the petitioners were all employees of the company. The
NLRC premised its conclusion on the additional pieces of evidence belatedly submitted by the petitioners, which it
supposed, have been overlooked by the LA owing to the time when it was received by the said office. It opined that the
said pieces of evidence are sufficient to establish the circumstances of their illegal termination. In particular, it noted that
in the affidavit of the petitioners, there were allegations about the company’s practice of not issuing employment records
and this was not rebutted by the respondents. It underscored that in a situation where doubt exists between evidence
presented by the employer and the employee, the scales of justice must be tilted in favor of the employee. It awarded the
petitioners with: (1) full backwages from the date of their dismissal up to the finality of the decision; (2) separation pay
equivalent to one month of salary for every year of service; and (3) attorney’s fees.

On petition for certiorari, the CA affirmed with modification the decision of the NLRC, holding that there was indeed an
illegal dismissal on the part of Tenazas and Endraca but not with respect to Francisco who failed to present substantial
evidence, proving that he was an employee of the respondents. The CA likewise dismissed the respondents’ claim that
Tenazas and Endraca abandoned their work, asseverating that immediate filing of a complaint for illegal dismissal and
persistent pleas for continuance of employment are incompatible with abandonment. It also deleted the NLRC’s award of
separation pay and instead ordered that Tenazas and Endraca be reinstated.28

"Well-settled is the rule that the jurisdiction of this Court in a petition for review on certiorari under Rule 45 of the
Revised Rules of Court is limited to reviewing only errors of law, not of fact, unless the factual findings complained of are
completely devoid of support from the evidence on record, or the assailed judgment is based on a gross misapprehension
of facts."29 The Court finds that none of the mentioned circumstances is present in this case.

In reviewing the decision of the NLRC, the CA found that no substantial evidence was presented to support the
conclusion that Francisco was an employee of the respondents and accordingly modified the NLRC decision. It stressed
that with the respondents’ denial of employer-employee relationship, it behooved Francisco to present substantial
evidence to prove that he is an employee before any question on the legality of his supposed dismissal becomes
appropriate for discussion. Francisco, however, did not offer evidence to substantiate his claim of employment with the
respondents. Short of the required quantum of proof, the CA correctly ruled that the NLRC’s finding of illegal dismissal
and the monetary awards which necessarily follow such ruling lacked factual and legal basis and must therefore be
deleted.

The action of the CA finds support in Anonas Construction and Industrial Supply Corp., et al. v. NLRC, et al.,30where the
Court reiterated:

[J]udicial review of decisions of the NLRC via petition for certiorari under Rule 65, as a general rule, is confined only to
issues of lack or excess of jurisdiction and grave abuse of discretion on the part of the NLRC. The CA does not assess and
weigh the sufficiency of evidence upon which the LA and the NLRC based their conclusions. The issue is limited to the
determination of whether or not the NLRC acted without or in excess of its jurisdiction, or with grave abuse of discretion
in rendering the resolution, except if the findings of the NLRC are not supported by substantial evidence.31 (Citation
omitted and emphasis ours)

It is an oft-repeated rule that in labor cases, as in other administrative and quasi-judicial proceedings, "the quantum of
proof necessary is substantial evidence, or such amount of relevant evidence which a reasonable mind might accept as
adequate to justify a conclusion."32 "[T]he burden of proof rests upon the party who asserts the affirmative of an
issue."33 Corollarily, as Francisco was claiming to be an employee of the respondents, it is incumbent upon him to proffer
evidence to prove the existence of said relationship.

"[I]n determining the presence or absence of an employer-employee relationship, the Court has consistently looked for the
following incidents, to wit: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of
dismissal; and (d) the employer’s power to control the employee on the means and methods by which the work is
accomplished. The last element, the so-called control test, is the most important element."34

There is no hard and fast rule designed to establish the aforesaid elements. Any competent and relevant evidence to prove
the relationship may be admitted. Identification cards, cash vouchers, social security registration, appointment letters or
employment contracts, payrolls, organization charts, and personnel lists, serve as evidence of employee status.35
In this case, however, Francisco failed to present any proof substantial enough to establish his relationship with the
respondents. He failed to present documentary evidence like attendance logbook, payroll, SSS record or any personnel file
that could somehow depict his status as an employee. Anent his claim that he was not issued with employment records, he
could have, at least, produced his social security records which state his contributions, name and address of his employer,
as his co-petitioner Tenazas did. He could have also presented testimonial evidence showing the respondents’ exercise of
control over the means and methods by which he undertakes his work. This is imperative in light of the respondents’
denial of his employment and the claim of another taxi operator, Emmanuel Villegas (Emmanuel), that he was his
employer. Specifically, in his Affidavit,36 Emmanuel alleged that Francisco was employed as a spare driver in his taxi
garage from January 2006 to December 2006, a fact that the latter failed to deny or question in any of the pleadings
attached to the records of this case. The utter lack of evidence is fatal to Francisco’s case especially in cases like his
present predicament when the law has been very lenient in not requiring any particular form of evidence or manner of
proving the presence of employer-employee relationship.

In Opulencia Ice Plant and Storage v. NLRC,37 this Court emphasized, thus:

No particular form of evidence is required to prove the existence of an employer-employee relationship. Any competent
and relevant evidence to prove the relationship may be admitted. For, if only documentary evidence would be required to
show that relationship, no scheming employer would ever be brought before the bar of justice, as no employer would wish
to come out with any trace of the illegality he has authored considering that it should take much weightier proof to
invalidate a written instrument.38

Here, Francisco simply relied on his allegation that he was an employee of the company without any other evidence
supporting his claim. Unfortunately for him, a mere allegation in the position paper is not tantamount to evidence.39 Bereft
of any evidence, the CA correctly ruled that Francisco could not be considered an employee of the respondents.

The CA’s order of reinstatement of Tenazas and Endraca, instead of the payment of separation pay, is also well in
accordance with prevailing jurisprudence. In Macasero v. Southern Industrial Gases Philippines,40 the Court reiterated,
thus:

[A]n illegally dismissed employee is entitled to two reliefs: backwages and reinstatement.1âwphi1 The two reliefs
provided are separate and distinct. In instances where reinstatement is no longer feasible because of strained relations
between the employee and the employer, separation pay is granted. In effect, an illegally dismissed employee is entitled to
either reinstatement, if viable, or separation pay if reinstatement is no longer viable, and backwages.

The normal consequences of respondents’ illegal dismissal, then, are reinstatement without loss of seniority rights, and
payment of backwages computed from the time compensation was withheld up to the date of actual reinstatement. Where
reinstatement is no longer viable as an option, separation pay equivalent to one (1) month salary for every year of service
should be awarded as an alternative. The payment of separation pay is in addition to payment of backwages.41 (Emphasis
supplied)

Clearly, it is only when reinstatement is no longer feasible that the payment of separation pay is ordered in lieu thereof.
For instance, if reinstatement would only exacerbate the tension and strained relations between the parties, or where the
relationship between the employer and the employee has been unduly strained by reason of their irreconcilable
differences, it would be more prudent to order payment of separation pay instead of reinstatement.42

This doctrine of strained relations, however, should not be used recklessly or applied loosely43 nor be based on impression
alone. "It bears to stress that reinstatement is the rule and, for the exception of strained relations to apply, it should be
proved that it is likely that if reinstated, an atmosphere of antipathy and antagonism would be generated as to adversely
affect the efficiency and productivity of the employee concerned."44

Moreover, the existence of strained relations, it must be emphasized, is a question of fact. In Golden Ace Builders v.
Talde,45 the Court underscored:
Strained relations must be demonstrated as a fact, however, to be adequately supported by evidence—substantial evidence
to show that the relationship between the employer and the employee is indeed strained as a necessary consequence of the
judicial controversy.46 (Citations omitted and emphasis ours)

After a perusal of the NLRC decision, this Court failed to find the factual basis of the award of separation pay to the
petitioners. The NLRC decision did not state the facts which demonstrate that reinstatement is no longer a feasible option
that could have justified the alternative relief of granting separation pay instead.

The petitioners themselves likewise overlooked to allege circumstances which may have rendered their reinstatement
unlikely or unwise and even prayed for reinstatement alongside the payment of separation pay in their position paper.47 A
bare claim of strained relations by reason of termination is insufficient to warrant the granting of separation pay.
Likewise, the filing of the complaint by the petitioners does not necessarily translate to strained relations between the
parties. As a rule, no strained relations should arise from a valid and legal act asserting one’s right.48 Although litigation
may also engender a certain degree of hostility, the understandable strain in the parties’ relation would not necessarily rule
out reinstatement which would, otherwise, become the rule rather the exception in illegal dismissal cases.49 Thus, it was a
prudent call for the CA to delete the award of separation pay and order for reinstatement instead, in accordance with the
general rule stated in Article 27950 of the Labor Code.

Finally, the Court finds the computation of the petitioners' backwages at the rate of P800.00 daily reasonable and just
under the circumstances. The said rate is consistent with the ruling of this Court in Hyatt Taxi Services, Inc. v.
Catinoy,51 which dealt with the same matter.

WHEREFORE, in view of the foregoing disquisition, the petition for review on certiorari is DENIED. The Decision dated
March 11, 2010 and Resolution dated June 28, 2010 of the Court of Appeals in CA-G.R. SP No. 111150 are AFFIRMED.

SO ORDERED.
 TIMOTEO H. SARONA, G.R. No. 185280

Petitioner,

Present:

CARPIO, J.,
- versus - Chairperson,

PEREZ,

SERENO,

REYES, and
NATIONAL LABOR RELATIONS
BERNABE, JJ. 

COMMISSION, ROYALE SECURITY

AGENCY (FORMERLY SCEPTRE

SECURITY AGENCY) and Promulgated:

CESAR S. TAN,

Respondents. January 18, 2012

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

DECISION

REYES, J.:
 This is a petition for review under Rule 45 of the Rules of Court from the May 29, 2008
Decision of the Twentieth Division of the Court of Appeals (CA) in CA-G.R. SP No. 02127
1

entitled “Timoteo H. Sarona v. National Labor Relations Commission, Royale Security Agency
(formerly Sceptre Security Agency) and Cesar S. Tan” (Assailed Decision), which affirmed the
National Labor Relations Commission’s (NLRC) November 30, 2005 Decision and January 31,
2006 Resolution, finding the petitioner illegally dismissed but limiting the amount of his
backwages to three (3) monthly salaries. The CA likewise affirmed the NLRC’s finding that the
petitioner’s separation pay should be computed only on the basis of his length of service with
respondent Royale Security Agency (Royale). The CA held that absent any showing that Royale is
a mere alter ego of Sceptre Security Agency (Sceptre), Royale cannot be compelled to recognize
the petitioner’s tenure with Sceptre. The dispositive portion of the CA’s Assailed Decision states:

WHEREFORE, in view of the foregoing, the instant petition is PARTLY

GRANTED, though piercing of the corporate veil is hereby denied for lack of merit.
Accordingly, the assailed Decision and Resolution of the NLRC respectively dated
November 30, 2005 and January 31, 2006 are hereby AFFIRMED as to the monetary
awards.

SO ORDERED. 2

Factual Antecedents

On June 20, 2003, the petitioner, who was hired by Sceptre as a security guard sometime in
April 1976, was asked by Karen Therese Tan (Karen), Sceptre’s Operation Manager, to submit a
resignation letter as the same was supposedly required for applying for a position at Royale. The
petitioner was also asked to fill up Royale’s employment application form, which was handed to
him by Royale’s General Manager, respondent Cesar Antonio Tan II (Cesar). 3

After several weeks of being in floating status, Royale’s Security Officer, Martin Gono
(Martin), assigned the petitioner at Highlight Metal Craft, Inc. (Highlight Metal) from July 29,
2003 to August 8, 2003. Thereafter, the petitioner was transferred and assigned to Wide Wide
World Express, Inc. (WWWE, Inc.). During his assignment at Highlight Metal, the petitioner used
the patches and agency cloths of Sceptre and it was only
when he was posted at WWWE, Inc. that he started using those of Royale. 4

On September 17, 2003, the petitioner was informed that his assignment at WWWE, Inc. had
been withdrawn because Royale had allegedly been replaced by another security agency. The
petitioner, however, shortly discovered thereafter that Royale was never replaced as WWWE, Inc.’s
security agency. When he placed a call at WWWE, Inc., he learned that his fellow security guard
was not relieved from his post.5

On September 21, 2003, the petitioner was once again assigned at Highlight Metal, albeit for
a short period from September 22, 2003 to September 30, 2003. Subsequently, when the petitioner
reported at Royale’s office on October 1, 2003, Martin informed him that he would no longer be
given any assignment per the instructions of Aida Sabalones-Tan (Aida), general manager of
Sceptre. This prompted him to file a complaint for illegal dismissal on October 4, 2003. 6

In his May 11, 2005 Decision, Labor Arbiter Jose Gutierrez (LA Gutierrez) ruled in the
petitioner’s favor and found him illegally dismissed. For being unsubstantiated, LA Gutierrez
denied credence to the respondents’ claim that the termination of the petitioner’s employment
relationship with Royale was on his accord following his alleged employment in another company.
That the petitioner was no longer interested in being an employee of Royale cannot be presumed
from his request for a certificate of employment, a claim which, to begin with, he vehemently
denies. Allegation of the petitioner’s abandonment is negated by his filing of a complaint for illegal
dismissal three (3) days after he was informed that he would no longer be given any assignments.
LA Gutierrez ruled:

In short, respondent wanted to impress before us that complainant abandoned his

employment. We are not however, convinced.

There is abandonment when there is a clear proof showing that one has no more
interest to return to work. In this instant case, the record has no proof to such effect. In
a long line of decisions, the Supreme Court ruled:
 “Abandonment of position is a matter of intention expressed in
clearly certain and unequivocal acts, however, an interim employment
does not mean abandonment.” (Jardine Davis, Inc. vs. NLRC, 225
SCRA 757).

“In abandonment, there must be a concurrence of the intention

to abandon and some overt acts from which an employee may be
declared as having no more interest to work.” (C. Alcontin & Sons,
Inc. vs. NLRC, 229 SCRA 109).

“It is clear, deliberate and unjustified refusal to severe

employment and not mere absence that is required to constitute
abandonment.” x x x” (De Ysasi III vs. NLRC, 231 SCRA 173).

Aside from lack of proof showing that complainant has abandoned his
employment, the record would show that immediate action was taken in order to
protest his dismissal from employment. He filed a complaint [for] illegal dismissal on
October 4, 2004 or three (3) days after he was dismissed. This act, as declared by the
Supreme Court is inconsistent with abandonment, as held in the case of Pampanga
Sugar Development Co., Inc. vs. NLRC, 272 SCRA 737 where the Supreme Court
ruled:

“The immediate filing of a complaint for [i]llegal [d]ismissal by

an employee is inconsistent with abandonment.” 7

The respondents were ordered to pay the petitioner backwages, which LA Gutierrez
computed from the day he was dismissed, or on October 1, 2003, up to the promulgation of his
Decision on May 11, 2005. In lieu of reinstatement, the respondents were ordered to pay the
petitioner separation pay equivalent to his one (1) month salary in consideration of his tenure with
Royale, which lasted for only one (1) month and three (3) days. In this
regard, LA Gutierrez refused to pierce Royale’s corporate veil for purposes of factoring the
petitioner’s length of service with Sceptre in the computation of his separation pay. LA Gutierrez
ruled that Royale’s corporate personality, which is separate and distinct from that of Sceptre, a sole
proprietorship owned by the late Roso Sabalones (Roso) and later, Aida, cannot be pierced absent
clear and convincing evidence that Sceptre and Royale share the same stockholders and
incorporators and that Sceptre has complete control and dominion over the finances and business
affairs of Royale. Specifically:

To support its prayer of piercing the veil of corporate entity of respondent Royale,
complainant avers that respondent Royal (sic) was using the very same office of
SCEPTRE in C. Padilla St., Cebu City. In addition, all officers and staff of SCEPTRE
are now the same officers and staff of ROYALE, that all [the] properties of SCEPTRE
are now being owned by ROYALE and that ROYALE is now occupying the property
of SCEPTRE. We are not however, persuaded.

It should be pointed out at this juncture that SCEPTRE, is a single proprietorship.

Being so, it has no distinct and separate personality. It is owned by the late Roso T.
Sabalones. After the death of the owner, the property is supposed to be divided by the
heirs and any claim against the sole proprietorship is a claim against Roso T.
Sabalones. After his death, the claims should be instituted against the estate of Roso
T. Sabalones. In short, the estate of the late Roso T. Sabalones should have been
impleaded as respondent of this case.

Complainant wanted to impress upon us that Sceptre was organized into another entity
now called Royale Security Agency. There is however, no proof to this assertion.
Likewise, there is no proof that Roso T. Sabalones, organized his single proprietorship
business into a corporation, Royale Security Agency. On the contrary, the name of
Roso T. Sabalones does not appear in the Articles of Incorporation. The names therein
as incorporators are:

Bruno M. Kuizon – [P]150,000.00

Wilfredo K. Tan – 100,000.00

Karen Therese S. Tan – 100,000.00

Cesar Antonio S. Tan – 100,000.00

Gabeth Maria K. Tan – 50,000.00

 Complainant claims that two (2) of the incorporators are the granddaughters of
Roso T. Sabalones. This fact even give (sic) us further reason to conclude that
respondent Royal (sic) Security Agency is not an alter ego or conduit of SCEPTRE. It
is obvious that respondent Royal (sic) Security Agency is not owned by the owner of
“SCEPTRE”.

It may be true that the place where respondent Royale hold (sic) office is the
same office formerly used by “SCEPTRE.” Likewise, it may be true that the same
officers and staff now employed by respondent Royale Security Agency were the
same officers and staff employed by “SCEPTRE.” We find, however, that these facts
are not sufficient to justify to require respondent Royale to answer for the liability of
Sceptre, which was owned solely by the late Roso T. Sabalones. As we have stated
above, the remedy is to address the claim on the estate of Roso T. Sabalones. 8

The respondents appealed LA Gutierrez’s May 11, 2005 Decision to the NLRC, claiming
that the finding of illegal dismissal was attended with grave abuse of discretion. This appeal was,
however, dismissed by the NLRC in its November 30, 2005 Decision, the dispositive portion of
9

which states:

WHEREFORE, premises considered, the Decision of the Labor Arbiter

declaring the illegal dismissal of complainant is hereby AFFIRMED.

However[,] We modify the monetary award by limiting the grant of backwages

to only three (3) months in view of complainant’s very limited service which lasted
only for one month and three days.

1. Backwages - [P]15,600.00

2. Separation Pay - 5,200.00

3. 13th Month Pay - 583.34

[P]21,383.34 Attorney’s Fees- 2,138.33

 Total [P]23,521.67

The appeal of respondent Royal (sic) Security Agency is

hereby DISMISSED for lack of merit.

SO ORDERED. 10

The NLRC partially affirmed LA Gutierrez’s May 11, 2005 Decision. It concurred with the
latter’s finding that the petitioner was illegally dismissed and the manner by which his separation
pay was computed, but modified the monetary award in the petitioner’s favor by reducing the
amount of his backwages from P95,600.00 to P15,600.00. The NLRC determined the petitioner’s
backwages as limited to three (3) months of his last monthly salary, considering that his
employment with Royale was only for a period for one (1) month and three (3) days, thus: 11

On the other hand, while complainant is entitled to backwages, We are aware that his
stint with respondent Royal (sic) lasted only for one (1) month and three (3) days such
that it is Our considered view that his backwages should be limited to only three (3)
months.

Backwages:

[P]5,200.00 x 3 months = [P]15,600.00 12

The petitioner, on the other hand, did not appeal LA Gutierrez’s May 11, 2005 Decision but opted
to raise the validity of LA Gutierrez’s adverse findings with respect to piercing Royale’s corporate
personality and computation of his separation pay in his Reply to the respondents’ Memorandum of
Appeal. As the filing of an appeal is the prescribed remedy and no aspect of the decision can be
overturned by a mere reply, the NLRC dismissed the petitioner’s efforts to reverse LA Gutierrez’s
disposition of these issues. Effectively, the petitioner had already waived his right to question LA
Gutierrez’s Decision when he failed to file an appeal within the reglementary period. The NLRC
held:

On the other hand, in complainant’s Reply to Respondent’s Appeal Memorandum he

prayed that the doctrine of piercing the veil of corporate fiction of respondent be
applied so that his services with Sceptre since 1976 [will not] be deleted. If
complainant assails this particular finding in the Labor Arbiter’s Decision,
complainant should have filed an appeal and not seek a relief by merely filing a Reply
to Respondent’s Appeal Memorandum. 13

Consequently, the petitioner elevated the NLRC’s November 30, 2005 Decision to the CA by way
of a Petition for Certiorari under Rule 65 of the Rules of Court. On the other hand, the respondents
filed no appeal from the NLRC’s finding that the petitioner was illegally dismissed.

The CA, in consideration of substantial justice and the jurisprudential dictum that an
appealed case is thrown open for the appellate court’s review, disagreed with the NLRC and
proceeded to review the evidence on record to determine if Royale is Sceptre’s alter ego that would
warrant the piercing of its corporate veil. According to the CA, errors not assigned on appeal may
14

be reviewed as technicalities should not serve as bar to the full adjudication of cases. Thus:

In Cuyco v. Cuyco, which We find application in the instant case, the Supreme Court
held:

“In their Reply, petitioners alleged that their petition only raised the sole
issue of interest on the interest due, thus, by not filing their own petition
for review, respondents waived their privilege to bring matters for the
Court’s review that [does] not deal with the sole issue raised.

Procedurally, the appellate court in deciding the case shall consider only
the assigned errors, however, it is equally settled that the Court is clothed
 with ample authority to review matters not assigned as errors in an
appeal, if it finds that their consideration is necessary to arrive at a just
disposition of the case.”

Therefore, for full adjudication of the case, We have to primarily resolve the issue of
whether the doctrine of piercing the corporate veil be justly applied in order to
determine petitioner’s length of service with private respondents. (citations omitted)
15

Nonetheless, the CA ruled against the petitioner and found the evidence he submitted to
support his allegation that Royale and Sceptre are one and the same juridical entity to be wanting.
The CA refused to pierce Royale’s corporate mask as one of the “probative factors that would
justify the application of the doctrine of piercing the corporate veil is stock ownership by one or
common ownership of both corporations” and the petitioner failed to present clear and convincing
proof that Royale and Sceptre are commonly owned or controlled. The relevant portions of the
CA’s Decision state:

In the instant case, We find no evidence to show that Royale Security Agency,
Inc. (hereinafter “Royale”), a corporation duly registered with the Securities and
Exchange Commission (SEC) and Sceptre Security Agency (hereinafter “Sceptre”), a
single proprietorship, are one and the same entity.

Petitioner, who has been with Sceptre since 1976 and, as ruled by both the
Labor Arbiter and the NLRC, was illegally dismissed by Royale on October 1, 2003,
alleged that in order to circumvent labor laws, especially to avoid payment of money
claims and the consideration on the length of service of its employees, Royale was
established as an alter ego or business conduit of Sceptre. To prove his claim,
petitioner declared that Royale is conducting business in the same office of Sceptre,
the latter being owned by the late retired Gen. Roso Sabalones, and was managed by
the latter’s daughter, Dr. Aida Sabalones-Tan; that two of Royale’s incorporators are
grandchildren [of] the late Gen. Roso Sabalones; that all the properties of Sceptre are
now owned by Royale, and that the officers and staff of both business establishments
are the same; that the heirs of Gen. Sabalones should have applied for dissolution of
Sceptre before the SEC before forming a new corporation.
 On the other hand, private respondents declared that Royale was incorporated
only on March 10, 2003 as evidenced by the Certificate of Incorporation issued by the
SEC on the same date; that Royale’s incorporators are Bruino M. Kuizon, Wilfredo
Gracia K. Tan, Karen Therese S. Tan, Cesar Antonio S. Tan II and [Gabeth] Maria K.
Tan.

Settled is the tenet that allegations in the complaint must be duly proven by
competent evidence and the burden of proof is on the party making the allegation.
Further, Section 1 of Rule 131 of the Revised Rules of Court provides:

“SECTION 1. Burden of proof. – Burden of proof is the duty of a

party to present evidence on the facts in issue necessary to establish his
claim or defense by the amount of evidence required by law.”

We believe that petitioner did not discharge the required burden of proof to
establish his allegations. As We see it, petitioner’s claim that Royale is an alter ego or
business conduit of Sceptre is without basis because aside from the fact that there is
no common ownership of both Royale and Sceptre, no evidence on record would
prove that Sceptre, much less the late retired Gen. Roso Sabalones or his heirs, has
control or complete domination of Royale’s finances and business transactions.
Absence of this first element, coupled by petitioner’s failure to present clear and
convincing evidence to substantiate his allegations, would prevent piercing of the
corporate veil. Allegations must be proven by sufficient evidence. Simply stated, he
who alleges a fact has the burden of proving it; mere allegation is not
evidence. (citations omitted)
16

By way of this Petition, the petitioner would like this Court to revisit the computation of his
backwages, claiming that the same should be computed from the time he was illegally dismissed
until the finality of this decision. The petitioner would likewise have this Court review and
17

examine anew the factual allegations and the supporting evidence to determine if the CA erred in
its refusal to pierce Royale’s corporate mask and rule that it is but a mere continuation or successor
of Sceptre. According to the petitioner, the erroneous computation of his separation pay was due to
the CA’s failure, as well as the NLRC and LA Gutierrez, to consider evidence conclusively
demonstrating that Royale and Sceptre are one and the same juridical entity. The petitioner claims
that since Royale is no more than Sceptre’s alter ego, it should recognize and credit his length of
service with Sceptre. 18

The petitioner claimed that Royale and Sceptre are not separate legal persons for purposes of
computing the amount of his separation pay and other benefits under the Labor Code. The piercing
of Royale’s corporate personality is justified by several indicators that Royale was incorporated for
the sole purpose of defeating his right to security of tenure and circumvent payment of his benefits
to which he is entitled under the law: (i) Royale was holding office in the same property used by
Sceptre as its principal place of business; (ii) Sceptre and Royal have the same officers and
19

employees; (iii) on October 14, 1994, Roso, the sole proprietor of Sceptre, sold to Aida, and her
20

husband, Wilfredo Gracia K. Tan (Wilfredo), the property used by Sceptre as its principal place of
21

business; (iv) Wilfredo is one of the incorporators of Royale; (v) on May 3, 1999, Roso ceded the
22 23

license to operate Sceptre issued by the Philippine National Police to Aida; (vi) on July 28, 1999,
24

the business name “Sceptre Security & Detective Agency” was registered with the Department of
Trade and Industry (DTI) under the name of Aida; (vii) Aida exercised control over the affairs of
25

Sceptre and Royale, as she was, in fact, the one who dismissed the petitioner from
employment; (viii) Karen, the daughter of Aida, was Sceptre’s Operation Manager and is one of
26

the incorporators of Royale; and (ix) Cesar Tan II, the son of Aida was one of Sceptre’s officers
27

and is one of the incorporators of Royale. 28

In their Comment, the respondents claim that the petitioner is barred from questioning the
manner by which his backwages and separation pay were computed. Earlier, the petitioner moved
for the execution of the NLRC’s November 30, 2005 Decision and the respondents paid him the
29

full amount of the monetary award thereunder shortly after the writ of execution was issued. The
30

respondents likewise maintain that Royale’s separate and distinct corporate personality should be
respected considering that the evidence presented by the petitioner fell short of establishing that
Royale is a mere alter ego of Sceptre.

The petitioner does not deny that he has received the full amount of backwages and
separation pay as provided under the NLRC’s November 30, 2005 Decision. However, he claims
31

that this does not preclude this Court from modifying a decision that is tainted with grave abuse of
discretion or issued without jurisdiction.
32
 ISSUES

Considering the conflicting submissions of the parties, a judicious determination of their

respective rights and obligations requires this Court to resolve the following substantive issues:

a. Whether Royale’s corporate fiction should be pierced for the purpose of

compelling it to recognize the petitioner’s length of service with Sceptre and for
holding it liable for the benefits that have accrued to him arising from his employment
with Sceptre; and

b. Whether the petitioner’s backwages should be limited to his salary for three
(3) months.

OUR RULING

Because his receipt of the proceeds of the award under

the NLRC’s November 30, 2005 Decision is qualified
and without prejudice to the CA’s resolution of his
petition for certiorari, the petitioner is not barred from
exercising his right to elevate the decision of the CA to
this Court.

Before this Court proceeds to decide this Petition on its merits, it is imperative to resolve the
respondents’ contention that the full satisfaction of the award under the NLRC’s November 30,
2005 Decision bars the petitioner from questioning the validity thereof. The respondents submit
that they had paid the petitioner the amount of P21,521.67 as directed by the NLRC and this
constitutes a waiver of his right to file an appeal to this Court.
The respondents fail to convince.

The petitioner’s receipt of the monetary award adjudicated by the NLRC is not absolute,
unconditional and unqualified. The petitioner’s May 3, 2007 Motion for Release contains a
reservation, stating in his prayer that: “it is respectfully prayed that the respondents and/or Great
Domestic Insurance Co. be ordered to RELEASE/GIVE the amount of P23,521.67 in favor of the
complainant TIMOTEO H. SARONA without prejudice to the outcome of the petition with the
CA.” 33

In Leonis Navigation Co., Inc., et al. v. Villamater, et al., this Court ruled that the prevailing
34

party’s receipt of the full amount of the judgment award pursuant to a writ of execution issued by
the labor arbiter does not
close or terminate the case if such receipt is qualified as without prejudice to the outcome of the
petition for certiorari pending with the CA.

Simply put, the execution of the final and executory decision or resolution of
the NLRC shall proceed despite the pendency of a petition forcertiorari, unless it is
restrained by the proper court. In the present case, petitioners already paid
Villamater’s widow, Sonia, the amount ofP3,649,800.00, representing the total and
permanent disability award plus attorney’s fees, pursuant to the Writ of Execution
issued by the Labor Arbiter. Thereafter, an Order was issued declaring the case as
"closed and terminated". However, although there was no motion for reconsideration
of this last Order, Sonia was, nonetheless, estopped from claiming that the
controversy had already reached its end with the issuance of the Order closing and
terminating the case. This is because the Acknowledgment Receipt she signed when
she received petitioners’ payment was without prejudice to the final outcome of the
petition for certiorari pending before the CA.35

The finality of the NLRC’s decision does not preclude the filing of a petition
for certiorari under Rule 65 of the Rules of Court. That the NLRC issues an entry of judgment after
the lapse of ten (10) days from the parties’ receipt of its decision will only give rise to the
36

prevailing party’s right to move for the execution thereof but will not prevent the CA from taking
cognizance of a petition for certiorari on jurisdictional and due process considerations. In turn, the
37
decision rendered by the CA on a petition for certiorari may be appealed to this Court by way of a
petition for review on certiorari under Rule 45 of the Rules of Court. Under Section 5, Article VIII
of the Constitution, this Court has the power to “review, revise, reverse, modify, or affirm on
appeal or certiorari as the law or the Rules of Court may provide, final judgments and orders of
lower courts in x x x all cases in which only an error or question of law is involved.” Consistent
with this constitutional mandate, Rule 45 of the Rules of Court provides the remedy of an appeal
by certiorari from decisions, final orders or resolutions of the CA in any case, i.e., regardless of the
nature of the action or proceedings
involved, which would be but a continuation of the appellate process over the original case. Since
38

an appeal to this Court is not an original and independent action but a continuation of the
proceedings before the CA, the filing of a petition for review under Rule 45 cannot be barred by the
finality of the NLRC’s decision in the same way that a petition for certiorari under Rule 65 with
the CA cannot.

Furthermore, if the NLRC’s decision or resolution was reversed and set aside for being issued with
grave abuse of discretion by way of a petition for certiorari to the CA or to this Court by way of an
appeal from the decision of the CA, it is considered void ab initio and, thus, had never become final
and executory. 39

A Rule 45 Petition should be confined to questions of

law. Nevertheless, this Court has the power to resolve a
question of fact, such as whether a corporation is a
mere alter ego of another entity or whether the
corporate fiction was invoked for fraudulent or
malevolent ends, if the findings in assailed decision is
not supported by the evidence on record or based on a
misapprehension of facts.

The question of whether one corporation is merely an alter ego of another is purely one of
fact. So is the question of whether a corporation is a paper company, a sham or subterfuge or
whether the petitioner adduced the requisite quantum of evidence warranting the piercing of the
veil of the respondent’s corporate personality.40
 As a general rule, this Court is not a trier of facts and a petition for review
on certiorari under Rule 45 of the Rules of Court must exclusively raise questions of law.
Moreover, if factual findings of the NLRC and the LA have been affirmed by the CA, this Court
accords them the respect and finality they deserve. It is well-settled and oft-repeated that findings
of fact of administrative agencies and quasi-judicial bodies, which have acquired expertise because
their jurisdiction is confined to specific matters, are generally accorded not only respect, but finality
when affirmed by the CA. 41

Nevertheless, this Court will not hesitate to deviate from what are clearly procedural
guidelines and disturb and strike down the findings of the CA and those of the labor tribunals if
there is a showing that they are unsupported by the evidence on record or there was a patent
misappreciation of facts. Indeed, that the impugned decision of the CA is consistent with the
findings of the labor tribunals does not per seconclusively demonstrate the correctness thereof. By
way of exception to the general rule, this Court will scrutinize the facts if only to rectify the
prejudice and injustice resulting from an incorrect assessment of the evidence presented.

A resolution of an issue that has supposedly become

final and executory as the petitioner only raised it in his
reply to the respondents’ appeal may be revisited by the
appellate court if such is necessary for a just disposition
of the case.

As above-stated, the NLRC refused to disturb LA Gutierrez’s denial of the petitioner’s plea to
pierce Royale’s corporate veil as the petitioner did not appeal any portion of LA Gutierrez’s May
11, 2005 Decision.

In this respect, the NLRC cannot be accused of grave abuse of discretion. Under Section 4(c), Rule
VI of the NLRC Rules, the NLRC shall limit itself to reviewing and deciding only the issues that
42

were elevated on appeal. The NLRC, while not totally bound by technical rules of procedure, is not
licensed to disregard and violate the implementing rules it implemented. 43
Nonetheless, technicalities should not be allowed to stand in the way of equitably and completely
resolving the rights and obligations of the parties. Technical rules are not binding in labor cases and
are not to be applied strictly if the result would be detrimental to the working man. This Court may
44

choose not to encumber itself with technicalities and limitations consequent to procedural rules if
such will only serve as a hindrance to its duty to decide cases judiciously and in a manner that
would put an end with finality to all existing conflicts between the parties.

Royale is a continuation or successor of Sceptre.

A corporation is an artificial being created by operation of law. It possesses the right of succession
and such powers, attributes, and properties expressly authorized by law or incident to its existence.
It has a personality separate and distinct from the persons composing it, as well as from any other
legal entity to which it may be related. This is basic.
45

Equally well-settled is the principle that the corporate mask may be removed or the corporate
veil pierced when the corporation is just an alter ego of a person or of another corporation. For
reasons of public policy and in the interest of justice, the corporate veil will justifiably be impaled
only when it becomes a shield for fraud, illegality or inequity committed against third persons. 46

Hence, any application of the doctrine of piercing the corporate veil should be done with
caution. A court should be mindful of the milieu where it is to be applied. It must be certain that the
corporate fiction was misused to such an extent that injustice, fraud, or crime was committed
against another, in disregard of rights. The wrongdoing must be clearly and convincingly
established; it cannot be presumed. Otherwise, an injustice that was never unintended may result
from an erroneous application. 47

Whether the separate personality of the corporation should be pierced hinges on obtaining
facts appropriately pleaded or proved. However, any piercing of the corporate veil has to be done
with caution, albeit the Court will not hesitate to disregard the corporate veil when it is misused or
when necessary in the interest of justice. After all, the concept of corporate entity was not meant to
promote unfair objectives. 48

The doctrine of piercing the corporate veil applies only in three (3) basic areas, namely: 1)
defeat of public convenience as when the corporate fiction is used as a vehicle for the evasion of an
existing obligation; 2) fraud cases or when the corporate entity is used to justify a wrong, protect
fraud, or defend a crime; or 3) alter ego cases, where a corporation is merely a farce since it is a
mere alter ego or business conduit of a person, or where the
corporation is so organized and controlled and its affairs are so conducted as
to make it merely an instrumentality, agency, conduit or adjunct of another corporation. 49

In this regard, this Court finds cogent reason to reverse the CA’s findings. Evidence abound
showing that Royale is a mere continuation or successor of Sceptre and fraudulent objectives are
behind Royale’s incorporation and the petitioner’s subsequent employment therein. These are
plainly suggested by events that the respondents do not dispute and which the CA, the NLRC and
LA Gutierrez accept as fully substantiated but misappreciated as insufficient to warrant the use of
the equitable weapon of piercing.

As correctly pointed out by the petitioner, it was Aida who exercised control and supervision
over the affairs of both Sceptre and Royale. Contrary to the submissions of the respondents that
Roso had been the only one in sole control of Sceptre’s finances and business affairs, Aida took
over as early as 1999 when Roso assigned his license to operate Sceptre on May 3, 1999. As 50

further proof of Aida’s acquisition of the rights as Sceptre’s sole proprietor, she caused the
registration of the business name “Sceptre Security & Detective Agency” under her name with the
DTI a few months after Roso abdicated his rights to Sceptre in her favor. As far as Royale is
51

concerned, the respondents do not deny that she has a hand in its management and operation and
possesses control and supervision of its employees, including the petitioner. As the petitioner
correctly pointed out, that Aida was the one who decided to stop giving any assignments to the
petitioner and summarily dismiss him is an eloquent testament of the power she wields insofar as
Royale’s affairs are concerned. The presence of actual common control coupled with the misuse of
the corporate form to perpetrate oppressive or manipulative conduct or evade performance of legal
obligations is patent; Royale cannot hide behind its corporate fiction.
 Aida’s control over Sceptre and Royale does not, by itself, call for a disregard of the
corporate fiction. There must be a showing that a fraudulent intent or illegal purpose is behind the
exercise of such control to warrant the piercing of the corporate veil. However, the manner by
52

which the petitioner was made to resign from Sceptre and how he became an employee of Royale
suggest the perverted use of the legal fiction of the separate corporate personality. It is undisputed
that the petitioner tendered his resignation and that he applied at Royale at the instance of Karen
and Cesar and on the impression they created that these were necessary for his continued
employment. They orchestrated the petitioner’s resignation from Sceptre and subsequent
employment at Royale, taking advantage of their ascendancy over the petitioner and the latter’s
lack of knowledge of his rights and the consequences of his actions. Furthermore, that the petitioner
was made to resign from Sceptre and apply with Royale only to be unceremoniously terminated
shortly thereafter leads to the ineluctable conclusion that there was intent to violate the petitioner’s
rights as an employee, particularly his right to security of tenure. The respondents’ scheme reeks of
bad faith and fraud and compassionate justice dictates that Royale and Sceptre be merged as a
single entity, compelling Royale to credit and recognize the petitioner’s length of service with
Sceptre. The respondents cannot use the legal fiction of a separate corporate personality for ends
subversive of the policy and purpose behind its creation or which could not have been intended by
53

law to which it owed its being. 54

For the piercing doctrine to apply, it is of no consequence if Sceptre is a sole proprietorship.

As ruled in Prince Transport, Inc., et al. v. Garcia, et al., it is the act of hiding behind the separate
55

and distinct personalities of juridical entities to perpetuate fraud, commit illegal acts, evade one’s
obligations that the equitable piercing doctrine was formulated to address and prevent:

A settled formulation of the doctrine of piercing the corporate veil is that when two
business enterprises are owned, conducted and controlled by the same parties, both
law and equity will, when necessary to protect the rights of third parties, disregard the
legal fiction that these two entities are distinct and treat them as identical or as one
and the same. In the present case, it may be true that Lubas is a single proprietorship
and not a corporation. However, petitioners’ attempt to isolate themselves from and
hide behind the supposed separate and distinct personality of Lubas so as to evade
their liabilities is precisely what the classical doctrine of piercing the veil of corporate
entity seeks to prevent and remedy. 56
Also, Sceptre and Royale have the same principal place of business. As early as October 14, 1994,
Aida and Wilfredo became the owners of the property used by Sceptre as its principal place of
business by virtue of a Deed of Absolute Sale they executed with Roso. Royale, shortly after its
57

incorporation, started to hold office in the same property. These, the respondents failed to dispute.

The respondents do not likewise deny that Royale and Sceptre share the same officers and
employees. Karen assumed the dual role of Sceptre’s Operation Manager and incorporator of
Royale. With respect to the petitioner, even if he has already resigned from Sceptre and has been
employed by Royale, he was still using the patches and agency cloths of Sceptre during his
assignment at Highlight Metal.

Royale also claimed a right to the cash bond which the petitioner posted when he was still
with Sceptre. If Sceptre and Royale are indeed separate entities, Sceptre should have released the
petitioner’s cash bond when he resigned and Royale would have required the petitioner to post a
new cash bond in its favor.

Taking the foregoing in conjunction with Aida’s control over Sceptre’s and Royale’s
business affairs, it is patent that Royale was a mere subterfuge for Aida. Since a sole proprietorship
does not have a separate and distinct personality from that of the owner of the enterprise, the latter
is personally liable. This is what she sought to avoid but cannot prosper.

Effectively, the petitioner cannot be deemed to have changed employers as Royale and
Sceptre are one and the same. His separation pay should, thus, be computed from the date he was
hired by Sceptre in April 1976 until the finality of this decision. Based on this Court’s ruling
inMasagana Concrete Products, et al. v. NLRC, et al., the intervening period between the day an
58

employee was illegally dismissed and the day the decision finding him illegally dismissed becomes
final and executory shall be considered in the computation of his separation pay as a period of
“imputed” or “putative” service:

Separation pay, equivalent to one month's salary for every year of service, is
awarded as an alternative to reinstatement when the latter is no longer an option.
Separation pay is computed from the commencement of employment up to the time of
 termination, including the imputed service for which the employee is entitled to
backwages, with the salary rate prevailing at the end of the period of putative service
being the basis for computation. 59

It is well-settled, even axiomatic, that if reinstatement is

not possible, the period covered in the computation of
backwages is from the time the employee was
unlawfully terminated until the finality of the decision
finding illegal dismissal.

With respect to the petitioner’s backwages, this Court cannot subscribe to the view that it should be
limited to an amount equivalent to three (3) months of his salary. Backwages is a remedy affording
the employee a way to recover what he has lost by reason of the unlawful dismissal. In awarding
60

backwages, the primordial consideration is the income that should have accrued to the employee
from the time that he was dismissed up to his reinstatement and the length of service prior to his
61

dismissal is definitely inconsequential.

As early as 1996, this Court, in Bustamante, et al. v. NLRC, et al., clarified in no uncertain
62

terms that if reinstatement is no longer possible, backwages should be computed from the time the
employee was terminated until the finality of the decision, finding the dismissal unlawful.

Therefore, in accordance with R.A. No. 6715, petitioners are entitled on their full
backwages, inclusive of allowances and other benefits or their monetary equivalent,
from the time their actual compensation was withheld on them up to the time of their
actual reinstatement.

As to reinstatement of petitioners, this Court has already ruled that reinstatement is no

longer feasible, because the company would be adjustly prejudiced by the continued
employment of petitioners who at present are overage, a separation pay equal to one-
month salary granted to them in the Labor Arbiter's decision was in order and,
therefore, affirmed on the Court's decision of 15 March 1996. Furthermore, since
 reinstatement on this case is no longer feasible, the amount of backwages shall be
computed from the time of their illegal termination on 25 June 1990 up to the
time of finality of this decision. (emphasis supplied)
63

A further clarification was made in Javellana, Jr. v. Belen: 64

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

Art. 279. Security of Tenure. - In cases of regular employment, the

employer shall not terminate the services of an employee except for a
just cause or when authorized by this Title. An employee who is unjustly
dismissed from work shall be entitled to reinstatement without loss of
seniority rights and other privileges and to his full backwages, inclusive
of allowances, and to his other benefits or their monetary equivalent
computed from the time his compensation was withheld from him up to
the time of his actual reinstatement.

Clearly, the law intends the award of backwages and similar benefits to accumulate
past the date of the Labor Arbiter's decision until the dismissed employee is actually
reinstated. But if, as in this case, reinstatement is no longer possible, this Court has
consistently ruled that backwages shall be computed from the time of illegal dismissal
until the date the decision becomes final. (citation omitted)
65

In case separation pay is awarded and reinstatement is no longer feasible, backwages shall be
computed from the time of illegal dismissal up to the finality of the decision should separation pay
not be paid in the meantime. It is the employee’s actual receipt of the full amount of his separation
pay that will effectively terminate the employment of an illegally dismissed employee. Otherwise,
66

the employer-employee relationship subsists and the illegally dismissed employee is entitled to
backwages, taking into account the increases and other benefits, including the 13 th month pay, that
were received by his co-employees who are not dismissed. It is the obligation of the employer to
67
pay an illegally dismissed employee or worker the whole amount of the salaries or wages, plus all
other benefits and
bonuses and general increases, to which he would have been normally entitled had he not been
dismissed and had not stopped working. 68

In fine, this Court holds Royale liable to pay the petitioner backwages to be computed from
his dismissal on October 1, 2003 until the finality of this decision. Nonetheless, the amount
received by the petitioner from the respondents in satisfaction of the November 30, 2005 Decision
shall be deducted accordingly.

Finally, moral damages and exemplary damages at P25,000.00 each as indemnity for the
petitioner’s dismissal, which was tainted by bad faith and fraud, are in order. Moral damages may
be recovered where the dismissal of the employee was tainted by bad faith or fraud, or where it
constituted an act oppressive to labor, and done in a manner contrary to morals, good customs or
public policy while exemplary damages are recoverable only if the dismissal was done in a wanton,
oppressive, or malevolent manner. 69

WHEREFORE, premises considered, the Petition is hereby GRANTED.

We REVERSE and SET ASIDE the CA’s May 29, 2008 Decision in C.A.-G.R. SP No. 02127 and
order the respondents to pay the petitioner the following minus the amount of (P23,521.67) paid to
the petitioner in satisfaction of the NLRC’s November 30, 2005 Decision in NLRC Case No. V-
000355-05:

a) full backwages and other benefits computed from October 1, 2003 (the date Royale
illegally dismissed the petitioner) until the finality of this decision;

b) separation pay computed from April 1976 until the finality of this decision at the rate of one
month pay per year of service;
 c) ten percent (10%) attorney’s fees based on the total amount of the awards under (a) and
(b) above;

d) moral damages of Twenty-Five Thousand Pesos (P25,000.00); and

5. exemplary damages of Twenty-Five Thousand Pesos (P25,000.00).

This case is REMANDED to the labor arbiter for computation of the separation pay, backwages,
and other monetary awards due the petitioner.

SO ORDERED.