RUBEN SERRANO vs.

NATIONAL LABOR RELATIONS COMMISSION This is a petition seeking review of the resolutions, dated March 30, 1994 and August 26, 1994, of the National Labor Relations Commission (NLRC) which reversed the decision of the Labor Arbiter and dismissed petitioner Ruben Serranos complaint for illegal dismissal and denied his motion for reconsideration. The facts are as follows: Petitioner was hired by private respondent Isetann Department Store as a security checker to apprehend shoplifters and prevent pilferage of merchandise.[1] Initially hired on October 4, 1984 on contractual basis, petitioner eventually became a regular employee on April 4, 1985. In 1988, he became head of the Security Checkers Section of private respondent.[2] Sometime in 1991, as a cost-cutting measure, private respondent decided to phase out its entire security section and engage the services of an independent security agency. For this reason, it wrote petitioner the following memorandum:[3] October 11, 1991 MR. RUBEN SERRANO PRESENT Dear Mr. Serrano, ......In view of the retrenchment program of the company, we hereby reiterate our verbal notice to you of your termination as Security Section Head effective October 11, 1991. ......Please secure your clearance from this office. Very truly yours, TERESITA A. VILLANUEVA Human Resources Division Manager The loss of his employment prompted petitioner to file a complaint on December 3, 1991 for illegal dismissal, illegal layoff, unfair labor practice, underpayment of wages, and nonpayment of salary and overtime pay.[4] The parties were required to submit their position papers, on the basis of which the Labor Arbiter defined the issues as follows:[5] Whether or not there is a valid ground for the dismissal of the complainant. Whether or not complainant is entitled to his monetary claims for underpayment of wages, nonpayment of salaries, 13th month pay for 1991 and overtime pay. Whether or not Respondent is guilty of unfair labor practice. Thereafter, the case was heard. On April 30, 1993, the Labor Arbiter rendered a decision finding petitioner to have been illegally dismissed. He ruled that private respondent failed to establish that it had retrenched its security section to prevent or minimize losses to its business; that private respondent failed to accord due process to petitioner; that private respondent failed to use reasonable standards in selecting employees whose employment would be terminated; that private respondent had not shown that petitioner and other employees in the security section were so inefficient so as to justify their replacement by a security agency, or that "cost-saving devices [such as] secret video cameras (to monitor and prevent shoplifting) and secret code tags on the merchandise" could not have been employed; instead, the day after petitioners dismissal, private respondent employed a safety and security supervisor with duties and functions similar to those of petitioner. Accordingly, the Labor Arbiter ordered:[6] WHEREFORE, above premises considered, judgment is hereby decreed:

(a)......Finding the dismissal of the complainant to be illegal and concomitantly, Respondent is ordered to pay complainant full backwages without qualification or deduction in the amount of P74,740.00from the time of his dismissal until reinstatement (computed till promulgation only) based on his monthly salary of P4,040.00/month at the time of his termination but limited to (3) three years; (b)......Ordering the Respondent to immediately reinstate the complainant to his former position as security section head or to a reasonably equivalent supervisorial position in charges of security without loss of seniority rights, privileges and benefits. This order is immediately executory even pending appeal; (c)......Ordering the Respondent to pay complainant unpaid wages in the amount of P2,020.73 and proportionate 13th month pay in the amount of P3,198.30; (d)......Ordering the Respondent to pay complainant the amount of P7,995.91, representing 10% attorneys fees based on the total judgment award of P79,959.12. All other claims of the complainant whether monetary or otherwise is hereby dismissed for lack of merit. SO ORDERED. Private respondent appealed to the NLRC which, in its resolution of March 30, 1994, reversed the decision of the Labor Arbiter and ordered petitioner to be given separation pay equivalent to one month pay for every year of service, unpaid salary, and proportionate 13th month pay. Petitioner filed a motion for reconsideration, but his motion was denied. The NLRC held that the phase-out of private respondents security section and the hiring of an independent security agency constituted an exercise by private respondent of "[a] legitimate business decision whose wisdom we do not intend to inquire into and for which we cannot substitute our judgment"; that the distinction made by the Labor Arbiter between "retrenchment" and the employment of "cost-saving devices" under Art. 283 of the Labor Code was insignificant because the company official who wrote the dismissal letter apparently used the term "retrenchment" in its "plain and ordinary sense: to layoff or remove from ones job, regardless of the reason therefor"; that the rule of "reasonable criteria" in the selection of the employees to be retrenched did not apply because all positions in the security section had been abolished; and that the appointment of a safety and security supervisor referred to by petitioner to prove bad faith on private respondents part was of no moment because the position had long been in existence and was separate from petitioners position as head of the Security Checkers Section. Hence this petition. Petitioner raises the following issue: IS THE HIRING OF AN INDEPENDENT SECURITY AGENCY BY THE PRIVATE RESPONDENT TO REPLACE ITS CURRENT SECURITY SECTION A VALID GROUND FOR THE DISMISSAL OF THE EMPLOYEES CLASSED UNDER THE LATTER?[7] Petitioner contends that abolition of private respondents Security Checkers Section and the employment of an independent security agency do not fall under any of the authorized causes for dismissal under Art. 283 of the Labor Code. Petitioner Laid Off for Cause Petitioners contention has no merit. Art. 283 provides: Closure of establishment and reduction of personnel. The employer may also terminate the employment of any employee due to the installation of labor-saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operations of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the workers and the Department of Labor and Employment at least one (1) month before the intended date thereof. In case of termination due to the installation of labor-saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least one (1) month pay or to at least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of closure or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to at least one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered as one (1) whole year.

In De Ocampo v. National Labor Relations Commission,[8] this Court upheld the termination of employment of three mechanics in a transportation company and their replacement by a company rendering maintenance and repair services. It held: In contracting the services of Gemac Machineries, as part of the companys cost-saving program, the services rendered by the mechanics became redundant and superfluous, and therefore properly terminable. The company merely exercised its business judgment or management prerogative. And in the absence of any proof that the management abused its discretion or acted in a malicious or arbitrary manner, the court will not interfere with the exercise of such prerogative.[9] In Asian Alcohol Corporation v. National Labor Relations Commission,[10] the Court likewise upheld the termination of employment of water pump tenders and their replacement by independent contractors. It ruled that an employers good faith in implementing a redundancy program is not necessarily put in doubt by the availment of the services of an independent contractor to replace the services of the terminated employees to promote economy and efficiency. Indeed, as we pointed out in another case, the "[management of a company] cannot be denied the faculty of promoting efficiency and attaining economy by a study of what units are essential for its operation. To it belongs the ultimate determination of whether services should be performed by its personnel or contracted to outside agencies . . . [While there] should be mutual consultation, eventually deference is to be paid to what management decides." [11]Consequently, absent proof that management acted in a malicious or arbitrary manner, the Court will not interfere with the exercise of judgment by an employer.[12] In the case at bar, we have only the bare assertion of petitioner that, in abolishing the security section, private respondents real purpose was to avoid payment to the security checkers of the wage increases provided in the collective bargaining agreement approved in 1990.[13] Such an assertion is not a sufficient basis for concluding that the termination of petitioners employment was not a bona fide decision of management to obtain reasonable return from its investment, which is a right guaranteed to employers under the Constitution. [14] Indeed, that the phase-out of the security section constituted a "legitimate business decision" is a factual finding of an administrative agency which must be accorded respect and even finality by this Court since nothing can be found in the record which fairly detracts from such finding.[15] Accordingly, we hold that the termination of petitioners services was for an authorized cause, i.e., redundancy. Hence, pursuant to Art. 283 of the Labor Code, petitioner should be given separation pay at the rate of one month pay for every year of service. Sanctions for Violations of the Notice Requirement Art. 283 also provides that to terminate the employment of an employee for any of the authorized causes the employer must serve "a written notice on the workers and the Department of Labor and Employment at least one (1) month before the intended date thereof." In the case at bar, petitioner was given a notice of termination on October 11, 1991. On the same day, his services were terminated. He was thus denied his right to be given written notice before the termination of his employment, and the question is the appropriate sanction for the violation of petitioners right. To be sure, this is not the first time this question has arisen. In Sebuguero v. NLRC,[16] workers in a garment factory were temporarily laid off due to the cancellation of orders and a garment embargo. The Labor Arbiter found that the workers had been illegally dismissed and ordered the company to pay separation pay and backwages. The NLRC, on the other hand, found that this was a case of retrenchment due to business losses and ordered the payment of separation pay without backwages. This Court sustained the NLRCs finding. However, as the company did not comply with the 30-day written notice in Art. 283 of the Labor Code, the Court ordered the employer to pay the workers P2,000.00 each as indemnity. The decision followed the ruling in several cases involving dismissals which, although based on any of the just causes under Art. 282,[17] were effected without notice and hearing to the employee as required by the implementing rules. [18] As this Court said: "It is now settled that where the dismissal of one employee is in fact for a just and valid cause and is so proven to be but he is not accorded his right to due process, i.e., he was not furnished the twin requirements of notice and opportunity to be heard, the dismissal shall be upheld but the employer must be sanctioned for non-compliance with the requirements of, or for failure to observe, due process."[19] The rule reversed a long standing policy theretofore followed that even though the dismissal is based on a just cause or the termination of employment is for an authorized cause, the dismissal or termination is illegal if effected without notice to the employee. The shift in doctrine took place in 1989 in Wenphil Corp. v. NLRC.[20] In announcing the change, this Court said:[21]

The Court holds that the policy of ordering the reinstatement to the service of an employee without loss of seniority and the payment of his wages during the period of his separation until his actual reinstatement but not exceeding three (3) years without qualification or deduction, when it appears he was not afforded due process, although his dismissal was found to be for just and authorized cause in an appropriate proceeding in the Ministry of Labor and Employment, should be re-examined. It will be highly prejudicial to the interests of the employer to impose on him the services of an employee who has been shown to be guilty of the charges that warranted his dismissal from employment. Indeed, it will demoralize the rank and file if the undeserving, if not undesirable, remains in the service. However, the petitioner must nevertheless be held to account for failure to extend to private respondent his right to an investigation before causing his dismissal. The rule is explicit as above discussed. The dismissal of an employee must be for just or authorized cause and after due process. Petitioner committed an infraction of the second requirement. Thus, it must be imposed a sanction for its failure to give a formal notice and conduct an investigation as required by law before dismissing petitioner from employment. Considering the circumstances of this case petitioner must indemnify the private respondent the amount of P1,000.00. The measure of this award depends on the facts of each case and the gravity of the omission committed by the employer. The fines imposed for violations of the from P1,000.00[22] to P2,000.00[23] to P5,000.00[24] to P10,000.00.[25] Need for Reexamining the Wenphil Doctrine Today, we once again consider the question of appropriate sanctions for violations of the notice requirement in light of our experience during the last decade or so with the Wenphil doctrine. The number of cases involving dismissals without the requisite notice to the employee, although effected for just or authorized causes, suggests that the imposition of fine for violation of the notice requirement has not been effective in deterring violations of the notice requirement. Justice Panganiban finds the monetary sanctions "too insignificant, too niggardly, and sometimes even too late." On the other hand, Justice Puno says there has in effect been fostered a policy of "dismiss now, pay later" which moneyed employers find more convenient to comply with than the requirement to serve a 30-day written notice (in the case of termination of employment for an authorized cause under Arts. 283-284) or to give notice and hearing (in the case of dismissals for just causes under Art. 282). For this reason, they regard any dismissal or layoff without the requisite notice to be null and void even though there are just or authorized causes for such dismissal or layoff. Consequently, in their view, the employee concerned should be reinstated and paid backwages. Validity of Petitioners Layoff Not Affected by Lack of Notice We agree with our esteemed colleagues, Justices Puno and Panganiban, that we should rethink the sanction of fine for an employers disregard of the notice requirement. We do not agree, however, that disregard of this requirement by an employer renders the dismissal or termination of employment null and void. Such a stance is actually a reversion to the discredited pre-Wenphil rule of ordering an employee to be reinstated and paid backwages when it is shown that he has not been given notice and hearing although his dismissal or layoff is later found to be for a just or authorized cause. Such rule was abandoned in Wenphil because it is really unjust to require an employer to keep in his service one who is guilty, for example, of an attempt on the life of the employer or the latters family, or when the employer is precisely retrenching in order to prevent losses. The need is for a rule which, while recognizing the employees right to notice before he is dismissed or laid off, at the same time acknowledges the right of the employer to dismiss for any of the just causes enumerated in Art. 282 or to terminate employment for any of the authorized causes mentioned in Arts. 283-284. If the Wenphil rule imposing a fine on an employer who is found to have dismissed an employee for cause without prior notice is deemed ineffective in deterring employer violations of the notice requirement, the remedy is not to declare the dismissal void if there are just or valid grounds for such dismissal or if the termination is for an authorized cause. That would be to uphold the right of the employee but deny the right of the employer to dismiss for cause. Rather, the remedy is to order the payment to the employee of full backwages from the time of his dismissal until the court finds that the dismissal was for a just cause. But, otherwise, his dismissal must be upheld and he should not be reinstated. This is because his dismissal is ineffectual. For the same reason, if an employee is laid off for any of the causes in Arts. 283-284, i.e., installation of a labor-saving device, but the employer did not give him and the DOLE a 30-day written notice of termination in advance, then the termination of his employment should be considered ineffectual and he should be paid backwages. However, the notice requirement have varied

termination of his employment should not be considered void but he should simply be paid separation pay as provided in Art. 283 in addition to backwages. Justice Puno argues that an employers failure to comply with the notice requirement constitutes a denial of the employees right to due process. Prescinding from this premise, he quotes the statement of Chief Justice Concepcion inVda. de Cuaycong v. Vda. de Sengbengco[26] that "acts of Congress, as well as of the Executive, can deny due process only under the pain of nullity, and judicial proceedings suffering from the same flaw are subject to the same sanction, any statutory provision to the contrary notwithstanding." Justice Puno concludes that the dismissal of an employee without notice and hearing, even if for a just cause, as provided in Art. 282, or for an authorized cause, as provided in Arts. 283284, is a nullity. Hence, even if just or authorized causes exist, the employee should be reinstated with full back pay. On the other hand, Justice Panganiban quotes from the statement in People v. Bocar[27] that "[w]here the denial of the fundamental right of due process is apparent, a decision rendered in disregard of that right is void for lack of jurisdiction." Violation of Notice Requirement Not a Denial of Due Process The cases cited by both Justices Puno and Panganiban refer, however, to the denial of due process by the State, which is not the case here. There are three reasons why, on the other hand, violation by the employer of the notice requirement cannot be considered a denial of due process resulting in the nullity of the employees dismissal or layoff. The first is that the Due Process Clause of the Constitution is a limitation on governmental powers. It does not apply to the exercise of private power, such as the termination of employment under the Labor Code. This is plain from the text of Art. III, 1 of the Constitution, viz.: "No person shall be deprived of life, liberty, or property without due process of law. . . ." The reason is simple: Only the State has authority to take the life, liberty, or property of the individual. The purpose of the Due Process Clause is to ensure that the exercise of this power is consistent with what are considered civilized methods. The second reason is that notice and hearing are required under the Due Process Clause before the power of organized society are brought to bear upon the individual. This is obviously not the case of termination of employment under Art. 283. Here the employee is not faced with an aspect of the adversary system. The purpose for requiring a 30-day written notice before an employee is laid off is not to afford him an opportunity to be heard on any charge against him, for there is none. The purpose rather is to give him time to prepare for the eventual loss of his job and the DOLE an opportunity to determine whether economic causes do exist justifying the termination of his employment. Even in cases of dismissal under Art. 282, the purpose for the requirement of notice and hearing is not to comply with Due Process Clause of the Constitution. The time for notice and hearing is at the trial stage. Then that is the time we speak of notice and hearing as the essence of procedural due process. Thus, compliance by the employer with the notice requirement before he dismisses an employee does not foreclose the right of the latter to question the legality of his dismissal. As Art. 277(b) provides, "Any decision taken by the employer shall be without prejudice to the right of the worker to contest the validity or legality of his dismissal by filing a complaint with the regional branch of the National Labor Relations Commission." Indeed, to contend that the notice requirement in the Labor Code is an aspect of due process is to overlook the fact that Art. 283 had its origin in Art. 302 of the Spanish Code of Commerce of 1882 which gave either party to the employeremployee relationship the right to terminate their relationship by giving notice to the other one month in advance. In lieu of notice, an employee could be laid off by paying him a mesada equivalent to his salary for one month.[28] This provision was repealed by Art. 2270 of the Civil Code, which took effect on August 30, 1950. But on June 12, 1954, R.A. No. 1052, otherwise known as the Termination Pay Law, was enacted reviving the mesada. On June 21, 1957, the law was amended by R.A. No. 1787 providing for the giving of advance notice or the payment of compensation at the rate of onehalf month for every year of service.[29] The Termination Pay Law was held not to be a substantive law but a regulatory measure, the purpose of which was to give the employer the opportunity to find a replacement or substitute, and the employee the equal opportunity to look for another job or source of employment. Where the termination of employment was for a just cause, no notice was required to be given to the employee.[30] It was only on September 4, 1981 that notice was required to be given even where the dismissal or termination of an employee was for cause. This was made in the rules issued by the then Minister of Labor and Employment to implement B.P. Blg. 130 which amended the Labor Code. And it was still much later when the notice requirement was embodied in the law with the amendment of Art. 277(b) by R.A. No. 6715 on March 2, 1989. It cannot be that the former regime denied due process to the employee. Otherwise, there should now likewise be a rule that, in case an employee leaves his job without cause and without prior notice to his employer, his act should be void instead of simply making him liable for damages.

The third reason why the notice requirement under Art. 283 can not be considered a requirement of the Due Process Clause is that the employer cannot really be expected to be entirely an impartial judge of his own cause. This is also the case in termination of employment for a just cause under Art. 282 (i.e., serious misconduct or willful disobedience by the employee of the lawful orders of the employer, gross and habitual neglect of duties, fraud or willful breach of trust of the employer, commission of crime against the employer or the latters immediate family or duly authorized representatives, or other analogous cases). Justice Puno disputes this. He says that "statistics in the DOLE will prove that many cases have been won by employees before the grievance committees manned by impartial judges of the company." The grievance machinery is, however, different because it is established by agreement of the employer and the employees and composed of representatives from both sides. That is why, in Batangas Laguna Tayabas Bus Co. v. Court of Appeals,[31] which Justice Puno cites, it was held that "Since the right of [an employee] to his labor is in itself a property and that the labor agreement between him and [his employer] is the law between the parties, his summary and arbitrary dismissal amounted to deprivation of his property without due process of law." But here we are dealing with dismissals and layoffs by employers alone, without the intervention of any grievance machinery. Accordingly in Montemayor v. Araneta University Foundation,[32] although a professor was dismissed without a hearing by his university, his dismissal for having made homosexual advances on a student was sustained, it appearing that in the NLRC, the employee was fully heard in his defense. Lack of Notice Only Makes Termination Ineffectual Not all notice requirements are requirements of due process. Some are simply part of a procedure to be followed before a right granted to a party can be exercised. Others are simply an application of the Justinian precept, embodied in the Civil Code,[33] to act with justice, give everyone his due, and observe honesty and good faith toward ones fellowmen. Such is the notice requirement in Arts. 282-283. The consequence of the failure either of the employer or the employee to live up to this precept is to make him liable in damages, not to render his act (dismissal or resignation, as the case may be) void. The measure of damages is the amount of wages the employee should have received were it not for the termination of his employment without prior notice. If warranted, nominal and moral damages may also be awarded. We hold, therefore, that, with respect to Art. 283 of the Labor Code, the employers failure to comply with the notice requirement does not constitute a denial of due process but a mere failure to observe a procedure for the termination of employment which makes the termination of employment merely ineffectual. It is similar to the failure to observe the provisions of Art. 1592, in relation to Art. 1191, of the Civil Code [34] in rescinding a contract for the sale of immovable property. Under these provisions, while the power of a party to rescind a contract is implied in reciprocal obligations, nonetheless, in cases involving the sale of immovable property, the vendor cannot exercise this power even though the vendee defaults in the payment of the price, except by bringing an action in court or giving notice of rescission by means of a notarial demand.[35] Consequently, a notice of rescission given in the letter of an attorney has no legal effect, and the vendee can make payment even after the due date since no valid notice of rescission has been given.[36] Indeed, under the Labor Code, only the absence of a just cause for the termination of employment can make the dismissal of an employee illegal. This is clear from Art. 279 which provides: 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.[37] Thus, only if the termination of employment is not for any of the causes provided by law is it illegal and, therefore, the employee should be reinstated and paid backwages. To contend, as Justices Puno and Panganiban do, that even if the termination is for a just or authorized cause the employee concerned should be reinstated and paid backwages would be to amend Art. 279 by adding another ground for considering a dismissal illegal. What is more, it would ignore the fact that under Art. 285, if it is the employee who fails to give a written notice to the employer that he is leaving the service of the latter, at least one month in advance, his failure to comply with the legal requirement does not result in making his resignation void but only in making him liable for damages.[38] This disparity in legal treatment, which would result from the adoption of the theory of the minority cannot simply be explained by invoking President Ramon Magsaysays motto that "he who has less in life should have more in law." That would be a misapplication of this noble phrase originally from Professor Thomas Reed Powell of the Harvard Law School. Justice Panganiban cites Pepsi-Cola Bottling Co. v. NLRC,[39] in support of his view that an illegal dismissal results not only from want of legal cause but also from the failure to observe "due process." The Pepsi-Cola case actually involved a

dismissal for an alleged loss of trust and confidence which, as found by the Court, was not proven. The dismissal was, therefore, illegal, not because there was a denial of due process, but because the dismissal was without cause. The statement that the failure of management to comply with the notice requirement "taints the dismissal with illegality" was merely a dictum thrown in as additional grounds for holding the dismissal to be illegal. Given the nature of the violation, therefore, the appropriate sanction for the failure to give notice is the payment of backwages for the period when the employee is considered not to have been effectively dismissed or his employment terminated. The sanction is not the payment alone of nominal damages as Justice Vitug contends. Unjust Results of Considering Dismissals/Layoffs Without Prior Notice As Illegal The refusal to look beyond the validity of the initial action taken by the employer to terminate employment either for an authorized or just cause can result in an injustice to the employer. For not giving notice and hearing before dismissing an employee, who is otherwise guilty of, say, theft, or even of an attempt against the life of the employer, an employer will be forced to keep in his employ such guilty employee. This is unjust. It is true the Constitution regards labor as "a primary social economic force."[40] But so does it declare that it "recognizes the indispensable role of the private sector, encourages private enterprise, and provides incentives to needed investment."[41] The Constitution bids the State to "afford full protection to labor."[42] But it is equally true that "the law, in protecting the rights of the laborer, authorizes neither oppression nor self-destruction of the employer." [43] And it is oppression to compel the employer to continue in employment one who is guilty or to force the employer to remain in operation when it is not economically in his interest to do so. In sum, we hold that if in proceedings for reinstatement under Art. 283, it is shown that the termination of employment was due to an authorized cause, then the employee concerned should not be ordered reinstated even though there is failure to comply with the 30-day notice requirement. Instead, he must be granted separation pay in accordance with Art. 283, to wit: In case of termination due to the installation of labor-saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one month for every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of closures or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six months shall be considered one (1) whole year. If the employees separation is without cause, instead of being given separation pay, he should be reinstated. In either case, whether he is reinstated or only granted separation pay, he should be paid full backwages if he has been laid off without written notice at least 30 days in advance. On the other hand, with respect to dismissals for cause under Art. 282, if it is shown that the employee was dismissed for any of the just causes mentioned in said Art. 282, then, in accordance with that article, he should not be reinstated. However, he must be paid backwages from the time his employment was terminated until it is determined that the termination of employment is for a just cause because the failure to hear him before he is dismissed renders the termination of his employment without legal effect. WHEREFORE, the petition is GRANTED and the resolution of the National Labor Relations Commission is MODIFIED by ordering private respondent Isetann Department Store, Inc. to pay petitioner separation pay equivalent to one (1) month pay for every year of service, his unpaid salary, and his proportionate 13th month pay and, in addition, full backwages from the time his employment was terminated on October 11, 1991 up to the time the decision herein becomes final. For this purpose, this case is REMANDED to the Labor Arbiter for computation of the separation pay, backwages, and other monetary awards to petitioner. SO ORDERED.

JENNY AGABON vs. NATIONAL LABOR RELATIONS COMMISSION This petition for review seeks to reverse the decision[1] of the Court of Appeals dated January 23, 2003, in CA-G.R. SP No. 63017, modifying the decision of National Labor Relations Commission (NLRC) in NLRC-NCR Case No. 023442-00. Private respondent Riviera Home Improvements, Inc. is engaged in the business of selling and installing ornamental and construction materials. It employed petitioners Virgilio Agabon and Jenny Agabon as gypsum board and cornice installers on January 2, 1992[2] until February 23, 1999 when they were dismissed for abandonment of work. Petitioners then filed a complaint for illegal dismissal and payment of money claims[3] and on December 28, 1999, the Labor Arbiter rendered a decision declaring the dismissals illegal and ordered private respondent to pay the monetary claims. The dispositive portion of the decision states: WHEREFORE, premises considered, We find the termination of the complainants illegal. respondent is hereby ordered to pay them their backwages up to November 29, 1999 in the sum of: 1. 2. Jenny M. Agabon Virgilio C. Agabon P56, 231.93 56, 231.93 Accordingly,

and, in lieu of reinstatement to pay them their separation pay of one (1) month for every year of service from date of hiring up to November 29, 1999. Respondent is further ordered to pay the complainants their holiday pay and service incentive leave pay for the years 1996, 1997 and 1998 as well as their premium pay for holidays and rest days and Virgilio Agabons 13th month pay differential amounting to TWO THOUSAND ONE HUNDRED FIFTY (P2,150.00) Pesos, or the aggregate amount of ONE HUNDRED TWENTY ONE THOUSAND SIX HUNDRED SEVENTY EIGHT & 93/100 (P121,678.93) Pesos for Jenny Agabon, and ONE HUNDRED TWENTY THREE THOUSAND EIGHT HUNDRED TWENTY EIGHT & 93/100 (P123,828.93) Pesos for Virgilio Agabon, as per attached computation of Julieta C. Nicolas, OIC, Research and Computation Unit, NCR. SO ORDERED.[4] On appeal, the NLRC reversed the Labor Arbiter because it found that the petitioners had abandoned their work, and were not entitled to backwages and separation pay. The other money claims awarded by the Labor Arbiter were also denied for lack of evidence.[5] Upon denial of their motion for reconsideration, petitioners filed a petition for certiorari with the Court of Appeals. The Court of Appeals in turn ruled that the dismissal of the petitioners was not illegal because they had abandoned their employment but ordered the payment of money claims. The dispositive portion of the decision reads: WHEREFORE, the decision of the National Labor Relations Commission is REVERSED only insofar as it dismissed petitioners money claims. Private respondents are ordered to pay petitioners holiday pay for four (4) regular holidays in 1996, 1997, and 1998, as well as their service incentive leave pay for said years, and to pay the balance of petitioner Virgilio Agabons 13th month pay for 1998 in the amount of P2,150.00. SO ORDERED.[6] Hence, this petition for review on the sole issue of whether petitioners were illegally dismissed.[7] Petitioners assert that they were dismissed because the private respondent refused to give them assignments unless they agreed to work on a pakyaw basis when they reported for duty on February 23, 1999. They did not agree on this arrangement because it would mean losing benefits as Social Security System (SSS) members. Petitioners also claim that private respondent did not comply with the twin requirements of notice and hearing.[8] Private respondent, on the other hand, maintained that petitioners were not dismissed but had abandoned their work. [9] In fact, private respondent sent two letters to the last known addresses of the petitioners advising them to report for work. Private respondents manager even talked to petitioner Virgilio Agabon by telephone sometime in June 1999 to tell him about the new assignment at Pacific Plaza Towers involving 40,000 square meters of cornice installation work. However, petitioners did not report for work because they had subcontracted to perform installation work for another company. Petitioners also demanded for an increase in their wage to P280.00 per day. When this was not granted, petitioners stopped reporting for work and filed the illegal dismissal case.[10]

It is well-settled that findings of fact of quasi-judicial agencies like the NLRC are accorded not only respect but even finality if the findings are supported by substantial evidence. This is especially so when such findings were affirmed by the Court of Appeals.[11] However, if the factual findings of the NLRC and the Labor Arbiter are conflicting, as in this case, the reviewing court may delve into the records and examine for itself the questioned findings.[12] Accordingly, the Court of Appeals, after a careful review of the facts, ruled that petitioners dismissal was for a just cause. They had abandoned their employment and were already working for another employer. To dismiss an employee, the law requires not only the existence of a just and valid cause but also enjoins the employer to give the employee the opportunity to be heard and to defend himself.[13] Article 282 of the Labor Code enumerates the just causes for termination by the employer: (a) serious misconduct or willful disobedience by the employee of the lawful orders of his employer or the latters representative in connection with the employees work; (b) gross and habitual neglect by the employee of his duties; (c) fraud or willful breach by the employee of the trust reposed in him by his employer or his duly authorized representative; (d) commission of a crime or offense by the employee against the person of his employer or any immediate member of his family or his duly authorized representative; and (e) other causes analogous to the foregoing. Abandonment is the deliberate and unjustified refusal of an employee to resume his employment. [14] It is a form of neglect of duty, hence, a just cause for termination of employment by the employer. [15] For a valid finding of abandonment, these two factors should be present: (1) the failure to report for work or absence without valid or justifiable reason; and (2) a clear intention to sever employer-employee relationship, with the second as the more determinative factor which is manifested by overt acts from which it may be deduced that the employees has no more intention to work. The intent to discontinue the employment must be shown by clear proof that it was deliberate and unjustified.[16] In February 1999, petitioners were frequently absent having subcontracted for an installation work for another company. Subcontracting for another company clearly showed the intention to sever the employer-employee relationship with private respondent. This was not the first time they did this. In January 1996, they did not report for work because they were working for another company. Private respondent at that time warned petitioners that they would be dismissed if this happened again. Petitioners disregarded the warning and exhibited a clear intention to sever their employer-employee relationship. The record of an employee is a relevant consideration in determining the penalty that should be meted out to him.[17] In Sandoval Shipyard v. Clave,[18] we held that an employee who deliberately absented from work without leave or permission from his employer, for the purpose of looking for a job elsewhere, is considered to have abandoned his job. We should apply that rule with more reason here where petitioners were absent because they were already working in another company. The law imposes many obligations on the employer such as providing just compensation to workers, observance of the procedural requirements of notice and hearing in the termination of employment. On the other hand, the law also recognizes the right of the employer to expect from its workers not only good performance, adequate work and diligence, but also good conduct[19] and loyalty. The employer may not be compelled to continue to employ such persons whose continuance in the service will patently be inimical to his interests.[20] After establishing that the terminations were for a just and valid cause, we now determine if the procedures for dismissal were observed. The procedure for terminating an employee is found in Book VI, Rule I, Section 2(d) of the Omnibus Rules Implementing the Labor Code: Standards of due process: requirements of notice. In all cases of termination of employment, the following standards of due process shall be substantially observed: I. For termination of employment based on just causes as defined in Article 282 of the Code:

(a) A written notice served on the employee specifying the ground or grounds for termination, and giving to said employee reasonable opportunity within which to explain his side; (b) A hearing or conference during which the employee concerned, with the assistance of counsel if the employee so desires, is given opportunity to respond to the charge, present his evidence or rebut the evidence presented against him; and

(c) A written notice of termination served on the employee indicating that upon due consideration of all the circumstances, grounds have been established to justify his termination. In case of termination, the foregoing notices shall be served on the employees last known address. Dismissals based on just causes contemplate acts or omissions attributable to the employee while dismissals based on authorized causes involve grounds under the Labor Code which allow the employer to terminate employees. A termination for an authorized cause requires payment of separation pay. When the termination of employment is declared illegal, reinstatement and full backwages are mandated under Article 279. If reinstatement is no longer possible where the dismissal was unjust, separation pay may be granted. Procedurally, (1) if the dismissal is based on a just cause under Article 282, the employer must give the employee two written notices and a hearing or opportunity to be heard if requested by the employee before terminating the employment: a notice specifying the grounds for which dismissal is sought a hearing or an opportunity to be heard and after hearing or opportunity to be heard, a notice of the decision to dismiss; and (2) if the dismissal is based on authorized causes under Articles 283 and 284, the employer must give the employee and the Department of Labor and Employment written notices 30 days prior to the effectivity of his separation. From the foregoing rules four possible situations may be derived: (1) the dismissal is for a just cause under Article 282 of the Labor Code, for an authorized cause under Article 283, or for health reasons under Article 284, and due process was observed; (2) the dismissal is without just or authorized cause but due process was observed; (3) the dismissal is without just or authorized cause and there was no due process; and (4) the dismissal is for just or authorized cause but due process was not observed. In the first situation, the dismissal is undoubtedly valid and the employer will not suffer any liability. In the second and third situations where the dismissals are illegal, Article 279 mandates that the employee is entitled to reinstatement without loss of seniority rights and other privileges and full backwages, inclusive of allowances, and other benefits or their monetary equivalent computed from the time the compensation was not paid up to the time of actual reinstatement. In the fourth situation, the dismissal should be upheld. While the procedural infirmity cannot be cured, it should not invalidate the dismissal. However, the employer should be heldliable for non-compliance with the procedural requirements of due process. The present case squarely falls under the fourth situation. The dismissal should be upheld because it was established that the petitioners abandoned their jobs to work for another company. Private respondent, however, did not follow the notice requirements and instead argued that sending notices to the last known addresses would have been useless because they did not reside there anymore. Unfortunately for the private respondent, this is not a valid excuse because the law mandates the twin notice requirements to the employees last known address. [21] Thus, it should be held liable for noncompliance with the procedural requirements of due process. A review and re-examination of the relevant legal principles is appropriate and timely to clarify the various rulings on employment termination in the light of Serrano v. National Labor Relations Commission.[22] Prior to 1989, the rule was that a dismissal or termination is illegal if the employee was not given any notice. In the 1989 case of Wenphil Corp. v. National Labor Relations Commission,[23] we reversed this long-standing rule and held that the dismissed employee, although not given any notice and hearing, was not entitled to reinstatement and backwages because the dismissal was for grave misconduct and insubordination, a just ground for termination under Article 282. The employee had a violent temper and caused trouble during office hours, defying superiors who tried to pacify him. We concluded that reinstating the employee and awarding backwages may encourage him to do even worse and will render a mockery of the rules of discipline that employees are required to observe.[24] We further held that: Under the circumstances, the dismissal of the private respondent for just cause should be maintained. He has no right to return to his former employment. However, the petitioner must nevertheless be held to account for failure to extend to private respondent his right to an investigation before causing his dismissal. The rule is explicit as above discussed. The dismissal of an employee must be for just or authorized cause and after due process. Petitioner committed an infraction of the second requirement. Thus, it must be imposed a sanction for its failure to give a formal notice and conduct an investigation as required by law before dismissing petitioner from employment. Considering the circumstances of this case petitioner must indemnify the private

respondent the amount of P1,000.00. The measure of this award depends on the facts of each case and the gravity of the omission committed by the employer.[25] The rule thus evolved: where the employer had a valid reason to dismiss an employee but did not follow the due process requirement, the dismissal may be upheld but the employer will be penalized to pay an indemnity to the employee. This became known as the Wenphil or Belated Due Process Rule. On January 27, 2000, in Serrano, the rule on the extent of the sanction was changed. We held that the violation by the employer of the notice requirement in termination for just or authorized causes was not a denial of due process that will nullify the termination. However, the dismissal is ineffectual and the employer must pay full backwages from the time of termination until it is judicially declared that the dismissal was for a just or authorized cause. The rationale for the re-examination of the Wenphil doctrine in Serrano was the significant number of cases involving dismissals without requisite notices. We concluded that the imposition of penalty by way of damages for violation of the notice requirement was not serving as a deterrent. Hence, we now required payment of full backwages from the time of dismissal until the time the Court finds the dismissal was for a just or authorized cause. Serrano was confronting the practice of employers to dismiss now and pay later by imposing full backwages. We believe, however, that the ruling in Serrano did not consider the full meaning of Article 279 of the Labor Code which states: 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. This means that the termination is illegal only if it is not for any of the justified or authorized causes provided by law. Payment of backwages and other benefits, including reinstatement, is justified only if the employee was unjustly dismissed. The fact that the Serrano ruling can cause unfairness and injustice which elicited strong dissent has prompted us to revisit the doctrine. To be sure, the Due Process Clause in Article III, Section 1 of the Constitution embodies a system of rights based on moral principles so deeply imbedded in the traditions and feelings of our people as to be deemed fundamental to a civilized society as conceived by our entire history. Due process is that which comports with the deepest notions of what is fair and right and just.[26] It is a constitutional restraint on the legislative as well as on the executive and judicial powers of the government provided by the Bill of Rights. Due process under the Labor Code, like Constitutional due process, has two aspects: substantive, i.e., the valid and authorized causes of employment termination under the Labor Code; and procedural, i.e., the manner of dismissal. Procedural due process requirements for dismissal are found in the Implementing Rules of P.D. 442, as amended, otherwise known as the Labor Code of the Philippines in Book VI, Rule I, Sec. 2, as amended by Department Order Nos. 9 and 10.[27] Breaches of these due process requirements violate the Labor Code. Therefore statutory due process should be differentiated from failure to comply with constitutional due process. Constitutional due process protects the individual from the government and assures him of his rights in criminal, civil or administrative proceedings; while statutory due process found in the Labor Code and Implementing Rules protects employees from being unjustly terminated without just cause after notice and hearing. In Sebuguero v. National Labor Relations Commission,[28] the dismissal was for a just and valid cause but the employee was not accorded due process. The dismissal was upheld by the Court but the employer was sanctioned. The sanction should be in the nature of indemnification or penalty, and depends on the facts of each case and the gravity of the omission committed by the employer. In Nath v. National Labor Relations Commission,[29] it was ruled that even if the employee was not given due process, the failure did not operate to eradicate the just causes for dismissal. The dismissal being for just cause, albeit without due process, did not entitle the employee to reinstatement, backwages, damages and attorneys fees.

Mr. Justice Jose C. Vitug, in his separate opinion in MGG Marine Services, Inc. v. National Labor Relations Commission, [30] which opinion he reiterated in Serrano, stated: C. Where there is just cause for dismissal but due process has not been properly observed by an employer, it would not be right to order either the reinstatement of the dismissed employee or the payment of backwages to him. In failing, however, to comply with the procedure prescribed by law in terminating the services of the employee, the employer must be deemed to have opted or, in any case, should be made liable, for the payment of separation pay. It might be pointed out that the notice to be given and the hearing to be conducted generally constitute the two-part due process requirement of law to be accorded to the employee by the employer. Nevertheless, peculiar circumstances might obtain in certain situations where to undertake the above steps would be no more than a useless formality and where, accordingly, it would not be imprudent to apply the res ipsa loquitur rule and award, in lieu of separation pay, nominal damages to the employee. x x x.[31] After carefully analyzing the consequences of the divergent doctrines in the law on employment termination, we believe that in cases involving dismissals for cause but without observance of the twin requirements of notice and hearing, the better rule is to abandon the Serrano doctrine and to follow Wenphil by holding that the dismissal was for just cause but imposing sanctions on the employer. Such sanctions, however, must be stiffer than that imposed in Wenphil. By doing so, this Court would be able to achieve a fair result by dispensing justice not just to employees, but to employers as well. The unfairness of declaring illegal or ineffectual dismissals for valid or authorized causes but not complying with statutory due process may have far-reaching consequences. This would encourage frivolous suits, where even the most notorious violators of company policy are rewarded by invoking due process. This also creates absurd situations where there is a just or authorized cause for dismissal but a procedural infirmity invalidates the termination. Let us take for example a case where the employee is caught stealing or threatens the lives of his co-employees or has become a criminal, who has fled and cannot be found, or where serious business losses demand that operations be ceased in less than a month. Invalidating the dismissal would not serve public interest. It could also discourage investments that can generate employment in the local economy. The constitutional policy to provide full protection to labor is not meant to be a sword to oppress employers. The commitment of this Court to the cause of labor does not prevent us from sustaining the employer when it is in the right, as in this case.[32] Certainly, an employer should not be compelled to pay employees for work not actually performed and in fact abandoned. The employer should not be compelled to continue employing a person who is admittedly guilty of misfeasance or malfeasance and whose continued employment is patently inimical to the employer. The law protecting the rights of the laborer authorizes neither oppression nor self-destruction of the employer.[33] It must be stressed that in the present case, the petitioners committed a grave offense, i.e., abandonment, which, if the requirements of due process were complied with, would undoubtedly result in a valid dismissal. An employee who is clearly guilty of conduct violative of Article 282 should not be protected by the Social Justice Clause of the Constitution. Social justice, as the term suggests, should be used only to correct an injustice. As the eminent Justice Jose P. Laurel observed, social justice must be founded on the recognition of the necessity of interdependence among 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.[34] This is not to say that the Court was wrong when it ruled the way it did in Wenphil, Serrano and related cases. Social justice is not based on rigid formulas set in stone. It has to allow for changing times and circumstances. Justice Isagani Cruz strongly asserts the need to apply a balanced approach to labor-management relations and dispense justice with an even hand in every case: We have repeatedly stressed that social justice or any justice for that matter is for the deserving, whether he be a millionaire in his mansion or a pauper in his hovel. It is true that, in case of reasonable doubt, we are to tilt the balance in favor of the poor to whom the Constitution fittingly extends its sympathy and compassion. But never is it justified to give preference to the poor simply because they are poor, or reject the rich simply because they are rich, for justice must always be served for the poor and the rich alike, according to the mandate of the law.[35]

Justice in every case should only be for the deserving party. It should not be presumed that every case of illegal dismissal would automatically be decided in favor of labor, as management has rights that should be fully respected and enforced by this Court. As interdependent and indispensable partners in nation-building, labor and management need each other to foster productivity and economic growth; hence, the need to weigh and balance the rights and welfare of both the employee and employer. Where the dismissal is for a just cause, as in the instant case, the lack of statutory due process should not nullify the dismissal, or render it illegal, or ineffectual. However, the employer should indemnify the employee for the violation of his statutory rights, as ruled in Reta v. National Labor Relations Commission.[36] The indemnity to be imposed should be stiffer to discourage the abhorrent practice of dismiss now, pay later, which we sought to deter in the Serrano ruling. The sanction should be in the nature of indemnification or penalty and should depend on the facts of each case, taking into special consideration the gravity of the due process violation of the employer. Under the Civil Code, nominal damages is adjudicated in order that a right of the plaintiff, which has been violated or invaded by the defendant, may be vindicated or recognized, and not for the purpose of indemnifying the plaintiff for any loss suffered by him.[37] As enunciated by this Court in Viernes v. National Labor Relations Commissions,[38] an employer is liable to pay indemnity in the form of nominal damages to an employee who has been dismissed if, in effecting such dismissal, the employer fails to comply with the requirements of due process. The Court, after considering the circumstances therein, fixed the indemnity at P2,590.50, which was equivalent to the employees one month salary. This indemnity is intended not to penalize the employer but to vindicate or recognize the employees right to statutory due process which was violated by the employer.[39] The violation of the petitioners right to statutory due process by the private respondent warrants the payment of indemnity in the form of nominal damages. The amount of such damages is addressed to the sound discretion of the court, taking into account the relevant circumstances.[40] Considering the prevailing circumstances in the case at bar, we deem it proper to fix it at P30,000.00. We believe this form of damages would serve to deter employers from future violations of the statutory due process rights of employees. At the very least, it provides a vindication or recognition of this fundamental right granted to the latter under the Labor Code and its Implementing Rules. Private respondent claims that the Court of Appeals erred in holding that it failed to pay petitioners holiday pay, service incentive leave pay and 13th month pay. We are not persuaded. We affirm the ruling of the appellate court on petitioners money claims. Private respondent is liable for petitioners holiday pay, service incentive leave pay and 13th month pay without deductions. As a general rule, one who pleads payment has the burden of proving it. Even where the employee must allege nonpayment, the general rule is that the burden rests on the employer to prove payment, rather than on the employee to prove non-payment. The reason for the rule is that the pertinent personnel files, payrolls, records, remittances and other similar documents which will show that overtime, differentials, service incentive leave and other claims of workers have been paid are not in the possession of the worker but in the custody and absolute control of the employer.[41] In the case at bar, if private respondent indeed paid petitioners holiday pay and service incentive leave pay, it could have easily presented documentary proofs of such monetary benefits to disprove the claims of the petitioners. But it did not, except with respect to the 13th month pay wherein it presented cash vouchers showing payments of the benefit in the years disputed.[42] Allegations by private respondent that it does not operate during holidays and that it allows its employees 10 days leave with pay, other than being self-serving, do not constitute proof of payment. Consequently, it failed to discharge the onus probandi thereby making it liable for such claims to the petitioners. Anent the deduction of SSS loan and the value of the shoes from petitioner Virgilio Agabons 13 th month pay, we find the same to be unauthorized. The evident intention of Presidential Decree No. 851 is to grant an additional income in the form of the 13th month pay to employees not already receiving the same [43] so as to further protect the level of real wages from the ravages of world-wide inflation.[44] Clearly, as additional income, the 13th month pay is included in the definition of wage under Article 97(f) of the Labor Code, to wit: (f) Wage paid to any employee shall mean the remuneration or earnings, however designated, capable of being expressed in terms of money whether fixed or ascertained on a time, task, piece , or commission basis, or other method of calculating the same, which is payable by an employer to an employee under a written or unwritten contract of employment for work done or to be done, or for

services rendered or to be rendered and includes the fair and reasonable value, as determined by the Secretary of Labor, of board, lodging, or other facilities customarily furnished by the employer to the employee from which an employer is prohibited under Article 113[45] of the same Code from making any deductions without the employees knowledge and consent. In the instant case, private respondent failed to show that the deduction of the SSS loan and the value of the shoes from petitioner Virgilio Agabons 13 th month pay was authorized by the latter. The lack of authority to deduct is further bolstered by the fact that petitioner Virgilio Agabon included the same as one of his money claims against private respondent. The Court of Appeals properly reinstated the monetary claims awarded by the Labor Arbiter ordering the private respondent to pay each of the petitioners holiday pay for four regular holidays from 1996 to 1998, in the amount of P6,520.00, service incentive leave pay for the same period in the amount of P3,255.00 and the balance of Virgilio Agabons thirteenth month pay for 1998 in the amount of P2,150.00. WHEREFORE, in view of the foregoing, the petition is DENIED. The decision of the Court of Appeals dated January 23, 2003, in CA-G.R. SP No. 63017, finding that petitioners Jenny and Virgilio Agabon abandoned their work, and ordering private respondent to pay each of the petitioners holiday pay for four regular holidays from 1996 to 1998, in the amount of P6,520.00, service incentive leave pay for the same period in the amount of P3,255.00 and the balance of Virgilio Agabons thirteenth month pay for 1998 in the amount of P2,150.00 isAFFIRMED with the MODIFICATION that private respondent Riviera Home Improvements, Inc. is further ORDERED to pay each of the petitioners the amount of P30,000.00 as nominal damages for non-compliance with statutory due process. No costs. SO ORDERED.

GSIS vs. RAOET

In this Petition for Review on Certiorari,[1] petitioner Government Service Insurance System (GSIS) seeks to set aside the Court of Appeals (CA) Decision[2] dated February 3, 2003 in CA-G.R. SP. No. 72820, which overturned and set aside the July 24, 2002 decision[3] of the Employees Compensation Commission (ECC) in ECC Case No. GM-13079-302, and granted respondent Jean Raoets (respondent) claim for income benefits arising from her husbands death. The respondents husband, Francisco M. Raoet (Francisco), entered government service on July 16, 1974 as an Engineer Trainee at the National Irrigation Administration (NIA). On July 5, 1978, he was appointed as Junior Civil Engineer, and on April 22, 1981, he rose to the rank of Irrigation Engineer B. On August 1, 1998, he was promoted to the position of Engineer A the position he held until his death on May 5, 2001. As Engineer A, Francisco supervised the implementation of construction activities of Lateral E and E-1. He was also tasked to review and check the structural plan and the facilities.[4] In 2000, Francisco was diagnosed with Hypertension, Severe, Stage III, Coronary Artery Disease, and he was confined at the Region I Medical Center from July 16 to July 25, 2000.[5] As the GSIS considered this a work-related condition, Francisco was awarded 30 days Temporary Total Disability benefits, plus reimbursement of medical expenses incurred during treatment. On May 5, 2001, Francisco was rushed to the Dr. Marcelo M. Chan Memorial Hospital because he was vomiting blood.[6] He was pronounced dead on arrival at the hospital. His death certificate listed the causes of his death as follows: CAUSES OF DEATH Immediate cause: Cardiac Arrest Antecedent cause: Acute Massive Hemorrhage Underlying cause: T/C Bleeding Peptic Ulcer Disease The respondent, as widow, filed with the GSIS on May 24, 2001 a claim for income benefits accruing from the death of her husband, pursuant to Presidential Decree No. 626 (P.D. 626), as amended. On August 31, 2001, the GSIS denied the claim on the ground that the respondent did not submit any supporting documents to show that Franciscos death was due to peptic ulcer. On appeal, the ECC affirmed the findings of the GSIS in its decision of July 24, 2002. According to the ECC, it could not determine if Franciscos death was compensable due to the absence of documents supporting the respondents claim. Since Francisco had no prior history of consultation relating to peptic ulcer and no autopsy was performed to ascertain the cause of his death, the ECC could not conclude that Bleeding Peptic Ulcer Disease was the reason for his demise. The respondent elevated the case to the CA through a Petition for Review. She cited the following supporting grounds: 1. Employees Compensation Commission failed to consider that peptic ulcer is an on and off disease which does not need confinement in a hospital or clinic or submission to a Doctor of Medicine because it can be cured by self-medication. The Employees Compensation Commission failed to consider also that there were medical treatment of Francisco Raoet of occupational and compensable diseases other than peptic ulcer as shown by the medical findings of certificates, Xerox copies of which are attached to this petition.

2.

The CA reversed[8] the ECC decision. The appellate court held that while the Amended Rules on Employees Compensation does not list peptic ulcer as an occupational disease, Franciscos death should be compensable since its immediate cause was cardiac arrest. Thus, the CA ordered the GSIS to pay the respondents claim for death benefits under P.D. 626, as amended. The GSIS, this time, appealed through the present petition, raising the following issues: I. Whether or not the CA was correct in reversing the decision of the ECC and the GSIS denying the respondents claim for income benefit under P.D. 626, as amended, for the death of her husband, Francisco.

II.

Whether or not the ailment Acute Massive Hemorrhage t/c Bleeding Peptic Ulcer Disease, which caused the death of the late Francisco, is work-connected or whether there was any proof to show that the risk of contracting the same was increased by factors attendant to his employment.

The GSIS reasons out that since the cause of Franciscos death was peptic ulcer, a disease not included in the occupational diseases listed in Annex A of the Amended Rules on Employees Compensation, proof must be shown that the risk of contracting the disease was increased by his working conditions. The respondent failed to present any such evidence to support her claim apart from her bare allegations. In fact, Franciscos medical records disclose that he did not consult his doctors regarding peptic ulcer. Since no autopsy was performed to ascertain the cause of death, no assurance exists that Bleeding Peptic Ulcer was indeed the cause of his death. The GSIS further argues that Franciscos other ailments, i.e., his hypertension and coronary artery disease, had already been awarded the maximum benefits commensurate to the degree of his disability when he was granted 30 days Temporary Total Disability benefits, plus reimbursement of medical expenses incurred in the treatment of these illnesses. Thus, no death benefit for the same diseases can be claimed. The GSIS also points out that the employees compensation trust fund is presently empty, and claims on this fund are being paid by the GSIS from advances coming from its other funds. Accordingly, the GSIS argues that the trust fund would suffer if benefits are paid to claimants who are not entitled under the law. In contrast, the respondent claims that the issues the GSIS raised are essentially questions of fact which the Court is now barred from resolving in a petition for review on certiorari. Thus, she posits that the petition should be denied. THE COURTS RULING We deny the petition for lack of merit. The Procedural issue A petition for review under Rule 45 of the Rules of Court opens a case for review only on questions of law, not questions of fact. A question of law exists when the doubt centers on what the law is on a certain set of facts. A question of fact exists when the doubt is on the truth or falsity of the alleged facts.[9] In raising questions regarding Franciscos cause of death and its compensability, the GSIS, at first blush, appears to be raising a basic question of fact the actual cause of Franciscos death. Its question, however, is not on the truth or falsity of the claimed cause of death, but on whether evidence exists supporting the claimed cause of death. Posed in this manner, the question is not purely a factual one as it involves the appreciation of how evidence is to be viewed, and whether such evidence supports or rejects the claimed cause of death. Thus, it is a question we can rule upon in this petition. From the perspective of the CA decision, the issue is not so much the actual cause of death, but a reading of the cause of death from the point of view of compensability. This is essentially a legal issue, touching as it does on the issue of compensability. Hence, it is likewise within the power of this Court to review in this Rule 45 petition. Factors determining compensability of death P.D. 626, as amended, defines compensable sickness as "any illness definitely accepted as an occupational disease listed by the Commission, or any illness caused by employment subject to proof by the employee that the risk of contracting the same is increased by the working conditions." Section 1 (b), Rule III of the Amended Rules on Employees' Compensation implements P.D. 626 and requires that for sickness and the resulting disability or death to be compensable, it must be an "occupational disease" included in the list provided (Annex "A"), with the conditions attached to the listed sickness duly satisfied; otherwise, the claimant must show proof that the risk of contracting the illness is increased by his working conditions. In plainer terms, to be entitled to compensation, a claimant must show that the sickness is either: (1) a result of an occupational disease listed under Annex "A" of the Amended Rules on Employees' Compensation under the conditions Annex A sets forth; or (2) if not so listed, that the risk of contracting the disease is increased by the working conditions.[10] Based on Franciscos death certificate, the immediate cause of his death was cardiac arrest; the antecedent cause was acute massive hemorrhage, and the underlying cause was bleeding peptic ulcer disease.

The GSIS maintains that the respondents claim for income benefits should be denied because she failed to present any proof, documentary or otherwise, that peptic ulcer was the underlying cause for Franciscos death. We disagree with this position, as we find that the respondent submitted sufficient proof of the cause of her husbands death when she presented his death certificate. In Philippine American Life Insurance Company v. CA,[11] we held that death certificates and the notes by a municipal health officer prepared in the regular performance of his duties are prima facie evidence of facts therein stated. A duly-registered death certificate is considered a public document and the entries found therein are presumed correct, unless the party who contests its accuracy can produce positive evidence establishing a contrary conclusion. We also ruled in People v. Datun[12] that a death certificate establishes the fact of death and its immediate, antecedent, and underlying causes. Since neither the GSIS nor the ECC presented any evidence to refute that cardiac arrest was the immediate cause, and peptic ulcer was the underlying cause of Franciscos death, we accept as established, in accordance with the death certificate, that the underlying cause of Franciscos demise was peptic ulcer. The CA decision and Peptic Ulcer as Compensable Illness In the assailed decision, the CA focused on Franciscos immediate cause of death cardiac arrest and ignored the underlying cause of death peptic ulcer. According to the CA, Franciscos death is compensable even if peptic ulcer is not a listed occupational disease, since Francisco died due to a listed cause cardiac arrest. The CA is apparently wrong in its conclusion as it viewed in isolation the immediate cause of death (cardiac arrest), disregarding that what brought about the cardiac arrest was the ultimate underlying cause peptic ulcer. This error, however, does not signify that Franciscos death is not compensable because peptic ulcer itself, under specific conditions, is a compensable illness. Contrary to the CAs conclusion, peptic ulcer is a compensable cause of death, pursuant to ECC Resolution No. 1676 dated January 29, 1981, which unmistakably provides that peptic ulcer is a compensable disease listed under Annex A, provided the claimant is in an occupation that involves prolonged emotional or physical stress, as among professional people, transport workers and the like.[13] Peptic Ulcer is defined as: An ulceration of the mucous membrane of the esophagus, stomach or duodenum, caused by the action of the acid gastric juice. Peptic ulcer is most common among persons who are chronically anxious or irritated, or who otherwise suffer from mental tension. It occurs about three times as often in men as in women. Symptoms include a pain or gnawing sensation in the epigastric region. The pain occurs from 1 to 3 hours after eating, and is usually relieved by eating or taking an antacid drug. Vomiting, sometimes preceded by nausea, usually follows a severe bout of pain. COMPLICATIONS. If ulcers are untreated, bleeding can occur, leading to anemia and therefore weakness and impaired health. Blood may be vomited, and appears brownish and like coffee grounds because of the digestive effect of gastric secretions on the hemoglobin. There may be blood in the stools, giving them a tarry black color. In acute cases sudden hemorrhage can occur and may be fatal if not treated properly. xxxx Worry and anxiety can contribute to the development of an ulcer and prevent it from healing. If emotional tensions persist, an ulcer that has been healed by medical treatment can return. Therefore, every effort is made to help the patient relax. Sometimes counseling or psychotherapy is helpful in relieving emotional strain.[14] [Emphasis supplied.] Based on the Annex A list and the accompanying requisite condition for compensability, the question that really confronts us is: did Franciscos occupation involve prolonged emotional or physical stress to make his death due to peptic ulcer compensable? A significant point to appreciate in considering this question is that based on the GSIS own records,[15] Francisco was diagnosed with Hypertension, Severe, Stage III, Coronary Artery Disease, and confined at the Region I Medical Center in July 2000. The GSIS found this ailment work-connected and awarded Francisco 30 days Temporary Total

Disability benefits. This finding assumes importance in the present case because the established underlying causes of the combination of these diseases are, among others, the stressful nature and pressures inherent in an occupation. [16] This was what the GSIS acknowledged in recognizing Franciscos total temporary disability. As already mentioned, Francisco worked as Engineer A with the NIA, a job with enormous responsibilities. He had to supervise the construction activities of Lateral E and E-1, and review the structural plan and facilities.[17] The stresses these responsibilities carried did not abate for Francisco when he returned from his Temporary Total Disability; he occupied the same position without change of responsibilities until his death on May 5, 2001. Thus, Francisco had continuous exposure to prolonged emotional stress that would qualify his peptic ulcer a stress-driven ailment as a compensable cause of death. In arriving at this conclusion, we stress that in determining the compensability of an illness, we do not require that the employment be the sole factor in the growth, development, or acceleration of a claimants illness to entitle him to the benefits provided for. It is enough that his employment contributed, even if only in a small degree, to the development of the disease.[18] In the recent case of GSIS v. Vicencio, we said:[19] It is well-settled that the degree of proof required under P.D. No. 626 is merely substantial evidence, which means, such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. What the law requires is a reasonable work-connection and not a direct causal relation. It is enough that the hypothesis on which the workmans claim is based is probable. Medical opinion to the contrary can be disregarded especially where there is some basis in the facts for inferring a work-connection. Probability, not certainty, is the touchstone. It is not required that the employment be the sole factor in the growth, development or acceleration of a claimants illness to entitle him to the benefits provided for. It is enough that his employment contributed, even if to a small degree, to the development of the disease. [Emphasis supplied.] In this case, the chain of causation that led to the peptic ulcer is too obvious to be disregarded. The pressures of Franciscos work constant, continuing and consistent at his level of responsibility inevitably manifested their physical effects on Franciscos health and body; the initial and most obvious were the hypertension and coronary artery disease that the GSIS itself recognized. Less obvious, but nevertheless arising from the same pressures and stresses, were the silent killers, like peptic ulcer, that might not have attracted Franciscos attention to the point of driving him to seek immediate and active medical intervention. Ultimately, when the ulcer-producing stresses did not end, his ulcer bled profusely, affecting his heart and causing its arrest. In this manner, Francisco died. That his widow should now be granted benefits for Franciscos death is a conclusion we cannot avoid and is, in fact, one that we should gladly make as a matter of law and social justice. Purpose of P.D. 626 Understandably, the GSIS may accuse us of leniency in the grant of compensation benefits in light of the jurisprudential trends in this area of law. Our leniency, however, is not due to our individual predilections or liberal leanings; it proceeds mainly from the character of P.D. 626 as a social legislation whose primordial purpose is to provide meaningful protection to the working class against the hazards of disability, illness, and other contingencies resulting in loss of income. In employee compensation, persons charged by law to carry out the Constitutions social justice objectives should adopt a liberal attitude in deciding compensability claims and should not hesitate to grant compensability where a reasonable measure of work-connection can be inferred. Only this kind of interpretation can give meaning and substance to the laws compassionate spirit as expressed in Article 4 of the Labor Code that all doubts in the implementation and interpretation of the provisions of the Labor Code, including their implementing rules and regulations, should be resolved in favor of labor.[20] When the implementors fail to reach up to these standards, this Court, as guardian of the Constitution, necessarily has to take up the slack and order what we must, to ensure that the constitutional objectives are achieved. This is simply what we are doing in this case. Acting on this same role, we remind the GSIS that when it is called upon to determine the compensability of an employees disease or death, the present state of the State Insurance Fund cannot be an excuse to avoid the payment of compensation. If the State Insurance Fund lacks the financial capacity, it is not the responsibility of the insured civil servant, but rather of the State to fill in the deficiency and ensure the solvency of the State Insurance Fund. This is the clear mandate of Article 184 of the Labor Code, which reads: Article 184. Government guarantee. The Republic of the Philippines guarantees the benefits prescribed under this Title, and accepts general responsibility for the solvency of the State Insurance Fund. In case of deficiency, the same shall be covered by supplemental appropriations from the national government.

In Biscarra v. Republic, we explicitly said:[21] The fear that this humane, liberal and progressive view will swamp the Government with claims for continuing medical, hospital and surgical services and as a consequence unduly drain the National Treasury, is no argument against it; because the Republic of the Philippines as a welfare State, in providing for the social justice guarantee in our Constitution, assumes such risk. This assumption of such a noble responsibility is, as heretofore stated, only just and equitable since the employees to be benefited thereby precisely became permanently injured or sick while invariably devoting the greater portion of their lives to the service of our country and people. Human beings constitute the most valuable natural resources of the nation and therefore should merit the highest solicitude and the greatest protection from the State to relieve them from unbearable agony. They have a right to entertain the hope that during the few remaining years of their life some dedicated institution or gifted individual may produce a remedy or cure to relieve them from the painful or crippling or debilitating or humiliating effects of their injury or ailment, to fully and completely rehabilitate them and develop their "mental, vocational and social potential," so that they will remain useful and productive citizens. [Emphasis supplied] The GSIS, therefore, cannot use the excuse of the State Insurance Funds present lack of capital to refuse paying income benefits to the respondent, whose husband devoted 27 years of his life to government service and whose death was caused by an ailment aggravated by the emotional stresses and pressures of his work. WHEREFORE, premises considered, we hereby DENY the petition for lack of merit. No costs. SO ORDERED.

TOYOTA vs. NLRC

In the instant petition under Rule 45 subject of G.R. Nos. 158786 and 158789, Toyota Motor Philippines Corporation Workers Association (Union) and its dismissed officers and members seek to set aside the February 27, 2003 Decision[1] of the Court of Appeals (CA) in CA-G.R. SP Nos. 67100 and 67561, which affirmed the August 9, 2001 Decision[2] and September 14, 2001 Resolution[3] of the National Labor Relations Commission (NLRC), declaring illegal the strikes staged by the Union and upholding the dismissal of the 227 Union officers and members. On the other hand, in the related cases docketed as G.R. Nos. 158798-99, Toyota Motor Philippines Corporation (Toyota) prays for the recall of the award of severance compensation to the 227 dismissed employees, which was granted under the June 20, 2003 CA Resolution[4] in CA-G.R. SP Nos. 67100 and 67561. In view of the fact that the parties are petitioner/s and respondent/s and vice-versa in the four (4) interrelated cases, they will be referred to as simply the Union and Toyota hereafter. The Facts The Union is a legitimate labor organization duly registered with the Department of Labor and Employment (DOLE) and is the sole and exclusive bargaining agent of all Toyota rank and file employees.[5] Toyota, on the other hand, is a domestic corporation engaged in the assembly and sale of vehicles and parts.[6] It is a Board of Investments (BOI) participant in the Car Development Program and the Commercial Vehicle Development Program. It is likewise a BOI-preferred non-pioneer export trader of automotive parts and is under the Special Economic Zone Act of 1995. It is one of the largest motor vehicle manufacturers in the country employing around 1,400 workers for its plants in Bicutan and Sta. Rosa, Laguna. It is claimed that its assets amount to PhP 5.525 billion, with net sales of PhP 14.646 billion and provisions for income tax of PhP 120.9 million. On February 14, 1999, the Union filed a petition for certification election among the Toyota rank and file employees with the National Conciliation and Mediation Board (NCMB), which was docketed as Case No. NCR-ODM-9902-001. Med-Arbiter Ma. Zosima C. Lameyra denied the petition, but, on appeal, the DOLE Secretary granted the Unions prayer, and, through the June 25, 1999 Order, directed the immediate holding of the certification election.[7] After Toyotas plea for reconsideration was denied, the certification election was conducted. Med-Arbiter Lameyras May 12, 2000 Order certified the Union as the sole and exclusive bargaining agent of all the Toyota rank and file employees. Toyota challenged said Order via an appeal to the DOLE Secretary.[8] In the meantime, the Union submitted its Collective Bargaining Agreement (CBA) proposals to Toyota, but the latter refused to negotiate in view of its pending appeal. Consequently, the Union filed a notice of strike on January 16, 2001 with the NCMB, docketed as NCMB-NCR-NS-01-011-01, based on Toyotas refusal to bargain. On February 5, 2001, the NCMB-NCR converted the notice of strike into a preventive mediation case on the ground that the issue of whether or not the Union is the exclusive bargaining agent of all Toyota rank and file employees was still unresolved by the DOLE Secretary. In connection with Toyotas appeal, Toyota and the Union were required to attend a hearing on February 21, 2001 before the Bureau of Labor Relations (BLR) in relation to the exclusion of the votes of alleged supervisory employees from the votes cast during the certification election. The February 21, 2001 hearing was cancelled and reset to February 22, 2001. On February 21, 2001, 135 Union officers and members failed to render the required overtime work, and instead marched to and staged a picket in front of the BLR office in Intramuros, Manila.[9] The Union, in a letter of the same date, also requested that its members be allowed to be absent on February 22, 2001 to attend the hearing and instead work on their next scheduled rest day. This request however was denied by Toyota. Despite denial of the Unions request, more than 200 employees staged mass actions on February 22 and 23, 2001 in front of the BLR and the DOLE offices, to protest the partisan and anti-union stance of Toyota. Due to the deliberate absence of a considerable number of employees on February 22 to 23, 2001, Toyota experienced acute lack of manpower in its manufacturing and production lines, and was unable to meet its production goals resulting in huge losses of PhP 53,849,991. Soon thereafter, on February 27, 2001, Toyota sent individual letters to some 360 employees requiring them to explain within 24 hours why they should not be dismissed for their obstinate defiance of the companys directive to render overtime work on February 21, 2001, for their failure to report for work on February 22 and 23, 2001, and for their participation in the concerted actions which severely disrupted and paralyzed the plants operations. [10] These letters specifically cited Section D, paragraph 6 of the Companys Code of Conduct, to wit:

Inciting or participating in riots, disorders, alleged strikes, or concerted actions detrimental to [Toyotas] interest. 1st offense dismissal.[11] Meanwhile, a February 27, 2001 Manifesto was circulated by the Union which urged its members to participate in a strike/picket and to abandon their posts, the pertinent portion of which reads, as follows: YANIG sa kanyang komportableng upuan ang management ng TOYOTA. And dating takot, kimi, at mahiyaing manggagawa ay walang takot na nagmartsa at nagprotesta laban sa desperadong pagtatangkang baguhin ang desisyon ng DOLE na pabor sa UNYON. Sa tatlong araw na protesta, mahigit sa tatlong daang manggagawa ang lumahok. xxxx HANDA na tayong lumabas anumang oras kung patuloy na ipagkakait ng management ang CBA. Oo maari tayong masaktan sa welga. Oo, maari tayong magutom sa piketlayn. Subalit may pagkakaiba ba ito sa unti-unting pagpatay sa atin sa loob ng 12 taong makabaling likod ng pagtatrabaho? Ilang taon na lang ay magkakabutas na ang ating mga baga sa mga alipato at usok ng welding.Ilang taon na lang ay marupok na ang ating mga buto sa kabubuhat. Kung dumating na ang panahong ito at wala pa tayong CBA, paano na? Hahayaan ba nating ang kumpanya lang ang makinabang sa yamang likha ng higit sa isang dekadang pagpapagal natin? HUWAG BIBITIW SA NASIMULANG TAGUMPAY! PAIGTINGIN ANG PAKIKIBAKA PARA SA ISANG MAKATARUNGANG CBA! HIGIT PANG PATATAGIN ANG PAGKAKAISA NG MGA MANGGAGAWA SA TOYOTA![12] (Emphasis supplied.) On the next day, the Union filed with the NCMB another notice of strike docketed as NCMB-NCR-NS-02-061-01 for union busting amounting to unfair labor practice. On March 1, 2001, the Union nonetheless submitted an explanation in compliance with the February 27, 2001 notices sent by Toyota to the erring employees. The Union members explained that their refusal to work on their scheduled work time for two consecutive days was simply an exercise of their constitutional right to peaceably assemble and to petition the government for redress of grievances. It further argued that the demonstrations staged by the employees on February 22 and 23, 2001 could not be classified as an illegal strike or picket, and that Toyota had already condoned the alleged acts when it accepted back the subject employees.[13] Consequently, on March 2 and 5, 2001, Toyota issued two (2) memoranda to the concerned employees to clarify whether or not they are adopting the March 1, 2001 Unions explanation as their own. The employees were also required to attend an investigative interview,[14] but they refused to do so. On March 16, 2001, Toyota terminated the employment of 227 employees[15] for participation in concerted actions in violation of its Code of Conduct and for misconduct under Article 282 of the Labor Code. The notice of termination reads: After a careful evaluation of the evidence on hand, and a thorough assessment of your explanation, TMP has concluded that there are overwhelming reasons to terminate your services based on Article 282 of the Labor Code and TMPs Code of Conduct. Your repeated absences without permission on February 22 to 23, 2001 to participate in a concerted action against TMP constitute abandonment of work and/or very serious misconduct under Article 282 of the Labor Code. The degree of your offense is aggravated by the following circumstances: 1. You expressed to management that you will adopt the unions letter dated March 1, 2001, as your own explanation to the charges contained in the Due Process Form dated February 27, 2001. It is evident from such explanation that you did not come to work because you deliberately participated together with other Team Members in a plan to engage in concerted actions

detrimental to TMPs interest. As a result of your participation in the widespread abandonment of work by Team Members from February 22 to 23, 2001, TMP suffered substantial damage. It is significant that the absences you incurred in order to attend the clarificatory hearing conducted by the Bureau of Labor Relations were unnecessary because the union was amply represented in the said hearings by its counsel and certain members who sought and were granted leave for the purpose. Your reason for being absent is, therefore, not acceptable; and 2. Your participation in the organized work boycott by Team Members on February 22 and 23 led to work disruptions that prevented the Company from meeting its production targets, resulting [in] foregone sales of more than eighty (80) vehicles, mostly new-model Revos, valued at more than Fifty Million Pesos (50,000,000.00).

The foregoing is also a violation of TMPs Code of Conduct (Section D, Paragraph 6) to wit: Inciting or participating in riots, disorders, illegal strikes or concerted actions detrimental to TMPs interest. Based on the above, TMP Management is left with no other recourse but to terminate your employment effective upon your receipt thereof. [Sgd.] JOSE MARIA ALIGADA Deputy Division Manager[16] In reaction to the dismissal of its union members and officers, the Union went on strike on March 17, 2001. Subsequently, from March 28, 2001 to April 12, 2001, the Union intensified its strike by barricading the gates of Toyotas Bicutan and Sta. Rosa plants. The strikers prevented workers who reported for work from entering the plants. In his Affidavit, Mr. Eduardo Nicolas III, Security Department Head, stated that: 3. On March 17, 2001, members of the Toyota Motor Philippines Corporation Workers Association (TMPCWA), in response to the dismissal of some two hundred twenty seven (227) leaders and members of TMPCWA and without observing the requirements mandated by the Labor Code, refused to report for work and picketed TMPC premises from 8:00 a.m. to 5:00 p.m. The strikers badmouthed people coming in and hurled invectives such as bakeru at Japanese officers of the company. The strikers likewise pounded the officers vehicle as they tried to enter the premises of the company. 4. On March 28, 2001, the strikers intensified their picketing and barricaded the gates of TMPCs Bicutan and Sta. Rosa plants, thus, blocking the free ingress/egress to and from the premises. Shuttle buses and cars containing TMPC employees, suppliers, dealers, customers and other people having business with the company, were prevented by the strikers from entering the plants. 5. As a standard operating procedure, I instructed my men to take photographs and video footages of those who participated in the strike. Seen on video footages taken on various dates actively participating in the strike were union officers Emilio C. Completo, Alexander Esteva, Joey Javellonar and Lorenzo Caraqueo. 6. Based on the pictures, among those identified to have participated in the March 28, 2001 strike were Grant Robert Toral, John Posadas, Alex Sierra, Allan John Malabanan, Abel Bersos, Ernesto Bonavente, Ariel Garcia, Pablito Adaya, Feliciano Mercado, Charlie Oliveria, Philip Roxas, June Lamberte, Manjolito Puno, Baldwin San Pablo, Joseph Naguit, Federico Torres, Larry Gerola, Roderick Bayani, Allan Oclarino, Reynaldo Cuevas, Jorge Polutan, Arman Ercillo, Jimmy Hembra, Albert Mariquit, Ramil Gecale, Jimmy Palisoc, Normandy Castalone, Joey Llanera, Greg Castro, Felicisimo Escrimadora, Rodolfo Bay, Ramon Clemente, Dante Baclino, Allan Palomares, Arturo Murillo and Robert Gonzales. Attached hereto as Annexes 1 to 18 are the pictures taken on March 28, 2001 at the Bicutan and Sta. Rosa plants. 7. From March 29 to 31, 2001, the strikers continued to barricade the entrances to TMPCs two (2) plants. Once again, the strikers hurled nasty remarks and prevented employees aboard shuttle buses from entering the plants. Among the strikers were Christopher Saldivar, Basilio Laqui, Sabas Bernabise, Federico Torres, Freddie Olit, Josel Agosto, Arthur Parilla, Richard Calalang, Ariel Garcia,

Edgar Hilaga, Charlie Oliveria, Ferdinand Jaen, Wilfredo Tagle, Alejandro Imperial, Manjolito Puno, Delmar Espadilla, Domingo Javier, Apollo Violeta and Elvis Tabinao.[17]

On March 29, 2001, Toyota filed a petition for injunction with a prayer for the issuance of a temporary restraining order (TRO) with the NLRC, which was docketed as NLRC NCR Case No. INJ-0001054-01. It sought free ingress to and egress from its Bicutan and Sta. Rosa manufacturing plants. Acting on said petition, the NLRC, on April 5, 2001, issued a TRO against the Union, ordering its leaders and members as well as its sympathizers to remove their barricades and all forms of obstruction to ensure free ingress to and egress from the companys premises. In addition, the NLRC rejected the Unions motion to dismiss based on lack of jurisdiction.[18] Meanwhile, Toyota filed a petition to declare the strike illegal with the NLRC arbitration branch, which was docketed as NLRC NCR (South) Case No. 30-04-01775-01, and prayed that the erring Union officers, directors, and members be dismissed.[19] On April 10, 2001, the DOLE Secretary assumed jurisdiction over the labor dispute and issued an Order [20] certifying the labor dispute to the NLRC. In said Order, the DOLE Secretary directed all striking workers to return to work at their regular shifts by April 16, 2001. On the other hand, it ordered Toyota to accept the returning employees under the same terms and conditions obtaining prior to the strike or at its option, put them under payroll reinstatement. The parties were also enjoined from committing acts that may worsen the situation. The Union ended the strike on April 12, 2001. The union members and officers tried to return to work on April 16, 2001 but were told that Toyota opted for payroll-reinstatement authorized by the Order of the DOLE Secretary. In the meantime, the Union filed a motion for reconsideration of the DOLE Secretarys April 10, 2001 certification Order, which, however, was denied by the DOLE Secretary in her May 25, 2001 Resolution. Consequently, a petition for certiorari was filed before the CA, which was docketed as CA-G.R. SP No. 64998. In the intervening time, the NLRC, in compliance with the April 10, 2001 Order of the DOLE Secretary, docketed the case as Certified Case No. 000203-01. Meanwhile, on May 23, 2001, at around 12:00 nn., despite the issuance of the DOLE Secretarys certification Order, several payroll-reinstated members of the Union staged a protest rally in front of Toyotas Bicutan Plant bearing placards and streamers in defiance of the April 10, 2001 Order. Then, on May 28, 2001, around forty-four (44) Union members staged another protest action in front of the Bicutan Plant. At the same time, some twenty-nine (29) payroll-reinstated employees picketed in front of the Santa Rosa Plants main entrance, and were later joined by other Union members. On June 5, 2001, notwithstanding the certification Order, the Union filed another notice of strike, which was docketed as NCMB-NCR-NS-06-150-01. On June 18, 2001, the DOLE Secretary directed the second notice of strike to be subsumed in the April 10, 2001 certification Order. In the meantime, the NLRC, in Certified Case No. 000203-01, ordered both parties to submit their respective position papers on June 8, 2001. The union, however, requested for abeyance of the proceedings considering that there is a pending petition for certiorari with the CA assailing the validity of the DOLE Secretarys Assumption of Jurisdiction Order. Thereafter, on June 19, 2001, the NLRC issued an Order, reiterating its previous order for both parties to submit their respective position papers on or before June 2, 2001. The same Order also denied the Unions verbal motion to defer hearing on the certified cases. On June 27, 2001, the Union filed a Motion for Reconsideration of the NLRCs June 19, 2001 Order, praying for the deferment of the submission of position papers until its petition for certiorari is resolved by the CA. On June 29, 2001, only Toyota submitted its position paper. On July 11, 2001, the NLRC again ordered the Union to submit its position paper by July 19, 2001, with a warning that upon failure for it to do so, the case shall be considered submitted for decision. Meanwhile, on July 17, 2001, the CA dismissed the Unions petition for certiorari in CA-G.R. SP No. 64998, assailing the DOLE Secretarys April 10, 2001 Order.

Notwithstanding repeated orders to file its position paper, the Union still failed to submit its position paper on July 19, 2001. Consequently, the NLRC issued an Order directing the Union to submit its position paper on the scheduled August 3, 2001 hearing; otherwise, the case shall be deemed submitted for resolution based on the evidence on record. During the August 3, 2001 hearing, the Union, despite several accommodations, still failed to submit its position paper. Later that day, the Union claimed it filed its position paper by registered mail. Subsequently, the NLRC, in its August 9, 2001 Decision, declared the strikes staged by the Union on February 21 to 23, 2001 and May 23 and 28, 2001 as illegal. The decretal portion reads:

WHEREFORE, premises considered, it is hereby ordered: (1) Declaring the strikes staged by the Union to be illegal.

(2) Declaring that the dismissal of the 227 who participated in the illegal strike on February 21-23, 2001 is legal. (3) However, the Company is ordered to pay the 227 Union members, who participated in the illegal strike severance compensation in an amount equivalent to one month salary for every year of service, as an alternative relief to continued employment. (4) Declared [sic] that the following Union officers and directors to have forfeited their employment status for having led the illegal strikes on February 21-23, 2001 and May 23 and 28, 2001: Ed Cubelo, Maximino Cruz, Jr., Ricky Chavez, Joselito Hugo, Virgilio Colandog, Rommel Digma, Federico Torres, Emilio Completo, Alexander Esteva, Joey Javellonar, Lorenzo Caraqueo, Roderick Nieres, Antonio Borsigue, Bayani Manguil, Jr., and Mayo Mata.[21] SO ORDERED.[22]

The NLRC considered the mass actions staged on February 21 to 23, 2001 illegal as the Union failed to comply with the procedural requirements of a valid strike under Art. 263 of the Labor Code. After the DOLE Secretary assumed jurisdiction over the Toyota dispute on April 10, 2001, the Union again staged strikes on May 23 and 28, 2001. The NLRC found the strikes illegal as they violated Art. 264 of the Labor Code which proscribes any strike or lockout after jurisdiction is assumed over the dispute by the President or the DOLE Secretary. The NLRC held that both parties must have maintained the status quo after the DOLE Secretary issued the assumption/certification Order, and ruled that the Union did not respect the DOLE Secretarys directive. Accordingly, both Toyota and the Union filed Motions for Reconsideration, which the NLRC denied in its September 14, 2001 Resolution.[23] Consequently, both parties questioned the August 9, 2001 Decision[24] and September 14, 2001 Resolution of the NLRC in separate petitions for certiorari filed with the CA, which were docketed as CA-G.R. SP Nos. 67100 and 67561, respectively. The CA then consolidated the petitions. In its February 27, 2003 Decision,[25] the CA ruled that the Unions petition is defective in form for its failure to append a proper verification and certificate of non-forum shopping, given that, out of the 227 petitioners, only 159 signed the verification and certificate of non-forum shopping. Despite the flaw, the CA proceeded to resolve the petitions on the merits and affirmed the assailed NLRC Decision and Resolution with a modification, however, of deleting the award of severance compensation to the dismissed Union members. In justifying the recall of the severance compensation, the CA considered the participation in illegal strikes as serious misconduct. It defined serious misconduct as a transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere error in judgment. It cited Panay Electric Company, Inc. v. NLRC,[26] where we revoked the grant of separation benefits to employees who lawfully participated in an illegal strike based on Art. 264 of the Labor Code, which states that any union officer who

knowingly participates in an illegal strike and any worker or union officer who knowingly participates in the commission of illegal acts during a strike may be declared to have lost his employment status.[27] However, in its June 20, 2003 Resolution,[28] the CA modified its February 27, 2003 Decision by reinstating severance compensation to the dismissed employees based on social justice. The Issues Petitioner Union now comes to this Court and raises the following issues for our consideration: I. II. Whether the mere participation of ordinary employees in an illegal strike is enough reason to warrant their dismissal. Whether the Union officers and members act of holding the protest rallies in front of the BLR office and the Office of the Secretary of Labor and Employment on February 22 and 23, 2001 should be held as illegal strikes. In relation hereto, whether the protests committed on May 23 and 28, 2001, should be held as illegal strikes. Lastly, whether the Union violated the Assumption of Jurisdiction Order issued by the Secretary of Labor and Employment. Whether the dismissal of 227 Union officers and members constitutes unfair labor practice. Whether the CA erred in affirming the Decision of the NLRC which excluded the Unions Position Paper which the Union filed by mail. In the same vein, whether the Unions right to due process was violated when the NLRC excluded their Position Paper. Whether the CA erred in dismissing the Unions Petition for Certiorari. Toyota, on the other hand, presents this sole issue for our determination: I. Whether the Court of Appeals erred in issuing its Resolution dated June 20, 2003, partially modifying its Decision dated February 27, 2003, and awarding severance compensation to the dismissed Union members. In sum, two main issues are brought to the fore: (1) (2) strikes. The Courts Ruling The Union contends that the NLRC violated its right to due process when it disregarded its position paper in deciding Toyotas petition to declare the strike illegal. We rule otherwise. It is entirely the Unions fault that its position paper was not considered by the NLRC. Records readily reveal that the NLRC was even too generous in affording due process to the Union. It issued no less than three (3) orders for the parties to submit its position papers, which the Union ignored until the last minute. No sufficient justification was offered why the Union belatedly filed its position paper. In Datu Eduardo Ampo v. The Hon. Court of Appeals, it was explained that a party cannot complain of deprivation of due process if he was afforded an opportunity to participate in the proceedings but failed to do so. If he does not avail himself of the chance to be heard, then it is deemed waived or forfeited without violating the constitutional guarantee. [29] Thus, there was no violation of the Unions right to due process on the part of the NLRC. Whether the mass actions committed by the Union on different occasions are illegal strikes; and Whether separation pay should be awarded to the Union members who participated in the illegal

III. IV.

V.

On a procedural aspect, the Union faults the CA for treating its petition as an unsigned pleading and posits that the verification signed by 159 out of the 227 petitioners has already substantially complied with and satisfied the requirements under Secs. 4 and 5 of Rule 7 of the Rules of Court. The Unions proposition is partly correct. Sec. 4 of Rule 7 of the Rules of Court states: Sec. 4. Verification.Except when otherwise specifically required by law or rule, pleadings need not be under oath, verified or accompanied by affidavit. A pleading is verified by an affidavit that the affiant has read the pleading and that the allegations therein are true and correct of his personal knowledge or based on authentic records. A pleading required to be verified which contains a verification based on information and belief or upon knowledge, information and belief, or lacks a proper verification, shall be treated as an unsigned pleading. The verification requirement is significant, as it is intended to secure an assurance that the allegations in the pleading are true and correct and not the product of the imagination or a matter of speculation. [30] This requirement is simply a condition affecting the form of pleadings, and noncompliance with the requirement does not necessarily render it fatally defective. Indeed, verification is only a formal and not a jurisdictional requirement.[31] In this case, the problem is not the absence but the adequacy of the Unions verification, since only 159 out of the 227 petitioners executed the verification. Undeniably, the petition meets the requirement on the verification with respect to the 159 petitioners who executed the verification, attesting that they have sufficient knowledge of the truth and correctness of the allegations of the petition. However, their signatures cannot be considered as verification of the petition by the other 68 named petitioners unless the latter gave written authorization to the 159 petitioners to sign the verification on their behalf. Thus, in Loquias v. Office of the Ombudsman, we ruled that the petition satisfies the formal requirements only with regard to the petitioner who signed the petition but not his copetitioner who did not sign nor authorize the other petitioner to sign it on his behalf. [32] The proper ruling in this situation is to consider the petition as compliant with the formal requirements with respect to the parties who signed it and, therefore, can be given due course only with regard to them. The other petitioners who did not sign the verification and certificate against forum shopping cannot be recognized as petitioners have no legal standing before the Court. The petition should be dismissed outright with respect to the non-conforming petitioners. In the case at bench, however, the CA, in the exercise of sound discretion, did not strictly apply the ruling in Loquias and instead proceeded to decide the case on the merits. The alleged protest rallies in front of the offices of BLR and DOLE Secretary and at the Toyota plants constituted illegal strikes When is a strike illegal? Noted authority on labor law, Ludwig Teller, lists six (6) categories of an illegal strike, viz: (1) [when it] is contrary to a specific prohibition of law, such as strike by employees performing governmental functions; or (2) [when it] violates a specific requirement of law[, such as Article 263 of the Labor Code on the requisites of a valid strike]; or (3) [when it] is declared for an unlawful purpose, such as inducing the employer to commit an unfair labor practice against non-union employees; or (4) [when it] employs unlawful means in the pursuit of its objective, such as a widespread terrorism of non-strikers [for example, prohibited acts under Art. 264(e) of the Labor Code]; or

(5) [when it] is declared in violation of an existing injunction[, such as injunction, prohibition, or order issued by the DOLE Secretary and the NLRC under Art. 263 of the Labor Code]; or (6) [when it] is contrary to an existing agreement, such as a no-strike clause or conclusive arbitration clause.[33] Petitioner Union contends that the protests or rallies conducted on February 21 and 23, 2001 are not within the ambit of strikes as defined in the Labor Code, since they were legitimate exercises of their right to peaceably assemble and petition the government for redress of grievances. Mainly relying on the doctrine laid down in the case of Philippine Blooming Mills Employees Organization v. Philippine Blooming Mills Co., Inc.,[34] it argues that the protest was not directed at Toyota but towards the Government (DOLE and BLR). It explains that the protest is not a strike as contemplated in the Labor Code. The Union points out that in Philippine Blooming Mills Employees Organization, the mass action staged in Malacaang to petition the Chief Executive against the abusive behavior of some police officers was a proper exercise of the employees right to speak out and to peaceably gather and ask government for redress of their grievances. The Unions position fails to convince us. While the facts in Philippine Blooming Mills Employees Organization are similar in some respects to that of the present case, the Union fails to realize one major difference: there was no labor dispute in Philippine Blooming Mills Employees Organization. In the present case, there was an on-going labor dispute arising from Toyotas refusal to recognize and negotiate with the Union, which was the subject of the notice of strike filed by the Union on January 16, 2001. Thus, the Unions reliance on Phililippine Blooming Mills Employees Organization is misplaced, as it cannot be considered a precedent to the case at bar. A strike means any temporary stoppage of work by the concerted action of employees as a result of an industrial or labor dispute. A labor dispute, in turn, includes any controversy or matter concerning terms or conditions of employment or the association or representation of persons in negotiating, fixing, maintaining, changing, or arranging the terms and conditions of employment, regardless of whether the disputants stand in the proximate relation of the employer and the employee.[35] In Bangalisan v. Court of Appeals, it was explained that [t]he fact that the conventional term strike was not used by the striking employees to describe their common course of action is inconsequential, since the substance of the situation and not its appearance, will be deemed controlling.[36] The term strike has been elucidated to encompass not only concerted work stoppages, but also slowdowns, mass leaves, sit-downs, attempts to damage, destroy, or sabotage plant equipment and facilities, and similar activities.[37] Applying pertinent legal provisions and jurisprudence, we rule that the protest actions undertaken by the Union officials and members on February 21 to 23, 2001 are not valid and proper exercises of their right to assemble and ask government for redress of their complaints, but are illegal strikes in breach of the Labor Code. The Unions position is weakened by the lack of permit from the City of Manila to hold rallies. Shrouded as demonstrations, they were in reality temporary stoppages of work perpetrated through the concerted action of the employees who deliberately failed to report for work on the convenient excuse that they will hold a rally at the BLR and DOLE offices in Intramuros, Manila, on February 21 to 23, 2001. The purported reason for these protest actions was to safeguard their rights against any abuse which the med-arbiter may commit against their cause. However, the Union failed to advance convincing proof that the med-arbiter was biased against them. The acts of the med-arbiter in the performance of his duties are presumed regular. Sans ample evidence to the contrary, the Union was unable to justify the February 2001 mass actions. What comes to the fore is that the decision not to work for two days was designed and calculated to cripple the manufacturing arm of Toyota. It becomes obvious that the real and ultimate goal of the Union is to coerce Toyota to finally acknowledge the Union as the sole bargaining agent of the company. This is not a legal and valid exercise of the right of assembly and to demand redress of grievance. We sustain the CAs affirmance of the NLRCs finding that the protest rallies staged on February 21 to 23, 2001 were actually illegal strikes. The illegality of the Unions mass actions was succinctly elaborated by the labor tribunal, thus: We have stated in our questioned decision that such mass actions staged before the Bureau of Labor Relations on February 21-23, 2001 by the union officers and members fall squarely within the definition of a strike (Article 212 (o), Labor Code). These concerted actions resulted in the temporary stoppage of work causing the latter substantial losses. Thus, without the requirements for a valid strike

having been complied with, we were constrained to consider the strike staged on such dates as illegal and all employees who participated in the concerted actions to have consequently lost their employment status. If we are going to stamp a color of legality on the two (2) [day-] walk out/strike of respondents without filing a notice of strike, in effect we are giving license to all the unions in the country to paralyze the operations of their companies/employers every time they wish to hold a demonstration in front of any government agency. While we recognize the right of every person or a group to peaceably assemble and petition the government for redress of grievances, the exercise of such right is governed by existing laws, rules and regulations. Although the respondent union admittedly made earnest representations with the company to hold a mass protest before the BLR, together with their officers and members, the denial of the request by the management should have been heeded and ended their insistence to hold the planned mass demonstration. Verily, the violation of the company rule cannot be dismissed as mere absences of two days as being suggested by the union [are but] concerted actions detrimental to Petitioner Toyotas interest.[38] (Emphasis supplied.) It is obvious that the February 21 to 23, 2001 concerted actions were undertaken without satisfying the prerequisites for a valid strike under Art. 263 of the Labor Code. The Union failed to comply with the following requirements: (1) a notice of strike filed with the DOLE 30 days before the intended date of strike, or 15 days in case of unfair labor practice;[39] (2) strike vote approved by a majority of the total union membership in the bargaining unit concerned obtained by secret ballot in a meeting called for that purpose; and (3) notice given to the DOLE of the results of the voting at least seven days before the intended strike. These requirements are mandatory and the failure of a union to comply with them renders the strike illegal.[40] The evident intention of the law in requiring the strike notice and the strike-vote report is to reasonably regulate the right to strike, which is essential to the attainment of legitimate policy objectives embodied in the law.[41] As they failed to conform to the law, the strikes on February 21, 22, and 23, 2001 were illegal. Moreover, the aforementioned February 2001 strikes are in blatant violation of Sec. D, par. 6 of Toyotas Code of Conduct which prohibits inciting or participating in riots, disorders, alleged strikes or concerted actions detrimental to [Toyotas] interest. The penalty for the offense is dismissal. The Union and its members are bound by the company rules, and the February 2001 mass actions and deliberate refusal to render regular and overtime work on said days violated these rules. In sum, the February 2001 strikes and walk-outs were illegal as these were in violation of specific requirements of the Labor Code and a company rule against illegal strikes or concerted actions. With respect to the strikes committed from March 17 to April 12, 2001, those were initially legal as the legal requirements were met. However, on March 28 to April 12, 2001, theUnion barricaded the gates of the Bicutan and Sta. Rosa plants and blocked the free ingress to and egress from the company premises. Toyota employees, customers, and other people having business with the company were intimidated and were refused entry to the plants. As earlier explained, these strikes were illegal because unlawful means were employed. The acts of the Union officers and members are in palpable violation of Art. 264(e), which proscribes acts of violence, coercion, or intimidation, or which obstruct the free ingress to and egress from the company premises. Undeniably, the strikes from March 28 to April 12, 2001 were illegal. Petitioner Union also posits that strikes were not committed on May 23 and 28, 2001. The Union asserts that the rallies held on May 23 and 28, 2001 could not be considered strikes, as the participants were the dismissed employees who were on payroll reinstatement. It concludes that there was no work stoppage. This contention has no basis. It is clear that once the DOLE Secretary assumes jurisdiction over the labor dispute and certifies the case for compulsory arbitration with the NLRC, the parties have to revert to thestatus quo ante (the state of things as it was before). The intended normalcy of operations is apparent from the fallo of the April 10, 2001 Order of then DOLE Secretary Patricia A. Sto. Tomas, which reads: WHEREFORE, PREMISES CONSIDERED, this Office hereby CERTIFIES the labor dispute at Toyota Motors Philippines Corporation to the [NLRC] pursuant to Article 263 (g) of the Labor Code, as amended. This Certification covers the current labor cases filed in relation with the Toyota strike, particularly, the Petition for Injunction filed with the National Labor Relations Commission entitled Toyota Motor Philippines Corporation vs. Toyota Motor Philippines Corporation Workers Association (TMPCWA), Ed Cubelo, et al., NLRC Injunction Case No. 3401054-01; Toyota Motor Philippines Corporation vs.

Toyota Motor Philippines Corporation Workers Association, et al., NLRC NCR Case No. 3004-01775-01, and such other labor cases that the parties may file relating to the strike and its effects while this Certification is in effect. As provided under Article 2634(g) of the Labor Code, all striking workers are directed to return to work at their regular shifts by April 16, 2001; the Company is in turn directed to accept them back to work under the same terms and conditions obtaining prior to the work stoppage, subject to the option of the company to merely reinstate a worker or workers in the payroll in light of the negative emotions that the strike has generated and the need to prevent the further deterioration of the relationship between the company and its workers. Further, the parties are hereby ordered to cease and desist from committing any act that might lead to the worsening of an already deteriorated situation.[42] (Emphasis supplied.) It is explicit from this directive that the Union and its members shall refrain from engaging in any activity that might exacerbate the tense labor situation in Toyota, which certainly includes concerted actions. This was not heeded by the Union and the individual respondents who staged illegal concerted actions on May 23 and 28, 2001 in contravention of the Order of the DOLE Secretary that no acts should be undertaken by them to aggravate the already deteriorated situation. While it may be conceded that there was no work disruption in the two Toyota plants, the fact still remains that the Union and its members picketed and performed concerted actions in front of the Company premises. This is a patent violation of the assumption of jurisdiction and certification Order of the DOLE Secretary, which ordered the parties to cease and desist from committing any act that might lead to the worsening of an already deteriorated situation. While there are no work stoppages, the pickets and concerted actions outside the plants have a demoralizing and even chilling effect on the workers inside the plants and can be considered as veiled threats of possible trouble to the workers when they go out of the company premises after work and of impending disruption of operations to company officials and even to customers in the days to come. The pictures presented by Toyota undoubtedly show that the company officials and employees are being intimidated and threatened by the strikers. In short, the Union, by its mass actions, has inflamed an already volatile situation, which was explicitly proscribed by the DOLE Secretarys Order. We do not find any compelling reason to reverse the NLRC findings that the pickets on May 23 and 28, 2001 were unlawful strikes. From the foregoing discussion, we rule that the February 21 to 23, 2001 concerted actions, the March 17 to April 12, 2001 strikes, and the May 23 and 28, 2001 mass actions were illegal strikes. Union officers are liable for unlawful strikes or illegal acts during a strike Art. 264 (a) of the Labor Code provides: ART. 264. PROHIBITED ACTIVITIES (a) xxx Any worker whose employment has been terminated as a consequence of an unlawful lockout shall be entitled to reinstatement with full backwages. Any union officer who knowingly participates in an illegal strike and any worker or union officer who knowingly participates in the commission of illegal acts during a strike may be declared to have lost his employment status: Provided, That mere participation of a worker in a lawful strike shall not constitute sufficient ground for termination of his employment, even if a replacement had been hired by the employer during such lawful strike. Art. 264(a) sanctions the dismissal of a union officer who knowingly participates in an illegal strike or who knowingly participates in the commission of illegal acts during a lawful strike. It is clear that the responsibility of union officials is greater than that of the members. They are tasked with the duty to lead and guide the membership in decision making on union activities in accordance with the law, government rules and regulations, and established labor practices. The leaders are expected to recommend actions that are arrived at with circumspection and contemplation, and always keep paramount the best interests of the members and union within the bounds of law. If the implementation of an illegal strike is recommended, then they would mislead

and deceive the membership and the supreme penalty of dismissal is appropriate. On the other hand, if the strike is legal at the beginning and the officials commit illegal acts during the duration of the strike, then they cannot evade personal and individual liability for said acts. The Union officials were in clear breach of Art. 264(a) when they knowingly participated in the illegal strikes held from February 21 to 23, 2001, from March 17 to April 12, 2001, and on May 23 and 28, 2001. We uphold the findings of fact of the NLRC on the involvement of said union officials in the unlawful concerted actions as affirmed by the CA, thus: As regards to the Union officers and directors, there is overwhelming justification to declare their termination from service. Having instigated the Union members to stage and carry out all illegal strikes from February 21-23, 2001, and May 23 and 28, 2001, the following Union officers are hereby terminated for cause pursuant to Article 264(a) of the Labor Code: Ed Cubelo, Maximino Cruz, Jr., Ricky Chavez, Joselito Hugo, Virgilio Colandog, Rommel Digma, Federico Torres, Emilio Completo, Alexander Esteva, Joey Javellonar, Lorenzo Caraqueo, Roderick Nieres, Antonio Borsigue, Bayani Manguil, Jr., and Mayo Mata.[43] The rule is well entrenched in this jurisdiction that factual findings of the labor tribunal, when affirmed by the appellate court, are generally accorded great respect, even finality.[44] Likewise, we are not duty-bound to delve into the accuracy of the factual findings of the NLRC in the absence of clear showing that these were arbitrary and bereft of any rational basis. [45] In the case at bench, the Union failed to convince us that the NLRC findings that the Union officials instigated, led, and knowingly participated in the series of illegal strikes are not reinforced by substantial evidence. Verily, said findings have to be maintained and upheld. We reiterate, as a reminder to labor leaders, the rule that [u]nion officers are duty bound to guide their members to respect the law.[46] Contrarily, if the officers urge the members to violate the law and defy the duly constituted authorities, their dismissal from the service is a just penalty or sanction for their unlawful acts.[47] Members liability depends on participation in illegal acts Art. 264(a) of the Labor Code provides that a member is liable when he knowingly participates in an illegal act during a strike. While the provision is silent on whether the strike is legal or illegal, we find that the same is irrelevant. As long as the members commit illegal acts, in a legal or illegal strike, then they can be terminated. [48] However, when union members merely participate in an illegal strike without committing any illegal act, are they liable? This was squarely answered in Gold City Integrated Port Service, Inc. v. NLRC,[49] where it was held that an ordinary striking worker cannot be terminated for mere participation in an illegal strike. This was an affirmation of the rulings in Bacus v. Ople[50] and Progressive Workers Union v. Aguas,[51] where it was held that though the strike is illegal, the ordinary member who merely participates in the strike should not be meted loss of employment on the considerations of compassion and good faith and in view of the security of tenure provisions under the Constitution. In Esso Philippines, Inc. v. Malayang Manggagawa sa Esso (MME), it was explained that a member is not responsible for the unions illegal strike even if he voted for the holding of a strike which became illegal.[52] Noted labor law expert, Professor Cesario A. Azucena, Jr., traced the history relating to the liability of a union member in an illegal strike, starting with the rule of vicarious liability, thus: Under [the rule of vicarious liability], mere membership in a labor union serves as basis of liability for acts of individuals, or for a labor activity, done on behalf of the union. The union member is made liable on the theory that all the members are engaged in a general conspiracy, and the unlawful acts of the particular members are viewed as necessary incidents of the conspiracy. It has been said that in the absence of statute providing otherwise, the rule of vicarious liability applies. Even the Industrial Peace Act, however, which was in effect from 1953 to 1974, did not adopt the vicarious liability concept. It expressly provided that: No officer or member of any association or organization, and no association or organization participating or interested in a labor dispute shall be held responsible or liable for the unlawful acts of individual officers, members, or agents, except upon proof of actual participation in, or actual authorization of, such acts or of ratifying of such acts after actual knowledge thereof. Replacing the Industrial Peace Act, the Labor Code has not adopted the vicarious liability rule.[53]

Thus, the rule on vicarious liability of a union member was abandoned and it is only when a striking worker knowingly participates in the commission of illegal acts during a strike that he will be penalized with dismissal. Now, what are considered illegal acts under Art. 264(a)? No precise meaning was given to the phrase illegal acts. It may encompass a number of acts that violate existing labor or criminal laws, such as the following: (1) Violation of Art. 264(e) of the Labor Code which provides that [n]o person engaged in picketing shall commit any act of violence, coercion or intimidation or obstruct the free ingress to or egress from the employers premises for lawful purposes, or obstruct public thoroughfares; (2) Commission of crimes and other unlawful acts in carrying out the strike;[54] and

(3) Violation of any order, prohibition, or injunction issued by the DOLE Secretary or NLRC in connection with the assumption of jurisdiction/certification Order under Art. 263(g) of the Labor Code. As earlier explained, this enumeration is not exclusive and it may cover other breaches of existing laws. In the cases at bench, the individual respondents participated in several mass actions, viz: (1) (2) (3) The rallies held at the DOLE and BLR offices on February 21, 22, and 23, 2001; The strikes held on March 17 to April 12, 2001; and The rallies and picketing on May 23 and 28, 2001 in front of the Toyota Bicutan and Sta. Rosa plants.

Did they commit illegal acts during the illegal strikes on February 21 to 23, 2001, from March 17 to April 12, 2001, and on May 23 and 28, 2001? The answer is in the affirmative. As we have ruled that the strikes by the Union on the three different occasions were illegal, we now proceed to determine the individual liabilities of the affected union members for acts committed during these forbidden concerted actions. Our ruling in Association of Independent Unions in the Philippines v. NLRC lays down the rule on the liability of the union members: Decisive on the matter is the pertinent provisions of Article 264 (a) of the Labor Code that: [x x x] any worker [x x x] who knowingly participates in the commission of illegal acts during a strike may be declared to have lost his employment status. [x x x] It can be gleaned unerringly from the aforecited provision of law in point, however, that an ordinary striking employee can not be terminated for mere participation in an illegal strike.There must be proof that he committed illegal acts during the strike and the striker who participated in the commission of illegal act[s] must be identified. But proof beyond reasonable doubt is not required. Substantial evidence available under the circumstances, which may justify the imposition of the penalty of dismissal, may suffice. In the landmark case of Ang Tibay vs. CIR, the court ruled Not only must there be some evidence to support a finding or conclusion, but the evidence must be substantial. Substantial evidence is more than a mere scintilla. It means such relevant evidence that a reasonable mind might accept as sufficient to support a conclusion.[55] (Emphasis supplied.) Thus, it is necessary for the company to adduce proof on the participation of the striking employee in the commission of illegal acts during the strikes. After a scrutiny of the records, we find that the 227 employees indeed joined the February 21, 22, and 23, 2001 rallies and refused to render overtime work or report for work. These rallies, as we earlier ruled, are in reality

illegal strikes, as the procedural requirements for strikes under Art. 263 were not complied with. Worse, said strikes were in violation of the company rule prohibiting acts in citing or participating in riots, disorders, alleged strikes or concerted action detrimental to Toyotas interest. With respect to the February 21, 22, and 23, 2001 concerted actions, Toyota submitted the list of employees who did not render overtime work on February 21, 2001 and who did not report for work on February 22 and 23, 2001 as shown by Annex I of Toyotas Position Paper in NLRC Certified Case No. 000203-01 entitled In Re: Labor Dispute at Toyota Motor Philippines Corp. The employees who participated in the illegal concerted actions were as follows: 1. Aclan, Eugenio; 2. Agosto, Joel; 3. Agot, Rodelio; 4. Alarana, Edwin; 5. Alejo, Alex; 6. Alfonso, Erwin; 7. Apolinario, Dennis; 8. Apostol, Melvin; 9. Arceta, Romel; 10. Arellano, Ruel; 11. Ariate, Abraham; 12. Arollado, Daniel; 13. Arriola, Dominador; 14. Atun, Lester; 15. Bala, Rizalino; 16. Baluyut, Rolando; 17. Banzuela, Tirso Jr.; 18. Bayani, Roderick; 19. Benabise, Sabas Jr.; 20. Berces, Abel; 21. Bering, Benny; 22. Birondo, Alberto; 23. Blanco, Melchor; 24. Bolanos, Dexter; 25. Bolocon, Jerry; 26. Borebor, Rurel; 27. Borromeo, Jubert; 28. Borsigue, Antonio; 29. Bulan, Elmer; 30. Busano, Freddie; 31. Bustillo, Ernesto Jr.; 32. Caalim, Alexander; 33. Cabahug, Nelson; 34. Cabatay, Jessie; 35. Cabezas, Marcelo; 36. Calalang, Richard; 37. Candelario, Roque Jr.; 38. Capate, Leo Nelson; 39. Carandang, Resty; 40. Caraqueo, Lorenzo; 41. Caringal, Dennis; 42. Casaba, Gienell; 43. Catapusan, Christopher; 44. Catral, Rico; 45. Cecilio, Felipe; 46. Cinense, Joey; 47. Cometa, Julius; 48. Completo, Emilio; 49. Consignado, Randy; 50. Coral, Jay Antonio; 51. Correa, Claudio Jr.; 52. Cuevas, Reynaldo; 53. Dacalcap, Albert; 54. Dakay, Ryan; 55. Dalanon, Herbert; 56. Dalisay, Rene; 57. David, Benigno Jr.; 58. De Guzman, Joey; 59. Dela Cruz, Basilio; 60. Dela Cruz, Ferdinand; 61. Dela Torre, Heremo; 62. De Leon, Leonardo; 63. Delos Santos, Rogelio; 64. De Ocampo, Joselito; 65. De Silva, Leodegario; 66. Del Mundo, Alex; 67. Del Rio, Rey; 68. Dela Ysla, Alex; 69. Dia, Frank Manuel; 70. Dimayuga, Antonio; 71. Dingcong, Jessiah; 72. Dumalag, Jasper; 73. Duyag, Aldrin; 74. Ercillo, Armando; 75. Espadilla, Delmar; 76. Espejo, Lionel; 77. Espeloa, Dennis; 78. Esteva, Alexander; 79. Estole, Francisco; 80. Fajardo, George; 81. Fajilagutan, Jason; 82. Fajura, John; 83. Franco, Melencio; 84. Franco, Nikko; 85. Fulgar, Dexter; 86. Fulo, Dante; 87. Gado, Eduardo; 88. Galang, Erwin; 89. Gamit, Rodel; 90. Garces, Robin; 91. Garcia, Ariel; 92. Gaspi, Ronald; 93. Gavarra, Angelo; 94. Gerola, Genaro Jr.; 95. Gerola, Larry; 96. Gohilde, Michael; 97. Gojar, Regino; 98. Gojar, Reynaldo; 99. Gonzales, Roberto; 100. Gutierrez, Bernabe; 101. Hilaga, Edgar; 102. Hilanga, Melchor; 103. Hondrada, Eugene Jay; 104. Imperial, Alejandro; 105. Jaen, Ferdinand; 106. Jalea, Philip; 107. Javillonar, Joey; 108. Julve, Frederick; 109. Lalisan, Victorio; 110. Landicho, Danny; 111. Laqui, Basilio; 112. Lavide, Edgar; 113. Lazaro, Orlando; 114. Legaspi, Noel; 115. Lising, Reynaldo Jr.; 116. Llanera, Joey; 117. Lomboy, Alberto; 118. Lopez, Geronimo; 119. Lozada, Jude Jonobell; 120. Lucido, Johny; 121. Macalindong, Rommel; 122. Madrazo, Nixon; 123. Magbalita, Valentin; 124. Magistrado, Rogelio Jr.; 125. Magnaye, Philip John; 126. Malabanan, Allan John; 127. Malabrigo, Angelito; 128. Malaluan, Rolando Jr.; 129. Malate, Leoncio Jr.; 130. Maleon, Paulino; 131. Manaig, Roger; 132. Manalang, Joseph Patrick; 133. Manalo, Manuel Jr.; 134. Manaog, Jonamar; 135. Manaog, Melchor; 136. Mandolado, Melvin; 137. Maneclang, Jovito; 138. Manego, Ruel; 139. Manguil, Bayani Jr.; 140. Manigbas, June; 141. Manjares, Alfred; 142. Manzanilla, Edwin; 143. Marasigan, Carlito; 144. Marcial, Nilo; 145. Mariano, Rommel; 146. Mata, Mayo; 147. Mendoza, Bobit; 148. Mendoza, Roberto; 149. Milan, Joseph; 150. Miranda, Eduardo; 151. Miranda, Luis; 152. Montero, Ericson; 153. Montero, Marlaw; 154. Montes, Ruel; 155. Morales, Dennis; 156. Natividad, Kenneth; 157. Nava, Ronaldo; 158. Nevalga, Alexander; 159. Nicanor, Edwin; 160. Nierves, Roderick; 161. Nunez, Alex; 162. Nunez, Lolito; 163. Obe, Victor; 164. Oclarino, Alfonso; 165. Ojenal, Leo; 166. Olit, Freddie; 167. Oliver, Rex; 168. Oliveria, Charlie; 169. Operana, Danny; 170. Oriana, Allan; 171. Ormilla, Larry; 172. Ortiz, Felimon; 173. Paniterce, Alvin; 174. Parallag, Gerald; 175. Pecayo, Edwin; 176. Pena, Erwin; 177. Penamante, Jowald; 178. Piamonte, Melvin; 179. Piamonte, Rogelio; 180. Platon, Cornelio; 181. Polutan, Jorge; 182. Posada, John; 183. Puno, Manjolito; 184. Ramos, Eddie; 185. Reyes, Rolando; 186. Roxas, Philip; 187. Sales, Paul Arthur; 188. Sallan, David Jr.; 189. Salvador, Bernardo; 190. Sampang, Alejandro; 191. San Pablo, Baldwin; 192. Sangalang, Jeffrey; 193. Santiago, Eric; 194. Santos, Raymond; 195. Sapin, Al Jose; 196. Saquilabon, Bernabe; 197. Serrano, Ariel; 198. Sierra, Alex; 199. Simborio, Romualdo; 200. Sulit, Lauro; 201. Tabirao, Elvisanto; 202. Tablizo, Edwin; 203. Taclan, Petronio; 204. Tagala, Rommel; 205. Tagle, Wilfredo Jr.; 206. Tecson Alexander; 207. Templo, Christopher; 208. Tenorio, Roderick; 209. Tolentino, Rodel; 210. Tolentino, Rommel; 211. Tolentino, Romulo Jr.; 212. Tomas, Rolando; 213. Topaz, Arturo Sr.; 214. Toral, Grant Robert; 215. Torres, Dennis; 216. Torres, Federico; 217. Trazona, Jose Rommel; 218. Tulio, Emmanuel; 219. Umiten, Nestor Jr.; 220. Vargas, Joseph; 221. Vergara, Allan; 222. Vergara, Esdwin; 223. Violeta, Apollo Sr.; 224. Vistal, Alex; 225. Yangyon, Michael Teddy; 226. Zaldevar, Christopher; and 227. Zamora, Dominador Jr.

Toyotas Position Paper containing the list of striking workers was attested to as true and correct under oath by Mr. Jose Ma. Aligada, First Vice President of the Group Administration Division of Toyota. Mr. Emerito Dumaraos, Assistant Department Manager of the Production Department of Toyota, likewise submitted a June 29, 2001 Affidavit[56]confirming the low attendance of employees on February 21, 22, and 23, 2001, which resulted from the intentional absences of the aforelisted striking workers. The Union, on the other hand, did not refute Toyotas categorical assertions on the participation of said workers in the mass actions and their deliberate refusal to perform their assigned work on February 21, 22, and 23, 2001. More importantly, it did not deny the fact of absence of the employees on those days from the Toyota manufacturing plants and their deliberate refusal to render work. Their admission that they participated in the February 21 to 23, 2001 mass actions necessarily means they were absent from their work on those days. Anent the March 28 to April 12, 2001 strikes, evidence is ample to show commission of illegal acts like acts of coercion or intimidation and obstructing free ingress to or egress from the company premises. Mr. Eduardo Nicolas III, Toyotas Security Chief, attested in his affidavit that the strikers badmouthed people coming in and shouted invectives such as bakeru at Japanese officers of the company. The strikers even pounded the vehicles of Toyota officials. More importantly, they prevented the ingress of Toyota employees, customers, suppliers, and other persons who wanted to transact business with the company. These were patent violations of Art. 264(e) of the Labor Code, and may even constitute crimes under the Revised Penal Code such as threats or coercion among others. On March 28, 2001, the following have committed illegal actsblocking the ingress to or egress from the two (2) Toyota plants and preventing the ingress of Toyota employees on board the company shuttle at the Bicutan and Sta. Rosa Plants, viz: 1. Grant Robert Toral; 2. John Posadas; 3. Alex Sierra; 4. Allan John Malabanan; 5. Abel Berces; 6. Ariel Garcia; 7. Charlie Oliveria; 8. Manjolito Puno; 9. Baldwin San Pablo; 10. Federico Torres; 11. Larry Gerola; 12. Roderick Bayani; 13. Allan Oclarino; 14. Reynaldo Cuevas; 15. George Polutan; 16. Arman Ercillo; 17. Joey Llanera; and 18. Roberto Gonzales Photographs were submitted by Toyota marked as Annexes 1 through 18 of its Position Paper, vividly showing the participation of the aforelisted employees in illegal acts.[57] To further aggravate the situation, a number of union members committed illegal acts (blocking the ingress to and egress from the plant) during the strike staged on March 29, 2001 at the Toyota plant in Bicutan, to wit: 1. Basilio Laqui; 2. Sabas Benabise; 3. Federico Torres; 4. Freddie Olit; and 5. Joel Agosto Pictures marked as Annexes 21 to 22 of Toyotas Position Paper reveal the illegal acts committed by the aforelisted workers.[58] On the next day, March 30, 2001, several employees again committed illegal acts (blocking ingress to and egress from the plant) during the strike at the Bicutan plant, to wit: 1. Ariel Garcia; 2. Edgar Hilaga; 3. Charlie Oliveria; 4. Ferdinand Jaen; 5. Wilfredo Tagle; 6. Alejandro Imperial; 7. Manjolito Puno; 8. Delmar Espadilla; 9. Apollo Violeta; and 10. Elvis Tabirao

Pictures marked as Annexes 25 to 26 and 28 of Toyotas Position Paper show the participation of these workers in unlawful acts.[59] On April 5, 2001, seven (7) Toyota employees were identified to have committed illegal acts (blocking ingress to and egress from the plant) during the strike held at the Bicutan plant, to wit: 1. Raymund Santos; 2. Elvis Tabirao; 3. Joseph Vargas; 4. Bernardo Salvador; 5. Antonio Dimayuga; 6. Rurel Borebor; and 7. Alberto Lomboy

The participations of the strikers in illegal acts are manifest in the pictures marked as Annexes 32 and 33 of Toyotas Position Paper.[60] On April 6, 2001, only Rogelio Piamonte was identified to have committed illegal acts (blocking ingress to and egress from the Toyota plant) during the strike at the Toyota Santa Rosa plant.[61] Then, on April 9, 2001, Alvin Paniterce, Dennis Apolinario, and Eduardo Miranda[62] were identified to have committed illegal acts (blocking ingress to and egress from theToyota plant) during the strike at the Toyota Santa Rosa plant and were validly dismissed by Toyota. Lastly, the strikers, though on payroll reinstatement, staged protest rallies on May 23, 2001 and May 28, 2001 in front of the Bicutan and Sta. Rosa plants. These workers acts in joining and participating in the May 23 and 28, 2001 rallies or pickets were patent violations of the April 10, 2001 assumption of jurisdiction/certification Order issued by the DOLE Secretary, which proscribed the commission of acts that might lead to the worsening of an already deteriorated situation. Art. 263(g) is clear that strikers who violate the assumption/certification Order may suffer dismissal from work. This was the situation in the May 23 and 28, 2001 pickets and concerted actions, with the following employees who committed illegal acts: a. Strikers who joined the illegal pickets on May 23, 2001 were (1) Dennis Apolinario; (2) Abel Berces; (3) Benny Bering; (4) Dexter Bolaos; (5) Freddie Busano; (6) Ernesto Bustillo, Jr.; (7) Randy Consignado; (8) Herbert Dalanon; (9) Leodegario De Silva; (10) Alexander Esteva; (11) Jason Fajilagutan; (12) Nikko Franco; (13) Genaro Gerola, Jr.; (14) Michael Gohilde; (15) Rogelio Magistrado; (16) Rolando Malaluan, Jr.; (17) Leoncio Malate, Jr.; (18) Edwin Manzanilla; (19) Nila Marcial; (20) Roderick Nierves; (21) Larry Ormilla; (22) Filemon Ortiz; (23) Cornelio Platon; (24) Alejandro Sampang; (25) Eric Santiago; (26) Romualdo Simborio; (27) Lauro Sulit; and (28) Rommel Tagala. Pictures show the illegal acts (participation in pickets/strikes despite the issuance of a return-to-work order) committed by the aforelisted strikers.[63] b. Strikers who participated in the May 28, 2001 were (1) Joel Agosto; (2) Alex Alejo; (3) Erwin Alfonso; (4) Dennis Apolinario; (5) Melvin Apostol; (6) Rommel Arceta; (7) Lester Atun; (8) Abel Berces; (9) Benny Bering; (10) Dexter Bolanos; (11) Marcelo Cabezas; (12) Nelson Leo Capate; (13) Lorenzo Caraqueo; (14) Christopher Catapusan; (15) Ricky Chavez; (16) Virgilio Colandog; (17) Claudio Correa; (18) Ed Cubelo; (19) Reynaldo Cuevas; (20) Rene Dalisay; (21) Benigno David, Jr.; (22) Alex Del Mundo; (23) Basilio Dela Cruz; (24) Roel Digma; (25) Aldrin Duyag; (26) Armando Ercillo; (27) Delmar Espadilla; (28) Alexander Esteva; (29) Nikko Franco; (30) Dexter Fulgar; (31) Dante Fulo; (32) Eduardo Gado; (33) Michael Gohilde; (34) Eugene Jay Hondrada II; (35) Joey Javillonar; (36) Basilio Laqui; (37) Alberto Lomboy; (38) Geronimo Lopez; (39) Rommel Macalindog; (40) Nixon Madrazo; (41) Valentin Magbalita; (42) Allan Jon Malabanan; (43) Jonamar Manaog; (44) Bayani Manguil; (45) June Manigbas; (46) Alfred Manjares; (47) Edwin Manzanilla; (48) Mayo Mata; (49) Leo Ojenal; (50) Allan Oriana; (51) Rogelio Piamonte; (52) George Polutan; (53) Eric Santiago; (54) Bernabe Saquilabon; (55) Alex Sierra; (56) Romualdo Simborio; (57) Lauro Sulit; (58) Elvisanto Tabirao; (59) Edwin Tablizo; (60) Emmanuel Tulio; (61) Nestor Umiten; (62) Joseph Vargas; (63) Edwin Vergara; and (64) Michael Teddy Yangyon. Toyota presented photographs which show said employees conducting mass pickets and concerted actions.
[64]

Anent the grant of severance compensation to legally dismissed union members, Toyota assails the turnaround by the CA in granting separation pay in its June 20, 2003 Resolution after initially denying it in its February 27, 2003 Decision. The company asseverates that based on the CA finding that the illegal acts of said union members constitute gross misconduct, not to mention the huge losses it suffered, then the grant of separation pay was not proper. The general rule is that when just causes for terminating the services of an employee under Art. 282 of the Labor Code exist, the employee is not entitled to separation pay. The apparent reason behind the forfeiture of the right to termination pay is that lawbreakers should not benefit from their illegal acts. The dismissed employee, however, is entitled to whatever rights, benefits and privileges [s/he] may have under the applicable individual or collective bargaining agreement with the employer or voluntary employer policy or practice [65] or under the Labor Code and other existing laws. This means that the employee, despite the dismissal for a valid cause, retains the right to receive from the employer benefits provided by law, like accrued service incentive leaves. With respect to benefits granted by the CBA provisions and voluntary management policy or practice, the entitlement of the dismissed employees to the benefits depends on the stipulations of the CBA or the company rules and policies.

As in any rule, there are exceptions. One exception where separation pay is given even though an employee is validly dismissed is when the court finds justification in applying the principle of social justice well entrenched in the 1987 Constitution. In Phil. Long Distance Telephone Co. (PLDT) v. NLRC, the Court elucidated why social justice can validate the grant of separation pay, thus: The reason is that our Constitution is replete with positive commands for the promotion of social justice, and particularly the protection of the rights of the workers. The enhancement of their welfare is one of the primary concerns of the present charter. In fact, instead of confining itself to the general commitment to the cause of labor in Article II on the Declaration of Principles of State Policies, the new Constitution contains a separate article devoted to the promotion of social justice and human rights with a separate sub-topic for labor. Article XIII expressly recognizes the vital role of labor, hand in hand with management, in the advancement of the national economy and the welfare of the people in general. The categorical mandates in the Constitution for the improvement of the lot of the workers are more than sufficient basis to justify the award of separation pay in proper cases even if the dismissal be for cause.[66] In the same case, the Court laid down the rule that severance compensation shall be allowed only when the cause of the dismissal is other than serious misconduct or that which reflects adversely on the employees moral character. The Court succinctly discussed the propriety of the grant of separation pay in this wise: 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.[67] Explicit in PLDT are two exceptions when the NLRC or the courts should not grant separation pay based on social justiceserious misconduct (which is the first ground for dismissal under Art. 282) or acts that reflect on the moral character of the employee. What is unclear is whether the ruling likewise precludes the grant of separation pay when the employee is validly terminated from work on grounds laid down in Art. 282 of the Labor Code other than serious misconduct. A recall of recent cases decided bearing on the issue reveals that when the termination is legally justified on any of the grounds under Art. 282, separation pay was not allowed. InHa Yuan Restaurant v. NLRC,[68] we deleted the award of separation pay to an employee who, while unprovoked, hit her co-workers face, causing injuries, which then resulted in a series of fights and scuffles between them. We viewed her act as serious misconduct which did not warrant the award of separation pay. In House of Sara Lee v. Rey,[69] this Court deleted the award of separation pay to a branch supervisor who regularly, without authorization, extended the payment deadlines of the companys sales agents. Since the cause for the supervisors dismissal involved her integrity (which can be considered as breach of trust), she was not worthy of compassion as to deserve separation pay based on her length of service. In Gustilo v.

Wyeth Phils., Inc.,[70] this Court found no exceptional circumstance to warrant the grant of financial assistance to an employee who repeatedly violated the companys disciplinary rules and regulations and whose employment was thus terminated for gross and habitual neglect of his duties. In the doctrinal case of San Miguel v. Lao,[71] this Court reversed and set aside the ruling of the CA granting retirement benefits or separation pay to an employee who was dismissed for willful breach of trust and confidence by causing the delivery of raw materials, which are needed for its glass production plant, to its competitor. While a review of the case reports does not reveal a case involving a termination by reason of the commission of a crime against the employer or his/her family which dealt with the issue of separation pay, it would be adding insult to injury if the employer would still be compelled to shell out money to the offender after the harm done. In all of the foregoing situations, the Court declined to grant termination pay because the causes for dismissal recognized under Art. 282 of the Labor Code were serious or grave in nature and attended by willful or wrongful intent or they reflected adversely on the moral character of the employees. We therefore find that in addition to serious misconduct, in dismissals based on other grounds under Art. 282 like willful disobedience, gross and habitual neglect of duty, fraud or willful breach of trust, and commission of a crime against the employer or his family, separation pay should not be conceded to the dismissed employee. In analogous causes for termination like inefficiency, drug use, and others, the NLRC or the courts may opt to grant separation pay anchored on social justice in consideration of the length of service of the employee, the amount involved, whether the act is the first offense, the performance of the employee and the like, using the guideposts enunciated in PLDT on the propriety of the award of separation pay. In the case at bench, are the 227 striking employees entitled to separation pay? In the instant case, the CA concluded that the illegal strikes committed by the Union members constituted serious misconduct.[72] The CA ratiocinated in this manner: Neither can social justice justify the award to them of severance compensation or any other form of financial assistance. x x x xxxx Considering that the dismissal of the employees was due to their participation in the illegal strikes as well as violation of the Code of Conduct of the company, the same constitutes serious misconduct. A serious misconduct is a transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere error in judgment. In fact, in Panay Electric Company, Inc. v. NLRC, the Supreme Court nullified the grant of separation benefits to employees who unlawfully participated in an illegal strike in light of Article 264, Title VIII, Book V of the Labor Code, that, any union officer who knowingly participates in an illegal strike and any worker or union officer who knowingly participates in the commission of illegal acts during a strike may be declared to have lost his employment status. The constitutional guarantee on social justice is not intended only for the poor but for the rich as well. It is a policy of fairness to both labor and management.[73] (Emphasis supplied.)

In disposing of the Unions plea for reconsideration of its February 27, 2003 Decision, the CA however performed a volte-face by reinstating the award of separation pay. The CAs grant of separation pay is an erroneous departure from our ruling in Phil. Long Distance Telephone Co. v. NLRC that serious misconduct forecloses the award of separation pay. Secondly, the advertence to the alleged honest belief on the part of the 227 employees that Toyota committed a breach of the duty to bargain collectively and an abuse of valid exercise of management prerogative has not been substantiated by the evidence extant on record. There can be no good faith in intentionally incurring absences in a collective fashion from work on February 22 and 23, 2001 just to attend the DOLE hearings. The Unions strategy was plainly to cripple the operations and bring Toyota to its knees by inflicting substantial financial damage to the latter to compel union recognition. The Union officials and members are supposed to know through common sense that huge losses would befall the company by the abandonment of their regular work. It was not disputed that Toyota lost more than PhP 50 million because of the willful desertion of company operations in February 2001 by the dismissed union members. In

addition, further damage was experienced by Toyota when the Union again resorted to illegal strikes from March 28 to April 12, 2001, when the gates ofToyota were blocked and barricaded, and the company officials, employees, and customers were intimidated and harassed. Moreover, they were fully aware of the company rule on prohibition against concerted action inimical to the interests of the company and hence, their resort to mass actions on several occasions in clear violation of the company regulation cannot be excused nor justified. Lastly, they blatantly violated the assumption/certification Order of the DOLE Secretary, exhibiting their lack of obeisance to the rule of law. These acts indeed constituted serious misconduct. A painstaking review of case law renders obtuse the Unions claim for separation pay. In a slew of cases, this Court refrained from awarding separation pay or financial assistance to union officers and members who were separated from service due to their participation in or commission of illegal acts during strikes. In the recent case of Pilipino Telephone Corporation v. Pilipino Telephone Employees Association (PILTEA),[74] this Court upheld the dismissal of union officers who participated and openly defied the return-to-work order issued by the DOLE Secretary. No separation pay or financial assistance was granted. In Sukhothai Cuisine and Restaurant v. Court of Appeals,[75] this Court declared that the union officers who participated in and the union members who committed illegal acts during the illegal strike have lost their employment status. In this case, the strike was held illegal because it violated agreements providing for arbitration. Again, there was no award of separation pay nor financial assistance. In Philippine Diamond Hotel and Resort, Inc. v. Manila Diamond Hotel Employees Union,[76] the strike was declared illegal because the means employed was illegal. We upheld the validity of dismissing union members who committed illegal acts during the strike, but again, without awarding separation pay or financial assistance to the erring employees. In Samahang Manggagawa sa Sulpicio Lines, Inc. v. Sulpicio Lines,[77] this Court upheld the dismissal of union officers who participated in an illegal strike sans any award of separation pay. Earlier, in Grand Boulevard Hotel v. Genuine Labor Organization of Workers in Hotel, Restaurant and Allied Industries,[78] we affirmed the dismissal of the Unions officers who participated in an illegal strike without awarding separation pay, despite the NLRCs declaration urging the company to give financial assistance to the dismissed employees.[79] In Interphil Laboratories Union-FFW, et al. v. Interphil Laboratories, Inc.,[80] this Court affirmed the dismissal of the union officers who led the concerted action in refusing to render overtime work and causing work slowdowns. However, no separation pay or financial assistance was allowed. In CCBPI Postmix Workers Union v. NLRC,[81] this Court affirmed the dismissal of union officers who participated in the strike and the union members who committed illegal acts while on strike, without awarding them separation pay or financial assistance. In 1996, in Allied Banking Corporation v. NLRC,[82] this Court affirmed the dismissal of Union officers and members, who staged a strike despite the DOLE Secretarys issuance of a return to work order but did not award separation pay. In the earlier but more relevant case of Chua v. NLRC,[83] this Court deleted the NLRCs award of separation benefits to an employee who participated in an unlawful and violent strike, which strike resulted in multiple deaths and extensive property damage. In Chua, we viewed the infractions committed by the union officers and members as a serious misconduct which resulted in the deletion of the award of separation pay in conformance to the ruling in PLDT. Based on existing jurisprudence, the award of separation pay to the Union officials and members in the instant petitions cannot be sustained. One last point to considerit is high time that employer and employee cease to view each other as adversaries and instead recognize that theirs is a symbiotic relationship, wherein they must rely on each other to ensure the success of the business. When they consider only their own self-interests, and when they act only with their own benefit in mind, both parties suffer from short-sightedness, failing to realize that they both have a stake in the business. The employer wants the business to succeed, considering the investment that has been made. The employee in turn, also wants the business to succeed, as continued employment means a living, and the chance to better ones lot in life. It is clear then that they both have the same goal, even if the benefit that results may be greater for one party than the other. If this becomes a source of conflict, there are various, more amicable means of settling disputes and of balancing interests that do not add fuel to the fire, and instead open avenues for understanding and cooperation between the employer and the employee. Even though strikes and lockouts have been recognized as effective bargaining tools, it is an antiquated notion that they are truly beneficial, as they only provide short-term solutions by forcing concessions from one party; but staging such strikes would damage the working relationship between employers and employees, thus endangering the business that they both want to succeed. The more progressive and truly effective means of dispute resolution lies in mediation, conciliation, and arbitration, which do not increase tension but instead provide relief from them. In the end, an atmosphere of trust and understanding has much more to offer a business relationship than the traditional enmity that has long divided the employer and the employee. WHEREFORE, the petitions in G.R. Nos. 158786 and 158789 are DENIED while those in G.R. Nos. 15879899 are GRANTED. The June 20, 2003 CA Resolution in CA-G.R. SP Nos. 67100 and 67561 restoring the grant of severance compensation is ANNULLED and SET ASIDE.

The February 27, 2003 CA Decision in CA-G.R. SP Nos. 67100 and 67561, which affirmed the August 9, 2001 Decision of the NLRC but deleted the grant of severance compensation, is REINSTATED and AFFIRMED. No costs. SO ORDERED.

TIRAZONA vs. PHILIPPINE EDS TECHNO- SERVICE INC. 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 dated 24 May 2005 is hereby AFFIRMED. Costs against the petitioner.[6] On 29 April 2008, Tirazona moved for reconsideration[7] of our afore-mentioned Decision. She argued therein that the Court failed to consider the length of her service to PET in affirming her termination from employment. She prayed that her dismissal be declared illegal. Alternatively, should the Court uphold the legality of her dismissal, Tirazona pleaded that she be awarded separation pay and retirement benefits, out of humanitarian considerations. In our Resolution[8] dated 23 June 2008, we denied Tirazonas Motion for Reconsideration, as the same did not present any substantial arguments that would warrant a modification of our previous ruling. We thus decreed: ACCORDINGLY, the Court resolves to DENY the motion for reconsideration with FINALITY for lack of merit. On 21 August 2008, Tirazona filed the instant Motion for Leave to File [a] Second Motion for Reconsideration, with the Second Motion for Reconsideration incorporated therein, raising essentially the same arguments and prayers contained in her first Motion for Reconsideration. The Court thereafter required PET to comment on the above motion. On 19 November 2008, PET filed its Comment/Opposition,[9] to which Tirazona filed her Reply[10] on 8 December 2008. After thoroughly scrutinizing the averments of the present Motion, the Court unhesitatingly declares the same to be completely unmeritorious. Section 2, Rule 52 of the Rules of Court explicitly decrees that no second motion for reconsideration of a judgment or final resolution by the same party shall be entertained. Accordingly, a second motion for reconsideration is a prohibited pleading, which shall not be allowed, except for extraordinarily persuasive reasons and only after an express leave shall have first been obtained.[11] In this case, we fail to find any such extraordinarily persuasive reason to allow Tirazonas Second Motion for Reconsideration. As a general rule, an employee who has been dismissed for any of the just causes enumerated under Article 282[12] of the Labor Code is not entitled to separation pay.[13] In Sy v. Metropolitan Bank & Trust Company,[14] we declared

that only unjustly dismissed employees are 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] inPhilippine 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 1999 up 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, 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.
[19]

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.

RENO vs. NAGKAKAISANG LAKAS NG MANGGAGAWA There is no legal or equitable justification for awarding financial assistance to an employee who was dismissed for stealing company property. Social justice and equity are not magical formulas to erase the unjust acts committed by the employee against his employer. While compassion for the poor is desirable, it is not meant to coddle those who are unworthy of such consideration. This Petition for Review on Certiorari[1] assails the June 3, 2004 Decision[2] of the Court of Appeals (CA) in CA-G.R. SP No. 76789 which denied the petition for certiorari filed by the petitioners and affirmed the award of financial assistance to respondent Nenita Capor. Factual Antecedents Petitioner Reno Foods, Inc. (Reno Foods) is a manufacturer of canned meat products of which Vicente Khu is the president and is being sued in that capacity. Respondent NenitaCapor (Capor) was an employee of Reno Foods until her dismissal on October 27, 1998. It is a standard operating procedure of petitioner-company to subject all its employees to reasonable search of their belongings upon leaving the company premises. On October 19, 1998, the guard on duty found six Reno canned goods wrapped in nylon leggings inside Capors fabric clutch bag. The only other contents of the bag were money bills and a small plastic medicine container. Petitioners accorded Capor several opportunities to explain her side, often with the assistance of the union officers of Nagkakaisang Lakas ng Manggagawa (NLM) Katipunan. In fact, after petitioners sent a Notice of Termination to Capor, she was given yet another opportunity for reconsideration through a labor-management grievance conference held on November 17, 1999. Unfortunately, petitioners did not find reason to change its earlier decision to terminate Capors employment with the company. On December 8, 1998, petitioners filed a complaint-affidavit against Capor for qualified theft in the Office of the City Prosecutor, Malabon-Navotas Substation. On April 5, 1999, a Resolution[3] was issued finding probable cause for the crime charged. Consequently, an Information was filed against Capor docketed as Criminal Case No. 207-58-MN. Meanwhile, the Nagkakaisang Lakas ng Manggagawa (NLM) Katipunan filed on behalf of Capor a complaint[4] for illegal dismissal and money claims against petitioners with the Head Arbitration Office of the National Labor Relations Commission (NLRC) for the National Capital Region. The complaint prayed that Capor be paid her full backwages as well as moral and exemplary damages. The complaint was docketed as NLRC NCR Case No. 00-01-00183-99. Ruling of the Labor Arbiter In the proceedings before the Labor Arbiter, Capor alleged that she was unaware that her clutch bag contained the pilfered canned products. She claimed that petitioners might have planted the evidence against her so it could avoid payment of her retirement benefits, as she was set to retire in about a years time. After the submission of the parties respective position papers, the Labor Arbiter rendered his Decision [5] dated November 16, 1999 finding Capor guilty of serious misconduct which is a just cause for termination. The Labor Arbiter noted that Capor was caught trying to sneak out six cans of Reno products without authority from the company. Under Article 232 of the Labor Code, an employer may terminate the services of an employee for just cause, such as serious misconduct. In this case, the Labor Arbiter found that theft of company property is tantamount to serious misconduct; as such, Capor is not entitled to reinstatement and backwages, as well as moral and exemplary damages. Moreover, the Labor Arbiter ruled that consistent with prevailing jurisprudence, an employee who commits theft of company property may be validly terminated and consequently, the said employee is not entitled to separation pay.[6] Ruling of the National Labor Relations Commission On appeal, the NLRC affirmed the factual findings and monetary awards of the Labor Arbiter but added an award of financial assistance. The decretal portion of the September 20, 2002 Decision[7] reads: WHEREFORE, premises considered, the decision under review is hereby MODIFIED by granting an award of financial assistance in the form of separation pay equivalent to one-half month pay for every year of service. In all other respects the decision stands affirmed. All other claims of the complainant are dismissed for lack of merit.[8]

Both parties moved for a reconsideration of the NLRC Decision. Petitioners asked that the award of financial assistance be deleted, while Capor asked for a finding of illegal dismissal and for reinstatement with full backwages.[9] On February 28, 2003, the NLRC issued its Resolution[10] denying both motions for reconsideration for lack of merit. Ruling of the Court of Appeals Aggrieved, petitioners filed a Petition for Certiorari[11] before the CA imputing grave abuse of discretion amounting to lack or excess of jurisdiction on the part of the NLRC for awarding financial assistance to Capor. Citing Philippine Long Distance Telephone Company v. National Labor Relations Commission,[12] petitioners argued that theft of company property is a form of serious misconduct under Article 282(a) of the Labor Code for which no financial assistance in the form of separation pay should be allowed. Unimpressed, the appellate court affirmed the NLRCs award of financial assistance to Capor. It stressed that the laborers welfare should be the primordial and paramount consideration when carrying out and interpreting provisions of the Labor Code. It explained that the mandate laid down in Philippine Long Distance Telephone Company v. National Labor Relations Commission[13] was not absolute, but merely directory. Hence, this petition. Issue The issue before us is whether the NLRC committed grave abuse of discretion amounting to lack or excess of jurisdiction in granting financial assistance to an employee who was validly dismissed for theft of company property. Our Ruling We grant the petition. Conviction in a criminal case is not necessary to find just cause for termination of employment. On the date that the appellate court issued its Decision, Capor filed a Manifestation[14] informing the CA of her acquittal in the charge of qualified theft. The dispositive portion of said Decision reads: WHEREFORE, premises considered, judgment is hereby rendered acquitting Nenita Capor of the crime charged against her in this case on the ground of reasonable doubt with costs de oficio. Capor thus claims that her acquittal in the criminal case proves that petitioners failed to present substantial evidence to justify her termination from the company. She therefore asks for a finding of illegal dismissal and an award of separation pay equivalent to one month pay for every year of service. On the other hand, petitioners argue that the dismissal of a criminal action should not carry a corresponding dismissal of the labor action since a criminal conviction is unnecessary in warranting a valid dismissal for employment. Petitioners further maintain that the ruling in Philippine Long Distance Telephone Company v. National Labor Relations Commission[15] regarding the disallowance of separation pay for those dismissed due to serious misconduct or moral turpitude is mandatory. Petitioners likewise argue that in Zenco Sales, Inc. v. National Labor Relations Commission,[16] the Supreme Court found grave abuse of discretion on the part of the NLRC when it ignored the principles laid down in the Philippine Long Distance Telephone Company v. National Labor Relations Commission. Thus, petitioners pray for the reversal of the CA Decision and reinstatement of the Labor Arbiters Decision dated November 16, 1999. Capor was acquitted in Criminal Case No. 207-58-MN based on reasonable doubt. In his Decision, the trial judge entertained doubts regarding the guilt of Capor because of two circumstances: (1) an ensuing labor dispute (though it omitted to state the parties involved), and (2) the upcoming retirement of Capor. The trial judge made room for the possibility that these circumstances could have motivated petitioners to plant evidence against Capor so as to avoid paying her retirement benefits. The trial court did not categorically rule that the acts imputed to Capor did not occur. It did not find petitioners version of the event as fabricated, baseless, or unreliable. It merely acknowledged that seeds of doubt have been planted in the jurors mind which, in a criminal case, is enough to acquit an accused based on reasonable doubt. The pertinent portion of the trial courts Decision reads:

During the cross examination of the accused, she was confronted with a document that must be related to a labor dispute. x x x The Court noted very clearly from the transcript of stenographic notes that it must have been submitted to the NLRC. This is indicative of a labor dispute which, although not claimed directly by the accused, could be one of the reasons why she insinuated that evidence was planted against her in order to deprive her of the substantial benefits she will be receiving when she retires from the company. Incidentally, this document was never included in the written offer of evidence of the prosecution. Doubt has, therefore, crept into the mind of the Court concerning the guilt of accused Nenita Capor which in this jurisdiction is mandated to be resolved in favor of her innocence. Pertinent to the foregoing doubt being entertained by this Court, the Court of Appeals citing People v. Bacus, G.R. No. 60388, November 21, 1991: the phrase beyond reasonable doubt means not a single iota of doubt remains present in the mind of a reasonable and unprejudiced man that a person is guilty of a crime. Where doubt exists, even if only a shred, the Court must and should set the accused free. (People v. Felix, CA-G.R. No. 10871, November 24, 1992) WHEREFORE, premises considered, judgment is hereby rendered acquitting accused Nenita Capor of the crime charged against her in this case on the ground of reasonable doubt, with costs de oficio. SO ORDERED.[17] In Nicolas v. National Labor Relations Commission,[18] we held that a criminal conviction is not necessary to find just cause for employment termination. Otherwise stated, an employees acquittal in a criminal case, especially one that is grounded on the existence of reasonable doubt, will not preclude a determination in a labor case that he is guilty of acts inimical to the employers interests.[19] Criminal cases require proof beyond reasonable disputes require only substantial evidence, which means such relevant evidence as a doubt while labor

reasonable mind might accept as adequate to justify a conclusion.[20] The evidence in this case was reviewed by the appellate court and two labor tribunals endowed with expertise on the matter the Labor Arbiter and the NLRC. They all found substantial evidence to conclude that Capor had been validly dismissed for dishonesty or serious misconduct. It is settled that factual findings of quasijudicial agencies are generally accorded respect and finality so long as these are supported by substantial evidence. In the instant case, we find no compelling reason to doubt the common findings of the three reviewing bodies. The award of separation pay is not warranted under the law and jurisprudence. We find no justification for the award of separation pay to Capor. This award is a deviation from established law and jurisprudence. [21] The law is clear. Separation pay is only warranted when the cause for termination is not attributable to the employees fault, such as those provided in Articles 283 and 284 of the Labor Code, as well as in cases of illegal dismissal in which reinstatement is no longer feasible.[22] It is not allowed when an employee is dismissed for just cause,[23] such as serious misconduct. Jurisprudence has classified theft of company property as a serious misconduct and denied the award of separation pay to the erring employee.[24] We see no reason why the same should not be similarly applied in the case of Capor. She attempted to steal the property of her long-time employer. For committing such misconduct, she is definitely not entitled to an award of separation pay. It is true that there have been instances when the Court awarded financial assistance to employees who were terminated for just causes, on grounds of equity and social justice. The same, however, has been curbed and rationalized in Philippine Long Distance Telephone Company v. National Labor Relations Commission. [25] In that case, we recognized the harsh realities faced by employees that forced them, despite their good intentions, to violate company policies, for which the employer can rightfully terminate their employment. For these instances, the award of financial assistance was allowed. But, in clear and unmistakable language, we also held that the award of financial assistance shall not be given to validly terminated employees, whose offenses are iniquitous or reflective of some depravity in their moral character. When the employee commits an act of dishonesty, depravity, or iniquity, the grant of financial assistance is misplaced compassion. It is tantamount not only to condoning a patently illegal or dishonest act, but an endorsement thereof. It will be an insult to all the laborers who, despite their economic difficulties, strive to maintain good values and moral conduct.

In fact, in the recent case of Toyota Motors Philippines, Corp. Workers Association (TMPCWA) v. National Labor Relations Commission,[26] we ruled that separation pay shall not be granted to all employees who are dismissed on any of the four grounds provided in Article 282 of the Labor Code. Such ruling was reiterated and further explained in Central Philippines Bandag Retreaders, Inc. v. Diasnes:[27] To reiterate our ruling in Toyota, labor adjudicatory officials and the CA must demur the award of separation pay based on social justice when an employees dismissal is based on serious misconduct or willful disobedience; gross and habitual neglect of duty; fraud or willful breach of trust; or commission of a crime against the person of the employer or his immediate family grounds under Art. 282 of the Labor Code that sanction dismissals of employees. They must be most judicious and circumspect in awarding separation pay or financial assistance as the constitutional policy to provide full protection to labor is not meant to be an instrument to oppress the employers. The commitment of the Court to the cause of labor should not embarrass us from sustaining the employers when they are right, as here. In fine, we should be more cautious in awarding financial assistance to the undeserving and those who are unworthy of the liberality of the law. We are not persuaded by Capors argument that despite the finding of theft, she should still be granted separation pay in light of her long years of service with petitioners. We held in Central Pangasinan Electric Cooperative, Inc. v. National Labor Relations Commission[28] that: Although long years of service might generally be considered for the award of separation benefits or some form of financial assistance to mitigate the effects of termination, this case is not the appropriate instance for generosity x x x. The fact that private respondent served petitioner for more than twenty years with no negative record prior to his dismissal, in our view of this case, does not call for such award of benefits, since his violation reflects a regrettable lack of loyalty and worse, betrayal of the company. If an employees length of service is to be regarded as justification for moderating the penalty of dismissal, such gesture will actually become a prize for disloyalty, distorting the meaning of social justice and undermining the efforts of labor to clean its ranks of undesirables. Indeed, length of service and a previously clean employment record cannot simply erase the gravity of the betrayal exhibited by a malfeasant employee.[29] Length of service is not a bargaining chip that can simply be stacked against the employer. After all, an employer-employee relationship is symbiotic where both parties benefit from mutual loyalty and dedicated service. If an employer had treated his employee well, has accorded him fairness and adequate compensation as determined by law, it is only fair to expect a long-time employee to return such fairness with at least some respect and honesty. Thus, it may be said that betrayal by a long-time employee is more insulting and odious for a fair employer. As stated in another case: x x x The fact that [the employer] did not suffer pecuniary damage will not obliterate respondents betrayal of trust and confidence reposed by petitioner. Neither would his length of service justify his dishonesty or mitigate his liability. His length of service even aggravates his offense. He should have been more loyal to petitioner company from which he derived his family bread and butter for seventeen years.[30] While we sympathize with Capors plight, being of retirement age and having served petitioners for 39 years, we cannot award any financial assistance in her favor because it is not only against the law but also a retrogressive public policy. We have already explained the folly of granting financial assistance in the guise of compassion in the following pronouncements: x x x Certainly, a dishonest employee cannot be rewarded with separation pay or any financial benefit after his culpability is established in two decisions by competent labor tribunals, which decisions appear to be wellsupported by evidence. To hold otherwise, even in the name of compassion, would be to send a wrong signal not only that crime pays but also that one can enrich himself at the expense of another in the name of social justice. And courts as well as quasi-judicial entities will be overrun by petitioners mouthing dubious pleas for misplaced social justice. Indeed, before there can be an occasion for compassion and mercy, there must first be justice for all. Otherwise, employees will be encouraged to steal and misappropriate in the expectation that eventually, in the name of social justice and compassion, they will not be penalized but instead financially rewarded. Verily, a contrary holding will merely encourage lawlessness, dishonesty, and duplicity. These are not the values that society cherishes; these are the habits that it abhors.[31] WHEREFORE, the petition is GRANTED. The assailed June 3, 2004 Decision of the Court of Appeals in CA-G.R. SP No. 76789 affirming the September 20, 2002 Decision of the National Labor Relations Commission is ANNULLED and SET ASIDE. The November 16, 1999 Decision of the Labor Arbiter is REINSTATED and AFFIRMED. SO ORDERED.

PAL vs. NLRC This is a Petition for Certiorari under Rule 65 of the Rules of Court seeking to annul, reverse and set aside the following issuances of public respondent National Labor Relations Commission (NLRC): (1) Decision[1] dated September 29, 1995 in NLRC NCR CA 007860-94 (NLRC NCR 00-03-01859-91), entitled Aida M. Quijano v. Philippine Airlines, Inc., which set aside the Decision[2] of Labor Arbiter Roberto I. Santos and ordered petitioner Philippine Airlines, Inc. (PAL) to pay private respondent Aida M. Quijano (Quijano) her separation pay in accordance with petitioners Special Retirement & Separation Program, and (2) Resolution[3] dated November 14, 1995 denying petitioners Motion for Reconsideration thereof. It bears stressing that pursuant to St. Martin Funeral Home v. National Labor Relations Commission[4] and In Re: Dismissal of Special Civil Actions in NLRC Cases,[5] all special civil actions arising out of any decision, final resolution or order of the NLRC must be filed with the Court of Appeals. However, since both parties of this case had filed their respective Memoranda prior to the promulgation of our decision in St. Martin Funeral Home, this case was no longer referred to the Court of Appeals. The following are the pertinent facts, as summarized by the NLRC: Complainant Quijano rose from the ranks starting as accounting clerk in December 1967 until she became effective September 1, 1984, Manager-Agents Services Accounting Division (ASAD), vice Josefina Sioson. ASAD, the specific unit in PAL charged with the processing, verification, reconciliation, and validation of all claims for commission filed by agents worldwide, is under the direct supervision and control of the Vice President-Comptroller, and within the scope of the audit program of the Vice PresidentInternal Audit & Control. On May 5, 1989, an investigating committee chaired by Leslie W. Espino (hereinafter referred to as the Espino Committee) formally charged Quijano as Manager-ASAD in connection with the processing and payment of commission claims to Goldair Pty. Ltd. (Goldair for short) wherein PAL overpaid commissions to the latter amounting to several million Australian dollars during the period 1984-1987. Specifically, Quijano was charged as Manager-ASAD with the following: Failure on the job and gross negligence resulting in loss of trust and confidence in that you failed to: a. Exercise the necessary monitoring, control and supervision over your Senior Accounts Analyst to ensure that the latter was performing the basic duties and responsibilities of her job in checking and verifying the correctness and validity of the commission claims from Goldair. b. Adopt and perform the necessary checks and verification procedures as demanded by your position in order to ensure that the commission claims of Goldair which you were approving for payment were correct and valid claims thus resulting in consistent substantial overpayments to Goldair over a period of more than three years. c. Require or otherwise cause a final reconciliation of the remaining balance due as commission claims to Goldair for a particular month such that a claim for a particular month was never liquidated in a final amount and thus contributing to consistent overpayments to Goldair. The Senior Accounts Analyst referred to in the charge was Dora Jane Prado Curammeng who was included as a respondent. Curammeng was specifically assigned to handle and process commissions of agents in, among others, the Australia Region, and Goldair was among the travel agents whose production reports and commission claims were handled by her. Curammeng was accused of failing to verify the completeness of the documents supporting the claims; to trace and match each ticket in the production report submitted by Goldair with the IATA, BSP and CTO sales report; and to perform a complete verification of the net/net amounts claimed in the production reports against the approved marketing arrangements. However, Curammeng had already resigned and became a resident of Canada at the time of the investigation conducted by the Espino Committee.

Pending further investigation, the Espino Committee placed Quijano under preventive suspension and at the same time required her to submit her answer to the charges. As directed, Quijano submitted her answer wherein, among others, she explained as follows: My staff processes production reports submitted by both passenger and cargo agents. In 1984, they were only seven (7) people (with one on loan to Financial Analysis Division) and yet they process commission claims of an average of PHP four billion annually. My colleagues who are responsible for processing and recording gross passenger and cargo sales have around 51 people. Just the ratio of my staff to accounting sales staff, which is one to seven, would indicate the heavy load our unit experience. I wish to emphasize however, that the staff assigned under my division have been selected on the basis of their judgment competence considering the very nature of marketing arrangements with agents are strictly private and confidential. Under the circumstances I have just mentioned, my staffs judgment and competence is heavily relied on particularly when random checking of commission claims for traffic documents and airway bills against sales reports is being performed by them. I also seek your appreciation of the work environment we are in and the intermittent conflicts we experience due to the pressure of prompt settlement of claims to agents and yet having the satisfaction that the processing procedures are adequate. xxxx May I reiterate to the Committee that when my staff informed me of their findings of double claims on the production reports for the months of October and November 1987, I followed this up with a representative of Goldair. On June 1988, I received a handwritten note from the representative of Goldair signed by its General Manager Aleco Papazoglou, a xerox copy of it is hereto attached as Annex A. Mr. Papazoglou, in this note, guaranteed to me that he will undertake to collect any excessive payments on the agent fees from his agents and pay these to us afterwards. At this point, I would like to emphasize that ASAD, before known as Confidential Staff under the Office of the VP-Comptroller, became a unit since 1976. Due to the confidential nature of its functions, the accounting procedures were not written. The procedures being performed by the staff were mainly practices handed down from their predecessors. Further, the procedures were tailored to adopt to the market environment of the country which were based on the approved marketing arrangements. But of course, there were inherent internal controls. A final check whether accounting procedures being observed were appropriate in accordance with accounting standards, is the periodic examination of both our internal and external auditors. During all these 4-1/2 years I have been with ASAD, I did not receive any feedback that there were weaknesses or lapses in accounting controls and procedures being followed. In 1985, Cressop Mccormick & Paget made a study of the CMAs. They conducted an interview of all key personnel including me who were involved in handling CMAs. It was of course necessary for them to observe and evaluate the existing accounting procedures and controls. Their report, however, did not mention any adverse findings concerning my division. In 1986, Sycip, Gorres, Velayo & Co. were engaged to look into the CMA functional specifications and to propose the best method of allocating commission expenses to flown revenues. To be able for them to render a report, it is, of course, necessary for them to delve into the reports we receive and the records we maintain. It is safe to surmise that they walked through our accounting procedures. No mention, however, of weaknesses on our accounting procedures and controls was made in their report.

Again, during the early part of 1987, all the production reports from Australia for the period April to September 1986 were borrowed and audited by Internal Audit and control. We apprised the auditor then of the various procedures we observed in processing these production reports. We did not receive any adverse feedback about their audit. Our confidence that the AMAs were properly enforced by Australian agents and that there were no irregularities committed were thus regained. We shifted our concentration to the other agents particularly those under Nett-Nett settlement arrangements and tried to recall any commission that should be disallowed. In the middle of 1987, a special team from the Commission on Audit conducted a fraud audit and again, interviewed my staff and I on our accounting procedures. Incentive commission figures by agent by country were also furnished to them. I wasnt informed of any flaws in our accounting procedures and control nor existence of any fraud. My division underwent scrutiny of three (3) prestigious consulting firms and of our own internal audit. I relied heavily on the absence of any unfavorable findings on accounting procedures and controls from them since their studies were quite extensive and lengthy. It is quite surprising at times why I am now asked how I could have failed to observe that certain accounting procedures were not being followed by my staff. xxxx Also, Internal Audit & Control made a regular audit in Australia in November, 1986 headed by no less than the Vice President-Internal Audit & Control. They did not discover any fraud nor report any questionable transaction on Passenger but on Cargo transaction only. If they, the auditors, did not find any discrepancy when their concentration is on Australia alone, how much more with us when our concentration is on the whole system? The production reports of Goldair was borrowed and assessed by the auditor before and after the regular audit. The other members of the Espino Committee were Ricardo G. Paloma, then Senior Vice President-Strategic Planning & Corporate Services wrote a dissenting opinion to the Final Draft Majority Report in the following manner, to wit: A new set of procedures was apparently installed by Romeo Ines and Josefina Sioson in April, 1984 (without any evident formal authorization by the Comptroller Dept.) upon receipt of Aleco Papazoglous letter that automatic payment be made upon presentation of his production reports in Manila Gold Air gained immunity against any possibility of cross of their production reports: it was simply impossible to cross check the production reports against sales reports are not yet in by the time the hand carried production reports arrive in ASAD. Upon assumption of office by Aida Quijano this new set of procedure was carried over. She was made to understand that these were the OFFICIAL PROCEDURES, contrary to the actual procedure which called for production reports being initially checked by PAL Melbourne during the 1981 to 1983 period. This initial check which had until them been handled by the Regional Office was combined with the secondary check and were all dumped on ASAD. A mitigating factor in Quijanos favor is that UNSEEN HANDS designed or allowed this new procedures to be put in place. Ines, who became the VP Internal Audit should have known the prescribed procedures (or at the very least the actual practice during the period 1981 to 1983 when he was the VP Comptroller) and yet, did not alert her. Unknowingly, Quijano allowed the by-pass and the automatic payment of 80% upon presentation of production reports because Sioson assured her that was the procedure previously followed. Trustingly, she became a participant in this mess. It should be noted that the Romeo Ines mentioned in the dissenting opinion is the same Romeo R. Ines who was one of the members of the Espino Committee and who was later named a respondent in the second Goldair charge, together with Chairman Espino. Romeo R. Ines was the VP-Comptroller for the period 1981-1983 and VP-Internal Audit for the period 1984-1987. While Josefina Sioson, as earlier

shown, was the Manager-ASAD during the period 1981-1983 until she was replaced by Quijano on September 1, 1984. Incidentally, as found by respondents witness Benigno Datoc, the Goldair fraud started in 1981 and continued until its discovery sometime in the latter part of 1987. And as of that year, Goldair had been PALs agent for about seventeen (17) years already. On July 2, 1990, another Administrative charge involving the same Goldair anomaly was filed, this time including Committee Chairman Leslie W. Espino and Committee Member Romeo R. Ines and several others, for gross incompetence and inefficiency, negligence, imprudence, mismanagement, dereliction of duty, failure to observe and/or implement administrative and executive policies, and related acts or omissions. Pending the result of investigation by another committee chaired by Judge Martin S. Ocampo, the PAL Board of Directors suspended respondents Leslie W. Espino, Executive Vice-President and Chief Operating Officer; Ramon C. Lozon, Senior Vice-President-Finance; Romeo R. Ines, Vice President-Internal Audit & Control; Josefina Sioson, Manager-Staff Pricing; except respondents VPComptroller Robin C. Dui and Manager-ASAD Aida Quijano who were already suspended by the Espino Committee, and respondent Juan Yoga, former Regional Vice President-Australia who has already retired. Meantime, PAL filed a civil case in Australia against Goldair seeking to recover AUD 11 million. Twice, Quijano went to Australia as witness for PAL. Thereafter, a settlement was reached whereby Goldair was to pay PAL a total of around AUD 7 million inclusive of court costs. A criminal case was nevertheless filed against Goldairs owner, Alexandro Papazoglou, by the Fraud Squad Victorian Police. The Ocampo Committee having submitted its findings to the PAL Board of Directors, the latter, in a resolution dated January 18, 1991, considered respondents Leslie W. Espino, Ramon C. Lozon, Romeo R. Ines, Robin C. Dui, Josefina Sioson, and Aida M. Quijano, resigned from the service effective immediately, for loss of confidence and for acts inimical to the interest of the company. The Board found as follows: This is the extended Resolution. The Goldair fraud has caused a total loss to PAL as of August 1990 in the amount of AUD 14.6 million (PHP 204 million). Goldair is a company that served then as the General Sales Agent of PAL in Australia against Goldair, a settlement was reached whereby Goldair was to pay PAL a total of around AUD 7 million inclusive of court costs. This settlement is said to be the most practical and realistic under the circumstances. A criminal case was nevertheless filed against Goldairs owner, Alexandro Papazoglou, by the Fraud Squad Victorian Police. Hearings are still going on. According to the evidence received and evaluated by the investigating committee, PAL lost the above huge sum of money to Goldair as a result of false, padded, erroneous or irregular claims for commissions submitted by Goldair and unwittingly paid by PAL. The Agents Services Accounting Division (ASAD), one of the divisions under the Comptroller Department, is the specific unit in the company charged with the processing, verification, and validation of all claims for commissions filed by the companys agents worldwide (excluding the U.S. which is processed by the San Francisco Regional Office). Consequently, responsibility for the Goldair fraud has been attributed mainly to the failure of ASAD to properly process and validate Goldairs commission claims prior to payment. Thus, the following lapses or irregularities were uncovered in the course of the investigations that have been conducted: 1. No adequate effort was exerted to see to it that the supporting documents (photocopies of tickets submitted and attached to the production report were complete). Neither was a verification or comparison made between the tickets and the production report. 2. The simple and basic step of verifying the names of the passengers and their ticket numbers against ticket numbers, even on a check basis, to see whether they were reported more than once was not accomplished. If done, double or multiple reporting of tickets could have been readily detected.

3. Validation of the correctness of prorate values, by performing the proration, was not undertaken. 4. No reconciliation was made of all the amounts due the agent for a particular month. Such reconciliation would have disclosed whether or not the account for a particular month could be closed. 5. Production reports were not cross-checked against sales report or flight coupon registers. 6. Superiors failed to adequately monitor the activities of their subordinates to ensure that the latter were performing their duties. 7. The policy that cash vouchers could be approved only by duly authorized persons was in several cases violated. Resolving the case of Quijano, the Board said: The charge against Ms. Quijano is that: Quijano was the Manager-ASAD (Agents Services Accounting Division) in 198487, and responsible for the final scrutiny of agents Production Reports and final recommendation for payment of travel agents commissions. As Manager-ASAD from 1984 to 1987 (when the fraud was discovered), she failed to uncover or detect and report or grossly disregarded the fraud although the commissions vis--vis production were scandalously high. Ms. Quijano claims that she relied heavily on Ms. Curammengs judgment competence to perform her work, particularly the completeness of the documents check. She argues that if she were to do the completeness check herself, there would be no need for the analyst. This argument, however, wittingly or unwittingly, misconceives the nature of her job. Precisely, her basic role and duty as a manager was to make sure that the analysts in her division were performing the tasks assigned to them. But Ms. Quijano did not see to it that the completeness check was actually being performed by Ms. Curammeng. This lapse in control, contributed materially to the double, multiple and fictitious reporting of tickets, and double claims for commissions perpetrated by Goldair. Ms. Quijano was certainly not expected to personally do and perform the completeness check herself. But as manager, it was clearly incumbent upon her to see to it that this completeness check was being done by her subordinates competently and efficiently. Yet, Ms. Quijano even failed to adopt ways and means of keeping herself sufficiently informed of the activities of her staff members so as to prevent or at least discover at an early stage the fraud being perpetrated on a massive scale by Goldair against her company. Her incompetence at her job is patent. Her motion for reconsideration having been denied by the Board in a Resolution dated February 19, 1991, Quijano filed on March 25, 1991 the instant case against PAL for illegal suspension and illegal dismissal.[6] The Labor Arbiter dismissed private respondents complaint in a Decision dated September 7, 1994, the dispositive portion of which reads: WHEREFORE, in conformity with the opinion above-expressed, judgment is hereby rendered dismissing the above-captioned case for lack of merit and, consequently, the respondent is absolved from any liability.[7]

Undeterred, private respondent filed an appeal before the NLRC which rendered the assailed Decision dated September 29, 1995, the dispositive portion of which reads: WHEREFORE, in view of all the foregoing considerations, the decision appealed from should be, as it is hereby, VACATED and SET ASIDE and another one entered, directing the Philippine Airlines, Inc., thru its responsible officials, to pay Aida M. Quijano her separation pay in accordance with its Special Retirement & Separation Program dated February 15, 1988, plus ten percent (10%) of the total amount by way of attorneys fee.[8] Petitioner filed a Motion for Reconsideration but this was denied by the NLRC in its Resolution dated November 14, 1995, the dispositive portion of which reads: After due consideration of the Motion for Reconsideration filed by respondent-appellee on October 20, 1995, from the Decision of September 29, 1995, the Commission (Second Division) RESOLVED to deny the same for lack of merit.[9] Hence, this petition for certiorari. Both parties submitted their respective Memoranda[10] in late 1997, however, on September 11, 1998, petitioner filed a Motion for Suspension of Proceedings[11] based on Presidential Decree No. 902-A which reads, in part: That upon appointment of management committee, rehabilitation receiver, board or body, pursuant to this Decree, all actions for claims against corporations, partnerships or associations under management or receivership pending before any court, tribunal, board or body shall be suspended accordingly. [12] (Underscoring supplied.) The said motion referred to an Order[13] dated June 23, 1998 of the Securities and Exchange Commission (SEC) which appointed an Interim Rehabilitation Receiver for petitioner pursuant to Presidential Decree No. 902-A that was followed by the issuance of another Order[14] dated July 1, 1998 which commanded that all claims against PAL are deemed suspended. After hearing both parties on the question of whether or not the Court should render judgment during the state of suspension of claims, we ruled in the negative in a Resolution[15]dated September 4, 2000, the dispositive portion of which reads: IN VIEW THEREOF, the Motion for Suspension of Proceedings of petitioner is GRANTED.[16] Private respondent filed a Motion for Reconsideration[17] on October 3, 2000 of the above Resolution but we denied the same in a Resolution[18] dated November 13, 2000. Since then petitioner was required by this Court to submit periodic status reports on the rehabilitation proceedings, the last of which was dated October 22, 2007, [19] declaring that the petitioners request to exit from rehabilitation had been granted by the SEC via an Order[20] issued on September 28, 2007, the dispositive portion of which reads: WHEREFORE, in the light of the foregoing, and considering PALs firm commitment to settle its outstanding obligations as well as the fact that its operations and its financial condition have been normalizedand stabilized in conformity with the Amended and Restated Rehabilitation Plan exemplifying a successful corporate rehabilitation, the PALs request to exit from rehabilitation is hereby GRANTED. The PRR is likewise directed to furnish all creditors and parties concerned with copies of this Order at the expense of the Petitioner and submit proof of service thereof to the Commission, within fifteen (15) days from date of receipt of this Order.[21] Considering the foregoing and the fact that both parties have long submitted their respective Memoranda in the instant case, private respondent filed a Motion to Resume Proceedings and to Render Judgment [22] on December 11, 2007. In compliance with this Courts Resolution[23] dated January 21, 2008 requiring petitioner to comment on private

respondents motion, petitioner filed a Comment/Manifestation[24] on February 28, 2008 which confirmed that with the issuance of the Securities and Exchange Commissions September 28, 2007 Order granting PALs request to exit from rehabilitation, there is no longer any legal impediment to the resumption of the instant proceedings. In the instant petition, petitioner puts forward a singular argument, to wit: ASSUMING ARGUENDO (WITHOUT ADMITTING) THAT THE EQUITABLE CONSIDERATIONS CITED BY THE NLRC DID EXIST, THE SAME CANNOT JUSTIFY THE AWARD OF SEPARATION PAY TO MRS. QUIJANO (despite the finding that she was legally suspended and thereafter legally dismissed) IN THE FACE OF OVERWHELMING EVIDENCE SUBMITTED BY PETITIONER WHICH CLEARLY SHOW THAT PHILIPPINE AIRLINES, INC. LOST SEVERAL MILLION AUSTRALIAN DOLLARS AS A RESULT OF THE FRAUD COMMITTED BY GOLDAIR AND THAT SAID FRAUD COULD ONLY HAVE BEEN MADE POSSIBLE BY MRS. QUIJANOS PATENT MISMANAGEMENT AND GROSS INCOMPETENCE AS ASAD MANAGER IN FAILING TO DETECT THE IRREGULARITY. IN AWARDING SEPARATION PAY TO MRS. QUIJANO, THE NLRC COMMITTED A GRAVE ABUSE OF ITS DISCRETION AMOUNTING TO LACK OF JURISDICTION.[25] We affirm the NLRC ruling with modification. At the onset, it should be noted that the parties do not dispute the validity of private respondents dismissal from employment for loss of confidence and acts inimical to the interest of the employer. The assailed September 29, 1995 Decision of the NLRC was emphatic in declaring that it was not prepared to rule as illegal the preventive suspension and eventual dismissal from the service of [private respondent][26] and rightfully so because the last position that private respondent held, Manager-ASAD (Agents Services Accounting Division), undeniably qualifies as a position of trust and confidence. Loss of confidence as a just cause for termination of employment is premised from the fact that an employee concerned holds a position of trust and confidence. This situation holds where a person is entrusted with confidence on delicate matters, such as the custody, handling, or care and protection of the employers property. But, in order to constitute a just cause for dismissal, the act complained of must be work-related such as would show the employee concerned to be unfit to continue working for the employer.[27] The January 18, 1991 Resolution of the PAL Board of Directors, the relevant portions of which are discussed in the narration of the facts of this case as culled from the assailed September 29, 1995 NLRC Decision, clearly laid out the reasons why it considered private respondent along with her other co-employees in PAL resigned from the service effective immediately for loss of confidence and for acts inimical to the interest of the company. In private respondents case, the Resolution underscored her acts of mismanagement and gross incompetence which made her fail to detect the irregularities in the Goldair account that resulted in huge financial losses for petitioner. Admittedly, the said findings are not backed by proof beyond reasonable doubt but are, nevertheless, given credence since they have been adopted by both the labor arbiter and the NLRC and are supported by substantial evidence. As we have consistently held, the degree of proof required in labor cases is not as stringent as in other types of cases.[28] As a general rule, employers are allowed a wider latitude of discretion in terminating the employment of managerial personnel or those who, while not of similar rank, perform functions which by their nature require the employers full trust and confidence. This must be distinguished from the case of ordinary rank and file employees, whose termination on the basis of these same grounds requires a higher proof of involvement in the events in question; mere uncorroborated assertions and accusations by the employer will not suffice.[29] Having succinctly disposed of the issue of the validity of private respondents dismissal, we now delve into the true crux of this controversy which is the legality of the award of separation pay to private respondent despite having been lawfully terminated for a just cause. Petitioner argues that, in light of the fact that a just cause forms the basis for her lawful termination from the job, private respondent is not entitled to separation pay. Likewise, petitioner insists that even assuming that the equitable considerations cited by the NLRC did exist, the same cannot justify the award of separation pay. And, in awarding the same, the NLRC committed grave abuse of discretion amounting to lack of jurisdiction. We do not agree. Grave abuse of discretion is an evasion of a positive duty or a virtual refusal to perform a duty enjoined by law or to act in contemplation of law as when the judgment rendered is not based on law and evidence but on caprice, whim and

despotism.[30] This Court holds that the NLRC did not gravely abuse its discretion in granting separation pay to private respondent as the same is not characterized by caprice or arbitrariness being rooted in established jurisprudence. The language of Article 279 of the Labor Code is pregnant with the implication that a legally dismissed employee is not entitled to separation pay, to wit: 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. However, in exceptional cases, this Court has granted separation pay to a legally dismissed employee as an act of social justice or based on equity. In both instances, it is required that the dismissal (1) was not for serious misconduct; and (2) does not reflect on the moral character of the employee[31] or would involve moral turpitude. This equitable and humanitarian principle was first discussed by the Court in the landmark case of Philippine Long Distance Telephone Co. (PLDT) v. National Labor Relations Commission,[32] wherein it was held: Strictly speaking, however, it is not correct to say that there is no express justification for the grant of separation pay to lawfully dismissed employees other than the abstract consideration of equity. The reason is that our Constitution is replete with positive commands for the promotion of social justice, and particularly the protection of the rights of the workers. The enhancement of their welfare is one of the primary concerns of the present charter. In fact, instead of confining itself to the general commitment to the cause of labor in Article II on the Declaration of Principles of State Policies, the new Constitution contains a separate article devoted to the promotion of social justice and human rights with a separate sub-topic for labor. Article XIII expressly recognizes the vital role of labor, hand in hand with management, in the advancement of the national economy and the welfare of the people in general. The categorical mandates in the Constitution for the improvement of the lot of the workers are more than sufficient basis to justify the award of separation pay in proper cases even if the dismissal be for cause. 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.[33]

In Toyota Motor Phils. Corp. Workers Association (TMPCWA) v. National Labor Relations Commission,[34] we clarified that the grant of separation pay may still be precluded even if the ground for the employees dismissal is not serious misconduct under Article 282(a) of the Labor Code but other just causes under the same article and/or other authorized causes provided for under the Labor Code. However, the TMPCWA case still recognized the social justice exception prescribed in Philippine Long Distance Telephone Company. To quote the relevant portions of that decision: Explicit in PLDT are two exceptions when the NLRC or the courts should not grant separation pay based on social justiceserious misconduct (which is the first ground for dismissal under Art. 282) or acts that reflect on the moral character of the employee. What is unclear is whether the ruling likewise precludes the grant of separation pay when the employee is validly terminated from work on grounds laid down in Art. 282 of the Labor Code other than serious misconduct. A recall of recent cases decided bearing on the issue reveals that when the termination is legally justified on any of the grounds under Art. 282, separation pay was not allowed. x x x. xxxx In all of the foregoing situations, the Court declined to grant termination pay because the causes for dismissal recognized under Art. 282 of the Labor Code were serious or grave in nature and attended by willful or wrongful intent or they reflected adversely on the moral character of the employees. We therefore find that in addition to serious misconduct, in dismissals based on other grounds under Art. 282 like willful disobedience, gross and habitual neglect of duty, fraud or willful breach of trust, and commission of a crime against the employer or his family, separation pay should not be conceded to the dismissed employee. In analogous causes for termination like inefficiency, drug use, and others, the NLRC or the courts may opt to grant separation pay anchored on social justice in consideration of the length of service of the employee, the amount involved, whether the act is the first offense, the performance of the employee and the like, using the guideposts enunciated in PLDT on the propriety of the award of separation pay.[35] (Emphases supplied.) In other words, under the present jurisprudential framework, the grant of separation pay as a matter of equity to a validly dismissed employee is not contingent on whether the ground for dismissal is expressly under Article 282(a) but whether the ground relied upon is akin to serious misconduct or involves willful or wrongful intent on the part of the employee. It, thus, becomes pertinent to examine the ground relied upon for the dismissal of private respondent and to determine if the special circumstances described in PLDT are present in the case at bar. Serious misconduct as a valid cause for the dismissal of an employee is defined simply as improper or wrong conduct. It is a transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere error of judgment. To be serious within the meaning and intendment of the law, the misconduct must be of such grave and aggravated character and not merely trivial or unimportant. However serious such misconduct, it must, nevertheless, be in connection with the employees work to constitute just cause for his separation. The act complained of must be related to the performance of the employees duties such as would show him to be unfit to continue working for the employer. [36] On the other hand, moral turpitude has been defined as everything which is done contrary to justice, modesty, or good morals; an act of baseness, vileness or depravity in the private and social duties which a man owes his fellowmen, or to society in general, contrary to justice, honesty, modesty, or good morals.[37] In the case at bar, the transgressions imputed to private respondent have never been firmly established as deliberate and willful acts clearly directed at making petitioner lose millions of pesos. At the very most, they can only be characterized as unintentional, albeit major, lapses in professional judgment. Likewise, the same cannot be described as morally reprehensible actions. Thus, private respondent may be granted separation pay on the ground of equity which this Court had defined as justice outside law, being ethical rather than jural and belonging to the sphere of morals than of law. It is grounded on the precepts of conscience and not on any sanction of positive law, for equity finds no room for application where there is law.[38] A perusal of the assailed September 29, 1995 NLRC Decision would show that the following equitable considerations were relied upon by the NLRC to arrive at its assailed ruling, to wit:

a)

The Goldair fraud was found to have started in 1981. Private respondent became the ManagerASAD only on September 1, 1984. The former Manager-ASAD from 1981 to August 1984 was Josefina Sioson.[39] ASAD is under the direct supervision and control of the Vice President-Comptroller and within the scope of the audit program of the Vice President-Internal Audit and Control. The VP-Comptroller for the period 1981 to 1983 and the VP-Internal Audit for the period 1984 to 1987 was Romeo Ines.[40] The accounting procedures and controls inherited by private respondent when she took over ASAD were subjected to the scrutiny of prestigious accounting firms like Cressop, McCormick & Paget in 1985, the Sycip, Gorres, Velayo & Co., Inc. in 1986, including a special team from the Commission on Audit in 1987 all of which made no adverse findings concerning ASAD.[41] No less than the VP-Internal Audit made a regular audit in Australia in November 1986 and in the early part of 1987, by borrowing all production reports covering April to September 1986, but found no irregularities nor made any adverse feedback against ASAD.[42] Private respondent was the first to discover the overpayment of commission claims to Goldair in 1984 in rate differences in net/net settlement which, after her intervention, did not recur. She was also the one who first discovered the fraud in double and fictitious commission claims and promptly took action when she withheld all provisional payments due Goldair.[43] Even after the Goldair anomaly was discovered, private respondent could have availed of PALs Special Retirement and Separation Program, but she stayed put and had gone twice to Australia, while under preventive suspension, to attend court proceedings as a witness for petitioner enabling the said company to recover and minimize its economic loss.[44] Private respondent has no derogatory record during the entire period of her employment with petitioner for more than two decades. She steadily rose from the ranks until she became the ASAD Manager.[45] In the dissenting opinion of Ricardo Paloma, Vice Chairman of the Espino Committee and PAL Senior VP Strategic Planning and Corporate Service, to the Final Draft Majority Report, he observed that a mitigating factor in [private respondents] favor is that UNSEEN HANDS designed or allowed this new procedures to be put in place. Ines, who became the VP Internal Audit should have known the prescribed procedures (or at the very least the actual practice during the period 1981 to 1983 when he was the VP Comptroller) and yet, did not alert her. Unknowingly, [private respondent] allowed the by-pass and the automatic payment of 80% upon presentation of production reports because Sioson assured her that was the procedure previously followed. Trusting, she became a participant in this mess.[46]

b)

c)

d)

e)

f)

g)

h)

Considering the foregoing uncontroverted special circumstances, we rule that the NLRC did not commit grave abuse of discretion amounting to lack of jurisdiction in ordering petitioner to pay private respondent separation pay for equitable considerations. However, we do not agree with the NLRC that private respondents separation pay should be awarded in accordance with PALs Special Retirement & Separation Program dated February 15, 1988 plus ten percent (10%) of the total amount by way of attorneys fees. At the risk of stating the obvious, private respondent was not separated from petitioners employ due to mandatory or optional retirement but, rather, by termination of employment for a just cause. Thus, any retirement pay provided by PALs Special Retirement & Separation Program dated February 15, 1988 or, in the absence or legal inadequacy thereof, by Article 287 of the Labor Code[47] does not operate nor can be made to operate for the benefit of private respondent. Even private respondents assertion that, at the time of her lawful dismissal, she was already qualified for retirement does not aid her case because the fact remains that private respondent was already terminated for cause thereby rendering nugatory any entitlement to mandatory or optional retirement pay that she might have previously possessed. Likewise, attorneys fees are not proper in this case because the same can only be awarded when the employee is illegally dismissed in bad faith and is compelled to litigate or incur expenses to protect his rights by reason of the unjustified act of his employer.[48] The aforementioned conditions do not obtain in this case.

As to the matter of the proper amount of separation pay to be awarded to private respondent on the basis of equitable considerations, our pronouncement in Yrasuegui v. Philippine Airlines, Inc.[49] is instructive, to wit: Here, We grant petitioner separation pay equivalent to one-half (1/2) months pay for every year of service. It should include regular allowances which he might have been receiving. We are not blind to the fact that he was not dismissed for any serious misconduct or to any act which would reflect on his moral character. We also recognize that his employment with PAL lasted for more or less a decade. Private respondents circumstances are more or less identical to the above-cited case in the sense that, as previously discussed, her dismissal was neither for serious misconduct nor for an offense involving moral turpitude. Furthermore, her employment with petitioner spanned more than two decades unblemished with any derogatory record prior to the infractions at issue in the case at bar. WHEREFORE, the assailed NLRC Decision dated September 29, 1995 as well as the Resolution dated November 14, 1995 are AFFIRMED with the MODIFICATION that petitioner Philippine Airlines, Inc. pay private respondent Aida Quijano one-half (1/2) month salary for every year of service as separation pay on equitable grounds. SO ORDERED.