Labor 1 First 14 Cases August 19, 2016.docx

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, Petitioner,

G.R. No. 169712 Present:

- versus -

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

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

Promulgated:

January 20, 2009 x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

RESOLUTION

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

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

WHEREFORE, premises considered, the instant petition is hereby DENIED for lack of merit and the Decision of the Court of Appeals 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 with FINALITY for lack of merit.

resolves

to DENY the

motion

for

reconsideration

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

G.R. No. 162053

Present: PUNO, C.J., Chairperson, SANDOVAL-GUTIERREZ, CORONA, AZCUNA, and GARCIA, JJ.

-versusNATIONAL 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 subtopic 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 ObreroNFL (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 19962001 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 19931995 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.

4.

The accommodations reach P2.4 million upon the request of Mr. Edmund Ramos, surety, and this request was subsequently approved by undersigned. The excess accommodations started in July 96 without higher management approval. Checks started bouncing on September 20, 1996.

5.

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

6.

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

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

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

same reason that other banks granted DAUD to subject account and, likewise, the checks returned unpaid, namely: Solidbank P1.8 Million Allied Bank .8 Far East Bank 2.0 MBTC 5.0 The attached letter of Mr. Ramos dated 19 Nov. 1996 will speak for itself. Further to this, undersigned conferred with the acting BOH VSYap if these checks are legitimate 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 1. Infraction of Bank procedures in handling any Bank transaction or work assignment which results in a loss or probable loss

1ST Written Reprimand/ Suspension*

PENALTIES 2ND 3RD Suspension/ Dismissal* Dismissal*

4TH

* 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, Petitioner,

G.R. No. 177114

Present: -

versus -

CARPIO, J., Chairperson, BRION, DEL CASTILLO, ABAD, and

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

PEREZ, JJ.

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 oneman 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 showcause 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 nonpayment 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, vicepresident, 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, nonpayment 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-0006252004 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

03/06/06

Boundary System7

04/2000

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 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: 1

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 which states: 9

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 be reviewed as technicalities should not serve as bar to the full adjudication of cases. Thus: 14

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 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 17

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 employees; (iii) on October 14, 1994, Roso, the sole proprietor of Sceptre, sold to Aida, and her husband, Wilfredo Gracia K. Tan (Wilfredo), the property used by Sceptre as its principal place of business; (iv) Wilfredo is one of the incorporators of Royale; (v) on May 3, 1999, Roso ceded the license to operate Sceptre issued by the Philippine National Police to Aida; (vi) on July 28, 1999, 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 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 the incorporators of Royale; and (ix) Cesar Tan II, the son of Aida was one of Sceptre’s officers and is one of the incorporators of Royale. 19

20

21

22

23

24

25

26

27

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 full amount of the monetary award thereunder shortly after the writ of execution was issued. The 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. 29

30

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 that this does not preclude this Court from modifying a decision that is tainted with grave abuse of discretion or issued without jurisdiction. 31

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 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. 34

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 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 36

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 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. 38

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 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. 42

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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 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. 44

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 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 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. 50

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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 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 law to which it owed its being. 52

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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 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: 55

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 incorporation, started to hold office in the same property. These, the respondents failed to dispute. 57

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 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: 58

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 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 dismissal is definitely inconsequential. 60

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

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 onemonth 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:

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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, 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 66

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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. V000355-05:

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.