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[G.R. No. 174208. January 25, 2012.] JONATHAN V. MORALES, petitioner, vs. HARBOUR CENTRE PORT TERMINAL, INC.

, respondent.

DECISION

PEREZ, J :
p

Assailed in this petition for review on certiorari filed pursuant to Rule 45 of the 1997 Rules of Civil Procedure is the Decision 1 dated 19 June 2006 rendered by the Special Tenth Division of the Court of Appeals in CA-G.R. SP No. 92491, 2 the dispositive portion of which states:
WHEREFORE, premises considered, the Petition is GRANTED and the assailed NLRC decision is hereby SET ASIDE. In lieu thereof, the decision of the Labor Arbiter is ordered REINSTATED. No costs. SO ORDERED.
3

The Facts
On 16 May 2000, petitioner Jonathan V. Morales (Morales) was hired by respondent Harbour Centre Port Terminal, Inc. (HCPTI) as an Accountant and Acting Finance Officer, with a monthly salary of P18,000.00. 4 Regularized on 17 November 2000, 5 Morales was promoted to Division Manager of the Accounting Department, for which he was compensated a monthly salary of P33,700.00, plus allowances starting 1 July 2002. 6 Subsequent to HCPTI's transfer to its new offices at Vitas, Tondo, Manila on 2 January 2003, Morales received an inter-office memorandum dated 27 March 2003, reassigning him to Operations Cost Accounting, tasked with the duty of "monitoring and evaluating all consumables requests, gears and equipment" related to the corporation's operations and of interacting with its sub-contractor, Bulk Fleet Marine Corporation. The memorandum was issued by Danilo V. Singson (Singson), HCPTI's new Administration Manager, duly noted by Johnny U. Filart (Filart), its new Vice President for Administration and Finance, and approved by its President and Chief Executive Officer, Vicente T. Suazo, Jr. 7
SHIcDT

On 31 March 2003, Morales wrote Singson, protesting that his reassignment was a clear demotion since the position to which he was transferred was not even included in HCPTI's plantilla. In response to Morales' grievance that he had been effectively placed on floating status, 8 Singson issued a 4 April 2003 inter-office memorandum to the effect that "transfer of employees is a management prerogative" and that HCPTI had "the right and responsibility to find the perfect balance between the skills and abilities of employees to the needs of the business." 9 For the whole of the ensuing month Morales was absent from work and/or tardy. Singson issued to Morales a 29 April 2003 inter-office memorandum denominated as a First Warning. The memorandum reminded Morales that, as an employee of HCPTI, he was subject to its rules and regulations and could be disciplinarily dealt with pursuant to its Code of Conduct. 10 In view of the absences Morales continued to incur, HCPTI issued a Second Warning dated 6 May 2003 11 and a Notice to Report for Work and Final Warning dated 22 May 2003. 12 In the meantime, Morales filed a complaint dated 25 April 2003 against HCPTI, Filart and Singson, for constructive dismissal, moral and exemplary damages as well as attorney's fees. In support of the complaint which was docketed as NLRC-NCR Case No. 00-04-05061-2003 before the arbitral level of the National Labor Relations Commission (NLRC), 13 Morales alleged that subsequent to its transfer to its new offices, HCPTI had suspended all the privileges enjoyed by its Managers, Division Chiefs and Section Heads; that upon the instruction of Filart, Paulo Christian Suarez, HCPTI's Corporate Treasurer, informed him on 7 March 2003 that

he was going to be terminated and had only three (3) weeks to look for another job; that having confirmed his impending termination on 27 March 2003, Filart decided to "temper" the same by instead reassigning him to Operations Cost Accounting; and, that his reassignment to a position which was not included in HCPTI's plantilla was a demotion and operated as a termination from employment as of said date. Maintaining that he suffered great humiliation when, in addition to being deprived of his office and its equipments, he received no further instructions from Filart and Singson regarding his new position, Morales claimed that he was left no other choice but file his complaint for constructive dismissal. 14 Served with summons on 7 May 2003, 15 HCPTI, Filart and Singson filed their position paper, arguing that Morales abandoned his employment and was not constructively dismissed. Calling attention to the supposed fact that Morales' negligence had resulted in HCPTI's payment of P3,350,000.00 in taxes from which it was exempt as a PEZA-registered company, said respondents averred that, confronted by Filart sometime in March 2003 regarding the lapses in his work performance, Morales admitted his inability to handle his tasks at the corporation's Accounting Department; that as a consequence, HCPTI reassigned Morales from managerial accounting to operations cost accounting as an exercise of its management prerogative to assign its employees to jobs for which they are best suited; and, that despite the justification in Singson's 4 April 2003 reply to his 31 March 2003 protest against his reassignment, Morales chose to stop reporting for work. Faulting Morales with unjustified refusal to heed the repeated warnings and notices directing him to report for work, HCPTI, Filart and Singson prayed for the dismissal of the complaint and the grant of their counterclaim for attorney's fees. 16 In receipt of the parties' replies 17 and rejoinders, 18 Labor Arbiter Facundo L. Leda went on to render a Decision dated 21 November 2003, dismissing for lack of merit Morales' complaint for constructive dismissal. In discounting said employees' illegal dismissal from service, the Labor Arbiter ruled that Morales' reassignment was a valid exercise of HCPTI's management prerogative which cannot be construed as constructive dismissal absent showing that the same was done in bad faith and resulted in the diminution of his salary and benefits. 19 On appeal, the foregoing decision was, however, reversed and set aside in the 29 July 2005 Decision rendered by the NLRC's Third Division in NLRC NCR CA No. 038548-04. Finding that Morales' reassignment was a clear demotion despite lack of showing of diminution of salaries and benefits, 20 the NLRC disposed of the appeal in the following wise:
WHEREFORE, the decision dated 21 November 2003 is VACATED and SET ASIDE. The respondent company is ordered to pay complainant the following:
SacTCA

1.Backwages: (28 March 2003 to 21 Nov. 2003) a.Salary: P33,700 x 7.77 mos. = P261,849.00 b.13th month pay: P261,849/12 21,820.75 P283,669.75 2.Separation Pay: (16 May 2000 to 21 Nov. 2003) one month for every year of service (P33,700.00 x 4) = P134,800.00 Total = P 418,469.75

The other claims are DISMISSED. SO ORDERED.


21

With the NLRC's 10 October 2005 denial of the motion for reconsideration of the foregoing decision, 22 HCPTI elevated the case to the CA through the Rule 65 petition for certiorari docketed before said court's then Special Tenth Division as CA-G.R. SP No. 92491. 23 In view of the 3 November 2005 Entry of Judgment issued by the NLRC, 24 Morales filed a motion for execution 25 which remained unresolved due to the parties' signification of their willingness to explore the possibility of amicably settling the case. 26 On 19 June 2006, the CA rendered the herein assailed decision, reversing the NLRC's 29 July 2005 Decision, upon the following findings and conclusions: (a) Morales' reassignment to Operations Cost Accounting was a valid exercise of HCPTI's prerogative to transfer its employees as the exigencies of the business may require; (b) the transfer cannot be construed as constructive dismissal since it entailed no demotion in rank, salaries and benefits; and, (c) rather than being terminated, Morales refused his new assignment by taking a leave of absence from 4 to 17 April 2003 and disregarding HCPTI's warnings and directives to report back for work. 27 Morales' motion for reconsideration of the foregoing decision was denied for lack of merit in the CA's Resolution dated 14 August 2006, 28 hence, this petition.

The Issues
Morales proffers the following issues for resolution in seeking the reversal of the CA's 19 June 2006 Decision and 14 August 2006 Resolution, to wit:
I WHETHER OR NOT THE CHANGE IN THE DESIGNATION/POSITION OF PETITIONER CONSTITUTED CONSTRUCTIVE DISMISSAL. II WHETHER OR NOT THE NATIONAL LABOR RELATIONS COMMISSION COMMITTED GRAVE ABUSE OF DISCRETION.
DaTICE

III WHETHER OR NOT THE NATIONAL LABOR RELATIONS COMMISSION DECISION WHICH HAS GAINED FINALITY MAY BE PREVENTED EXECUTION BY REASON OF THE PETITION FOR CERTIORARI FILED BY RESPONDENTS. 29

The Court's Ruling


We find the petition impressed with merit. Constructive dismissal exists where there is cessation of work because "continued employment is rendered impossible, unreasonable or unlikely, as an offer involving a demotion in rank or a diminution in pay" 30 and other benefits. Aptly called a dismissal in disguise or an act amounting to dismissal but made to appear as if it were not, 31 constructive dismissal may, likewise, exist if an act of clear discrimination, insensibility, or disdain by an employer becomes so unbearable on the part of the employee that it could foreclose any choice by him except to forego his continued employment. 32 In cases of a transfer of an employee, the rule is settled that the employer is charged with the burden of proving that its conduct and action are for valid and legitimate grounds such as genuine business necessity 33 and that the transfer is not unreasonable, inconvenient or prejudicial to the employee. If the employer cannot overcome this burden of proof, the employee's transfer shall be tantamount to unlawful constructive dismissal. 34

Our perusal of the record shows that HCPTI miserably failed to discharge the foregoing onus. While there was a lack of showing that the transfer or reassignment entailed a diminution of salary and benefits, one fact that must not be lost sight of was that Morales was already occupying the position of Division Manager at HCPTI's Accounting Department as a consequence of his promotion to said position on 22 October 2002. Concurrently appointed as member of HCPTI's Management Committee (MANCOM) on 2 December 2002, 35 Morales was subsequently reassigned by HCPTI "from managerial accounting to Operations Cost Accounting" on 27 March 2003, without any mention of the position to which he was actually being transferred. That the reassignment was a demotion is, however, evident from Morales' new duties which, far from being managerial in nature, were very simply and vaguely described as inclusive of "monitoring and evaluating all consumables requests, gears and equipments related to [HCPTI's] operations" as well as "close interaction with [its] sub-contractor Bulk Fleet Marine Corporation." 36 We have carefully pored over the records of the case but found no evidentiary basis for the CA's finding that Morales was designated as head of HCPTI's Operations Department 37 which, as indicated in the corporation's plantilla, had the Vice-President for Operations at its helm. 38 On the contrary, Morales' demotion is evident from the fact that his reassignment entailed a transfer from a managerial position to one which was not even included in the corporation's plantilla. For an employee newly charged with functions which even the CA recognized as pertaining to the Operations Department, it also struck a discordant chord that Morales was, just the same, directed by HCPTI to report to Filart, its Vice-President for Finance 39 with whom he already had a problematic working relationship. 40 This matter was pointed out in Morales' 31 March 2003 protest but was notably brushed aside by HCPTI by simply invoking management prerogative in its inter-office memorandum dated 4 April 2003. 41
DIEAHc

Admittedly, the right of employees to security of tenure does not give them vested rights to their positions to the extent of depriving management of its prerogative to change their assignments or to transfer them. 42 By management prerogative is meant the right of an employer to regulate all aspects of employment, such as the freedom to prescribe work assignments, working methods, processes to be followed, regulation regarding transfer of employees, supervision of their work, lay-off and discipline, and dismissal and recall of workers. 43 Although jurisprudence recognizes said management prerogative, it has been ruled that the exercise thereof, while ordinarily not interfered with, 44 is not absolute and is subject to limitations imposed by law, collective bargaining agreement, and general principles of fair play and justice. 45 Thus, an employer may transfer or assign employees from one office or area of operation to another, provided there is no demotion in rank or diminution of salary, benefits, and other privileges, and the action is not motivated by discrimination, made in bad faith, or effected as a form of punishment or demotion without sufficient cause. 46 Indeed, having the right should not be confused with the manner in which that right is exercised. 47 In its comment to the petition, HCPTI argues that Morales' transfer was brought about by the reorganization of its corporate structure in 2003 which was undertaken in the exercise of its management prerogative to regulate every aspect of its business. 48 This claim is, however, considerably at odds with HCPTI's assertions before the Labor Arbiter to the effect, among other matters, that Morales erroneously and negligently authorized the repeated payments of realty taxes from which the corporation was exempt as a PEZAregistered company; that confronted by Filart regarding his poor work performance which resulted in losses amounting to P3,350,000.00, Morales admitted his inability to handle his job at the accounting department; and, that as a consequence, HCPTI decided to reassign him to the Operations Cost Accounting. 49 Without so much as an affidavit from Filart to prove the same, this purported reason for the transfer was, moreover, squarely refuted by Morales' 31 March 2003 protest against his reassignment. 50 By itself, HCPTI's claim of reorganization is bereft of any supporting evidence in the record. Having pointed out the matter in his 31 March 2003 written protest, Morales was able to prove that HCPTI's existing plantilla did not include an Operations Cost Accounting Department and/or an Operations Cost Accountant. 51 As the party belatedly seeking to justify the reassignment due to the supposed reorganization of its corporate structure, HCPTI, in contrast, did not even bother to show that it had implemented a corporate reorganization and/or approved a new plantilla of positions which included the one to which Morales was being transferred. Since the

burden of evidence lies with the party who asserts the affirmative of an issue, the respondent has to prove the allegations in his affirmative defenses in the same manner that the complainant has to prove the allegations in the complaint. 52 In administrative or quasi-judicial proceedings like those conducted before the NLRC, the standard of proof is substantial evidence which is understood to be more than just a scintilla or such amount of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion. 53 Having alleged 27 March 2003 as the date of his constructive dismissal, Morales was erroneously taken to task by the CA for inconsistently claiming that he took a leave of absence from 4 April 2003 to 17 April 2003. 54 As the date of his reassignment, 27 March 2003 was understandably specified by Morales as the date of his constructive dismissal since it was on said date that he considered himself demoted. Alongside his reporting for duty subsequent thereto, Morales' leave of absence on the aforesaid dates is, in turn, buttressed by HCPTI's 29 April 2003 Inter-Office Memorandum which, labeled as a First Warning, called attention to his being "either absent or tardy from work on several occasions during the entire month of April". 55 Since Morales could not have been tardy had he outrightly rejected his reassignment, this Inter-Office Memorandum notably debunks HCPTI's contention that he altogether stopped reporting for work after receiving Singson's reply to his 31 March 2003 protest against the demotion that resulted from his reassignment to Operations Cost Accounting. 56 Although much had been made about Morales' supposed refusal to heed his employer's repeated directives for him to return to work, our perusal of the record also shows that HCPTI's theory of abandonment of employment cannot bear close scrutiny. While ostensibly dated 6 May 2003, the Inter-Office Memorandum labeled as aSecond Warning was sent to Morales thru the JRS Express only on 9 May 2003 57 or two (2) days after summons were served on HCPTI, Filart and Singson on 7 May 2003. 58 Sent to Morales on 26 May 2003 or after the parties' initial conference before the Labor Arbiter on 19 May 2003, 59 there was obviously even less reason for HCPTI's 22 May 2003 letter denominated as Notice to Report for Work and Final Warning. As a just and valid ground for dismissal, at any rate, abandonment requires the deliberate, unjustified refusal of the employee to resume his employment, 60 without any intention of returning. 61 Since an employee like Morales who takes steps to protest his dismissal cannot logically be said to have abandoned his work, it is a settled doctrine that the filing of a complaint for illegal dismissal is inconsistent with abandonment of employment. 62 WHEREFORE, premises considered, the petition is GRANTED and the CA's assailed 19 June 2006 Decision is, accordingly, REVERSED and SET ASIDE. In lieu thereof, another is entered REINSTATING the NLRC's 29 July 2005 Decision. SO ORDERED.

Carpio, Sereno, Reyes and Perlas-Bernabe, * JJ., concur.

[G.R. No. 153569. January 24, 2012.] LOLITA S. CONCEPCION, petitioner, vs. MINEX IMPORT CORPORATION/MINERAMA CORPORATION, KENNETH MEYERS, SYLVIA P. MARIANO and VINA MARIANO, respondents.

DECISION

BERSAMIN, J :
p

The employer may validly dismiss for loss of trust and confidence an employee who commits an act of fraud prejudicial to the interest of the employer. Neither a criminal prosecution nor a conviction beyond reasonable doubt for the crime is a requisite for the validity of the dismissal. Nonetheless, the dismissal for a just or lawful cause must still be made upon compliance with the requirements of due process under the Labor Code; otherwise, the employer is liable to pay nominal damages as indemnity to the dismissed employee. Antecedents Respondent Minex Import-Export Corporation (Minex) engaged in the retail of semi-precious stones, selling them in kiosks or stalls installed in various shopping centers within Metro Manila. It employed the petitioner initially as a salesgirl, 1 rotating her assignment among nearly all its outlets. It made her a supervisor in July 1997, but did not grant her any salary increase. On October 23, 1997, respondent Vina Mariano, an Assistant Manager of Minex, assigned the petitioner to the SM Harrison Plaza kiosk with the instruction to hold the keys of the kiosk. Working under her supervision there were salesgirls Cristina Calung and Lida Baquilar. On November 9, 1997, a Sunday, the petitioner and her salesgirls had sales of crystal items totaling P39,194.50. At the close of business that day, they conducted a cash-count of their sales proceeds, including those from the preceding Friday and Saturday, and determined their total for the three days to be P50,912.00. The petitioner wrapped the amount in a plastic bag and deposited it in the drawer of the locked wooden cabinet of the kiosk. At about 9:30 am of November 10, 1997, the petitioner phoned Vina Mariano to report that the P50,912.00 was missing, explaining how she and her salesgirls had placed the wrapped amount at the bottom of the cabinet the night before, and how she had found upon reporting to work that morning that the contents of the cabinet were in disarray and the money already missing. Later, while the petitioner was giving a detailed statement on the theft to the security investigator of Harrison Plaza, Vina and Sylvia Mariano, her superiors, arrived with a policeman who immediately placed the petitioner under arrest and brought her to Precinct 9 of the Malate Police Station. There, the police investigated her. She was detained for a day, from 11:30 am of November 10, 1997 until 11:30 am of November 11, 1997, being released only because the inquest prosecutor instructed so. On November 12, 1997, the petitioner complained against the respondents for illegal dismissal in the Department of Labor and Employment. On November 14, 1997, Minex, through Vina, filed a complaint for qualified theft against the petitioner in the Office of the City Prosecutor in Manila.
cSTHAC

To the charge of qualified theft, the petitioner insisted on her innocence, reiterating that on November 9, 1997 she, together with Calung and Baquilar, had first counted the cash before placing it in a plastic bag that she deposited inside the drawer of the cabinet with the knowledge of Calung and Baquilar. She explained that on that night Baquilar had left for home ahead, leaving her and Calung to close the kiosk at around 8:00 pm; that at exactly 8:01 pm she proceeded to SM Department Store in Harrison Plaza to wait for her friends whom she had previously walked with to the LRT station; that she noticed upon arriving at the kiosk the next morning that the cabinet that they had positioned to block the entrance of the kiosk had been slightly moved; and that she then discovered upon opening the cabinet that its contents, including the cash, were already missing. Calung executed a sinumpaang salaysay, however, averring that she had left the petitioner alone in the kiosk in the night of November 9, 1997 because the latter had still to change her clothes; and that that was the first time that the petitioner had ever asked to be left behind, for they had previously left the kiosk together.

Vina declared that the petitioner did not call the office of Minex for the pick-up of the P39,194.50 cash sales on Sunday, November 9, 1997, in violation of the standard operating procedure (SOP) requiring cash proceeds exceeding P10,000.00 to be reported for pick-up if the amount could not be deposited in the bank. After the preliminary investigation, the Assistant Prosecutor rendered a resolution dated February 4, 1998 finding probable cause for qualified theft and recommending the filing of an information against the petitioner. 2 Thus, she was charged with qualified theft in the Regional Trial Court (RTC) in Manila, docketed as Criminal Case No. 98-165426. The petitioner appealed by petition for review to the Department of Justice (DOJ), but the DOJ Secretary denied her petition for review on July 4, 2001. 3 As to the petitioner's complaint for illegal dismissal, Labor Arbiter Jose G. de Vera rendered his decision dated December 15, 1998, viz.: 4
WHEREFORE, all the foregoing considered, judgment is hereby rendered in favor of the complainant and against the respondents declaring the dismissal of the latter from work illegal and ordering her reinstatement to her former work position with full backwages counted from November 10, 1997 until her actual reinstatement without loss of seniority or other employees' rights and benefits.
DSAEIT

Respondents are likewise ordered to pay complainant her monetary claims above as well as moral damages of P50,000.00 and exemplary damages of P20,000.00. Lastly, respondents are liable to pay ten percent (10%) of the total award as and by way of payment of attorney's fees. SO ORDERED.

On appeal by the respondents, the National Labor Relations Commission (NLRC) reversed the decision of the Labor Arbiter on December 28, 2000, declaring that the petitioner had not been dismissed, but had abandoned her job after being found to have stolen the proceeds of the sales; and holding that even if she had been dismissed, her dismissal would be justifiable for loss of trust and confidence in the light of the finding of probable cause by the DOJ and the City Prosecutor and the filing of the information for qualified theft against her. 5 The NLRC deleted the awards of backwages, service incentive leave pay, holiday pay and 13th month pay, moral and exemplary damages and attorney's fees, opining that the petitioner would be entitled to an award of damages only when the dismissal was shown to be effected in bad faith or fraud or was an act oppressive to labor, or was done in a manner contrary to good morals, good customs, or public policy. 6 After the NLRC denied her motion for reconsideration on March 16, 2001, the petitioner challenged the reversal by the NLRC in the Court of Appeals (CA) oncertiorari, claiming that the NLRC thereby committed grave abuse of discretion amounting to excess of jurisdiction for finding that there had been lawful cause to dismiss her; and insisting that the NLRC relied on mere suspicions and surmises, disregarding not only her explanations that, if considered, would have warranted a judgment in her favor but even the findings and disquisitions of the Labor Arbiter, which were in full accord with pertinent case law. On December 20, 2001, 7 however, the CA sustained the NLRC mainly because of the DOJ Secretary's finding of probable cause for qualified theft, holding:
With the finding of probable cause not only by the Investigating Prosecutor but by the Secretary of Justice no less, it cannot be validly claimed, as the Petitioner does, in her Petition at bench, that there is no lawful cause for her dismissal. The felony of qualified theft involves moral turpitude.

"Respondent cannot use social justice to shield wrongdoing. He occupied a position of trust and confidence. Petitioner relied on him to protect the properties of the company. Respondent betrayed this trust when he ordered the subject lamp posts to be delivered to the Adelfa Homeowners' Association. The offense he committed involves moral turpitude. Indeed, a City Prosecutor found probable cause to file an information for qualified theft against him." (United South Dockhandlers, Inc., versus NLRC, et al., 267 SCRA 401, at page 407, supra)
DTAIaH

Admittedly, there is no direct evidence that the Petitioner took the money from the drawer in the cabinet in the Kiosk. But direct evidence that the Petitioner took the money is not required for the Petitioner to be lawfully dismissed for the loss of the money of the Private Respondent corporation. If circumstantial evidence is sufficient on which to anchor a judgment of conviction in criminal cases under Section 4, Rule 133 of the Revised Rules of Evidence, there is no cogent reason why circumstantial evidence is not sufficient on which to anchor a factual basis for the dismissal of the Petitioner for loss of confidence. IN THE LIGHT OF ALL THE FOREGOING, the Petition at bench is denied due course and is hereby DISMISSED. SO ORDERED.

On May 13, 2002, the CA denied the petitioner's motion for reconsideration. Issues In her appeal, the petitioner submits that:

THE COURT OF APPEALS ERRED IN FINDING THAT THERE WAS NO ILLEGAL DISMISSAL IN THE CASE AT BAR, PARTICULARLY IN FINDING THAT: A.THERE WAS JUST CAUSE FOR HER DISMISSAL, AND B.RESPONDENT NEED NOT AFFORD THE PETITIONER DUE PROCESS TO PETITIONER.

Ruling The petition lacks merit. The decisive issue for resolution is whether or not the petitioner was terminated for a just and valid cause. To dismiss an employee, the law requires the existence of a just and valid cause. 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 latter's representative in connection with the employee's 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. The NLRC held that the termination of the petitioner was due to loss of trust and confidence. Sustaining the NLRC, the CA stated:
With the finding of probable cause not only by the investigating prosecutor but by the Secretary of Justice no less, it cannot be validly claimed, as the Petitioner does, in her Petition at bench, that there is no lawful cause for her dismissal . . . .

xxx xxx xxx Admittedly, there is no direct evidence that the Petitioner took the money from the drawer in the cabinet in the Kiosk. But direct evidence that the Petitioner took the money is not required for the Petitioner to be lawfully dismissed for the loss of the money of the Private Respondent corporation. If circumstantial evidence is sufficient on which to anchor a judgment of conviction in criminal cases under Section 4, Rule 133 of the Revised Rules of Evidence, there is no cogent reason why circumstantial evidence is not sufficient on which to anchor a factual basis for the dismissal of the Petitioner for loss of confidence. 9

The petitioner still argues, however, that there was no evidence at all upon which Minex could validly dismiss her considering that she had not yet been found guilty beyond reasonable doubt of the crime of qualified theft. The petitioner's argument is not novel. It has been raised and rejected many times before on the basis that neither conviction beyond reasonable doubt for a crime against the employer nor acquittal after criminal prosecution was indispensable. Nor was a formal charge in court for the acts prejudicial to the interest of the employer a pre-requisite for a valid dismissal.
DacASC

In its 1941 ruling in National Labor Union, Inc. v. Standard Vacuum Oil Company, thus:

10

the Court expressly stated

. . . The conviction of an employee in a criminal case is not indispensable to warrant his dismissal by his employer. If there is sufficient evidence to show that the employee has been guilty of a breach of trust, or that his employer has ample reason to distrust him, it cannot justly deny to the employer the authority to dismiss such employee. All that is incumbent upon the Court of Industrial Relations (now National Labor Relations Commission) to determine is whether the proposed dismissal is for just cause . . . . It is not necessary for said court to find that an employee has been guilty of a crime beyond reasonable doubt in order to authorize his dismissal. (Emphasis supplied)

In Philippine Long Distance Telephone Co. (BLTB Co.) vs. NLRC, 11 the Court held that the acquittal of the employee from the criminal prosecution for a crime committed against the interest of the employer did not automatically eliminate loss of confidence as a basis for administrative action against the employee; and that in cases where the acts of misconduct amounted to a crime, a dismissal might still be properly ordered notwithstanding that the employee was not criminally prosecuted or was acquitted after a criminal prosecution. In Batangas Laguna Tayabas Bus Co. v. NLRC,
12

the Court explained further, as follows:

Fraud or willful breach of trust reposed upon an employee by his employer is a recognized cause for termination of employment and it is not necessary that the employer should await the employee's final conviction in the criminal case involving such fraud or breach of trust before it can terminate the employee's services. In fact, even the dropping of the charges or an acquittal of the employee therefrom does not preclude the dismissal of an employee for acts inimical to the interests of the employer. To our mind, the criminal charges initiated by the company against private respondents and the finding after preliminary investigation of their prima facie guilt of the offense charged constitute substantial evidence sufficient to warrant a finding by the Labor Tribunal of the existence of a just cause for their termination based on loss of trust and confidence. The Labor Tribunal need not have gone further as to require private respondent's conviction of the crime charged, or inferred innocence on their part from their release from detention, which was mainly due to their posting of bail. (Emphasis supplied)

Indeed, the employer is not expected to be as strict and rigorous as a judge in a criminal trial in weighing all the probabilities of guilt before terminating the employee. Unlike a criminal case, which necessitates a moral certainty of guilt due to the loss of the personal liberty of the accused being the issue, a case concerning an employee suspected of wrongdoing leads only to his termination as a consequence. The quantum of proof required for convicting an accused is thus higher proof of guilt beyond reasonable doubt than the quantum prescribed for dismissing an employee substantial evidence. In so stating, we are not diminishing the value of employment, but only noting that the loss of employment occasions a consequence lesser than the loss of personal liberty, and may thus call for a lower degree of proof. It is also unfair to require an employer to first be morally certain of the guilt of the employee by awaiting a conviction before terminating him when there is already sufficient showing of the wrongdoing. Requiring that certainty may prove too late for the employer, whose loss may potentially be beyond repair. Here, no less than the DOJ Secretary found probable cause for qualified theft against the petitioner. That finding was enough to justify her termination for loss of confidence. To repeat, her responsibility as the supervisor tasked to oversee the affairs of the kiosk, including seeing to the secure handling of the sales proceeds, could not be ignored or downplayed. The employer's loss of trust and confidence in her was directly rooted in the manner of how she, as the supervisor, had negligently handled the large amount of sales by simply leaving the amount inside the cabinet drawer of the kiosk despite being aware of the great risk of theft. At the very least, she could have resorted to the SOP of first seeking guidance from the main office on how to secure the amount if she could not deposit in the bank due to that day being a Sunday.
SICDAa

Yet, even as we now say that the respondents had a just or valid cause for terminating the petitioner, it becomes unavoidable to ask whether or not they complied with the requirements of due process prior to the termination as embodied in Section 2 (d) of Rule I of the Implementing Rules of Book VI of the Labor Code, viz.:
Section 2.Security of tenure. . . . xxx xxx xxx (d)In all cases of termination of employment, the following standards of due process shall be substantially observed: For termination of employment based on just causes as defined in Article 282 of the Labor Code: (i)A written notice served on the employee specifying the ground or grounds for termination, and giving said employee reasonable opportunity within which to explain his side. (ii)A hearing or conference during which the employee concerned, with the assistance of counsel if he so desires is given opportunity to respond to the charge, present his evidence, or rebut the evidence presented against him. (iii)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. (emphasis supplied) xxx xxx xxx

We answer the query in the negative in the light of the circumstances of the petitioner's termination set forth in her affidavit, to wit:
xxx xxx xxx

14.While I was giving my statement to the security officer of the Mall, respondents Vina and Sylvia Mariano came with a policeman and they brought me to Precinct 9, Malate Police Station. Cristina Calung also arrived and together with the sister of Vina and Sylvia, they operated the booth as if nothing happened ; 15.I was detained at the police station from 11:15 a.m., November 10, up to 11:30 a.m., November 11, 1997; 16.After my release from the police precinct, I contacted by phone our office and I was able to talk to respondent Sylvia Mariano. I told her that since I was innocent of the charges they filed against me, I will report back to work. She shouted at me on the phone and told me she no longer wanted to see my face. I therefore decided to file a complaint for illegal dismissal against respondents with the NLRC, hence this present suit; (emphasis supplied) 13 xxx xxx xxx

The petitioner plainly demonstrated how quickly and summarily her dismissal was carried out without first requiring her to explain anything in her defense as demanded under Section 2 (d) of Rule I of the Implementing Rules of Book VI of the Labor Code. Instead, the respondents forthwith had her arrested and investigated by the police authorities for qualified theft. This, we think, was a denial of her right to due process of law, consisting in the opportunity to be heard and to defend herself. 14 In fact, their decision to dismiss her was already final even before the police authority commenced an investigation of the theft, the finality being confirmed by no less than Sylvia Mariano herself telling the petitioner during their phone conversation following the latter's release from police custody on November 11, 1997 that she (Sylvia) "no longer wanted to see" her.
DSAacC

The fact that the petitioner was the only person suspected of being responsible for the theft aggravated the denial of due process. When the respondents confronted her in the morning of November 10, 1997 for the first time after the theft, they brought along a police officer to arrest and hale her to the police precinct to make her answer for the theft. They evidently already concluded that she was the culprit despite a thorough investigation of the theft still to be made. This, despite their obligation under Section 2 (d)of Rule I of the Implementing Rules of Book VI of the Labor Code, firstly, to give her a "reasonable opportunity within which to explain (her) side;" secondly, to set a "hearing or conference during which the employee concerned, with the assistance of counsel if (she) so desires is given opportunity to respond to the charge, present (her) evidence, or rebut the evidence presented against (her);" and lastly, to serve her a "written notice of termination . . . indicating that upon due consideration of all the circumstances, grounds have been established to justify (her) termination." They wittingly shunted aside the tenets that mere accusation did not take the place of proof of wrongdoing, and that a suspicion or belief, no matter how sincere, did not substitute for factual findings carefully established through an orderly procedure. 15 The fair and reasonable opportunity required to be given to the employee before dismissal encompassed not only the giving to the employee of notice of the cause and the ability of the employee to explain, but also the chance to defend against the accusation. This was our thrust in Philippine Pizza, Inc. v. Bungabong, 16 where we held that the employee was not afforded due process despite the dismissal being upon a just cause, considering that he was not given a fair and reasonable opportunity to confront his accusers and to defend himself against the charge of theft notwithstanding his having submitted his explanation denying that he had stolen beer from the company dispenser. The termination letter was issued a day before the employee could go to the HRD Office for the investigation, which made it clear to him that the decision to terminate was already final even before he could submit his side and refute the charges against him. Nothing that he could say or do at that point would have changed the decision to dismiss him. Such omission to give the employee the benefit of a hearing and investigation before his termination constituted an infringement of his constitutional right to due process by the employer.

The respondents would further excuse their failure to afford due process by averring that "even before the respondents could issue the petitioner any formal written memorandum requiring her to explain the loss of the P50,912.00 sales proceeds . . . she went post haste to the NLRC and filed a case for illegal dismissal" in order to "beat the gun on respondents." 17 However, we cannot excuse the non-compliance with the requirement of due process on that basis, considering that her resort to the NLRC came after she had been told on November 11, 1997 by Sylvia that she (Sylvia) "no longer wanted to see" her. The definitive termination closed the door to any explanation she would tender. Being afforded no alternative, she understandably resorted to the complaint for illegal dismissal. In view of the foregoing, we impose on the respondents the obligation to pay to the petitioner an indemnity in the form of nominal damages of P30,000.00, conformably with Agabon v. NLRC, 18 where the Court said:
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. 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. As enunciated by this Court in Viernes v. National Labor Relations Commissions, 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 employee's one month salary. This indemnity is intended not to penalize the employer but to vindicate or recognize the employee's right to statutory due process which was violated by the employer.
EIcTAD

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. 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. (emphasis is in the original text)

WHEREFORE, the Court AFFIRMS the decision promulgated on December 20, 2001 by the Court of Appeals, but ORDERS the respondents to pay to the petitioner an indemnity in the form of nominal damages of P30,000.00 for non-compliance with the requirements of due process.
HacADE

No pronouncement as to costs of suit. SO ORDERED.

Corona, C.J., Carpio, Velasco, Jr., Leonardo-de Castro, Peralta, Del Castillo, Abad, Villarama, Jr., Perez, Mendoza, Sereno, Reyes and Perlas-Bernabe, JJ., concur. Brion, J., is on official leave.

[G.R. No. 175170. September 5, 2012.] MISAMIS ORIENTAL II ELECTRIC SERVICE COOPERATIVE (MORESCO II), petitioner, vs. VIRGILIO M. CAGALAWAN, respondent.

DECISION

DEL CASTILLO, J :
p

In labor cases, strict adherence with the technical rules is not required. 1 This liberal policy, however, should still conform with the rudiments of equitable principles of law. For instance, belated submission of evidence may only be allowed if the delay is adequately justified and the evidence is clearly material to establish the party's cause. 2
TAcSaC

By this Petition for Review on Certiorari, 3 petitioner Misamis Oriental II Electric Service Cooperative (MORESCO II) assails the Decision 4 dated July 26, 2005 of the Court of Appeals (CA) in CA-G.R. SP No. 84991, which reversed and set aside the Resolutions dated February 27, 2004 5 and April 26, 2004 6 of the National Labor Relations Commission (NLRC), and thereby reinstated the Labor Arbiter's Decision 7 dated September 30, 2003 pronouncing respondent Virgilio M. Cagalawan (Cagalawan) to have been constructively dismissed from employment. Also assailed is the CA Resolution 8 dated September 6, 2006 which denied MORESCO II's Motion for Reconsideration and granted Cagalawan's Partial Motion for Reconsideration.

Factual Antecedents
On September 1, 1993, MORESCO II, a rural electric cooperative, hired Cagalawan as a Disconnection Lineman on a probationary basis. On March 1, 1994 Cagalawan was appointed to the same post this time on a permanent basis. 9 On July 17, 2001, he was designated as Acting Head of the disconnection crew in Area III sub-office of MORESCO II in Balingasag, Misamis Oriental (Balingasag sub-office). 10 In a Memorandum 11 dated May 9, 2002, MORESCO II General Manager Amado B. Ke-e (Ke-e) transferred Cagalawan to Area I sub-office in Gingoog City, Misamis Oriental (Gingoog sub-office) as a member of the disconnection crew. Said memorandum stated that the transfer was done "in the exigency of the service." In a letter 12 dated May 15, 2002, Cagalawan assailed his transfer claiming he was effectively demoted from his position as head of the disconnection crew to a mere member thereof. He also averred that his transfer to the Gingoog sub-office is inconvenient and prejudicial to him as it would entail additional travel expenses to and from work. He likewise sought clarification on what kind of exigency exists as to justify his transfer and why he was the one chosen to be transferred. In a Memorandum 13 dated May 16, 2002, Ke-e explained that Cagalawan's transfer was not a demotion since he was holding the position of Disconnection Head only by mere designation and not by appointment. Ke-e did not, however, state the basis of the transfer but instead advised Cagalawan to just comply with the order and not to question management's legitimate prerogative to reassign him. In reply, Cagalawan claimed that he was transferred because he executed an Affidavit 14 in support of his coemployee Jessie Rances, who filed an illegal dismissal case against MORESCO II. 15 He emphasized though that his action was not an act of disloyalty to MORESCO II, contrary to what was being accused of him. Nonetheless, Cagalawan still reported for work at Gingoog sub-office on May 27, 2002 but reserved his right to contest the legality of such transfer. 16
EDcIAC

Meanwhile and in view of Cagalawan's transfer, Ke-e issued an order 17 recalling the former's previous designation as Acting Head of the disconnection crew of the Balingasag sub-office. Cagalawan eventually stopped reporting for work. On July 1, 2002, he filed a Complaint for constructive dismissal before the Arbitration branch of the NLRC against MORESCO II and its officers, Ke-e and Danilo Subrado (Subrado), in their capacities as General Manager and Board Chairman, respectively.

Proceedings before the Labor Arbiter


When the Labor Arbiter, in an Order 18 dated September 13, 2002, directed the parties to submit their respective verified position papers, only Cagalawan complied.19 He alleged that his transfer was unnecessary and was made only in retaliation for his having executed an affidavit in favor of a co-worker and against MORESCO II. In support of his contention, Cagalawan submitted a certification 20 executed by the Head of the disconnection crew of the Gingoog sub-office, Teodoro Ortiz (Ortiz), attesting that the said sub-office was not undermanned. In fact, when Cagalawan stopped working, no other employee was transferred or hired in his stead, a proof that there were enough disconnection crew members in Gingoog sub-office who can very well handle the assigned tasks. Moreover, Cagalawan claimed that his transfer constituted a demotion from his position as Acting Head of the disconnection crew which he had occupied for almost 10 months. As such, he should be considered regular in that position and entitled to its corresponding salary. Cagalawan further alleged that his transfer from Balingasag to Gingoog sub-office was tantamount to illegal constructive dismissal for being prejudicial and inconvenient as he had to spend an additional amount of P197.00 21 a day, leaving him nothing of his salary. He therefore had no choice but to stop working. Aside from reinstatement and backwages, Cagalawan sought to recover damages and attorney's fees because to him, his transfer was effected in a wanton, fraudulent, oppressive or malevolent manner. Apart from MORESCO II, he averred that Ke-e and Subrado should also be held personally liable for damages since the two were guilty of bad faith in effecting his transfer. He believed that Subrado had a hand in his arbitrary transfer considering that he is the son-in-law of Subrado's opponent in the recent election for directorship in the electric cooperative. In fact, Subrado even asked a certain Cleopatra Moreno Manuel to file a baseless complaint against him as borne out by the declaration of Bob Abao in an affidavit. 22
aTcIEH

In view of MORESCO II's failure to file a position paper, Cagalawan filed a Motion 23 for the issuance of an order to declare the case submitted for decision. This was granted in an Order 24 dated March 14, 2003. On September 30, 2003, the Labor Arbiter rendered a Decision 25 declaring that Cagalawan's transfer constituted illegal constructive dismissal. Aside from finding merit in Cagalawan's uncontroverted allegation that the transfer became grossly inconvenient for him, the Labor Arbiter found no sufficient reason for his transfer and that the same was calculated to rid him of his employment, impelled by a vindictive motive after he executed an Affidavit in favor of a colleague and against MORESCO II. Thus, the Labor Arbiter ordered Cagalawan's reinstatement to the position of Collector and awarded him backwages from the date of his transfer on May 16, 2002 up to his actual reinstatement. However, the Labor Arbiter denied his prayer for regularization as head of the disconnection crew since the period of six months which he claimed as sufficient to acquire regular status applies only to probationary employment. Hence, the fact that he was acting as head of the disconnection crew for 10 months did not entitle him to such position on a permanent basis. Moreover, the decision to promote him to the said position should only come from the management. With respect to damages, the Labor Arbiter found Ke-e to have acted capriciously in effecting the transfer, hence, he awarded moral and exemplary damages to Cagalawan. Attorney's fees was likewise adjudged in his favor.

The dispositive portion of the Decision reads:


WHEREFORE, premises considered, judgment is rendered declaring the transfer of complainant as tantamount to constructive dismissal and ordering respondent[s] to reinstate complainant to his position as collector in Balingasag, Misamis Oriental without loss of seniority rights and to pay complainant the following:
1.Backwages-P189,096.00 2.Exemplary damages-P10,000.00 3.Moral damages-P20,000.00 4.Attorney's fee 10%-P21,909.60 GRAND TOTAL AWARDP241,005.60

========
SO ORDERED.
26
HDTSIE

Proceedings before the National Labor Relations Commission


MORESCO II and Cagalawan both appealed the Labor Arbiter's Decision. In its Memorandum on Appeal, 27 MORESCO II invoked the liberal application of the rules and prayed for the NLRC to admit its evidence on appeal. MORESCO II denied that Cagalawan's transfer was done in retaliation for executing an affidavit in favor of a co-worker. MORESCO II explained that the transfer was in response to the request of the area manager in Gingoog sub-office for additional personnel in his assigned area. To substantiate this, it submitted a letter 28 dated May 8, 2002 from Gingoog sub-office Area Manager, Engr. Ronel B. Canada (Engr. Canada), addressed to Ke-e. In said letter, Engr. Canada requested for two additional disconnection linemen in order to attain the collection quota allocated in his area. MORESCO II then averred that as against this letter of Engr. Canada who is a managerial employee, the certification issued by Ortiz should be considered as incompetent since the latter is a mere disconnection crew. Moreover, Cagalawan's claim of additional expenses brought about by his transfer, specifically for meal and transportation, deserves no appreciation at all since he would still incur these expenses regardless of his place of assignment and also considering that he was provided with a rented motorcycle with fuel and oil allowance. Also, MORESCO II intimated that it has no intention of removing Cagalawan from its employ especially since his father-in-law was its previous Board Member. In fact, it was Cagalawan himself who committed an act of insubordination when he abandoned his job. In his Reply 29 to MORESCO II's Memorandum of Appeal, Cagalawan averred that the latter cannot present any evidence for the first time on appeal without giving any valid reason for its failure to submit its evidence before the Labor Arbiter as provided under the NLRC rules. Further, the evidence sought to be presented by MORESCO II is not newly discovered evidence as to warrant its admission on appeal. In particular, he claimed that the May 8, 2002 letter of Engr. Canada should have been submitted at the earliest opportunity, that is, before the Labor Arbiter. MORESCO II's failure to present the same at such time thus raises suspicion that the document was merely fabricated for the purpose of appeal. Moreover, Cagalawan claimed that if there was indeed a request from the Area Manager of Gingoog sub-office for additional personnel as required by the exigency of the service, such reason should have been mentioned in Ke-e's May 16, 2002 Memorandum. In

this way, the transfer would appear to have a reasonable basis at the outset. However, no such mention was made precisely because the transfer was without any valid reason. Anent Cagalawan's partial appeal, 30 he prayed that the decision be modified in that he should be reinstated as Disconnection Lineman and not as Collector. The NLRC, through a Resolution 31 dated February 27, 2004, set aside and vacated the Decision of the Labor Arbiter and dismissed Cagalawan's complaint against MORESCO II. The NLRC admitted MORESCO II's evidence even if submitted only on appeal in the interest of substantial justice. It then found said evidence credible in showing that Cagalawan's transfer to Gingoog sub-office was required in the exigency of the cooperative's business interest. It also ruled that the transfer did not entail a demotion in rank and diminution of pay as to constitute constructive dismissal and thus upheld the right of MORESCO II to transfer Cagalawan in the exercise of its sound business judgment. Cagalawan filed a Motion for Reconsideration April 26, 2004.
ESHcTD

32

but the same was denied by the NLRC in a Resolution

33

dated

Proceedings before the Court of Appeals


Cagalawan thus filed a Petition for Certiorari 34 with the CA. In a Decision 35 dated July 26, 2005, the CA found the NLRC to have gravely abused its discretion in admitting MORESCO II's evidence, citing Section 3, Rule V of the NLRC Rules of Procedure 36 which prohibits the parties from making new allegations or cause of action not included in the complaint or position paper, affidavits and other documents. It held that what MORESCO II presented on appeal was not just an additional evidence but its entire evidence after the Labor Arbiter rendered a Decision adverse to it. To the CA, MORESCO II's belated submission of evidence despite the opportunities given it cannot be countenanced as such practice "defeats speedy administration of justice" and "smacks of unfairness." The dispositive portion of the CA Decision reads:
IN VIEW THEREOF, the petition is GRANTED. The Decision of the Labor Arbiter is reinstated with the modification that if reinstatement of petitioner is not feasible, he should be paid separation pay in accordance with law. SO ORDERED.
37

MORESCO II filed a Motion for Reconsideration 38 insisting that it may present evidence for the first time on appeal as the NLRC is not precluded from admitting the same because technical rules are not binding in labor cases. Besides, of paramount importance is the opportunity of the other party to rebut or comment on the appeal, which in this case, was afforded to Cagalawan. Cagalawan, for his part, filed a Partial Motion for Reconsideration, 39 seeking modification of the Decision by ordering his reinstatement to the position of Disconnection Lineman instead of Collector.
ACcaET

In a Resolution 40 dated September 6, 2006, the CA maintained its ruling that MORESCO II's unexplained failure to present evidence or submit a position paper before the Labor Arbiter for almost 12 months from receipt of Cagalawan's position paper is intolerable and cannot be permitted. Hence, it denied its Motion for Reconsideration. With respect to Cagalawan's motion, the same was granted by the CA, viz.:
Anent petitioner's Partial Motion for Reconsideration, We find the same meritorious. The records of this case reveal that prior to his constructive dismissal, petitioner was a Disconnection Lineman, not a Collector, assigned at Balingasag, Misamis Oriental. Hence, We modify the dispositive portion of Our July 26, 2005 Decision, to read:

'IN VIEW THEREOF, the petition is GRANTED. The Decision of the Labor Arbiter is reinstated with modification that petitioner be reinstated to his position as Disconnection Lineman in Balingasag, Misamis Oriental with further modification that if reinstatement of petitioner is not feasible, he should be paid separation pay in accordance with law.' 41 (Emphasis in the original.)

Issues MORESCO II thus filed this petition raising the following issues: (1)Was the respondent constructively dismissed by the petitioner? (2)Did the Court of Appeals err in reversing the NLRC?
42

MORESCO II insists that Cagalawan's transfer was necessary in order to attain the collection quota of the Gingoog sub-office. It contests the credibility of Ortiz's certification which stated that there was no need for additional personnel in the Gingoog sub-office. According to it, Ortiz is not a managerial employee but merely a disconnection crew who is not competent to make declarations in relation to MORESCO II's business needs. It likewise refutes Cagalawan's claim of incurring additional expenses due to his transfer which caused him inconvenience. In sum, it claims that Cagalawan was not constructively dismissed but instead had voluntarily abandoned his job.
SCEDAI

MORESCO II avers that the CA's ruling is not in accordance with jurisprudence on the matter of admitting evidence on appeal in labor cases. It submits that the NLRC is correct in accepting its evidence submitted for the first time on appeal in line with the basic precepts of equity and fairness. The NLRC also correctly ruled in its favor after properly appreciating its evidence which had been rebutted and contradicted by Cagalawan. Our Ruling The petition has no merit.

MORESCO II's belated submission of evidence cannot be permitted.


Labor tribunals, such as the NLRC, are not precluded from receiving evidence submitted on appeal as technical rules are not binding in cases submitted before them.43 However, any delay in the submission of evidence should be adequately explained and should adequately prove the allegations sought to be proven. 44 In the present case, MORESCO II did not cite any reason why it had failed to file its position paper or present its cause before the Labor Arbiter despite sufficient notice and time given to do so. Only after an adverse decision was rendered did it present its defense and rebut the evidence of Cagalawan by alleging that his transfer was made in response to the letter-request of the area manager of the Gingoog sub-office asking for additional personnel to meet its collection quota. To our mind, however, the belated submission of the said letter-request without any valid explanation casts doubt on its credibility, specially so when the same is not a newly discovered evidence. For one, the letter-request was dated May 8, 2002 or a day before the memorandum for Cagalawan's transfer was issued. MORESCO II could have easily presented the letter in the proceedings before the Labor Arbiter for serious examination. Why it was not presented at the earliest opportunity is a serious question which lends credence to Cagalawan's theory that it may have just been fabricated for the purpose of appeal. It should also be recalled that after Cagalawan received the memorandum for his transfer to the Gingoog suboffice, he immediately questioned the basis thereof through a letter addressed to Ke-e. If at that time there was already a letter-request from the Gingoog area manager, Ke-e could have easily referred to or specified

this in his subsequent memorandum of May 16, 2002 which served as his response to Cagalawan's queries about the transfer. However, the said memorandum was silent in this respect. Nevertheless, Cagalawan, for his part, faithfully complied with the transfer order but with the reservation to contest its validity precisely because he was not adequately informed of its real basis.
aDcHIS

The rule is that it is within the ambit of the employer's prerogative to transfer an employee for valid reasons and according to the requirement of its business, provided that the transfer does not result in demotion in rank or diminution of salary, benefits and other privileges. 45 This Court has always considered the management's prerogative to transfer its employees in pursuit of its legitimate interests. But this prerogative should be exercised without grave abuse of discretion and with due regard to the basic elements of justice and fair play, such that if there is a showing that the transfer was unnecessary or inconvenient and prejudicial to the employee, it cannot be upheld. 46 Here, while we find that the transfer of Cagalawan neither entails any demotion in rank since he did not have tenurial security over the position of head of the disconnection crew, nor result to diminution in pay as this was not sufficiently proven by him, MORESCO II's evidence is nevertheless not enough to show that said transfer was required by the exigency of the electric cooperative's business interest. Simply stated, the evidence sought to be admitted by MORESCO II is not substantial to prove that there was a genuine business urgency that necessitated the transfer. Notably, the only evidence adduced by MORESCO II to support the legitimacy of the transfer was the letterrequest of Engr. Canada. However, this piece of evidence cannot in itself sufficiently establish that the Gingoog sub-office was indeed suffering from losses due to collection deficiency so as to justify the assignment of additional personnel in the area. Engr. Canada's letter is nothing more than a mere request for additional personnel to augment the number of disconnection crew assigned in the area. While it mentioned that the area's collection efficiency should be improved and that there is a shortage of personnel therein, it is, standing alone, self-serving and thus cannot be considered as competent evidence to prove the accuracy of the allegations therein. MORESCO II could have at least presented financial documents or any other concrete documentary evidence showing that the collection quota of the Gingoog sub-office has not been met or could not be reached. It should have also submitted such other documents which would show the lack of sufficient personnel in the area. Unfortunately, the area manager's letter provides no more than bare allegations which deserve not even the slightest credit. When there is doubt between the evidence submitted by the employer and that submitted by the employee, the scales of justice must be tilted in favor of the employee. 47 This is consistent with the rule that an employer's cause could only succeed on the strength of its own evidence and not on the weakness of the employee's evidence. 48 Thus, MORESCO II cannot rely on the weakness of Ortiz's certification in order to give more credit to its own evidence. Self-serving and unsubstantiated declarations are not sufficient where the quantum of evidence required to establish a fact is substantial evidence, described as more than a mere scintilla. 49 "The evidence must be real and substantial, and not merely apparent." 50 MORESCO II has miserably failed to discharge the onus of proving the validity of Cagalawan's transfer.
TAaEIc

Clearly, not only was the delay in the submission of MORESCO II's evidence not explained, there was also failure on its part to sufficiently support its allegation that the transfer of Cagalawan was for a legitimate purpose. This being the case, MORESCO II's plea that its evidence be admitted in the interest of justice does not deserve any merit.

Ke-e and Subrado, as corporate officers, could not be held personally liable for Cagalawan's monetary awards.
In the Decision of the Labor Arbiter, the manager of MORESCO II was held to have acted in an arbitrary manner in effecting Cagalawan's transfer such that moral and exemplary damages were awarded in the latter's

favor. However, the said Decision did not touch on the issue of bad faith on the part of MORESCO II's officers, namely, Ke-e and Subrado. Consequently, no pronouncement was made as to whether the two are also personally liable for Cagalawan's money claims arising from his constructive dismissal. Still, we hold that Ke-e and Subrado cannot be held personally liable for Cagalawan's money claims. "[B]ad faith does not simply connote bad judgment or negligence; it imputes a dishonest purpose or some moral obliquity and conscious doing of a wrong; a breach of sworn duty through some motive or intent or ill will; it partakes of the nature of fraud." 51 Here, although we agree with the Labor Arbiter that Ke-e acted in an arbitrary manner in effecting Cagalawan's transfer, the same, absent any showing of some dishonest or wrongful purpose, does not amount to bad faith. Suffice it to say that bad faith must be established clearly and convincingly as the same is never presumed. 52 Similarly, no bad faith can be presumed from the fact that Subrado was the opponent of Cagalawan's father-in-law in the election for directorship in the cooperative. Cagalawan's claim that this was one of the reasons why he was transferred is a mere allegation without proof. Neither does Subrado's alleged instruction to file a complaint against Cagalawan bolster the latter's claim that the former had malicious intention against him. As the Chairman of the Board of Directors of MORESCO II, Subrado has the duty and obligation to act upon complaints of its clients. On the contrary, the Court finds that Subrado had no participation whatsoever in Cagalawan's illegal dismissal; hence, the imputation of bad faith against him is untenable.
ACTIHa

WHEREFORE, the petition is DENIED. The Decision dated July 26, 2005 of the Court of Appeals in CA-G.R. SP No. 84991 and its Resolution dated September 6, 2006, are AFFIRMED. SO ORDERED.

Carpio, Brion, Perez and Perlas-Bernabe, JJ., concur.

[G.R. No. 173882. February 15, 2012.] JULIE'S BAKESHOP AND/OR EDGAR REYES, petitioners, vs. HENRY ARNAIZ EDGAR NAPAL, * and JONATHAN TOLORES, respondents.

DECISION

DEL CASTILLO, J :
p

Management has a wide latitude to conduct its own affairs in accordance with the necessities of its business. This so-called management prerogative, however, should be exercised in accordance with justice and fair play. By this Petition for Review on Certiorari, 1 petitioners Julie's Bakeshop and/or Edgar Reyes (Reyes) assail the September 23, 2005 Decision 2 of the Court of Appeals (CA) in CA-G.R. SP No. 86257, which reversed the Resolutions dated December 18, 2003 3 and April 19, 2004 4 of the National Labor Relations Commission (NLRC) and ordered petitioners to reinstate respondents Henry Arnaiz (Arnaiz), Edgar Napal (Napal) and Jonathan Tolores (Tolores) and to pay them their backwages for having been constructively dismissed, as well as their other monetary benefits.

Factual Antecedents

Reyes hired respondents as chief bakers in his three franchise branches of Julie's Bakeshop in Sibalom and San Jose, Antique. On January 26, 2000, respondents filed separate complaints against petitioners for underpayment of wages, payment of premium pay for holiday and rest day, service incentive leave pay, 13th month pay, cost of living allowance (COLA) and attorney's fees. These complaints were later on consolidated. Subsequently, in a memorandum dated February 16, 2000, Reyes reassigned respondents as utility/security personnel tasked to clean the outside vicinity of his bakeshops and to maintain peace and order in the area. Upon service of the memo, respondents, however, refused to sign the same and likewise refused to perform their new assignments by not reporting for work. In a letter-memorandum dated March 13, 2000, Reyes directed respondents to report back for work and to explain why they failed to assume their duties as utility/security personnel. A second letter-memorandum of the same tenor dated March 28, 2000 was also sent to respondents. Respondents did not heed both memoranda.

Proceedings before the Labor Arbiter


Meanwhile, in the preliminary conference set on February 21, 2000, respondents with their counsel, Atty. Ronnie V. Delicana (Atty. Delicana), on one hand, and Reyes on the other, appeared before the Labor Arbiter to explore the possibility of an amicable settlement. It was agreed that the parties would enter into a compromise agreement on March 7, 2000. However, on February 29, 2000, respondents, who were then represented by a different counsel, Atty. Mariano R. Pefianco (Atty. Pefianco), amended their complaints by including in their causes of action illegal dismissal and a claim for reinstatement and backwages.
aSIDCT

The supposed signing of the compromise agreement (which could have culminated in respondents receiving the total amount of P54,126.00 as payment for their 13th month pay and separation pay) was reset to March 28, 2000 because of respondents' non-appearance in the hearing of March 7, 2000. On March 28, 2000, Atty. Pefianco failed to appear despite due notice. On the next hearing scheduled on April 24, 2000, both Atty. Delicana and Atty. Pefianco appeared but the latter verbally manifested his withdrawal as counsel for respondents. Thus, respondents, through Atty. Delicana, and Reyes, continued to explore the possibility of settling the case amicably. Manifesting that they need to sleep on the proposed settlement, respondents requested for continuance of the hearing on April 26, 2000. Come said date, however, respondents did not appear. Realizing the futility of further resetting the case to give way to a possible settlement, the Labor Arbiter ordered the parties to file their respective position papers. Despite his earlier withdrawal as counsel, Atty. Pefianco filed a Joint Position Paper 5 on behalf of respondents alleging that they were dismissed from employment on February 21, 2000 without valid cause. As for petitioners, they stated in their position paper 6 that respondents were never dismissed but that they abandoned their jobs after filing their complaints. Petitioners denied that Reyes is the employer of Arnaiz and Napal but admitted such fact insofar as Tolores is concerned. In his Decision 7 dated August 25, 2000, the Labor Arbiter expressed dismay over respondents' lack of good faith in negotiating a settlement. The Labor Arbiter denounced the way respondents dealt with Atty. Delicana during their discussions for a possible settlement since respondents themselves later on informed the said tribunal that at the time of the said discussions, they no longer considered Atty. Delicana as their counsel. Despite this, the Labor Arbiter still required the parties to submit their respective position papers. And as respondents' position paper was filed late and no evidence was attached to prove the allegations therein, the Labor Arbiter resolved to dismiss the complaints, thus:
WHEREFORE, premises considered the above-entitled cases should be, as they are hereby dismissed without prejudice.

SO ORDERED.

Proceedings before the National Labor Relations Commission


Respondents filed a joint appeal 9 with the NLRC. In a Decision 10 dated January 17, 2002, the NLRC overruled the Decision of the Labor Arbiter and held that the burden of proof lies on herein petitioners as Reyes admitted being the employer of Tolores. Hence, petitioners not Tolores, had the duty to advance proof. With respect to Arnaiz and Napal, the NLRC noted that since their alleged employer was not impleaded, said respondents' cases should be remanded to the Labor Arbiter, and tried as new and separate cases. The dispositive portion of the NLRC's Decision reads:
WHEREFORE, the case is REMANDED for purposes of identifying the real respondents, to be separated as discussed, if warranted, and for further proceedings to be conducted. SO ORDERED.
11

Respondents filed a Motion for Reconsideration, 12 alleging that the NLRC Decision violated their right to speedy disposition of their cases. They also insisted that Reyes is their employer as shown by his lettermemorandum dated March 13, 2000 which directed all of them to report back for work. In addition, the fact that Reyes was willing to pay all the respondents the amount of P54,126.00 as settlement only proves that there is an employer-employee relationship between them and Reyes.
ASHEca

In a Resolution 13 dated September 23, 2003, the NLRC found merit in respondents' Motion for Reconsideration. It held that Reyes failed to present concrete proof of his allegation that a certain Rodrigo Gandiongco is the employer of Arnaiz and Napal; hence, Reyes is still presumed to be their employer as franchise owner of the branches where these employees were assigned. The NLRC further ruled that respondents' demotion in rank from chief bakers to utility/security personnel is tantamount to constructive dismissal which entitles them to the reliefs available to illegally dismissed employees. As for the money claims, the NLRC granted respondents their salary differentials, premium pay for rest day, holiday pay, service incentive leave pay, 13th month pay and COLA. In awarding such monetary awards, the NLRC ratiocinated that the employer bears the burden of proving that the employees received their wages and benefits. In this case, however, no proof of such payment was presented by the petitioners. The claim for overtime pay though was denied since proof of overtime work is necessary to warrant such award. Lastly, for Reyes' unjustified act done in bad faith, respondents were awarded 10% attorney's fees. The NLRC ruled as follows:
WHEREFORE, Our previous Decision is VACATED and a new one rendered declaring complainants to have been illegally dismissed. Complainants are to be reinstated to their former positions without loss of seniority rights. Complainants are further awarded backwages reckoned from the time they were constructively dismissed up to the time of their actual reinstatement, whether physically or on payroll. Complainants being underpaid are to be [paid] their salary differentials reckoned three (3) years backwards from the time they filed the instant complaints on January 26, 2000, premium pay for holiday, premium pay for rest day, holiday pay, service incentive leave pay, 13th month pay and COLA, if these have not been paid to them yet. SO ORDERED.
14

Petitioners sought to reconsider this ruling via a Motion for Reconsideration, 15 insisting that respondents were not illegally dismissed and that their reassignment or transfer as utility/security personnel was indispensable, made in good faith and in the exercise of a valid management prerogative. Hence, such reassignment does not amount to constructive dismissal. Reyes claimed that it would be likely for respondents, after filing complaints against him, to do something prejudicial to the business as chief bakers, like mixing harmful ingredients into the bread that they bake. This could be inimical to the health of the consuming public. Petitioners averred that respondents' reassignment as utility/security personnel is a preventive measure

designed to protect the business and its customers. They likewise added that the transfer was meant to be only temporary and besides, same does not involve any diminution in pay, rights and privileges of the respondents. Petitioners also alleged that respondents' wage of P115.00 per day is in consonance with and is even higher than the mandated minimum wage of P105.00 under Wage Order No. RB6-09 for retail and service establishments employing not more than 10 workers as in his business. The NLRC, in its Resolution 16 dated December 18, 2003, again reconsidered its own ruling and held that respondents were not dismissed, either actually or constructively, but instead willfully disobeyed the return to work order of their employer. The NLRC upheld petitioners' prerogative to transfer respondents if only to serve the greater interest, safety and well-being of the buying public by forestalling irregular acts of said employees. The NLRC then put the blame on respondents for disobeying the lawful orders of their employer, noting that it was the same attitude displayed by them in their dealings with their counsel, Atty. Delicana, in the proceedings before the Labor Arbiter. It also reversed its previous ruling that respondents were underpaid their wages and adjudged them to be even overpaid by P10.00 per Wage Order No. RB 6-09-A. Thus, respondents' complaints were dismissed except for their claims for premium pay for holiday, and rest day, service incentive leave pay, 13th month pay and COLA, which awards would stand only if no payment therefor has yet been made. Respondents filed a Motion for Reconsideration 17 and sought for the execution of the NLRC Resolution dated September 23, 2003 due to the alleged finality of the ruling. According to them, petitioners' pro forma Motion for Reconsideration of the said resolution did not suspend the running of the period for taking an appeal. This motion was, however, denied in the NLRC Resolution 18 dated April 19, 2004.
cEaCAH

Proceedings before the Court of Appeals


Respondents appealed to the CA through a petition for certiorari, 19 wherein they imputed grave abuse of discretion on the part of the NLRC in not declaring them to have been illegally dismissed and entitled to salary differentials. The CA, in its Decision 20 dated September 23, 2005, found merit in the petition, ruling that respondents were constructively dismissed since their designation from chief bakers to utility/security personnel is undoubtedly a demotion in rank which involved "a drastic change in the nature of work resulting to a demeaning and humiliating work condition." It also held that petitioners' fear that respondents might introduce harmful foreign substances in baking bread is more imaginary than real. Further, respondents could not be held guilty of abandonment of work as this was negated by their immediate filing of complaints to specifically ask for reinstatement. Nevertheless, the CA denied the claim for salary differentials by totally agreeing with the NLRC's finding on the matter. Said court then resolved to award respondents the rest of their monetary claims for failure of petitioners to present proof of payment and 10% attorney's fees as respondents' dismissal was attended with bad faith which forced them to litigate, viz.:
WHEREFORE, in view of the foregoing premises, judgment is hereby rendered by us SETTING ASIDE and REVERSING the Resolutions dated December 18, 2003 and April 19, 2004 in NLRC Case No. V-000785-2000. The record of this case is hereby REMANDED to the Labor Arbiter for the computation of backwages, premium pay for holidays and rest days, holiday pay, service incentive leave pay, 13th month pay and attorney's fees due to the petitioners and, thereafter, for the payment thereof by the private respondent Reyes. 21

Petitioners filed a Motion for Reconsideration May 25, 2006.

22

but the same was denied by the CA in a Resolution Issues

23

dated

Hence, this present petition raising the following issues for the Court's consideration:

I.DID THE HONORABLE COURT OF APPEALS, IN DISTURBING THE FINDINGS OF FACTS OF THE LABOR ARBITER AS WELL AS THE NATIONAL LABOR [RELATIONS] COMMISSION WHO HAVE TRIED THE CASE, [COMMIT] GRAVE ABUSE OF DISCRETION TANTAMOUNT TO LACK OF JURISDICTION? II.DID THE HONORABLE COURT OF APPEALS MANIFESTLY [OVERLOOK] RELEVANT FACTS NOT DISPUTED BY THE RESPONDENTS, WHICH, IF PROPERLY CONSIDERED COULD JUSTIFY A DIFFERENT CONCLUSION? III.WAS THE TRANSFER/REASSIGNMENT OF RESPONDENTS TO ANOTHER POSITION WITHOUT DIMINUTION IN PAY AND OTHER PRIVILEGES TANTAMOUNT TO CONSTRUCTIVE DISMISSAL? 24

Petitioners maintain that the NLRC, in its Resolution dated December 18, 2003, merely upheld the findings of the Labor Arbiter that there was no constructive dismissal because of the absence of any evidence to prove such allegation. As such, Reyes' supposition is that the CA erred in coming up with a contrary finding. Petitioners insist that the order transferring or reassigning respondents from chief bakers to utility/security personnel is a valid exercise of management prerogative for it does not involve any diminution in pay and privileges and that same is in accordance with the requirements of the business, viz.: to protect its goodwill and reputation as well as the health and welfare of the consuming public. Our Ruling We find no merit in the petition.

The Court of Appeals is correct in reviewing the findings of the National Labor Relations Commission.
cACDaH

Petitioners claim that the CA should have accorded respect and finality to the factual findings rendered by the NLRC in its December 18, 2003 Resolution as the same merely affirmed the findings of the Labor Arbiter. Citing several jurisprudence on the matter, petitioners add that factual findings of labor officials who acquired expertise on matters within their jurisdiction have conclusive effect. We reject this contention as none of the NLRC divergent rulings affirmed the findings of the Labor Arbiter. To recall, the Labor Arbiter dismissed respondents' complaints on a technicality, that is, on the ground that respondents' Joint Position Paper was filed late and that it did not contain any attachments to prove the allegations therein. Upon appeal, the NLRC rendered its first Decision on January 17, 2002 which remanded the case to the Labor Arbiter for purposes of identifying the real respondents and separating the consolidated cases if warranted, and for the conduct of further proceedings due to Reyes's allegation that Arnaiz and Napal have a different employer. The NLRC also disagreed with the Labor Arbiter's ratiocination that it behooved upon respondents to attach proof of their illegal dismissal. According to the NLRC, since Reyes admitted that he is Tolores's employer, the burden to prove that the termination is valid as well as the due payment of money claims falls upon petitioners. Upon petitioners' motion, however, the NLRC reconsidered this ruling and resolved the case on the merits. In so doing, it found the respondents to have been constructively dismissed through its Resolution dated September 23, 2003. The NLRC, however, once again reversed itself in a Resolution dated December 18, 2003 upon Reyes's filing of a Motion for Reconsideration. This time, the NLRC held that respondents were not illegally dismissed but instead abandoned their jobs. It was at this point that respondents sought recourse from the CA. Indeed, "factual findings of labor officials who are deemed to have acquired expertise in matters within their respective jurisdictions are generally accorded not only respect, but even finality." 25 It is a well-entrenched rule that findings of facts of the NLRC, affirming those of the Labor Arbiter, are accorded respect and due

consideration when supported by substantial evidence. 26 We, however, find that the doctrine of great respect and finality has no application to the case at bar. As stated, the Labor Arbiter dismissed respondents' complaints on mere technicality. The NLRC, upon appeal, then came up with three divergent rulings. At first, it remanded the case to the Labor Arbiter. However, in a subsequent resolution, it decided to resolve the case on the merits by ruling that respondents were constructively dismissed. But later on, it again reversed itself in its third and final resolution of the case and ruled in petitioners' favor. Therefore, contrary to Reyes's claim, the NLRC did not, on any occasion, affirm any factual findings of the Labor Arbiter. The CA is thus correct in reviewing the entire records of the case to determine which findings of the NLRC is sound and in accordance with law. Besides, the CA, at any rate, may still resolve factual issues by express mandate of the law despite the respect given to administrative findings of fact. 27

The transfer/reassignment of respondents constitutes constructive dismissal.


Petitioners contend that the order transferring or reassigning respondents from their position as chief bakers to utility/security personnel is within the ambit of management prerogative as employer. They harp on the fact that no evidence was presented by respondents to show that they were dismissed from employment. We have held that management is free to regulate, according to its own discretion and judgment, all aspects of employment, including hiring, work assignments, working methods, time, place and manner of work, processes to be followed, supervision of workers, working regulations, transfer of employees, work supervision, lay off of workers and discipline, dismissal and recall of workers. The exercise of management prerogative, however, is not absolute as it must be exercised in good faith and with due regard to the rights of labor. 28 In constructive dismissal cases, the employer has the burden of proving that the transfer of an employee is for just or valid ground, such as genuine business necessity. The employer must demonstrate that the transfer is not unreasonable, inconvenient, or prejudicial to the employee and that the transfer does not involve a demotion in rank or a diminution in salary and other benefits. "If the employer fails to overcome this burden of proof, the employee's transfer is tantamount to unlawful constructive dismissal." 29 In this case, petitioners insist that the transfer of respondents was a measure of self-preservation and was prompted by a desire to protect the health of the buying public, claiming that respondents should be transferred to a position where they could not sabotage the business pending resolution of their cases. According to petitioners, the possibility that respondents might introduce harmful substances to the bread while in the performance of their duties as chief bakers is not imaginary but real as borne out by what Tolores did in one of the bakeshops in Culasi, Antique where he was assigned as baker.
cSATEH

This postulation is not well-taken. On the contrary, petitioners failed to satisfy the burden of proving that the transfer was based on just or valid ground. Petitioners' bare assertions of imminent threat from the respondents are mere accusations which are not substantiated by any proof. This Court is proscribed from making conclusions based on mere presumptions or suppositions. An employee's fate cannot be justly hinged upon conjectures and surmises. 30 The act attributed against Tolores does not even convince us as he was merely a suspected culprit in the alleged sabotage for which no investigation took place to establish his guilt or culpability. Besides, Reyes still retained Tolores as an employee and chief baker when he could have dismissed him for cause if the allegations were indeed found true. In view of these, this Court finds no compelling reason to justify the transfer of respondents from chief bakers to utility/security personnel. What appears to this Court is that respondents' transfer was an act of retaliation on the part of petitioners due to the former's filing of complaints against them, and thus, was clearly made in bad faith. In fact, petitioner Reyes even admitted that he caused the reassignments due to the pending complaints filed against him. As the CA aptly held:
In the case at bench, respondent Reyes failed to justify petitioners' transfer from the position of chief bakers to utility/security personnel. We find that the threat being alluded to by respondent Reyes

that the petitioners might introduce harmful foreign substances in baking bread is imaginary and not real. We recall that what triggered the petitioners' reassignment was the filing of their complaints against private respondents in the NLRC. The petitioners were not even given an opportunity to refute the reason for the transfer. The drastic change in petitioners' nature of work unquestionably resulted in, as rightly perceived by them, a demeaning and humiliating work condition. The transfer was a demotion in rank, beyond doubt. There is demotion when an employee is transferred from a position of dignity to a servile or menial job. One does not need to stretch the imagination to distinguish the work of a chief baker to that of a security cum utility man. 31

"[D]emotion involves a situation in which an employee is relegated to a subordinate or less important position constituting a reduction to a lower grade or rank, with a corresponding decrease in duties and responsibilities, and usually accompanied by a decrease in salary." 32 When there is a demotion in rank and/or a diminution in pay; when a clear discrimination, insensibility or disdain by an employer becomes unbearable to the employee; or when continued employment is rendered impossible, unreasonable or unlikely, the transfer of an employee may constitute constructive dismissal. 33 We agree with the CA in ruling that the transfer of respondents amounted to a demotion. Although there was no diminution in pay, there was undoubtedly a demotion in titular rank. One cannot deny the disparity between the duties and functions of a chief baker to that of a utility/security personnel tasked to clean and manage the orderliness of the outside premises of the bakeshop. Respondents were even prohibited from entering the bakeshop. The change in the nature of their work undeniably resulted to a demeaning and humiliating work condition. In Globe Telecom, Inc. v. Florendo-Flores,
34

we held:

The managerial prerogative to transfer personnel must be exercised without grave abuse of discretion. It must always bear in mind the basic elements of justice and fair play. Having the right must not be confused with the manner that right is exercised. Thus, it cannot be used as a subterfuge by the employer to rid himself of an undesirable worker.

Petitioners' claim that respondents abandoned their job stands on shallow grounds. Respondents cannot be faulted for refusing to report for work as they were compelled to quit their job due to a demotion without any just cause. Moreover, we have consistently held that a charge of abandonment is inconsistent with the filing of a complaint for constructive dismissal. 35 Respondents' demand to maintain their positions as chief bakers by filing a case and asking for the relief of reinstatement belies abandonment. 36 As the transfer proves unbearable to respondents as to foreclose any choice on their part except to forego continued employment, same amounts to constructive dismissal for which reinstatement without loss of seniority rights, full backwages, inclusive of allowances, and other benefits or their monetary equivalent, computed from the time their compensation was withheld up to the time of their actual reinstatement, should be granted. 37 The CA, therefore, did not err in awarding the reliefs prayed for by the respondents as they were, without a doubt, constructively dismissed. WHEREFORE, the petition is DENIED. The September 23, 2005 Decision of the Court of Appeals in CA-G.R. SP No. 86257 is AFFIRMED. SO ORDERED.

Corona, C.J., Leonardo-de Castro, Bersamin and Villarama, Jr., JJ., concur.

[G.R. No. 144412. November 18, 2003.]

ALLIED BANKING CORPORATION, petitioner, vs. COURT OF APPEALS and POTENCIANO L. GALANIDA, respondents.

Ocampo Tejada Guevarra & Associates for petitioner. The Solicitor General for public respondents. Loreto M. Durano for private respondent.
SYNOPSIS Respondent Galanida was assistant manager when he was dismissed by petitioner Allied Bank for refusing an order to transfer to another branch. Hence, the issue on the legality of such dismissal. The transfer of an employee is within the ambit of the employer's prerogatives, for valid reasons according to the requirement of the business, and provided that the transfer does not result in demotion in rank or diminution of the employee's remunerations.'Here, the constant transfer of bank personnel with accounting responsibilities from one branch to another is a standard practice of Allied Bank, and the Bangko Sentral ng Pilipinas' Manual of Regulations for Banks also require the rotation of these personnel. Galanida was well aware of this, as it was a condition which he consented to in his employment. And neither was the transfer in the nature of a demotion. His refusal to obey a valid transfer order constitutes willful disobedience of a lawful order of an employer. Thus, he was dismissed for just cause under Art. 282 (a) of the Labor Code, and he was not entitled to reinstatement or to separation pay. SYLLABUS 1.LEGAL ETHICS; CODE OF PROFESSIONAL RESPONSIBILITY; DUTY OF LAWYER TO CITE THE RULINGS OF THE SUPREME COURT ACCURATELY. The syllabus of cases in official or unofficial reports of Supreme Court decisions or resolutions is not the work of the Court, nor does it state this Court's decision. The syllabus is simply the work of the reporter who gives his understanding of the decision. The reporter writes the syllabus for the convenience of lawyers in reading the reports. A syllabus is not a part of the court's decision. A counsel should not cite a syllabus in place of the carefully considered text in the decision of the Court. In the present case, Labor Arbiter Almirante and Atty. Durano began by quoting from Dosch, but substituted a portion of the decision with a headnote from the SCRA syllabus, which they even underscored. In short, they deliberately made the quote from the SCRA syllabus appear as the words of the Supreme Court. We admonish them for what is at the least patent carelessness, if not an outright attempt to mislead the parties and the courts taking cognizance of this case. Rule 10.02, Canon 10 of the Code of Professional Responsibility mandates that a lawyer shall not knowingly misquote or misrepresent the text of a decision or authority. It is the duty of all officers of the court to cite the rulings and decisions of the Supreme Court accurately. 2.REMEDIAL LAW; EVIDENCE; FACTUAL FINDINGS OF COURT OF APPEALS AFFIRMING FINDINGS OF NLRC, ACCORDED GREAT WEIGHT AND FINALITY; EXCEPTIONS. We accord great weight and even finality to the factual findings of the Court of Appeals, particularly when they affirm the findings of the NLRC or the lower courts. However, there are recognized exceptions to this rule. These exceptions are: (1) when the findings are grounded on speculation, surmise and conjecture; (2) when the inference made is manifestly mistaken, absurd or impossible; (3) when there is grave abuse of discretion in the appreciation of facts; (4) when the factual findings of the trial and appellate courts are conflicting; (5) when the Court of Appeals, in making its findings, has gone beyond the issues of the case and such findings are contrary to the admissions of both appellant and appellee; (6) when the judgment of the appellate court is premised on a misapprehension of facts or when it has failed to consider certain relevant facts which, if properly considered, will justify a different conclusion; (7)

when the findings of fact are conclusions without citation of specific evidence on which they are based; and (8) when the findings of fact of the Court of Appeals are premised on the absence of evidence but are contradicted by the evidence on record. 3.LABOR AND SOCIAL LEGISLATION; TERMINATION OF EMPLOYMENT; ILLEGAL DISMISSAL; TRANSFER OF EMPLOYEE MUST BE PROVED NECESSARY BY THE EMPLOYER. The rule is that the transfer of an employee ordinarily lies within the ambit of the employer's prerogatives. The employer exercises the prerogative to transfer an employee for valid reasons and according to the requirement of its business, provided the transfer does not result in demotion in rank or diminution of the employee's salary, benefits and other privileges. In illegal dismissal cases, the employer has the burden of showing that the transfer is not unnecessary, inconvenient and prejudicial to the displaced employee. The constant transfer of bank officers and personnel with accounting responsibilities from one branch to another is a standard practice of Allied Bank, which has more than a hundred branches throughout the country. Allied Bank does this primarily for internal control. It also enables bank employees to gain the necessary experience for eventual promotion. The Bangko Sentral ng Pilipinas, in its Manual of Regulations for Banks and Other Financial Intermediaries, requires the rotation of these personnel. The Manual directs that the "duties of personnel handling cash, securities and bookkeeping records should be rotated" and that such rotation "should be irregular, unannounced and long enough to permit disclosure of any irregularities or manipulations." Galanida was well aware of Allied Bank's policy of periodically transferring personnel to different branches. As the Court of Appeals found, assignment to the different branches of Allied Bank was a condition of Galanida's employment. Galanida consented to this condition when he signed the Notice of Personnel Action. The evidence on record contradicts the charge that Allied Bank discriminated against Galanida and was in bad faith when it ordered his transfer. The employer has the prerogative, based on its assessment of the employees' qualifications and competence, to rotate them in the various areas of its business operations to ascertain where they will function with maximum benefit to the company. Neither was Galanida's transfer in the nature of a demotion. 4.ID.; ID.; UNFAIR LABOR PRACTICE; NOT PRESENT IN CASE AT BAR. There is also no basis for the finding that Allied Bank was guilty of unfair labor practice in dismissing Galanida. Unfair labor practices relate only to violations of "the constitutional right of workers and employees to self-organization" and are limited to the acts enumerated in Article 248 of the Labor Code, none of which applies to the present case. There is no evidence that Galanida took part in forming a union, or even that a union existed in Allied Bank. 5.ID.; ID.; DISMISSAL JUST CAUSE; WILLFUL DISOBEDIENCE OF A LAWFUL ORDER OF AN EMPLOYER; PRESENT WHEN EMPLOYEE REFUSED VALID TRANSFER ORDER. The refusal to obey a valid transfer order constitutes willful disobedience of a lawful order of an employer. Employees may object to, negotiate and seek redress against employers for rules or orders that they regard as unjust or illegal. However, until and unless these roles or orders are declared illegal or improper by competent authority, the employees ignore or disobey them at their peril. For Galanida's continued refusal to obey Allied Bank's transfer orders, we hold that the bank dismissed Galanida for just cause in accordance with Article 282 (a) of the Labor Code. Galanida is thus not entitled to reinstatement or to separation pay. 6.ID.; ID.; ID.; REQUIREMENTS. To be effective, a dismissal must comply with Section 2 (d), Rule 1, Book VI of the Omnibus Rules' Implementing the Labor Code ("Omnibus Rules"), which provides: For termination of employment based on just causes as defined in Article 282 of the Labor Code: (i) A written notice served on the employee specifying the ground or grounds of termination, and giving said employee reasonable opportunity within which to explain his side. (ii) A hearing or conference during which the employee concerned, with the assistance of counsel if he so desires is given opportunity to respond to the charge, present his evidence, or rebut the evidence presented against him. (iii) 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. 7.ID.; ID.; ID.; ID.; HEARING; DOES NOT REQUIRE ACTUAL HEARING. On the requirement of a hearing, this Court has held that the essence of due process is simply an opportunity to be heard. An actual hearing is

not necessary. The exchange of several letters, in which Galanida's wife, a lawyer with the City Prosecutor's Office, assisted him, gave Galanida an opportunity to respond to the charges against him. 8.ID.; ID.; ID.; ID.; NOTICE OF TERMINATION; MEMO INFORMING EMPLOYER'S DECISION TO DISMISS EMPLOYEE; SUFFICIENT. A cursory reading of the Memo will show that it unequivocally informed Galanida of Allied Bank's decision to dismiss him. The statement, "please be informed that the Bank has terminated your services effective September 1, 1994 and considered whatever benefit, if any, that you are entitled [to] as forfeited xxx" is plainly worded and needs no interpretation. The Memo also discussed the findings of the Investigation Committee that served as grounds for Galanida's dismissal. The Memo referred to Galanida's "open defiance and refusal" to transfer first to the Bacolod City branch and then to the Tagbilaran City branch. The Memo also mentioned his continued refusal to report for work despite the denial of his application for additional vacation leave. The Memo also refuted Galanida's charges of discrimination and demotion, and concluded that he had violated Article XII of the bank's Employee Discipline Policy and Procedure. The Memo, although captioned "Transfer and Reassignment," did not preclude it from being a notice of termination. The Court has held that the nature of an instrument is characterized not by the title given to it but by its body and contents.

9.ID.; ID.; ID.; ID.; ID.; EFFECTIVE ONLY UPON RECEIPT THEREOF. To be effective, a written notice of termination must be served on the employee. Allied Bank could not terminate Galanida on 1 September 1994 because he had not received as of that date the notice of Allied Bank's decision to dismiss him. Galanida's dismissal could only take effect on 5 October 1994, upon his receipt of the Memo. For this reason, Galanida is entitled to backwages for the period from 1 September 1994 to 4 October 1994. Under the circumstances, we also find an award of P10,000 in nominal damages proper. Courts award nominal damages to recognize or vindicate the right of a person that another has violated. The law entitles Galanida to receive timely notice of Allied Bank's decision to dismiss him. Allied Bank should have exercised more care in issuing the notice of termination.

DECISION

CARPIO, J :
p

The Case
Before the Court is a petition for review 1 assailing the Decision 2 of 27 April 2000 and the Resolution of 8 August 2000 of the Court of Appeals in CA-G.R. SP No. 51451. The Court of Appeals upheld the Decision 3 of 18 September 1998 and the Resolution of 24 December 1998 of the National Labor Relations Commission ("NLRC") in NLRC Case No. V-000180-98. The NLRC modified the Decision dated 23 December 1997 of Labor Arbiter Dominador A. Almirante ("Labor Arbiter") in NLRC Case No. RAB VII-05-0545-94 holding that Allied Banking Corporation ("Allied Bank") illegally dismissed Potenciano L. Galanida ("Galanida"). The NLRC awarded Galanida separation pay, backwages, moral and exemplary damages, and other amounts totaling P1,264,933.33.

Antecedent Facts
For a background of this case, we quote in part from the Decision of the Court of Appeals:
Private respondent Potenciano Galanida was hired by petitioner Allied Banking Corporation on 11 January 1978 and rose from accountant-book(k)eeper to assistant manager in 1991. His appointment

was covered by a "Notice of Personnel Action" which provides as one of the conditions of employment the provision on petitioner's right to transfer employees: "REGULAR APPOINTMENT: . . . It is understood that the bank reserves the right to transfer or assign you to other departments or branches of the bank as the need arises and in the interest of maintaining smooth and uninterrupted service to the public." Private respondent was promoted several times and was transferred to several branches as follows: "a)January, 1978 to March, 1982 Tagbilaran City Branch "b)April, 1982 to May, 1984 Lapulapu City Branch "c)June, 1984 Mandaue City Branch "d)July, 1984 to April, 1986 Tagbilaran City Branch "e)May, 1986 to May, 1987 Dumaguete City Branch "f)June, 1987 to August, 1987 Carbon Branch, Cebu City "g)September, 1987 to Sept. 1989 Lapulapu City Branch, Cebu "h)October, 1989 to Sept. 1992 Carbon Branch, Cebu City "i)October 1992 to Sept. 1994 Jakosalem Regional Branch, Cebu City: (Rollo, p. 47) Effecting a rotation/movement of officers assigned in the Cebu homebase, petitioner listed respondent as second in the order of priority of assistant managers to be assigned outside of Cebu City having been stationed in Cebu for seven years already. Private respondent manifested his refusal to be transferred to Bacolod City in a letter dated 19 April 1994 citing as reason parental obligations, expenses, and the anguish that would result if he is away from his family. He then filed a complaint before the Labor Arbiter for constructive dismissal.

Subsequently, petitioner bank informed private respondent ( Rollo, p. 86) that he was to report to the Tagbilaran City Branch effective 23 May 1994. Private respondent refused. In a letter dated 13 June 1994, petitioner warned and required of private respondent as follows: "There is no discrimination in your transfer. In fact, among the officers mentioned, only you have refused the new assignment citing difficulty of working away from your family as if the other officers concerned do not suffer the same predicament. To exempt you from the officer transfer would result in favoritism in your favor and discrimination as against the other officers concerned. "In furtherance of maintaining a smooth and uninterrupted service to the public, and in accordance with the Bank's order of priority of rotating its accountants' places of assignments, you are well aware that Roberto Isla, AM/Accountant, assigned in Cebu form ore than ten (10) years, was, on February 14, 1994, reassigned to Iligan City Branch and then to Cagayan de Oro City Branch on June 8, 1994. Hence, your objection on the ground of your length of service is without merit. xxx xxx xxx "As discussed, your refusal to follow instruction concerning your transfer and reassignment to Bacolod City and to Tagbilaran City is penalized under Article XII of the Bank's Employee Discipline Policy and Procedure [which] provides: 'XII Transfer and Reassignment Refusal to follow instruction concerning transfers and reassignments. First and subsequent offenses The penalty may range from suspension to dismissal as determined by management. The employee shall be required to comply with the order of transfer and reassignment, if the penalty is not termination of employment.' "In view of the foregoing, please explain in writing within three (3) days from receipt hereof why no disciplinary action should be meted against you for your having refused to follow instructions concerning the foregoing transfer and reassignment." . . . 4

On 16 June 1994, Galanida replied that "(w)hether the bank's penalty for my refusal be Suspension or Dismissal . . . it will all the more establish and fortify my complaint now pending at NLRC, RAB 7." 5 In the same letter, he charged Allied Bank with discrimination and favoritism in ordering his transfer, thus:
. . . What I cannot decipher now under the headship of Mr. Olveda is management's discriminatory act of transferring only the long staying accountants of Cebu in the guise of its exercise of management prerogative when in truth and in fact, the ulterior motive is to accommodate some new officers who happen to enjoy favorable connection with management. How can the bank ever justify the transfer of Melinda T. Co, a new officer who had experienced being assigned outside of Cebu for more than a year only to Tabunok Branch? If the purpose is for check and balance, is management implying that Melinda Co can better carry out such function over Mr. Larry Sabelino, who is a seasoned and experienced accountant or any of the Metro Cebu accountants for that matter? Isn't this act of management an obvious display of favoritism? . . . 6

On 5 October 1994, Galanida received an inter-office communication 7 ("Memo") dated 8 September 1994 from Allied Bank's Vice-President for Personnel, Mr. Leonso C. Pe. The Memo informed Galanida that Allied Bank had terminated his services effective 1 September 1994. The reasons given for the dismissal were: (1) Galanida's continued refusal to be transferred from the Jakosalem, Cebu City branch; and (2) his refusal to

report for work despite the denial of his application for additional vacation leave. The salient portion of the Memo reads:
Therefore, your refusal to follow instruction concerning your transfer and reassignment to Bacolod City and to Tagbilaran City is without any justifiable reason and constituted violations of Article XII of the Bank's EDPP . . . In view of the foregoing, please be informed that the Bank has terminated your services effective September 1, 1994 and considered whatever benefit, if any, that you are entitled as forfeited in accordance with 04, V Administrative Penalties, page 6 of the Bank's EDPP which provides as follows: "04.Dismissal. Dismissal is a permanent separation for cause . . . Notice of termination shall be issued by the Investigation Committee subject to the confirmation of the President or his authorized representative as officer/employee who is terminated for cause shall not be eligible to receive any benefit arising from her/his employment with the Bank or to termination pay." It is understood that the termination of your service shall be without prejudice to whatever legal remedies which the Bank may have already undertaken and/or will undertake against you. Please be guided accordingly. (Emphasis supplied)
8

The Ruling of the Labor Arbiter


After several hearings, the Labor Arbiter held that Allied Bank had abused its management prerogative in ordering the transfer of Galanida to its Bacolod and Tagbilaran branches. In ruling that Galanida's refusal to transfer did not amount to insubordination, the Labor Arbiter misquoted this Court's decision in Dosch v. NLRC, 9 thus:
As a general rule, the right to transfer or reassign an employee is recognized as an employer's exclusive right and the prerogative of management (Abbott Laboratories vs. NLRC, 154 SCRA 713 [1987]). The exercise of this right, is not however, absolute. It has certain limitations. Thus, in Helmut Dosch vs. NLRC, et al. 123 SCRA 296 (1983), the Supreme Court, ruled: "While it may be true that the right to transfer or reassign an employee is an employer's exclusive right and the prerogative of management, such right is not absolute. The right of an employer to freely select or discharge his employee is limited by the paramount police power . . . for the relations between capital and labor are not merely contractual but impressed with public interest. . . . And neither capital nor labor shall act oppressively against each other.
IaESCH

Refusal to obey a transfer order cannot be considered insubordination where employee cited reason for said refusal, such (sic) as that of being away from the family." 10 (Emphasis supplied
by the Labor Arbiter)

The Labor Arbiter reasoned that Galanida's transfer was inconvenient and prejudicial because Galanida would have to incur additional expenses for board, lodging and travel. On the other hand, the Labor Arbiter held that Allied Bank failed to show any business urgency that would justify the transfer.

The Labor Arbiter also gave credence to Galanida's claim that Allied Bank gave Ms. Co special treatment. The Labor Arbiter stated that Allied Bank deliberately left out Ms. Co's name from the list of accountants transferred to Cebu as contained in Allied Bank's letter dated 13 June 1994. However, Mr. Regidor Olveda, Allied Bank's Vice President for Operations Accounting, testified that the bank transferred Ms. Co to the Tabunok, Cebu branch within the first half of 1994. Still, the Labor Arbiter declined to award Galanida back wages because he was not entirely free from blame. Since another bank had already employed Galanida, the Labor Arbiter granted Galanida separation pay in lieu of reinstatement. The dispositive portion of the Labor Arbiter's Decision of 23 December 1997 provides:
WHEREFORE, premises considered, judgment is hereby rendered ordering respondent Allied Banking Corporation to pay complainant the aggregate total amount of Three Hundred Twenty Four Thousand Pesos (P324,000.00) representing the following awards: a)Separation pay for P272,000.00; b)Quarter bonus for 1994 P16,000.00; c)13th month pay for 1994 P16,000.00; d)Refund of contribution to Provident Fund P20,000.00. SO ORDERED.
11

The Ruling of the NLRC


On appeal, the NLRC likewise ruled that Allied Bank terminated Galanida without just cause. The NLRC agreed that the transfer order was unreasonable and unjustified, considering the family considerations mentioned by Galanida. The NLRC characterized the transfer as a demotion since the Bacolod and Tagbilaran branches were smaller than the Jakosalem branch, a regional office, and because the bank wanted Galanida, an assistant manager, to replace an assistant accountant in the Tagbilaran branch. The NLRC found unlawful discrimination since Allied Bank did not transfer several junior accountants in Cebu. The NLRC also held that Allied Bank gave Ms. Co special treatment by assigning her to Cebu even though she had worked for the bank for less than two years. The NLRC ruled that Galanida's termination was illegal for lack of due process. The NLRC stated that Allied Bank did not conduct any hearing. The NLRC declared that Allied Bank failed to send a termination notice, as required by law for a valid termination. The Memo merely stated that Allied Bank would issue a notice of termination, but the bank did not issue any notice. The NLRC concluded that Allied Bank dismissed Galanida in bad faith, tantamount to an unfair labor practice as the dismissal undermined Galanida's right to security of tenure and equal protection of the laws. On these grounds, the NLRC promulgated its Decision of 18 September 1998, the relevant portion of which states:
In this particular case, We view as impractical, unrealistic and no longer advantageous to both parties to order reinstatement of the complainant. . . . For lack of sufficient basis, We deny the claim for 1994 quarter bonus. Likewise, no attorney's fees is awarded as counsels for complainant-appellee are from the City Prosecutor's Office of Cebu. WHEREFORE, premises considered, the decision of the Labor Arbiter dated December 23, 1997 is hereby MODIFIED by increasing the award of separation pay and granting in addition thereto backwages, moral and exemplary damages. The respondent-appellant, ALLIED BANKING CORPORATION, is thus ordered to pay to herein complainant-appellee, POTENCIANO L. GALANIDA, the following amounts:

a)P336,000.00, representing separation pay b)P833,600.00, representing backwages c)P5,333.23 representing proportional 1994 13th month pay d)P20,000.00 representing refund of Provident Fund Contribution e)P50,000.00 representing moral damages f)P20,000.00 representing exemplary damages ======== P1,264,933.33 TOTAL AWARD All other claims are dismissed for lack of basis. The other respondents are dropped for lack of sufficient basis that they acted in excess of their corporate powers. SO ORDERED.
12

Allied Bank filed a motion for reconsideration which the NLRC denied in its Resolution of 24 December 1998.

13

Dissatisfied, Allied Bank filed a petition for review questioning the Decision and Resolution of the NLRC before the Court of Appeals.

The Ruling of the Court of Appeals


Citing Dosch v. NLRC, 14 the Court of Appeals held that Galanida's refusal to comply with the transfer orders did not warrant his dismissal. The appellate court ruled that the transfer from a regional office to the smaller Bacolod or Tagbilaran branches was effectively a demotion. The appellate court agreed that Allied Bank did not afford Galanida procedural due process because there was no hearing and no notice of termination. The Memo merely stated that the bank would issue a notice of termination but there was no such notice. The Court of Appeals affirmed the ruling of the NLRC in its Decision of 27 April 2000, thus:
WHEREFORE, for lack of merit, the petition is DISMISSED and the assailed Decision of public respondent NLRC is AFFIRMED. SO ORDERED.
15

Allied Bank filed a motion for reconsideration which the appellate court denied in its Resolution of 8 August 2000. 16 On 26 April 2001, Allied Bank appealed the appellate court's decision and resolution to the Supreme Court. Allied Bank prayed that the Supreme Court: (1) issue a temporary restraining order or writ of preliminary injunction ex parte to restrain the implementation or execution of the questioned Decision and Resolution; (2) declare Galanida's termination as valid and legal; (3) set aside the Court of Appeals' Decision and Resolution; (4) make permanent the restraining order or preliminary injunction; (5) order Galanida to pay the costs; and (6) order other equitable reliefs.

The Issues
Allied Bank raises the following issues:

1.WHETHER UNDER THE FACTS PRESENTED THERE IS LEGAL BASIS IN PETITIONER'S EXERCISE OF ITS MANAGEMENT PREROGATIVE. 2.WHETHER PRIVATE RESPONDENT'S VIOLATIONS OF COMPANY RULES CONSTITUTE A GROUND TO WARRANT THE PENALTY OF DISMISSAL. 3.WHETHER UNDER THE FACTS PRESENTED, THERE IS LEGAL BASIS TO HOLD THAT ALLIED BANK AFFORDED PRIVATE RESPONDENT THE REQUIRED DUE PROCESS. 4.WHETHER UNDER THE FACTS, THERE IS LEGAL BASIS TO HOLD THAT PRIVATE RESPONDENT CANNOT RECOVER ANY MONETARY AWARD. 17

In sum, Allied Bank argues that the transfer of Galanida was a valid exercise of its management prerogative. Allied Bank contends that Galanida's continued refusal to obey the transfer orders constituted willful disobedience or insubordination, which is a just cause for termination under the Labor Code. On the other hand, Galanida defended his right to refuse the transfer order. The memorandum for Galanida filed with this Court, prepared by Atty. Loreto M. Durano, again misquoted the Court's ruling in Dosch v. NLRC, thus:
. . . His [Galanida's] refusal to transfer falls well within the ruling of the Supreme Court in Helmut Dosch vs. NLRC, et al., 123 SCRA 296 (1983) quoted as follows: xxx xxx xxx

Refusal to obey a transfer order cannot be considered insubordination where employee cited reason for said refusal, such as that of being away from the family." 18

The Ruling of the Court


The petition is partly meritorious.

Preliminary Matter: Misquoting Decisions of the Supreme Court


The memorandum prepared by Atty. Durano and, worse, the assailed Decision of the Labor Arbiter, both misquoted the Supreme Court's ruling in Dosch v. NLRC. The Court held in Dosch:
We cannot agree to Northwest's submission that petitioner was guilty of disobedience and insubordination which respondent Commission sustained. The only piece of evidence on which Northwest bases the charge of contumacious refusal is petitioner's letter dated August 28, 1975 to R.C. Jenkins wherein petitioner acknowledged receipt of the former's memorandum dated August 18, 1975, appreciated his promotion to Director of International Sales but at the same time regretted "that at this time for personal reasons and reasons of my family, I am unable to accept the transfer from the Philippines" and thereafter expressed his preference to remain in his position, saying: "I would, therefore, prefer to remain in my position of Manager-Philippines until such time that my services in that capacity are no longer required by Northwest Airlines." From this evidence, We cannot discern even the slightest hint of defiance, much less imply insubordination on the part of petitioner. 19

The phrase "[r]efusal to obey a transfer order cannot be considered insubordination where employee cited reason for said refusal, such as that of being away from the family" does not appear anywhere in the Dosch decision. Galanida's counsel lifted the erroneous phrase from one of the italicized lines in the syllabus of Doschfound in the Supreme Court Reports Annotated ("SCRA"). The syllabus of cases in official or unofficial reports of Supreme Court decisions or resolutions is not the work of the Court, nor does it state this Court's decision. The syllabus is simply the work of the reporter who gives

his understanding of the decision. The reporter writes the syllabus for the convenience of lawyers in reading the reports. A syllabus is not a part of the court's decision. 20 A counsel should not cite a syllabus in place of the carefully considered text in the decision of the Court. In the present case, Labor Arbiter Almirante and Atty. Durano began by quoting from Dosch, but substituted a portion of the decision with a headnote from the SCRA syllabus, which they even underscored. In short, they deliberately made the quote from the SCRA syllabus appear as the words of the Supreme Court. We admonish them for what is at the least patent carelessness, if not an outright attempt to mislead the parties and the courts taking cognizance of this case. Rule 10.02, Canon 10 of the Code of Professional Responsibility mandates that a lawyer shall not knowingly misquote or misrepresent the text of a decision for authority. It is the duty of all officers of the court to cite the rulings and decisions of the Supreme Court accurately. 21

Whether Galanida was dismissed for just cause


We accord great weight and even finality to the factual findings of the Court of Appeals, particularly when they affirm the findings of the NLRC or the lower courts. However, there are recognized exceptions to this rule. These exceptions are: (1) when the findings are grounded on speculation, surmise and conjecture; (2) when the inference made is manifestly mistaken, absurd or impossible; (3) when there is grave, abuse of discretion in the appreciation of facts; (4) when the factual findings of the trial and appellate courts are conflicting; (5) when the Court of Appeals, in making its findings, has gone beyond the issues of the case and such findings are contrary to the admissions of both appellant and appellee; (6) when the judgment of the appellate court is premised on a misapprehension of facts or when it has failed to consider certain relevant facts which, if properly considered, will justify a different conclusion; (7) when the findings of fact are conclusions without citation of specific evidence on which they are based; and (8) when the findings of fact of the Court of Appeals are premised on the absence of evidence but are contradicted by the evidence on record. 22 After a scrutiny of the records, we find that some of these exceptions obtain in the present case. The rule is that the transfer of an employee ordinarily lies within the ambit of the employer's prerogatives. 23 The employer exercises the prerogative to transfer an employee for valid reasons and according to the requirement of its business, provided the transfer does not result in demotion in rank or diminution of the employee's salary, benefits and other privileges. 24 In illegal dismissal cases, the employer has the burden of showing that the transfer is not unnecessary, inconvenient and prejudicial to the displaced employee. 25 The constant transfer of bank officers and personnel with accounting responsibilities from one branch to another is a standard practice of Allied Bank, which has more than a hundred branches throughout the country. 26 Allied Bank does this primarily for internal control. It also enables bank employees to gain the necessary experience for eventual promotion. The Bangko Sentral ng Pilipinas, in its Manual of Regulations for Banks and Other Financial Intermediaries, 27 requires the rotation of these personnel. The Manual directs that the "duties of personnel, handling cash, securities and bookkeeping records should be rotated" and that such rotation "should be irregular, unannounced and long enough to permit disclosure of any irregularities or manipulations." 28 Galanida was well aware of Allied Bank's policy of periodically transferring personnel to different branches. As the Court of Appeals found, assignment to the different branches of Allied Bank was a condition of Galanida's employment. Galanida consented to this condition when he signed the Notice of Personnel Action. 29 The evidence on record contradicts the charge that Allied Bank discriminated against Galanida and was in bad faith when it ordered his transfer. Allied Bank's letter of 13 June 1994 30 showed that at least 14 accounting officers and personnel from various branches, including Galanida, were transferred to other branches. Allied Bank did not single out Galanida. The same letter explained that Galanida was second in line for assignment

outside Cebu because he had been in Cebu for seven years already. The person first in line, Assistant Manager Roberto Isla, who had been in Cebu for more than ten years, had already transferred to a branch in Cagayan de Oro City. We note that none of the other transferees joined Galanida in his complaint or corroborated his allegations of widespread discrimination and favoritism. As regards Ms. Co, Galanida's letter of 16 June 1994 itself showed that her assignment to Cebu was not in any way related to Galanida's transfer. Ms. Co was supposed to replace a certain Larry Sabelino in the Tabunok branch. The employer has the prerogative, based on its assessment of the employees' qualifications and competence, to rotate them in the various areas of its business operations to ascertain where they will function with maximum benefit to the company. 31 Neither was Galanida's transfer in the nature of a demotion. Galanida did not present evidence showing that the transfer would diminish his salary, benefits or other privileges. Instead, Allied Bank's letter of 13 June 1994 assured Galanida that he would not suffer any reduction in rank or grade, and that the transfer would involve the same rank, duties and obligations. Mr. Olveda explained this further in the affidavit he submitted to the Labor Arbiter, thus:
19.There is no demotion in position/rank or diminution of complainant's salary, benefits and other privileges as the transfer/assignment of branch officers is premised on the role/functions that they will assume in the management and operations of the branch, as shown below: (a)The Branch Accountant, as controller of the branch is responsible for the proper discharge of the functions of the accounting section of the branch, review of documentation/proper accounting and control of transaction. As such, the accounting functions in the branch can be assumed by any of the following officers with the rank of: Senior Manager/Acctg.; Manager/Acctg.; Senior Asst. Manager/Acctg.; Asst. Manager/Acctg.; Accountant or Asst. Accountant. xxx xxx xxx 20.The transfer/assignment of branch officer from one branch, to another branch/office is lateral in nature and carries with it the same position/rank, salary, benefits and other privileges. The assignment/transfer is for the officer to assume the functions relative to his job and NOT the position/rank of the officer to be replaced.

There is also no basis for the finding that Allied Bank was guilty of unfair labor practice in dismissing Galanida. Unfair labor practices relate only to violations of "the constitutional right of workers and employees to self-organization" 32 and are limited to the acts enumerated in Article 248 of the Labor Code, none of which applies to the present case. There is no evidence that Galanida took part in forming a union, or even that a union existed in Allied Bank. This leaves the issue of whether Galanida could validly refuse the transfer orders on the ground of parental obligations, additional expenses, and the anguish he would suffer if assigned away from his family. The Court has ruled on this issue before. In the case of Homeowners Savings and Loan Association, Inc. v. NLRC, 33 we held:
The acceptability of the proposition that transfer made by an employer for an illicit or underhanded purpose i.e., to defeat an employee's right to self-organization, to rid himself of an undesirable worker, or to penalize an employee for union activities cannot be upheld is self-evident and cannot be gainsaid. The difficulty lies in the situation where no such illicit, improper or underhanded purpose can be ascribed to the employer, the objection to the transfer being grounded solely upon the personal inconvenience or hardship that will be caused to the employee by reason of the transfer. What then? This was the very same situation we faced in Phil. Telegraph and Telephone Corp. v. Laplana. In that case, the employee, Alicia Laplana, was a cashier at the Baguio City Branch of PT&T who was directed

to transfer to the company's branch office at Laoag City. In refusing the transfer, the employee averred that she had established Baguio City as her permanent residence and that such transfer will involve additional expenses on her part, plus the fact that an assignment to a far place will be a big sacrifice for her as she will be kept away from her family which might adversely affect her efficiency. In ruling for the employer, the Court upheld the transfer from one city to another within the country as valid as long as there is no bad faith on the part of the employer. We held then: "Certainly the Court cannot accept the proposition that when an employee opposes his employer's decision to transfer him to another work place, there being no bad faith or underhanded motives on the part of either party, it is the employee's wishes that should be made to prevail."

Galanida, through counsel, invokes the Court's ruling in Dosch v. NLRC. 34 Dosch, however, is not applicable to the present case. Helmut Dosch refused a transfer consequential to a promotion. We upheld the refusal because no law compels an employee to accept a promotion, and because the position Dosch was supposed to be promoted to did not even exist at that time. 35 This left as the only basis for the charge of insubordination a letter from Dosch in which the Court found "not even the slightest hint of defiance, much less . . . insubordination." 36 Moreover, the transfer of an employee to an overseas post, as in the Dosch case, cannot be likened to a transfer from one city to another within the country, 37 which is the situation in the present case. The distance from Cebu City to Bacolod City or from Cebu City to Tagbilaran City does not exceed the distance from Baguio City to Laoag City or from Baguio City to Manila, which the Court considered a reasonable distance in PT&T v. Laplana. 38 The refusal to obey a valid transfer order constitutes willful disobedience of a lawful order of an employer. 39 Employees may object to, negotiate and seek redress against employers for rules or orders that they regard as unjust or illegal. However, until and unless these rules or orders are declared illegal or improper by competent authority, the employees ignore or disobey them at their peril. 40 For Galanida's continued refusal to obey Allied Bank's transfer orders, we hold that the bank dismissed Galanida for just cause in accordance with Article 282(a) of the Labor Code. 41 Galanida is thus not entitled to reinstatement or to separation pay.

Whether Galanida's dismissal violated the requirement of notice and hearing


To be effective, a dismissal must comply with Section 2(d), Rule 1, Book VI of the Omnibus Rules Implementing the Labor Code ("Omnibus Rules"), which provides:
For termination of employment based on just causes as defined in Article 282 of the Labor Code: (i)A written notice served on the employee specifying the ground or grounds of termination, and giving said employee reasonable opportunity within which to explain his side. (ii)A hearing or conference during which the employee concerned, with the assistance of counsel if he so desires is given opportunity to respond to the charge, present his evidence, or rebut the evidence presented against him. (iii)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.

The first written notice was embodied in Allied Bank's letter of 13 June 1994. The first notice required Galanida to explain why no disciplinary action should be taken against him for his refusal to comply with the transfer orders. On the requirement of a hearing this Court has held that the essence of due process is simply an opportunity to be heard. 42 An actual hearing is not necessary. The exchange of several letters, in which Galanida's wife, a lawyer with the City Prosecutor's Office, assisted him, gave Galanida an opportunity to respond to the charges against him. The remaining issue is whether the Memo dated 8 September 1994 sent to Galanida constitutes the written notice of termination required by the Omnibus Rules. In finding that it did not, the Court of Appeals and the NLRC cited Allied Bank's rule on dismissals, quoted in the Memo, that, "Notice of termination shall be issued by the Investigation Committee subject to the confirmation of the President or his authorized representative." 43 The appellate court and NLRC held that Allied Bank did not send any notice of termination to Galanida. The Memo, with the heading "Transfer and Reassignment," was not the termination notice required by law. We do not agree. Even a cursory reading of the Memo will show that it unequivocally informed Galanida of Allied Bank's decision to dismiss him. The statement, "please be informed that the Bank has terminated your services effective September 1, 1994 and considered whatever benefit, if any, that you are entitled [to] as forfeited . . ." 44 is plainly worded and needs no interpretation. The Memo also discussed the findings of the Investigation Committee that served as grounds for Galanida's dismissal, The Memo referred to Galanida's "open defiance and refusal" to transfer first to the Bacolod City branch and then to the Tagbilaran City branch. The Memo also mentioned his continued refusal to report for work despite the denial of his application for additional vacation leave. 45 The Memo also refuted Galanida's charges of discrimination and demotion, and concluded that he had violated Article XII of the bank's Employee Discipline Policy and Procedure. The Memo, although captioned "Transfer and Reassignment," did not preclude it from being a notice of termination. The Court has held that the nature of an instrument is characterized not by the title given to it but by its body and contents. 46 Moreover, it appears that Galanida himself regarded the Memo as a notice of termination. We quote, from the Memorandum for Private Respondent-Appellee, as follows:
The proceedings may be capsulized as follows: 1.On March 13, 1994 47 Private Respondent-Appellee filed before the Region VII Arbitration Branch a Complaint for Constructive Dismissal. A copy of the Complaint is attached to the Petition as Annex "H"; xxx xxx xxx 5.On September 8, 1994, Petitioner-Appellant issued him a Letter of Termination. A copy of said letter is attached to the Petition as Annex "N"; 6.Private Respondent-Appellee filed an Amended/Supplemental Complaint wherein he alleged illegal dismissal. A copy of the Amended/Supplemental Complaint is attached to the Petition as Annex "O"; . . . 48 (Emphasis supplied)

The Memorandum for Private Respondent-Appellee refers to the Memo as a "Letter of Termination." Further, Galanida amended his complaint for constructive dismissal 49 to one for illegal dismissal 50 after he received the Memo. Clearly, Galanida had understood the Memo to mean that Allied Bank had terminated his services. The Memo complied with Allied Bank's internal rules which required the bank's President or his authorized representative to confirm the notice of termination. The bank's Vice-President for Personnel, as the head of

the department that handles the movement of personnel within Allied Bank, can certainly represent the bank president in cases involving the dismissal of employees. Nevertheless, we agree that the Memo suffered from certain errors. Although the Memo stated that Allied Bank terminated Galanida's services as of 1 September 1994, the Memo bore the date 8 September 1994. More importantly, Galanida only received a copy of the Memo on 5 October 1994, or more than a month after the supposed date of his dismissal. To be effective, a written notice of termination must be served on the employees. 51 Allied Bank could not terminate Galanida on 1 September 1994 because he had not received as of that date the notice of Allied Bank's decision to dismiss him. Galanida's dismissal could only take effect on 5 October 1994, upon his receipt of the Memo. For this reason, Galanida is entitled to backwages for the period from 1 September 1994 to 4 October 1994. Under the circumstances, we also find an award of P10,000 in nominal damages proper. Courts award nominal damages to recognize or vindicate the right of a person that another has violated. 52 The law entitles Galanida to receive timely notice of Allied Bank's decision to dismiss him. Allied Bank should have exercised more care in issuing the notice of termination. WHEREFORE, the Decision of 27 April 2000 of the Court of Appeals in CA-G.R. SP No. 51451 upholding the Decision of 18 September 1998 of the NLRC in NLRC Case No. V-000180-98 is AFFIRMED, with the following MODIFICATIONS: 1)The awards of separation pay, moral damages and exemplary damages are hereby deleted for lack of basis; 2)Reducing the award of backwages to cover only the period from 1 September 1994 to 4 October 1994; and 3)Awarding nominal damages to private respondent for P10,000. This case is REMANDED to the Labor Arbiter for the computation, within thirty (30) days from receipt of this Decision, of the backwages, inclusive of allowances and other benefits, due to Potenciano L. Galanida for the time his dismissal was ineffectual from 1 September 1994 until 4 October 1994. Labor Arbiter Dominador A. Almirante and Atty. Loreto M. Durano are ADMONISHED to be more careful in citing the decisions of the Supreme Court in the future. SO ORDERED.
ScTIAH

Davide, Jr., C .J ., Panganiban, Ynares-Santiago and Azcuna, JJ ., concur.

[G.R. No. 173774. January 30, 2012.] MANILA ELECTRIC COMPANY, petitioner, vs. MA. LUISA BELTRAN, respondent.

DECISION

DEL CASTILLO, J :
p

As the law regards workers with compassion, an employer's right to discipline them should be tempered with compassion as well. In line with this, the imposition of the supreme penalty of dismissal is justified only when there are sufficient grounds as supported by substantial evidence. This Petition for Review on Certiorari 1 assails the November 25, 2005 Decision 2 of the Court of Appeals (CA) in CA-G.R. SP No. 67960, which granted the petition filed therewith, reversed the May 30, 2001 Decision 3 of the National Labor Relations Commission (NLRC), and accordingly affirmed the July 16, 1999 Decision 4 of the Labor Arbiter ordering petitioner Manila Electric Company (MERALCO) to reinstate respondent Ma. Luisa Beltran (Beltran) to her former position but without payment of backwages. Likewise assailed is the CA Resolution 5 dated July 19, 2006 which denied the Motion for Reconsideration thereto.

Factual Antecedents
Beltran was employed by MERALCO on December 16, 1987. At the time material to this case, she was holding the position of Senior Branch Clerk at MERALCO's Pasig branch. While rendering overtime work on September 28, 1996, a Saturday, Beltran accepted P15,164.48 from Collection Route Supervisor Berlin Marcos (Marcos), which the latter received from customer Andy Chang (Chang). The cash payment was being made in lieu of a returned check earlier issued as payment for Chang's electric bill. Beltran was at first hesitant as it was not part of her regular duties to accept payments from customers but was later on persuaded by Marcos' persistence. Hence, Beltran received the payment and issued Auxiliary Receipt No. 87964 6 which she dated September 30, 1996, a Monday, instead of September 28, 1996. This was done to show that it was an accommodation, an accepted practice in the office. She thereafter placed the money and the original auxiliary receipt and other documents pertinent to the returned check underneath her other files inside the drawer of her table.
ScEaAD

Beltran, however, was only able to remit Chang's payment on January 13, 1997. Thus, in a Memorandum 7 dated January 16, 1997, she was placed under preventive suspension effective January 20, 1997 pending completion of an investigation. MERALCO considered as misappropriation or withholding of company funds her failure to immediately remit said payment in violation of its Code on Employee Discipline. Investigation thereafter ensued. 8 In her Sinumpaang Salaysay, 9 Beltran admitted receipt of Chang's payment of P15,164.48 on September 28, 1996. She also admitted having issued an Auxiliary Receipt dated September 30, 1996 and having remitted the amount only on January 13, 1997, after her immediate supervisor, Elenita L. Garcia (Garcia), called her attention about the payment and its non-remittance. Beltran nevertheless explained the circumstances which caused the delay of the turn-over of Chang's payment. She recounted that on the day following her receipt of the money, she had a huge fight with her husband which led to their separation; that on September 30, 1997, she reported at MERALCO's Taguig branch where she worked until 8:30 p.m.; and, that subsequent marital woes coupled with her worries for her ailing child distracted her into forgetting Chang's payment. Beltran claimed that after Garcia approached her regarding the unremitted payment of Chang, she immediately looked for the money in her drawer and right there and then handed it over to Garcia together with the other pertinent documents. Beltran denied having personally used the money. Garcia, the Administrative Supervisor of MERALCO's Pasig branch, on the other hand, testified that while doing an accounting of all outstanding returned checks sometime in December 1996, she noticed that Chang's returned check was missing. Upon further inquiry, she discovered that Chang had already redeemed the returned check after paying P15,164.48 to Beltran, who in turn issued an Auxiliary Receipt dated September 30, 1996. It was also discovered that the payment has not yet been remitted. This prompted her to inquire from Beltran on January 7, 1997 about the supposed payment and immediately ordered the remittance of the same. Beltran, however, failed to do so on that day and even on the next day when she reported for work. Beltran subsequently went on leave of absence on January 9 and 10, 1997. It was only on January 13, 1997 that the money with the pertinent documents were handed over. 10

In a memorandum 11 dated February 25, 1997, the investigator found Beltran guilty of misappropriating and withholding Chang's payment of P15,164.48 and recommended her dismissal from service thus:
For wil[l]fully, unlawfully and feloniously withholding and/or misappropriating for your personal purposes or benefit electric bill payment of a Meralco customer, you have thereby violated Section 7 par. (1) of the Company Code on Employee Discipline which proscribes "(m)isappropriating, or withholding, Company funds: penalized therein with dismissal from the service. Because of this act of fraud and dishonesty, you have wil[l]fully breached the trust and confidence reposed in you by your employer. xxx xxx xxx Accordingly, Management is constrained to dismiss you for cause from the service and employ of the Company, as you are hereby so dismissed effective 13 March 1997, with forfeiture of all rights and privileges. 12 (Emphasis supplied.)

By virtue thereof, Beltran was terminated effective March 13, 1997.

13

Beltran filed a complaint for illegal dismissal 14 against MERALCO. She argued that she had no intention to withhold company funds. Besides, it was not her customary duty to collect and remit payments from customers. She claimed good faith, believing that her acceptance of Chang's payment is considered goodwill in favor of both MERALCO and its customer. If at all, her only violation was a simple delay in remitting the payment, which caused no considerable harm to the company. Further, her nine years of unblemished service to the company should be taken into account such that the penalty of dismissal is not a commensurate penalty for the unintentional act committed.
cCSHET

MERALCO, on the other hand, maintained that under company policy, Beltran had the duty to remit payment for electric bills by any customer on the day the same was received. It opined that if indeed the money was kept intact inside the drawer and was not put to personal use, Beltran could have easily turned over the same when Garcia instructed her to do so on January 7, 1997. However, Beltran failed to remit the money on said date and even on the following day, January 8, when she reported for work. Worse, in the two succeeding days, she went on leave. Thus, there was a clear sign of misappropriation of company funds, considered a serious misconduct and punishable by dismissal from the service. Further, Beltran's reason for her failure to perform such obligation on account of family problems deserves scant consideration. MERALCO insisted that Beltran's act renders her unworthy of the trust and confidence demanded of her position.

Ruling of the Labor Arbiter


In a Decision 15 dated June 16, 1999, the Labor Arbiter regarded the penalty of dismissal as not commensurate to the degree of infraction committed as there was no adequate proof of misappropriation on the part of Beltran. If there was delay in Beltran's remittance of Chang's payment, it was unintentional and same cannot serve as sufficient basis to conclude that there was misappropriation of company funds. In fact, Beltran did not even attempt to deny possession of, or refuse to hand in, the money. The Labor Arbiter thus gave compassionate consideration for the neglect to remit the money promptly, stating that it is excusable for Beltran to commit lapses in her work due to serious family difficulties. While the Labor Arbiter commiserated with Beltran's circumstances and took into account her long and untainted service, he nonetheless imposed disciplinary action in the form of forfeiture of salary for her neglect in remitting the funds at once. The dispositive portion of his Decision reads as follows:
IN THE LIGHT OF THE FOREGOING, the respondent is hereby ordered to reinstate the complainant to her former position without backwages. The forfeiture of backwages should be an equitable penalty for the delay in the remittance of company funds. SO ORDERED.
16

Ruling of the National Labor Relations Commission


Upon appeal, the NLRC reversed the Labor Arbiter's Decision and dismissed Beltran's complaint against MERALCO in its Decision 17 dated May 30, 2001. It found that Beltran withheld company funds by failing to remit it for almost four months. It disregarded Beltran's assertion of family problems as the same cannot be used as an excuse for committing a serious misconduct in violation of the trust reposed on her as a Senior Branch Clerk. The NLRC was convinced that Beltran used the money for her personal needs since her act of taking a leave of absence right after her confrontation with Garcia suggested that she needed time to produce it. The NLRC thus ruled that MERALCO validly dismissed Beltran from the service in the exercise of its inherent right to discipline its employees. In her Motion for Reconsideration, 18 Beltran attributed grave abuse of discretion on the part of the NLRC in basing its conclusions on mere inferences and presumptions. Beltran argued that she could not be guilty of withholding Chang's payment, much more, misappropriating it. She alleged that Garcia did not order her to remit the money on January 7, 1997 or on the following day. Further, records reveal that she was on leave from January 9 to 10 to attend to her child who was suffering from asthma. And since January 11 and 12 are Saturday and Sunday, she deemed it appropriate to make the remittance on the following Monday, January 13, 1997. Garcia, however, refused to accept the money, saying that she already committed withholding of company funds.
IEaATD

The NLRC denied Beltran's Motion for Reconsideration.

19

Ruling of the Court of Appeals


When Beltran brought the case to the CA via a Petition for Certiorari, 20 the NLRC's ruling was reversed. The CA instead agreed with the findings of the Labor Arbiter that there were no serious grounds to warrant Beltran's dismissal. The CA held that the penalty of dismissal is harsh considering the infraction committed and Beltran's nine years of unblemished service with MERALCO. It held that Beltran's mere failure to remit the payment was unintentional and not attended by any ill motive and that her excuse for the inadvertence was reasonable. As such, the CA affirmed the ruling of the Labor Arbiter ordering MERALCO to reinstate Beltran to her former position but with the forfeiture of her salary as an equitable penalty for her negligence. Thus, in its Decision 21 dated November 25, 2005, the petition was resolved as follows:
WHEREFORE, premises considered, the instant petition is hereby GRANTED. The . . . Decision dated May 30, 2001 and the Resolution dated August 22, 2001 of the National Labor Relations Commission are hereby REVERSED. ACCORDINGLY, the Decision of the Labor Arbiter dated June 16, 1999, is herebyAFFIRMED. SO ORDERED.
22

In a Resolution 23 dated July 19, 2006, MERALCO's Motion for Reconsideration was denied by the CA. Hence, MERALCO filed this present Petition for Review onCertiorari, raising the lone issue of whether
Issue THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN ORDERING THE REINSTATEMENT OF [BELTRAN] DESPITE THE UNDISPUTED FINDING THAT SHE IS GUILTY OF WITHHOLDING . . . COMPANY FUNDS. 24

Our Ruling MERALCO insists that there was convincing basis to dismiss Beltran from employment. While there was no concrete proof of misappropriation, the fact that there was withholding of company funds remains undisputed. This act of negligence by Beltran in the performance of her duties has resulted to the loss of trust and

confidence reposed on her, notwithstanding her self-serving allegations of marital woes and family difficulties, which were not even corroborated by any clear evidence. We do not agree. On the contrary, we support the CA's finding that there are no sufficient grounds to warrant Beltran's dismissal. For loss of trust and confidence to be a valid ground for dismissal, it must be based on a willful breach of trust and founded on clearly established facts. A breach is willful if it is done intentionally, knowingly and purposely, without justifiable excuse, as distinguished from an act done carelessly, thoughtlessly, heedlessly or inadvertently. In addition, loss of trust and confidence must rest on substantial grounds and not on the employer's arbitrariness, whims, caprices or suspicion. 25
IASCTD

In the case at bench, Beltran attributed her delay in turning over Chang's payment to her difficult family situation as she and her husband were having marital problems and her child was suffering from an illness. Admittedly, she was reminded of Chang's payment by her supervisor on January 7, 1997 but denied having been ordered to remit the money on that day. She then reasoned that her continued delay was caused by an inevitable need to take a leave of absence for her to attend to the needs of her child who was suffering from asthma. It should be emphasized at this point that the burden of proving the legality of an employee's dismissal lies with the employer. 26 "Unsubstantiated suspicions, accusations, and conclusions of employers do not provide legal justification for dismissing employees." 27 "[M]ere conjectures cannot work to deprive employees of their means of livelihood." 28 To begin with, MERALCO cannot claim or conclude that Beltran misappropriated the money based on mere suspicion. The NLRC thus erred in concluding that Beltran made use of the money from the mere fact that she took a leave of absence after having been reminded of the unremitted funds. And even if Beltran delayed handing over the funds to the company, MERALCO still has the burden of proof to show clearly that such act of negligence is sufficient to justify termination from employment. Moreover, we find that Beltran's delay does not clearly and convincingly establish a willful breach on her part, that is, which is done "intentionally, knowingly and purposely, without any justifiable excuse." True, the reasons Beltran proffered for her delay in remitting the cash payment are mere allegations without any concrete proof. Nonetheless, we emphasize that as the employer, the burden still lies on MERALCO to provide clear and convincing facts upon which the alleged loss of confidence is to be made to rest. Undoubtedly, Beltran was remiss in her duties for her failure to immediately turn over Chang's payment to the company. Such negligence, however, is not sufficient to warrant separation from employment. To justify removal from service, the negligence should be gross and habitual. 29 "Gross negligence . . . is the want of even slight care, acting or omitting to act in a situation where there is duty to act, not inadvertently but willfully and intentionally, with a conscious indifference to consequences insofar as other persons may be affected." 30 Habitual neglect, on the other hand, connotes repeated failure to perform one's duties for a period of time, depending upon the circumstances. 31 No concrete evidence was presented by MERALCO to show that Beltran's delay in remitting the funds was done intentionally. Neither was it shown that same is willful, unlawful and felonious contrary to MERALCO's finding as stated in the letter of termination it sent to Beltran.32 Surely, Beltran's single and isolated act of negligence cannot justify her dismissal from service. Moreover, Beltran's simple negligence did not result in any loss. From the time she received the payment on September 28, 1996 until January 7, 1997 when she was apprised by her supervisor about Chang's payment, no harm or damage to the company or to its customers attributable to Beltran's negligence was alleged by MERALCO. Also, from the time she was apprised of the non-remittance by her superior on January 7, 1997, until the turn-over of the amount on January 13, 1997, no such harm or damage was ever claimed by MERALCO.
cHaDIA

Under the circumstances, MERALCO's sanction of dismissal will not be commensurate to Beltran's inadvertence not only because there was no clear showing of bad faith and malice but also in consideration of her untainted

record of long and dedicated service to MERALCO. Company v. Berbano, Jr., 34 we held that:

33

In the similar case of Philippine Long Distance Telephone

The magnitude of the infraction committed by an employee must be weighed and equated with the penalty prescribed and must be commensurate thereto, in view of the gravity of the penalty of dismissal or termination from the service. The employer should bear in mind that in termination cases, what is at stake is not simply the employee's job or position but [her] very livelihood.

Where a penalty less punitive would suffice, whatever missteps may be committed by an employee ought not to be visited with a consequence so severe such as dismissal from employment. 35 Hence, we find no reversible error or any grave abuse of discretion on the part of the CA in ordering Beltran's reinstatement without backwages. The forfeiture of her salary is an equitable punishment for the simple negligence committed. WHEREFORE, the petition is DENIED. The Court of Appeals Decision dated November 25, 2005 and Resolution dated July 19, 2006 in CA-G.R. SP No. 67960 areAFFIRMED. SO ORDERED.

Corona, C.J., Leonardo-de Castro, Bersamin and Villarama, Jr., JJ., concur.

[G.R. No. 172223. February 6, 2012.] CANADIAN OPPORTUNITIES UNLIMITED, INC., petitioner, vs. BART Q. DALANGIN, JR., respondent.

DECISION

BRION, J :
p

For resolution is the petition for review on certiorari 1 to nullify the decision dated December 19, 2005 2 and the resolution dated March 30, 2006 3 of the Court of Appeals (CA) rendered in CA-G.R. SP No. 84907. The Antecedents On November 20, 2001, respondent Bart Q. Dalangin, Jr. filed a complaint for illegal dismissal, with prayer for reinstatement and backwages, as well as damages (moral and exemplary) and attorney's fees, against petitioner Canadian Opportunities Unlimited, Inc. (company). The company, based in Pasong Tamo, Makati City, provides assistance and related services to applicants for permanent residence in Canada. Dalangin was hired by the company only in the previous month, or in October 2001, as Immigration and Legal Manager, with a monthly salary of P15,000.00. He was placed on probation for six months. He was to report directly to the Chief Operations Officer, Annie Llamanzares Abad. His tasks involved principally the review of the clients' applications for immigration to Canada to ensure that they are in accordance with Canadian and Philippine laws.

Through a memorandum 4 dated October 27, 2001, signed by Abad, the company terminated Dalangin's employment, declaring him "unfit" and "unqualified" to continue as Immigration and Legal Manager, for the following reasons:
AICTcE

a)Obstinacy and utter disregard of company policies. Propensity to take prolonged and extended lunch breaks, shows no interest in familiarizing oneself with the policies and objectives. b)Lack of concern for the company's interest despite having just been employed in the company. (Declined to attend company sponsored activities, seminars intended to familiarize company employees with Management objectives and enhancement of company interest and objectives.) c)Showed lack of enthusiasm toward work. d)Showed lack of interest in fostering relationship with his co-employees.
5

The Compulsory Arbitration Proceedings

Dalangin's submission
Dalangin alleged, in his Position Paper, 6 that the company issued a memorandum requiring its employees to attend a "Values Formation Seminar" scheduled for October 27, 2001 (a Saturday) at 2:00 p.m. onwards. He inquired from Abad about the subject and purpose of the seminar and when he learned that it bore no relation to his duties, he told Abad that he would not attend the seminar. He said that he would have to leave at 2:00 p.m. in order to be with his family in the province. Dalangin claimed that Abad insisted that he attend the seminar so that the other employees would also attend. He replied that he should not be treated similarly with the other employees as there are marked differences between their respective positions and duties. Nonetheless, he signified his willingness to attend the seminar, but requested Abad to have it conducted within office hours to enable everybody to attend. Dalangin further alleged that Abad refused his request and stressed that all company employees may be required to stay beyond 2:00 p.m. on Saturdays which she considered still part of office hours. Under his employment contract, 7 his work schedule was from 9:00 a.m. to 6:00 p.m., Monday to Friday, and 9:00 a.m. to 2:00 p.m. on Saturdays. Dalangin argued that it has been an established company practice that on Saturdays, office hours end at 2:00 p.m.; and that an employee cannot be made to stay in the office beyond office hours, except under circumstances provided in Article 89 of the Labor Code.
DcHSEa

On October 26, 2001, Dalangin claimed that Abad issued a memorandum 8 requiring him to explain why he could not attend the seminar scheduled for October 27, 2001 and the other forthcoming seminars. The following day, October 27, 2001, Abad informed him that Mr. Yadi N. Sichani, the company's Managing Director, wanted to meet with him regarding the matter. He alleged that at the meeting, he was devastated to hear from Sichani that his services were being terminated because Sichani could not keep in his company "people who are hard-headed and who refuse to follow orders from management." 9 Sichani also told him that since he was a probationary employee, his employment could be terminated at any time and at will. Sichani refused to accept his letter-reply to the company memorandum dated October 26, 2001 and instead told him to just hand it over to Abad.

The company's defense


Through their position paper, 10 the company and its principal officers alleged that at the time of Dalangin's engagement, he was advised that he was under probation for six months and his employment could be terminated should he fail to meet the standards to qualify him as a regular employee. He was informed that he would be evaluated on the basis of the results of his work; on his attitude towards the company, his work and his co-employees, as spelled out in his job description;11 and on the basis of Abad's affidavit. 12

They further alleged that during his brief employment in the company, Dalangin showed lack of enthusiasm towards his work and was indifferent towards his co-employees and the company clients. Dalangin refused to comply with the company's policies and procedures, routinely taking long lunch breaks, exceeding the one hour allotted to employees, and leaving the company premises without informing his immediate superior, only to call the office later and say that he would be unable to return because he had some personal matters to attend to. He also showed lack of interpersonal skills and initiative which he manifested when the immigration application of a company client, Mrs. Jennifer Tecson, was denied by the Canadian Embassy. Dalangin failed to provide counsel to Tecson; he also should have found a way to appeal her denied application, but he did not. As it turned out, the explanation he gave to Tecson led her to believe that the company did not handle her application well. Dalangin's lack of interest in the company was further manifested when he refused to attend company-sponsored seminars designed to acquaint or update the employees with the company's policies and objectives. The company argued that since Dalangin failed to qualify for the position of Immigration and Legal Manager, the company decided to terminate his services, after duly notifying him of the company's decision and the reason for his separation.
AHCETa

The Compulsory Arbitration Rulings In his decision dated April 23, 2003, 13 Labor Arbiter Eduardo G. Magno declared Dalangin's dismissal illegal, and awarded him backwages of P75,000.00, moral damages of P50,000.00 and exemplary damages of P50,000.00, plus 10% attorney's fees. The labor arbiter found that the charges against Dalangin, which led to his dismissal, were not established by clear and substantial proof. On appeal by the company, the National Labor Relations Commission (NLRC) rendered a decision on March 26, 2004 14 granting the appeal, thereby reversing the labor arbiter's ruling. It found Dalangin's dismissal to be a valid exercise of the company's management prerogative because Dalangin failed to meet the standards for regular employment. Dalangin moved for reconsideration, but the NLRC denied the motion, prompting him to go to the CA on a petition for certiorari under Rule 65 of the Rules of Court. The CA Decision In its now assailed decision, 15 the CA held that the NLRC erred when it ruled that Dalangin was not illegally dismissed. As the labor arbiter did, the CA found that the company failed to support, with substantial evidence, its claim that Dalangin failed to meet the standards to qualify as a regular employee. Citing a ruling of the Court in an earlier case, 16 the CA pointed out that the company did not allow Dalangin to prove that he possessed the qualifications to meet the reasonable standards for his regular employment; instead, it dismissed Dalangin peremptorily from the service. It opined that it was quite improbable that the company could fully determine Dalangin's performance barely one month into his employment. 17 The CA denied the company's subsequent motion for reconsideration in its resolution of March 30, 2006. 18 Hence, this appeal. The Company's Case Through its submissions the Petition, 19 the Reply 20 and the Memorandum 21 the company seeks a reversal of the CA rulings, raising the following issues: (1) whether the requirements of notice and hearing in employee dismissals are applicable to Dalangin's case; and (2) whether Dalangin is entitled to moral and exemplary damages, and attorney's fees. On the first issue, the company argues that the notice and hearing requirements are to be observed only in termination of employment based on just causes as defined in Article 282 of the Labor Code. Dalangin's

dismissal, it maintains, was not based on a just cause under Article 282, but was due to his failure to meet the company's standards for regular employment. It contends that under the Labor Code's Implementing Rules and Regulations, "[i]f the termination is brought about . . . by failure of an employee to meet the standards of

the employer in the case of probationary employment, it shall be sufficient that a written notice is served the employee within a reasonable time from the effective date of termination." 22 It points out that it properly

observed the notice requirement when it notified Dalangin of his dismissal on October 27, 2001, 23 after it asked him to explain (memorandum of October 26, 2001) why he could not attend the seminar scheduled for October 27, 2001; Dalangin failed to submit his explanation. It posits that contrary to the CA's conclusion, the company's finding that Dalangin failed to meet its standards for regular employment was supported by substantial evidence.
aSIHcT

With respect to the second issue, the company submits that Dalangin is not entitled to moral and exemplary damages, and attorney's fees. It maintains that Dalangin failed to present convincing evidence establishing bad faith or ill-motive on its part. It insists that it dismissed Dalangin in good faith with the belief that he would not contribute any good to the company, as manifested by his behavior towards his work and coemployees. The Case for Dalangin Through his Comment 24 and Memorandum, 25 Dalangin asks the Court to deny the petition. He argues that (1) probationary employees, under existing laws and jurisprudence, are entitled to notice and hearing prior to the termination of their employment; and (2) he is entitled to moral and exemplary damages, and attorney's fees. Dalangin disputes the company's submission that under the Labor Code's implementing rules, only a written notice is required for the dismissal of probationary employees. He argues that the rules cited by the company clearly mandate the employer to (1) serve the employee a written notice and (2) within a reasonable time before effecting the dismissal. He stresses that for the dismissal to be valid, these requirements must go hand in hand. He explains that in the present case, the company did not observe the above two requirements as he was dismissed the day after he was asked, by way of a memorandum dated October 26, 2001, 26 to explain within twenty-four hours why he could not attend the October 27, 2001 seminar. He adds that on the assumption that the termination letter dated October 27, 2001 refers to the written notice contemplated under the rules, still the company did not observe the second requirement of providing him a reasonable time before he was dismissed. He posits that the company disregarded the security of tenure guarantee under the Constitution which makes no distinction between regular and probationary employees. On the company's claim that he failed to perform in accordance with its standards, Dalangin argues that a perusal of the "grounds" in support of his dismissal reveals that none of the charges leveled against him is supported by concrete and tangible evidence. He maintains that the company miserably failed to cite a single company policy which he allegedly violated and defied. He refutes the company's claim that his job description and his employment contract apprise him of the company policy that he is to observe for the duration of his employment. He, thus, maintains that he had not been previously informed of the company standards he was supposed to satisfy. He stresses that the CA did not err in holding that the company's general averments regarding his failure to meet its standards for regular employment were not corroborated by any other evidence and, therefore, are insufficient to justify his dismissal.
HEcSDa

Dalangin insists that he is entitled to backwages, moral and exemplary damages, as well as attorney's fees, claiming that his dismissal was unjust, oppressive, tainted with bad faith, and contrary to existing morals, good customs and public policy. There was bad faith, he argues, because he was dismissed without the requisite notice and hearing required under the law; and merely on the basis of the company's bare, sweeping and general allegations that he is difficult to deal with and that he might cause problems to the company's future

business operations. He is entitled to attorney's fees, he submits, because he was forced to litigate and vindicate his rights. He bewails what he considers as "a pre-conceived plan and determined design" 27 on the part of Sichani and Abad to immediately terminate his employment. Elaborating, he points out that the company, through Abad, prepared two memoranda, both dated October 26, 2001, one is the memo to him requiring his written explanation 28 and the other, addressed to Sichani, recommending his dismissal. 29 He was surprised that Sichani did not bother to ask Abad why she gave him two conflicting memos on the same day; neither did Sichani or Abad investigate the surrounding circumstances on the matter nor did they give him the opportunity to explain his side. The Court's Ruling As a rule, the Court is not a trier of facts, the resolution of factual issues being the function of lower courts whose findings are received with respect and are binding on the Court subject to certain exceptions. 30 A recognized exception to the rule is the circumstance in which there are conflicting findings of fact by the CA, on the one hand, and the trial court or government agency concerned, on the other, as in the present case. The factual findings of the NLRC on the dispute between Dalangin and the company are at variance with those of the CA, thus necessitating our review of the case, especially the evidence on record. 31 We now resolve the core issue of whether Dalangin, a probationary employee, was validly dismissed. In International Catholic Migration Commission v. NLRC, 32 the Court explained that a probationary employee, as understood under Article 281 of the Labor Code, is one who is on trial by an employer, during which, the latter determines whether or not he is qualified for permanent employment. A probationary appointment gives the employer an opportunity to observe the fitness of a probationer while at work, and to ascertain whether he would be a proper and efficient employee.
DHacTC

Dalangin was barely a month on the job when the company terminated his employment. He was found wanting in qualities that would make him a "proper and efficient" employee or, as the company put it, he was unfit and unqualified to continue as its Immigration and Legal Manager. Dalangin's dismissal was viewed differently by the NLRC and the CA. The NLRC upheld the dismissal as it was, it declared, in the exercise of the company's management prerogative. On the other hand, the CA found that the dismissal was not supported by substantial evidence and that the company did not allow Dalangin to prove that he had the qualifications to meet the company's standards for his regular employment. The CA did not believe that the company could fully assess Dalangin's performance within a month. It viewed Dalangin's dismissal as arbitrary, considering that the company had very little time to determine his fitness for the job. We disagree. The essence of a probationary period of employment fundamentally lies in the purpose or objective of both the employer and the employee during the period. While the employer observes the fitness, propriety and efficiency of a probationer to ascertain whether he is qualified for permanent employment, the latter seeks to prove to the former that he has the qualifications to meet the reasonable standards for permanent employment. 33
IDTHcA

The "trial period" or the length of time the probationary employee remains on probation depends on the parties' agreement, but it shall not exceed six (6) months under Article 281 of the Labor Code, unless it is covered by an apprenticeship agreement stipulating a longer period. Article 281 provides:

Probationary employment. Probationary employment shall not exceed six (6) months from the date the employee started working, unless it is covered by an apprenticeship agreement stipulating a longer period. The services of an employee who has been engaged on a probationary basis may be terminated for a just cause or when he fails to qualify as a regular employee in accordance with reasonable standards made known by the employer to the employee at the time of his engagement. An employee who is allowed to work after a probationary period shall be considered a regular employee.

As the Court explained in International Catholic Migration Commission, "the word 'probationary,' as used to describe the period of employment, implies the purpose of the term or period, but not its length." 34 Thus, the fact that Dalangin was separated from the service after only about four weeks does not necessarily mean that his separation from the service is without basis. Contrary to the CA's conclusions, we find substantial evidence indicating that the company was justified in terminating Dalangin's employment, however brief it had been. Time and again, we have emphasized that substantial evidence is such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. 35 Dalangin overlooks the fact, wittingly or unwittingly, that he offered glimpses of his own behavior and actuations during his four-week stay with the company; he betrayed his negative attitude and regard for the company, his co-employees and his work. Dalangin admitted in compulsory arbitration that the proximate cause for his dismissal was his refusal to attend the company's "Values Formation Seminar" scheduled for October 27, 2001, a Saturday. He refused to attend the seminar after he learned that it had no relation to his duties, as he claimed, and that he had to leave at 2:00 p.m. because he wanted to be with his family in the province. When Abad insisted that he attend the seminar to encourage his co-employees to attend, he stood pat on not attending, arguing that marked differences exist between their positions and duties, and insinuating that he did not want to join the other employees. He also questioned the scheduled 2:00 p.m. seminars on Saturdays as they were not supposed to be doing a company activity beyond 2:00 p.m. He considers 2:00 p.m. as the close of working hours on Saturdays; thus, holding them beyond 2:00 p.m. would be in violation of the law.
CHTcSE

The "Values Formation Seminar" incident is an eye-opener on the kind of person and employee Dalangin was. His refusal to attend the seminar brings into focus and validates what was wrong with him, as Abad narrated in her affidavit 36 and as reflected in the termination of employment memorandum. 37 It highlights his lack of interest in familiarizing himself with the company's objectives and policies. Significantly, the seminar involved acquainting and updating the employees with the company's policies and objectives. Had he attended the seminar, Dalangin could have broadened his awareness of the company's policies, in addition to Abad's briefing him about the company's policies on punctuality and attendance, and the procedures to be followed in handling the clients' applications. No wonder the company charged him with obstinacy. The incident also reveals Dalangin's lack of interest in establishing good working relationship with his coemployees, especially the rank and file; he did not want to join them because of his view that the seminar was not relevant to his position and duties. It also betrays an arrogant and condescending attitude on his part towards his co-employees, and a lack of support for the company objective that company managers be examples to the rank and file employees. Additionally, very early in his employment, Dalangin exhibited negative working habits, particularly with respect to the one hour lunch break policy of the company and the observance of the company's working hours. Thus, Abad stated that Dalangin would take prolonged lunch breaks or would go out of the office without leave of the company only to call the personnel manager later to inform the latter that he would be unable to return as he had to attend to personal matters. Without expressly countering or denying Abad's statement, Dalangin dismissed the charge for the company's failure to produce his daily time record. 38

The same thing is true with Dalangin's handling of Tecson's application for immigration to Canada, especially his failure to find ways to appeal the denial of Tecson's application, as Abad stated in her affidavit. Again, without expressly denying Abad's statement or explaining exactly what he did with Tecson's application, Dalangin brushes aside Abad's insinuation that he was not doing his job well, with the ready argument that the company did not even bother to present Tecson's testimony. In the face of Abad's direct statements, as well as those of his co-employees, it is puzzling that Dalangin chose to be silent about the charges, other than saying that the company could not cite any policy he violated. All along, he had been complaining that he was not able to explain his side, yet from the labor arbiter's level, all the way to this Court, he offered no satisfactory explanation of the charges. In this light, coupled with Dalangin's adamant refusal to attend the company's "Values Formation Seminar" and a similar program scheduled earlier, we find credence in the company's submission that Dalangin was unfit to continue as its Immigration and Legal Manager. As we stressed earlier, we are convinced that the company had seen enough from Dalangin's actuations, behavior and deportment during a four-week period to realize that Dalangin would be a liability rather than an asset to its operations.
caAICE

We, therefore, disagree with the CA that the company could not have fully determined Dalangin's performance barely one month into his employment. As we said inInternational Catholic Migration Commission, the probationary term or period denotes its purpose but not its length. To our mind, four weeks was enough for the company to assess Dalangin's fitness for the job and he was found wanting. In separating Dalangin from the service before the situation got worse, we find the company not liable for illegal dismissal.

The procedural due process issue


Section 2, Rule I, Book VI of the Labor Code's Implementing Rules and Regulations provides:
If the termination is brought about by the completion of a contract or phase thereof, or by failure of an employee to meet the standards of the employer in the case of probationary employment, it shall be sufficient that a written notice is served the employee within a reasonable time from the effective date of termination.

The company contends that it complied with the above rule when it asked Dalangin, through Abad's Memorandum dated October 26, 2001, 39 to explain why he could not attend the seminar scheduled for October 27, 2001. When he failed to submit his explanation, the company, again through Abad, served him a notice the following day, October 27, 2001, terminating his employment. Dalangin takes strong exception to the company's submission. He insists that the company failed to comply with the rules as he was not afforded a reasonable time to defend himself before he was dismissed. The records support Dalangin's contention. The notice served on him did not give him a reasonable time, from the effective date of his separation, as required by the rules. He was dismissed on the very day the notice was given to him, or, on October 27, 2001. Although we cannot invalidate his dismissal in light of the valid cause for his separation, the company's non-compliance with the notice requirement entitles Dalangin to indemnity, in the form of nominal damages in an amount subject to our discretion. 40 Under the circumstances, we consider appropriate an award of nominal damages of P10,000.00 to Dalangin.

Damages and attorney's fees


Finally, given the valid reason for Dalangin's dismissal, the claim for moral and exemplary damages, as well as attorney's fees, must necessarily fail. WHEREFORE, premises considered, the petition is hereby GRANTED. The assailed decision and resolution of the Court of Appeals are hereby SET ASIDE. The complaint is DISMISSED for lack of merit.

Petitioner Canadian Opportunities Unlimited, Inc. is DIRECTED to pay respondent Bart Q. Dalangin, Jr. nominal damages in the amount of P10,000.00.
ASHECD

Costs against the respondent. SO ORDERED.

Carpio, Perez, Sereno and Reyes, JJ., concur.

[G.R. No. 185829. April 25, 2012.] ARMANDO ALILING, petitioner, vs. JOSE B. FELICIANO, MANUEL F. SAN MATEO III, JOSEPH R. LARIOSA, and WIDE WIDE WORLD EXPRESS CORPORATION, respondents.

DECISION

VELASCO, JR., J :
p

The Case This Petition for Review on Certiorari under Rule 45 assails and seeks to set aside the July 3, 2008 Decision 1 and December 15, 2008 Resolution 2 of the Court of Appeals (CA), in CA-G.R. SP No. 101309, entitled Armando Aliling v. National Labor Relations Commission, Wide Wide World Express Corporation, Jose B. Feliciano, Manuel F. San Mateo III and Joseph R. Lariosa. The assailed issuances modified the Resolutions dated May 31, 2007 3 and August 31, 2007 4 rendered by the National Labor Relations Commission (NLRC) in NLRC NCR Case No. 00-10-11166-2004, affirming the Decision dated April 25, 2006 5 of the Labor Arbiter. The Facts Via a letter dated June 2, 2004, 6 respondent Wide Wide World Express Corporation (WWWEC) offered to employ petitioner Armando Aliling (Aliling) as "Account Executive (Seafreight Sales)," with the following compensation package: a monthly salary of PhP13,000, transportation allowance of PhP3,000, clothing allowance of PhP800, cost of living allowance of PhP500, each payable on a per month basis and a 14th month pay depending on the profitability and availability of financial resources of the company. The offer came with a six (6)-month probation period condition with this express caveat: "Performance during [sic] probationary

period shall be made as basis for confirmation to Regular or Permanent Status."


On June 11, 2004, Aliling and WWWEC inked an Employment Contract others:
7

under the following terms, among

Conversion to regular status shall be determined on the basis of work performance; and Employment services may, at any time, be terminated for just cause or in accordance with the standards defined at the time of engagement. 8 Training then started. However, instead of a Seafreight Sale assignment, WWWEC asked Aliling to handle Ground Express (GX), a new company product launched on June 18, 2004 involving domestic cargo forwarding

service for Luzon. Marketing this product and finding daily contracts for it formed the core of Aliling's new assignment. Barely a month after, Manuel F. San Mateo III (San Mateo), WWWEC Sales and Marketing Director, emailed Aliling 9 to express dissatisfaction with the latter's performance, thus:
Armand, My expectations is [sic] that GX Shuttles should be 80% full by the 3rd week (August 5) after launch (July 15). Pls. make that happen. It has been more than a month since you came in. I am expecting sales to be pumping in by now. Thanks. Nonong

Thereafter, in a letter of September 25, 2004, 10 Joseph R. Lariosa (Lariosa), Human Resources Manager of WWWEC, asked Aliling to report to the Human Resources Department to explain his absence taken without leave from September 20, 2004. Aliling responded two days later. He denied being absent on the days in question, attaching to his replyletter 11 a copy of his timesheet 12 which showed that he worked from September 20 to 24, 2004. Aliling's explanation came with a query regarding the withholding of his salary corresponding to September 11 to 25, 2004. In a separate letter dated September 27, 2004, 13 Aliling wrote San Mateo stating: "Pursuant to your instruction on September 20, 2004, I hereby tender my resignation effective October 15, 2004." While WWWEC took no action on his tender, Aliling nonetheless demanded reinstatement and a written apology, claiming in a subsequent letter dated October 1, 2004 14 to management that San Mateo had forced him to resign. Lariosa's response-letter of October 1, 2004, 15 informed Aliling that his case was still in the process of being evaluated. On October 6, 2004, 16 Lariosa again wrote, this time to advise Aliling of the termination of his services effective as of that date owing to his "non-satisfactory performance" during his probationary period. Records show that Aliling, for the period indicated, was paid his outstanding salary which consisted of:
PhP 4,988.18 1,987.28 PhP 6,975.46 ======== Total (salary for the September 25, 2004 payroll) (salary for 4 days in October 2004)

Earlier, however, or on October 4, 2004, Aliling filed a Complaint 17 for illegal dismissal due to forced resignation, nonpayment of salaries as well as damages with the NLRC against WWWEC. Appended to the complaint was Aliling's Affidavit dated November 12, 2004, 18 in which he stated: "5. At the time of my

engagement, respondents did not make known to me the standards under which I will qualify as a regular employee."
Refuting Aliling's basic posture, WWWEC stated in its Position Paper dated November 22, 2004 19 that, in addition to the letter-offer and employment contract adverted to, WWWEC and Aliling have signed a letter of appointment 20 on June 11, 2004 containing the following terms of engagement:

Additionally, upon the effectivity of your probation, you and your immediate superior are required to jointly define your objectives compared with the job requirements of the position. Based on the pre-agreed objectives, your performance shall be reviewed on the 3rd month to assess your competence and work attitude. The 5th month Performance Appraisal shall be the basis in elevating or confirming your employment status from Probationary to Regular . Failure to meet the job requirements during the probation stage means that your services may be terminated without prior notice and without recourse to separation pay.

WWWEC also attached to its Position Paper a memo dated September 20, 2004 21 in which San Mateo asked Aliling to explain why he should not be terminated for failure to meet the expected job performance, considering that the load factor for the GX Shuttles for the period July to September was only 0.18% as opposed to the allegedly agreed upon load of 80% targeted for August 5, 2004. According to WWWEC, Aliling, instead of explaining himself, simply submitted a resignation letter. In a Reply-Affidavit dated December 13, 2004, September 20, 2004 letter.
22

Aliling denied having received a copy of San Mateo's a Decision declaring Aliling's

Issues having been joined, the Labor Arbiter issued on April 25, 2006 termination as unjustified. In its pertinent parts, the decision reads:

23

The grounds upon which complainant's dismissal was based did not conform not only the standard but also the compliance required under Article 281 of the Labor Code, Necessarily, complainant's termination is not justified for failure to comply with the mandate the law requires. Respondents should be ordered to pay salaries corresponding to the unexpired portion of the contract of employment and all other benefits amounting to a total of THIRTY FIVE THOUSAND EIGHT HUNDRED ELEVEN PESOS (P35,811.00) covering the period from October 6 to December 7, 2004, computed as follows:

Unexpired Portion of the Contract:


Basic Salary Transportation Clothing Allowance ECOLA P13,000.00 3,000.00 800.00 500.00 P17,300.00 10/06/04 - 12/07/04 P17,300.00 x 2.7 mos. = P35,811.00 =========

Complainant's 13th month pay proportionately for 2004 was not shown to have been paid to complainant, respondent be made liable to him therefore computed at SIX THOUSAND FIVE HUNDRED THIRTY TWO PESOS AND 50/100 (P6,532.50). For engaging the services of counsel to protect his interest, complainant is likewise entitled to a 10% attorney's fees of the judgment amount. Such other claims for lack of basis sufficient to support for their grant are unwarranted.

WHEREFORE, judgment is hereby rendered ordering respondent company to pay complainant Armando Aliling the sum of THIRTY FIVE THOUSAND EIGHT HUNDRED ELEVEN PESOS (P35,811.00) representing his salaries and other benefits as discussed above. Respondent company is likewise ordered to pay said complainant the amount of TEN THOUSAND SEVEN HUNDRED SIXTY SIX PESOS AND 85/100 ONLY (10,766.85) representing his proportionate 13th month pay for 2004 plus 10% of the total judgment as and by way of attorney's fees. Other claims are hereby denied for lack of merit. (Emphasis supplied.)

The labor arbiter gave credence to Aliling's allegation about not receiving and, therefore, not bound by, San Mateo's purported September 20, 2004 memo. The memo, to reiterate, supposedly apprised Aliling of the sales quota he was, but failed, to meet. Pushing the point, the labor arbiter explained that Aliling cannot be validly terminated for non-compliance with the quota threshold absent a prior advisory of the reasonable standards upon which his performance would be evaluated. Both parties appealed the above decision to the NLRC, which affirmed the Decision in toto in its Resolution dated May 31, 2007. The separate motions for reconsideration were also denied by the NLRC in its Resolution dated August 31, 2007. Therefrom, Aliling went on certiorari to the CA, which eventually rendered the assailed Decision, the dispositive portion of which reads:
WHEREFORE, the petition is PARTLY GRANTED. The assailed Resolutions of respondent (Third Division) National Labor Relations Commission are AFFIRMED, with the following MODIFICATION/CLARIFICATION: Respondents Wide Wide World Express Corp. and its officers, Jose B. Feliciano, Manuel F. San Mateo III and Joseph R. Lariosa, are jointly and severally liable to pay petitioner Armando Aliling: (A) the sum of Forty Two Thousand Three Hundred Thirty Three & 50/100 (P42,333.50) as the total money judgment, (B) the sum of Four Thousand Two Hundred Thirty Three & 35/100 (P4,233.35) as attorney's fees, and (C) the additional sum equivalent to one-half (1/2) month of petitioner's salary as separation pay. SO ORDERED.
24

(Emphasis supplied.)

The CA anchored its assailed action on the strength of the following premises: (a) respondents failed to prove that Aliling's dismal performance constituted gross and habitual neglect necessary to justify his dismissal; (b) not having been informed at the time of his engagement of the reasonable standards under which he will qualify as a regular employee, Aliling was deemed to have been hired from day one as a regular employee; and (c) the strained relationship existing between the parties argues against the propriety of reinstatement. Aliling's motion for reconsideration was rejected by the CA through the assailed Resolution dated December 15, 2008. Hence, the instant petition. The Issues Aliling raises the following issues for consideration:
A.The failure of the Court of Appeals to order reinstatement (despite its finding that petitioner was illegally dismissed from employment) is contrary to law and applicable jurisprudence. B.The failure of the Court of Appeals to award backwages (even if it did not order reinstatement) is contrary to law and applicable jurisprudence.

C.The failure of the Court of Appeals to award moral and exemplary damages (despite its finding that petitioner was dismissed to prevent the acquisition of his regular status) is contrary to law and applicable jurisprudence. 25

In their Comment, 26 respondents reiterated their position that WWWEC hired petitioner on a probationary basis and fired him before he became a regular employee. The Court's Ruling The petition is partly meritorious. Petitioner is a regular employee On a procedural matter, petitioner Aliling argues that WWWEC, not having appealed from the judgment of CA which declared Aliling as a regular employee from the time he signed the employment contract, is now precluded from questioning the appellate court's determination as to the nature of his employment. Petitioner errs. The Court has, when a case is on appeal, the authority to review matters not specifically raised or assigned as error if their consideration is necessary in reaching a just conclusion of the case. We said as much in Sociedad Europea de Financiacion, SA v. Court of Appeals, 27 "It is axiomatic that an appeal, once accepted by this Court, throws the entire case open to review, and that this Court has the authority to review matters not specifically raised or assigned as error by the parties, if their consideration is necessary in arriving at a just resolution of the case." The issue of whether or not petitioner was, during the period material, a probationary or regular employee is of pivotal import. Its resolution is doubtless necessary at arriving at a fair and just disposition of the controversy. The Labor Arbiter cryptically held in his decision dated April 25, 2006 that:
Be that as it may, there appears no showing that indeed the said September 20, 2004 Memorandum addressed to complainant was received by him. Moreover, complainant's tasked where he was assigned was a new developed service. In this regard, it is noted: "Due process dictates that an employee be apprised beforehand of the conditions of his employment and of the terms of advancement therein. Precisely, implicit in Article 281 of the Labor Code is the requirement that reasonable standards be previously made known by the employer to the employee at the time of his engagement ( Ibid., citing Sameer Overseas Placement Agency, Inc. vs. NLRC, G.R. No. 132564, October 20, 1999). 28

From our review, it appears that the labor arbiter, and later the NLRC, considered Aliling a probationary employee despite finding that he was not informed of the reasonable standards by which his probationary employment was to be judged. The CA, on the other hand, citing Cielo v. National Labor Relations Commission, 29 ruled that petitioner was a regular employee from the outset inasmuch as he was not informed of the standards by which his probationary employment would be measured. The CA wrote:
Petitioner was regularized from the time of the execution of the employment contract on June 11, 2004, although respondent company had arbitrarily shortened his tenure. As pointed out, respondent company did not make known the reasonable standards under which he will qualify as a regular employee at the time of his engagement. Hence, he was deemed to have been hired from day one as a regular employee. 30(Emphasis supplied.)

WWWEC, however, excepts on the argument that it put Aliling on notice that he would be evaluated on the 3rd and 5th months of his probationary employment. To WWWEC, its efforts translate to sufficient compliance with the requirement that a probationary worker be apprised of the reasonable standards for his regularization. WWWEC invokes the ensuing holding in Alcira v. National Labor Relations Commission 31 to support its case:
Conversely, an employer is deemed to substantially comply with the rule on notification of standards if he apprises the employee that he will be subjected to a performance evaluation on a particular date after his hiring. We agree with the labor arbiter when he ruled that: In the instant case, petitioner cannot successfully say that he was never informed by private respondent of the standards that he must satisfy in order to be converted into regular status. This rans (sic) counter to the agreement between the parties that after five months of service the petitioner's performance would be evaluated. It is only but natural that the evaluation should be made vis-vis the performance standards for the job. Private respondent Trifona Mamaradlo speaks of such standard in her affidavit referring to the fact that petitioner did not perform well in his assigned work and his attitude was below par compared to the company's standard required of him. (Emphasis supplied.)

WWWEC's contention is untenable.

Alcira is cast under a different factual setting. There, the labor arbiter, the NLRC, the CA, and even finally this
Court were one in their findings that the employee concerned knew, having been duly informed during his engagement, of the standards for becoming a regular employee. This is in stark contrast to the instant case where the element of being informed of the regularizing standards does not obtain. As such, Alcira cannot be made to apply to the instant case.

To note, the June 2, 2004 letter-offer itself states that the regularization standards or the performance norms to be used are still to be agreed upon by Aliling and his supervisor. WWWEC has failed to prove that an agreement as regards thereto has been reached. Clearly then, there were actually no performance standards to speak of. And lest it be overlooked, Aliling was assigned to GX trucking sales, an activity entirely different to the Seafreight Sales he was originally hired and trained for. Thus, at the time of his engagement, the standards relative to his assignment with GX sales could not have plausibly been communicated to him as he was under Seafreight Sales. Even for this reason alone, the conclusion reached in Alcira is of little relevant to the instant case. Based on the facts established in this case in light of extant jurisprudence, the CA's holding as to the kind of employment petitioner enjoyed is correct. So was the NLRC ruling, affirmatory of that of the labor arbiter. In the final analysis, one common thread runs through the holding of the labor arbiter, the NLRC and the CA, i.e., petitioner Aliling, albeit hired from management's standpoint as a probationary employee, was deemed a regular employee by force of the following self-explanatory provisions:
Article 281 of the Labor Code ART. 281.Probationary employment. Probationary employment shall not exceed six (6) months from the date the employee started working, unless it is covered by an apprenticeship agreement stipulating a longer period. The services of an employee who has been engaged on a probationary basis may be terminated for a just cause or when he fails to qualify as a regular employee in accordance with reasonable standards made known by the employer to the employee at the time of his engagement. An employee who is allowed to work after a probationary period shall be considered a regular employee. (Emphasis supplied.) Section 6(d) of the Implementing Rules of Book VI, Rule VIII-A of the Labor Code

Sec. 6.Probationary employment. There is probationary employment where the employee, upon his engagement, is made to undergo a trial period where the employee determines his fitness to qualify for regular employment, based on reasonable standards made known to him at the time of engagement. Probationary employment shall be governed by the following rules: xxx xxx xxx (d)In all cases of probationary employment, the employer shall make known to the employee the standards under which he will qualify as a regular employee at the time of his engagement. Where no standards are made known to the employee at that time, he shall be deemed a regular employee. (Emphasis supplied.)

To repeat, the labor arbiter, NLRC and the CA are agreed, on the basis of documentary evidence adduced, that respondent WWWEC did not inform petitioner Aliling of the reasonable standards by which his probation would be measured against at the time of his engagement. The Court is loathed to interfere with this factual determination. As We have held:
Settled is the rule that the findings of the Labor Arbiter, when affirmed by the NLRC and the Court of Appeals, are binding on the Supreme Court, unless patently erroneous. It is not the function of the Supreme Court to analyze or weigh all over again the evidence already considered in the proceedings below. The jurisdiction of this Court in a petition for review on certiorari is limited to reviewing only errors of law, not of fact, unless the factual findings being assailed are not supported by evidence on record or the impugned judgment is based on a misapprehension of facts. 32

The more recent Peafrancia Tours and Travel Transport, Inc. v. Sarmiento to wit:

33

has reaffirmed the above ruling,

Finally, the CA affirmed the ruling of the NLRC and adopted as its own the latter's factual findings. Long-established is the doctrine that findings of fact of quasi-judicial bodies . . . are accorded respect, even finality, if supported by substantial evidence. When passed upon and upheld by the CA, they are binding and conclusive upon this Court and will not normally be disturbed. Though this doctrine is not without exceptions, the Court finds that none are applicable to the present case.

WWWEC also cannot validly argue that "the factual findings being assailed are not supported by evidence on record or the impugned judgment is based on a misapprehension of facts." Its very own letter-offer of employment argues against its above posture. Excerpts of the letter-offer:
Additionally, upon the effectivity of your probation, you and your immediate superior are required to jointly define your objectives compared with the job requirements of the position. Based on the pre-agreed objectives, your performance shall be reviewed on the 3rd month to assess your competence and work attitude. The 5th month Performance Appraisal shall be the basis in elevating or confirming your employment status from Probationary to Regular. Failure to meet the job requirements during the probation stage means that your services may be terminated without prior notice and without recourse to separation pay. (Emphasis supplied.)

Respondents further allege that San Mateo's email dated July 16, 2004 shows that the standards for his regularization were made known to petitioner Aliling at the time of his engagement. To recall, in that email message, San Mateo reminded Aliling of the sales quota he ought to meet as a condition for his continued employment, i.e., that the GX trucks should already be 80% full by August 5, 2004. Contrary to respondents' contention, San Mateo's email cannot support their allegation on Aliling being informed of the standards for his continued employment, such as the sales quota, at the time of his engagement. As it were, the email message was sent to Aliling more than a month after he signed his employment contract with WWWEC. The aforequoted Section 6 of the Implementing Rules of Book VI, Rule VIII-A of the Code specifically requires the

employer to inform the probationary employee of such reasonable standards at the time of his engagement, not at any time later; else, the latter shall be considered a regular employee. Thus, pursuant to the explicit provision of Article 281 of the Labor Code, Section 6 (d) of the Implementing Rules of Book VI, Rule VIII-A of the Labor Code and settled jurisprudence, petitioner Aliling is deemed a regular employee as of June 11, 2004, the date of his employment contract. Petitioner was illegally dismissed To justify fully the dismissal of an employee, the employer must, as a rule, prove that the dismissal was for a just cause and that the employee was afforded due process prior to dismissal. As a complementary principle, the employer has the onus of proving with clear, accurate, consistent, and convincing evidence the validity of the dismissal. 34 WWWEC had failed to discharge its twin burden in the instant case. First off, the attendant circumstances in the instant case aptly show that the issue of petitioner's alleged failure to achieve his quota, as a ground for terminating employment, strikes the Court as a mere afterthought on the part of WWWEC. Consider: Lariosa's letter of September 25, 2004 already betrayed management's intention to dismiss the petitioner for alleged unauthorized absences. Aliling was in fact made to explain and he did so satisfactorily. But, lo and behold, WWWEC nonetheless proceeded with its plan to dismiss the petitioner for non-satisfactory performance, although the corresponding termination letter dated October 6, 2004 did not even specifically state Aliling's "non-satisfactory performance," or that Aliling's termination was by reason of his failure to achieve his set quota. What WWWEC considered as the evidence purportedly showing it gave Aliling the chance to explain his inability to reach his quota was a purported September 20, 2004 memo of San Mateo addressed to the latter. However, Aliling denies having received such letter and WWWEC has failed to refute his contention of nonreceipt. In net effect, WWWEC was at a loss to explain the exact just reason for dismissing Aliling. At any event, assuming for argument that the petitioner indeed failed to achieve his sales quota, his termination from employment on that ground would still be unjustified. Article 282 of the Labor Code considers any of the following acts or omission on the part of the employee as just cause or ground for terminating employment:
(a)Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his work; (b)Gross and habitual neglect by the employee of his duties; (c)Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative; (d)Commission of a crime or offense by the employee against the person of his employer or any immediate member of his family or his duly authorized representatives; and (e)Other causes analogous to the foregoing. (Emphasis supplied)

In Lim v. National Labor Relations Commission, 35 the Court considered inefficiency as an analogous just cause for termination of employment under Article 282 of the Labor Code:
We cannot but agree with PEPSI that "gross inefficiency" falls within the purview of "other causes analogous to the foregoing," this constitutes, therefore, just cause to terminate an employee under Article 282 of the Labor Code. One is analogous to another if it is susceptible of

comparison with the latter either in general or in some specific detail; or has a close relationship with the latter. "Gross inefficiency" is closely related to "gross neglect," for both involve specific acts of omission on the part of the employee resulting in damage to the employer or to his business. In Buiser vs. Leogardo, this Court ruled that failure to observed prescribed standards to inefficiency may constitute just cause for dismissal. (Emphasis supplied.)

It did so anew in Leonardo v. National Labor Relations Commission

36

on the following rationale:

An employer is entitled to impose productivity standards for its workers, and in fact, non-compliance may be visited with a penalty even more severe than demotion. Thus, [t]he practice of a company in laying off workers because they failed to make the work quota has been recognized in this jurisdiction. (Philippine American Embroideries vs. Embroidery and Garment Workers, 26 SCRA 634, 639). In the case at bar, the petitioners' failure to meet the sales quota assigned to each of them constitute a just cause of their dismissal, regardless of the permanent or probationary status of their employment. Failure to observe prescribed standards of work, or to fulfill reasonable work assignments due to inefficiency may constitute just cause for dismissal. Such inefficiency is understood to mean failure to attain work goals or work quotas, either by failing to complete the same within the allotted reasonable period, or by producing unsatisfactory results. This management prerogative of requiring standards may be availed of so long as they are exercised in good faith for the advancement of the employer's interest. (Emphasis supplied.)

In fine, an employee's failure to meet sales or work quotas falls under the concept of gross inefficiency, which in turn is analogous to gross neglect of duty that is a just cause for dismissal under Article 282 of the Code. However, in order for the quota imposed to be considered a valid productivity standard and thereby validate a dismissal, management's prerogative of fixing the quota must be exercised in good faith for the advancement of its interest. The duty to prove good faith, however, rests with WWWEC as part of its burden to show that the dismissal was for a just cause. WWWEC must show that such quota was imposed in good faith. This WWWEC failed to do, perceptibly because it could not. The fact of the matter is that the alleged imposition of the quota was a desperate attempt to lend a semblance of validity to Aliling's illegal dismissal. It must be stressed that even WWWEC's sales manager, Eve Amador (Amador), in an internal e-mail to San Mateo, hedged on whether petitioner performed below or above expectation:
Could not quantify level of performance as he as was tasked to handle a new product (GX). Revenue report is not yet administered by IT on a month-to-month basis. Moreover, this in a way is an experimental activity. Practically you have a close monitoring with Armand with regards to his performance. Your assessment of him would be more accurate.

Being an experimental activity and having been launched for the first time, the sales of GX services could not be reasonably quantified. This would explain why Amador implied in her email that other bases besides sales figures will be used to determine Aliling's performance. And yet, despite such a neutral observation, Aliling was still dismissed for his dismal sales of GX services. In any event, WWWEC failed to demonstrate the reasonableness and the bona fides on the quota imposition. Employees must be reminded that while probationary employees do not enjoy permanent status, they enjoy the constitutional protection of security of tenure. They can only be terminated for cause or when they otherwise fail to meet the reasonable standards made known to them by the employer at the time of their engagement. 37 Respondent WWWEC miserably failed to prove the termination of petitioner was for a just cause nor was there substantial evidence to demonstrate the standards were made known to the latter at the time of his engagement. Hence, petitioner's right to security of tenure was breached. Aliling's right to procedural due process was violated

As earlier stated, to effect a legal dismissal, the employer must show not only a valid ground therefor, but also that procedural due process has properly been observed. When the Labor Code speaks of procedural due process, the reference is usually to the two (2)-written notice rule envisaged in Section 2 (III), Rule XXIII, Book V of the Omnibus Rules Implementing the Labor Code, which provides:
Section 2.Standard of due process: requirements of notice. In all cases of termination of employment, the following standards of due process shall be substantially observed. I.For termination of employment based on just causes as defined in Article 282 of the Code: (a)A written notice served on the employee specifying the ground or grounds for termination, and giving to said employee reasonable opportunity within which to explain his side; (b)A hearing or conference during which the employee concerned, with the assistance of counsel if the employee so desires, is given opportunity to respond to the charge, present his evidence or rebut the evidence presented against him; and (c)A written notice [of] termination served on the employee indicating that upon due consideration of all the circumstance, grounds have been established to justify his termination. In case of termination, the foregoing notices shall be served on the employee's last known address.

MGG Marine Services, Inc. v. NLRC

38 tersely described the mechanics of what may be considered a two-part due process requirement which includes the two-notice rule, ". . . one, of the intention to dismiss, indicating therein his acts or omissions complained against, and two, notice of the decision to dismiss; and an opportunity to answer and rebut the charges against him, in between such notices."

King of Kings Transport, Inc. v. Mamac

39

expounded on this procedural requirement in this manner:

(1)The first written notice to be served on the employees should contain the specific causes or grounds for termination against them, and a directive that the employees are given the opportunity to submit their written explanation within a reasonable period. "Reasonable opportunity" under the Omnibus Rules means every kind of assistance that management must accord to the employees to enable them to prepare adequately for their defense. This should be construed as a period of at least five calendar days from receipt of the notice . . . . Moreover, in order to enable the employees to intelligently prepare their explanation and defenses, the notice should contain a detailed narration of the facts and circumstances that will serve as basis for the charge against the employees. A general description of the charge will not suffice. Lastly, the notice should specifically mention which company rules, if any, are violated and/or which among the grounds under Art. 288 [of the Labor Code] is being charged against the employees. (2)After serving the first notice, the employees should schedule and conduct a hearing or conference wherein the employees will be given the opportunity to (1) explain and clarify their defenses to the charge against them; (2) present evidence in support of their defenses; and (3) rebut the evidence presented against them by the management. During the hearing or conference, the employees are given the chance to defend themselves personally, with the assistance of a representative or counsel of their choice . . . . (3)After determining that termination is justified, the employer shall serve the employees a written notice of termination indicating that: (1) all the circumstances involving the charge against the employees have been considered; and (2) grounds have been established to justify the severance of their employment. (Emphasis in the original.)

Here, the first and second notice requirements have not been properly observed, thus tainting petitioner's dismissal with illegality. The adverted memo dated September 20, 2004 of WWWEC supposedly informing Aliling of the likelihood of his termination and directing him to account for his failure to meet the expected job performance would have had constituted the "charge sheet," sufficient to answer for the first notice requirement, but for the fact that there is no proof such letter had been sent to and received by him. In fact, in his December 13, 2004 Complainant's Reply Affidavit, Aliling goes on to tag such letter/memorandum as fabrication. WWWEC did not adduce proof to show that a copy of the letter was duly served upon Aliling. Clearly enough, WWWEC did not comply with the first notice requirement. Neither was there compliance with the imperatives of a hearing or conference. The Court need not dwell at length on this particular breach of the due procedural requirement. Suffice it to point out that the record is devoid of any showing of a hearing or conference having been conducted. On the contrary, in its October 1, 2004 letter to Aliling, or barely five (5) days after it served the notice of termination, WWWEC acknowledged that it was still evaluating his case. And the written notice of termination itself did not indicate all the circumstances involving the charge to justify severance of employment. Aliling is entitled to backwages and separation pay in lieu of reinstatement As may be noted, the CA found Aliling's dismissal as having been illegally effected, but nonetheless concluded that his employment ceased at the end of the probationary period. Thus, the appellate court merely affirmed the monetary award made by the NLRC, which consisted of the payment of that amount corresponding to the unserved portion of the contract of employment. The case disposition on the award is erroneous. As earlier explained, Aliling cannot be rightfully considered as a mere probationary employee. Accordingly, the probationary period set in the contract of employment dated June 11, 2004 was of no moment. In net effect, as of that date June 11, 2004, Aliling became part of the WWWEC organization as a regular employee of the company without a fixed term of employment. Thus, he is entitled to backwages reckoned from the time he was illegally dismissed on October 6, 2004, with a PhP17,300.00 monthly salary, until the finality of this Decision. This disposition hews with the Court's ensuing holding in Javellana v. Belen: 40
Article 279 of the Labor Code, as amended by Section 34 of Republic Act 6715 instructs: Art. 279.Security of Tenure. In cases of regular employment, the employer shall not terminate the services of an employee except for a just cause or when authorized by this Title. An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement. (Emphasis supplied) Clearly, the law intends the award of backwages and similar benefits to accumulate past the date of the Labor Arbiter's decision until the dismissed employee is actually reinstated. But if, as in this case, reinstatement is no longer possible, this Court has consistently ruled that backwages shall be computed from the time of illegal dismissal until the date the decision becomes final. (Emphasis supplied.)

Additionally, Aliling is entitled to separation pay in lieu of reinstatement on the ground of strained relationship.

In Golden Ace Builders v. Talde,

41

the Court ruled:

The basis for the payment of backwages is different from that for the award of separation pay. Separation pay is granted where reinstatement is no longer advisable because of strained relations between the employee and the employer. Backwages represent compensation that should have been earned but were not collected because of the unjust dismissal. The basis for computing backwages is usually the length of the employee's service while that for separation pay is the actual period when the employee was unlawfully prevented from working. As to how both awards should be computed, Macasero v. Southern Industrial Gases Philippines instructs: [T]he award of separation pay is inconsistent with a finding that there was no illegal dismissal, for under Article 279 of the Labor Code and as held in a catena of cases, an employee who is dismissed without just cause and without due process is entitled to backwages and reinstatement or payment of separation pay in lieu thereof: Thus, an illegally dismissed employee is entitled to two reliefs: backwages and reinstatement. The two reliefs provided are separate and distinct. In instances where reinstatement is no longer feasible because of strained relations between the employee and the employer, separation pay is granted. In effect, an illegally dismissed employee is entitled to either reinstatement, if viable, or separation pay if reinstatement is no longer viable, and backwages. The normal consequences of respondents' illegal dismissal, then, are reinstatement without loss of seniority rights, and payment of backwages computed from the time compensation was withheld up to the date of actual reinstatement. Where reinstatement is no longer viable as an option, separation pay equivalent to one (1) month salary for every year of service should be awarded as an alternative. The payment of separation pay is in addition to payment of backwages. . . .

Velasco v. National Labor Relations Commission emphasizes:


The accepted doctrine is that separation pay may avail in lieu of reinstatement if reinstatement is no longer practical or in the best interest of the parties. Separation pay in lieu of reinstatement may likewise be awarded if the employee decides not to be reinstated. (emphasis in the original; italics supplied) Under the doctrine of strained relations, the payment of separation pay is considered an acceptable alternative to reinstatement when the latter option is no longer desirable or viable. On one hand, such payment liberates the employee from what could be a highly oppressive work environment. On the other hand, it releases the employer from the grossly unpalatable obligation of maintaining in its employ a worker it could no longer trust. Strained relations must be demonstrated as a fact, however, to be adequately supported by evidence substantial evidence to show that the relationship between the employer and the employee is indeed strained as a necessary consequence of the judicial controversy. In the present case, the Labor Arbiter found that actual animosity existed between petitioner Azul and respondent as a result of the filing of the illegal dismissal case. Such finding, especially when affirmed by the appellate court as in the case at bar, is binding upon the Court, consistent with the prevailing rules that this Court will not try facts anew and that findings of facts of quasi-judicial bodies are accorded great respect, even finality. (Emphasis supplied.)

As the CA correctly observed, "To reinstate petitioner [Aliling] would only create an atmosphere of antagonism and distrust, more so that he had only a short stint with respondent company." 42 The Court need not belabor the fact that the patent animosity that had developed between employer and employee generated what may be considered as the arbitrary dismissal of the petitioner. Following the pronouncements of this Court Sagales v. Rustan's Commercial Corporation, 43 the computation of separation pay in lieu of reinstatement includes the period for which backwages were awarded:
Thus, in lieu of reinstatement, it is but proper to award petitioner separation pay computed at onemonth salary for every year of service, a fraction of at least six (6) months considered as one whole year. In the computation of separation pay, the period where backwages are awarded must be included. (Emphasis supplied.)

Thus, Aliling is entitled to both backwages and separation pay (in lieu of reinstatement) in the amount of one (1) month's salary for every year of service, that is, from June 11, 2004 (date of employment contract) until the finality of this decision with a fraction of a year of at least six (6) months to be considered as one (1) whole year. As determined by the labor arbiter, the basis for the computation of backwages and separation pay will be Aliling's monthly salary at PhP17,300. Finally, Aliling is entitled to an award of PhP30,000 as nominal damages in consonance with prevailing jurisprudence 44 for violation of due process. Petitioner is not entitled to moral and exemplary damages In Nazareno v. City of Dumaguete, 45 the Court expounded on the requisite elements for a litigant's entitlement to moral damages, thus:
Moral damages are awarded if the following elements exist in the case: (1) an injury clearly sustained by the claimant; (2) a culpable act or omission factually established; (3) a wrongful act or omission by the defendant as the proximate cause of the injury sustained by the claimant; and (4) the award of damages predicated on any of the cases stated Article 2219 of the Civil Code. In addition, the person claiming moral damages must prove the existence of bad faith by clear and convincing evidence for the law always presumes good faith. It is not enough that one merely suffered sleepless nights, mental anguish, and serious anxiety as the result of the actuations of the other party. Invariably such action must be shown to have been willfully done in bad faith or with ill motive. Bad faith, under the law, does not simply connote bad judgment or negligence. It imports a dishonest purpose or some moral obliquity and conscious doing of a wrong, a breach of a known duty through some motive or interest or ill will that partakes of the nature of fraud. (Emphasis supplied.)

In alleging that WWWEC acted in bad faith, Aliling has the burden of proof to present evidence in support of his claim, as ruled in Culili v. Eastern Telecommunications Philippines, Inc.: 46
According to jurisprudence, "basic is the principle that good faith is presumed and he who alleges bad faith has the duty to prove the same." By imputing bad faith to the actuations of ETPI, Culili has the burden of proof to present substantial evidence to support the allegation of unfair labor practice. Culili failed to discharge this burden and his bare allegations deserve no credit.

This was reiterated in United Claimants Association of NEA (UNICAN) v. National Electrification Administration (NEA), 47 in this wise:
It must be noted that the burden of proving bad faith rests on the one alleging it. As the Court ruled in Culili v. Eastern Telecommunications, Inc., "According to jurisprudence, 'basic is the principle that good faith is presumed and he who alleges bad faith has the duty to prove the same.'" Moreover, in Spouses Palada v. Solidbank Corporation, the Court stated, "Allegations of bad faith and fraud must be proved by clear and convincing evidence."

Similarly, Aliling has failed to overcome such burden to prove bad faith on the part of WWWEC. Aliling has not presented any clear and convincing evidence to show bad faith. The fact that he was illegally dismissed is insufficient to prove bad faith. Thus, the CA correctly ruled that "[t]here was no sufficient showing of bad faith or abuse of management prerogatives in the personal action taken against petitioner." 48 In Lambert Pawnbrokers and Jewelry Corporation v. Binamira, 49 the Court ruled:
A dismissal may be contrary to law but by itself alone, it does not establish bad faith to entitle the dismissed employee to moral damages. The award of moral and exemplary damages cannot be justified solely upon the premise that the employer dismissed his employee without authorized cause and due process.

The officers of WWWEC cannot be held jointly and severally liable with the company The CA held the president of WWWEC, Jose B. Feliciano, San Mateo and Lariosa jointly and severally liable for the monetary awards of Aliling on the ground that the officers are considered "employers" acting in the interest of the corporation. The CA cited NYK International Knitwear Corporation Philippines (NYK) v. National Labor Relations Commission 50 in support of its argument. Notably, NYK in turn cited A.C. Ransom Labor Union-CCLU v. NLRC. 51 Such ruling has been reversed by the Court in Alba v. Yupangco, 52 where the Court ruled:
By Order of September 5, 2007, the Labor Arbiter denied respondent's motion to quash the 3rd alias writ. Brushing aside respondent's contention that his liability is merely joint, the Labor Arbiter ruled: Such issue regarding the personal liability of the officers of a corporation for the payment of wages and money claims to its employees, as in the instant case, has long been resolved by the Supreme Court in a long list of cases [A.C. Ransom Labor Union-CLU vs. NLRC (142 SCRA 269) and reiterated in the cases ofChua vs. NLRC (182 SCRA 353), Gudez vs. NLRC (183 SCRA 644)]. In the aforementioned cases, the Supreme Court has expressly held that the irresponsible officer of the corporation ( e.g., President) is liable for the corporation's obligations to its workers. Thus, respondent Yupangco, being the president of the respondent YL Land and Ultra Motors Corp., is properly jointly and severally liable with the defendant corporations for the labor claims of Complainants Alba and De Guzman. . . . xxx xxx xxx As reflected above, the Labor Arbiter held that respondent's liability is solidary. There is solidary liability when the obligation expressly so states, when the law so provides, or when the nature of the obligation so requires. MAM Realty Development Corporation v. NLRC, on solidary liability of corporate officers in labor disputes, enlightens: . . . A corporation being a juridical entity, may act only through its directors, officers and employees. Obligations incurred by them, acting as such corporate agents are not theirs but the direct accountabilities of the corporation they represent. True solidary liabilities may at times be incurred but only when exceptional circumstances warrant such as, generally, in the following cases: 1.When directors and trustees or, in appropriate cases, the officers of a corporation: (a)vote for or assent to patently unlawful acts of the corporation; (b)act in bad faith or with gross negligence in directing the corporate affairs; xxx xxx xxx

In labor cases, for instance, the Court has held corporate directors and officers solidarily liable with the corporation for the termination of employment of employees done with malice or in bad faith.

A review of the facts of the case does not reveal ample and satisfactory proof that respondent officers of WWEC acted in bad faith or with malice in effecting the termination of petitioner Aliling. Even assuming arguendo that the actions of WWWEC are ill-conceived and erroneous, respondent officers cannot be held jointly and solidarily with it. Hence, the ruling on the joint and solidary liability of individual respondents must be recalled. Aliling is entitled to Attorney's Fees and Legal Interest Petitioner Aliling is also entitled to attorney's fees in the amount of ten percent (10%) of his total monetary award, having been forced to litigate in order to seek redress of his grievances, pursuant to Article 111 of the Labor Code and following our ruling in Exodus International Construction Corporation v. Biscocho, 53 to wit:
In Rutaquio v. National Labor Relations Commission, this Court held that: It is settled that in actions for recovery of wages or where an employee was forced to litigate and, thus, incur expenses to protect his rights and interest, the award of attorney's fees is legally and morally justifiable. In Producers Bank of the Philippines v. Court of Appeals this Court ruled that: Attorney's fees may be awarded when a party is compelled to litigate or to incur expenses to protect his interest by reason of an unjustified act of the other party.

While in Lambert Pawnbrokers and Jewelry Corporation, 54 the Court specifically ruled:
However, the award of attorney's fee is warranted pursuant to Article 111 of the Labor Code. Ten (10%) percent of the total award is usually the reasonable amount of attorney's fees awarded. It is settled that where an employee was forced to litigate and, thus, incur expenses to protect his rights and interest, the award of attorney's fees is legally and morally justifiable.

Finally, legal interest shall be imposed on the monetary awards herein granted at the rate of 6% per annum from October 6, 2004 (date of termination) until fully paid. WHEREFORE, the petition is PARTIALLY GRANTED. The July 3, 2008 Decision of the Court of Appeals in CA-G.R. SP No. 101309 is hereby MODIFIED to read:
WHEREFORE, the petition is PARTIALLY GRANTED. The assailed Resolutions of respondent (Third Division) National Labor Relations Commission areAFFIRMED, with the following MODIFICATION/CLARIFICATION: Respondent Wide Wide World Express Corp. is liable to pay Armando Aliling the following: (a) backwages reckoned from October 6, 2004 up to the finality of this Decision based on a salary of PhP17,300 a month, with interest at 6% per annum on the principal amount from October 6, 2004 until fully paid; (b) the additional sum equivalent to one (1) month salary for every year of service, with a fraction of at least six (6) months considered as one whole year based on the period from June 11, 2004 (date of employment contract) until the finality of this Decision, as separation pay; (c) PhP30,000 as nominal damages; and (d) Attorney's Fees equivalent to 10% of the total award.

SO ORDERED.

Peralta, Abad, Mendoza and Perlas-Bernabe, JJ., concur.

[G.R. No. 193676. June 20, 2012.] COSMOS BOTTLING CORP., petitioner, vs. WILSON FERMIN, respondent. [G.R. No. 194303. June 20, 2012.] WILSON B. FERMIN, petitioner, vs. COSMOS BOTTLING CORPORATION and CECILIA BAUTISTA, respondents.

DECISION

SERENO, J :
p

Before this Court are two consolidated cases, namely: (1) Petition for Review dated 26 October 2010 (G.R. No. 193676) and (2) Petition for Review on Certiorariunder Rule 45 dated 14 October 2010 (G.R. No. 194303). 1 Both Petitions assail the Decision dated 20 May 2009 2 and Resolution dated 8 September 2010 3 issued by the Court of Appeals (CA). The dispositive portion of the Decision reads:
TaDAHE

WHEREFORE, the August 31, 2005 Decision and October 21, 2005 Resolution of the National Labor Relations Commission in NLRC NCR CA No. 043301-05 are hereby SET ASIDE. Respondent Cosmos Bottling Corporation is, in light of the foregoing discussions, hereby ORDERED to pay Petitioner his full retirement benefits. There being no data from which this Court can properly assess Petitioner's full retirement benefits, the case is, thus, remanded to the Labor Arbiter only for that purpose. SO ORDERED.

Wilson B. Fermin (Fermin) was a forklift operator at Cosmos Bottling Corporation (COSMOS), where he started his employment on 27 August 1976. 4 On 16 December 2002, he was accused of stealing the cellphone of his fellow employee, Luis Braga (Braga). 5 Fermin was then given a Show Cause Memorandum, requiring him to explain why the cellphone was found inside his locker. 6 In compliance therewith, he submitted an affidavit the following day, explaining that he only hid the phone as a practical joke and had every intention of returning it to Braga. 7 On 21 December 2002, Braga executed a handwritten narration of events stating the following:
8

(a)At around 6:00 a.m. on 16 December 2002, he was changing his clothes inside the locker room, with Fermin as the only other person present. (b)Braga went out of the locker room and inadvertently left his cellphone by the chair. Fermin was left inside the room. (c)After 10 minutes, Braga went back to the locker room to retrieve his cellphone, but it was already gone. (d)Braga asked if Fermin saw the cellphone, but the latter denied noticing it.

(e)Braga reported the incident to the security guard, who thereafter conducted an inspection of all the lockers. (f)The security guard found the cellphone inside Fermin's locker. (g)Later that afternoon, Fermin talked to Braga to ask for forgiveness. The latter pardoned the former and asked him not to do the same to their colleagues.
TAECSD

After conducting an investigation, COSMOS found Fermin guilty of stealing Braga's phone in violation of company rules and regulations. 9 Consequently, on 2 October 2003, 10 the company terminated Fermin from employment after 27 years of service, 11 effective on 6 October 2003. 12 Following the dismissal of Fermin from employment, Braga executed an affidavit, which stated the belief that the former had merely pulled a prank without any intention of stealing the cellphone, and withdrew from COSMOS his complaint against Fermin. 13 Meanwhile, Fermin filed a Complaint for Illegal Dismissal, 14 which the Labor Arbiter (LA) dismissed for lack of merit on the ground that the act of taking a fellow employee's cellphone amounted to gross misconduct. 15 Further, the LA likewise took into consideration Fermin's other infractions, namely: (a) committing acts of disrespect to a superior officer, and (b) sleeping on duty and abandonment of duty. 16 Fermin filed an appeal with the National Labor Relations Commission (NLRC), which affirmed the ruling of the LA 17 and denied Fermin's subsequent Motion for Reconsideration. 18 Thereafter, Fermin filed a Petition for Certiorari with the Court of Appeals (CA), 19 which reversed the rulings of the LA and the NLRC and awarded him his full retirement benefits. 20 Although the CA accorded with finality the factual findings of the lower tribunals as regards Fermin's commission of theft, it nevertheless held that the penalty of dismissal from service was improper on the ground that the said violation did not amount to serious misconduct or wilful disobedience, to wit:
[COSMOS], on which the onus of proving lawful cause in sustaining the dismissal of [Fermin] lies, failed to prove that the latter's misconduct was induced by a perverse and wrongful intent, especially in the light of Braga's Sinumpaang Salaysay which corroborated [Fermin's] claim that [Fermin] was merely playing a prank when he hid Braga's cellular phone. Parenthetically, the labor courts dismissed Braga's affidavit of desistance as a mere afterthought because the same was executed only after [Fermin] had been terminated. It must be pointed out, however, that in labor cases, in which technical rules of procedure are not to be strictly applied if the result would be detrimental to the workingman, an affidavit of desistance gains added importance in the absence of any evidence on record explicitly showing that the dismissed employee committed the act which caused the dismissal. While We cannot completely exculpate [Fermin] from his violation at this point, We cannot, however, turn a blind eye and disregard Braga's recantation altogether. Braga's recantation all the more bolsters Our conclusion that [Fermin's] violation does not amount to or borders on "serious or willful" misconduct or willful disobedience to call for his dismissal. Morever, [COSMOS] failed to prove any resultant material damage or prejudice on their part as a consequence of [Fermin's] questioned act. To begin with, the cellular phone subject of the stealth belonged, not to [COSMOS], but to Braga. Secondly, the said phone was returned to Braga in due time. Under the circumstances, a penalty such as suspension without pay would have sufficed to teach [Fermin] a lesson and for him to realize his wrongdoing.
CaDSHE

xxx xxx xxx

On another note, [COSMOS], in upholding the legality of [Fermin's] termination from service, considered the latter's past infractions with [COSMOS], i.e., threatening, provoking, challenging, insulting and committing acts of disrespect to a superior officer/defiance to an instruction and a lawful order of a superior officer; and, sleeping while on duty and abandonment of duty or leaving assigned post with permission from immediate supervisor, as aggravating circumstances to his present violation [stealth (sic) of a co-employee's property]. We disagree with Public Respondent on this matter. The correct rule is that previous infractions may be used as justification for an employee's dismissal from work in connection with a subsequent similaroffense, which is obviously not the case here. . . . . 21 (Emphases in the original.)

COSMOS and Fermin moved for reconsideration, but the CA likewise denied their motions. parties filed the present Petitions for Review.

22

Thus, both

COSMOS argues, among other things, that: (a) Fermin committed a clear act of bad faith and dishonesty in taking the cellphone of Braga and denying knowledge thereof; (b) the latter's recantation was a mere afterthought; (c) the lack of material damage or prejudice on the part of COSMOS does not preclude it from imposing the penalty of termination; and (d) the previous infractions committed by Fermin strengthen the decision of COSMOS to dismiss him from service. 23 On the other hand, Fermin contends that since the CA found that the penalty of dismissal was not proportionate to his offense, it should have ruled in favor of his entitlement to backwages. 24 It must be noted that in the case at bar, all the lower tribunals were in agreement that Fermin's act of taking Braga's cellphone amounted to theft. Factual findings made by administrative agencies, if established by substantial evidence as borne out by the records, are final and binding on this Court, whose jurisdiction is limited to reviewing questions of law. 25 The only disputed issue left for resolution is whether the imposition of the penalty of dismissal was appropriate. We rule in the affirmative. Theft committed against a co-employee is considered as a case analogous to serious misconduct, for which the penalty of dismissal from service may be meted out to the erring employee, 26 viz.:
Article 282 of the Labor Code provides: Article 282.Termination by Employer. An employer may terminate an employment for any of the following causes: (a)Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or his representatives in connection with his work;
cSHIaA

xxx xxx xxx (e)Other causes analogous to the foregoing. Misconduct involves "the transgression of some established and definite rule of action, forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere error in judgment." For misconduct to be serious and therefore a valid ground for dismissal, it must be: 1.of grave and aggravated character and not merely trivial or unimportant and 2.connected with the work of the employee. In this case, petitioner dismissed respondent based on the NBI's finding that the latter stole and used Yuseco's credit cards. But since the theft was not committed against petitioner itself but

against one of its employees, respondent's misconduct was not work-related and therefore, she could not be dismissed for serious misconduct. Nonetheless, Article 282(e) of the Labor Code talks of other analogous causes or those which are susceptible of comparison to another in general or in specific detail. For an employee to be validly dismissed for a cause analogous to those enumerated in Article 282, the cause must involve a voluntary and/or willful act or omission of the employee. A cause analogous to serious misconduct is a voluntary and/or willful act or omission attesting to an employee's moral depravity. Theft committed by an employee against a person other than his employer, if proven by substantial evidence, is a cause analogous to serious misconduct. 27(Emphasis supplied.)

In this case, the LA has already made a factual finding, which was affirmed by both the NLRC and the CA, that Fermin had committed theft when he took Braga's cellphone. Thus, this act is deemed analogous to serious misconduct, rendering Fermin's dismissal from service just and valid. Further, the CA was correct in ruling that previous infractions may be cited as justification for dismissing an employee only if they are related to the subsequent offense. 28 However, it must be noted that such a discussion was unnecessary since the theft, taken in isolation from Fermin's other violations, was in itself a valid cause for the termination of his employment. Finally, it must be emphasized that the award of financial compensation or assistance to an employee validly dismissed from service has no basis in law. Therefore, considering that Fermin's act of taking the cellphone of his co-employee is a case analogous to serious misconduct, this Court is constrained to reverse the CA's ruling as regards the payment of his full retirement benefits. In the same breath, neither can this Court grant his prayer for backwages. WHEREFORE, the Petition in G.R. No. 194303 is DENIED, while that in G.R. No. 193676 is GRANTED. The Decision dated 20 May 2009 and Resolution dated 8 September 2010 of the Court of Appeals are hereby REVERSED and SET ASIDE. The Decision dated 20 August 2004 of the Labor Arbiter is REINSTATED.
AHSaTI

SO ORDERED.

Carpio, Brion, Perez and Reyes, JJ., concur.

[G.R. No. 82580. April 25, 1989.] COCA-COLA BOTTLERS PHILIPPINES INCORPORATED, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and FERNANDO VEGA, respondents. [G.R. No. 84075. April 25, 1989] FERNANDO VEGA, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION THIRD DIVISION, MANILA and COCA-COLA BOTTLERS, PHILIPPINES, INC., respondents. SYLLABUS

1.LABOR LAWS; EMPLOYMENT; TERMINATION THEREOF; VALID GROUNDS THEREFOR; BREACH OF TRUST AND LOSS OF CONFIDENCE. When adequately proven, the dual grounds of breach of trust and loss of confidence constitute valid and ample bases to warrant termination of an errant employee. (Manila Midtown Commercial Corporation v. Nuwhrain (Ramada Chapter), 159 SCRA 212 [1988]). The employer's obligation to give his workers just compensation and treatment carries with it the corollary right to expect from the workers adequate work, diligence and good conduct. (Firestone Tire and Rubber Co. of the Phils. v. Lariosa, 148 SCRA 187 [1987]). In the last cited case, this Court held: "Although as a rule this Court leans over backwards to help workers and employees continue with their employment or to mitigate the penalties imposed on them, acts of dishonesty in the handling of company property are a different matter. "Thus under Article 283 of the Labor Code, an employer may terminate an employment for 'serious misconduct' or for fraud or willful breach by the employee of the trust reposed in him by his employer or representative. "If there is sufficient evidence that an employee has been guilty of a breach of trust or that his employer has ample reasons to distrust him, the labor tribunal cannot justly deny to the employer the authority to dismiss such an employee." 2.ID.; ID.; ID.; ID.; ID.; DEGREE OF TRUST AND CONFIDENCE REQUIRED; DEPENDS UPON NATURE OF THE JOB. 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 employer's full trust and confidence. This must be distinguished from the case of ordinary rankand-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. (See Manila Midtown Commercial Corporation v. Nuwhrain (Ramada Chapter), supra). Thus, in the case of San Miguel Corp. v. National Labor Relations Commission (142 SCRA 376, 384 [1986]), this Court held: "Private respondent represents petitioner in his dealings with the public. When charges of theft of customer's properties and misconduct on the job are imputed on the sales agent, and these charges are supported with evidence, they constitute sufficient reasons for termination of employment. Well established in our jurisprudence is the right of am employer to dismiss an employee whose continuance in the service is inimical to the employer's interest. (Manila Trading and Supply, Co. v. Philippine Labor Union, 71 Phil. 124; Engineering Equipment, Inc. v. NLRC, 133 SCRA 752)" 3.ID.; ID.; ID.; ID.; ID.; PREVIOUS RECORD OF EMPLOYEE TAKEN INTO CONSIDERATION. In this case, the employee's infraction was not his first offense. We note that he was suspended and grounded for other offenses he committed in 1978. We regret, then, that this Court is powerless to extend to him the remedy of reinstatement even on the ground of equity based on his length of service. As this Court held in the case of Piedad v. Lanao del Norte Electric Cooperative, Inc. (153 SCRA 500, 509 [1987]): "The precedents on the issue before us are clear. Dismissal of a dishonest employee is to the best interest not only of management but also of labor (International Hardwood and Veneer Co. of the Phils. v. Leogardo, Jr., 117 SCRA 967). As a measure of self-protection against acts inimical to its interest, a company has the right to dismiss its erring employees (Dole Phils., Inc. v. National Labor Relations Commission, supra). An employer cannot be compelled to continue in employment an employee guilty of acts inimical to its interest, justifying loss of confidence in him (International Hardwood and Veneer Co., of the Philippines v. Leogardo, Jr. supra; National Service Corporation v. Leogardo, Jr; supra; Engineering Equipment, Inc. v. National Labor Relations Commission, supra). The law does not impose unjust situations on either labor or management."

DECISION

GUTIERREZ, JR., J :
p

Before us are two separate petitions docketed as G.R. No. 82680 and G.R. No. 84075 both assailing the decision of the National Labor Relations Commission in RAB Case No. VI-0038-85.

Fernando Vega, the petitioner in G.R. No. 84075, began his employment with Coca-Cola Bottlers Philippines, Inc., the petitioner in G.R. No. 82580, on November 1, 1976 as Sprite Salesman covering the Iloilo City routes. He was subsequently promoted to regular salesman in 1978. In the same year, however, on charges of issuing temporary credit sales receipts and denying dealer's accounts, he was demoted to relief salesman. He was also suspended for one (1) month and six (6) days and grounded for six (6) months. In 1981, he was again promoted to regular salesman. He held the same position until June 26, 1984 when he was terminated from employment on the charge of falsification of route sales report. On July 16, 1984, he filed with the then Ministry of Labor and Employment a complaint for unfair labor practice, illegal dismissal, unpaid wages and separation pay and for damages and attorney's fees. He alleged that he was dismissed without lawful cause because the falsification imputed to him did not result from deliberate and malicious intent but from honest mistake and oversight. He averred that on March 10, 1984, on the might he was about to turn over to the company the proceeds of his sales, he noticed a discrepancy of about P100.00 in his liquidation report; that after he checked his papers he found that the Incoming Load Report issued by the gate guard declared only five (5) cases of empty bottles while the duplicate copy issued by the stock clerk listed fifteen (15) cases of empties; that as he was about to correct the report, an unscheduled brown-out occurred; that he immediately submitted the uncorrected report to the pre-audit personnel with the intention to settle the error the following day. He further related that after he was informed by the cashier of his shortage, he immediately paid the amount of P100.00; that on May 12, 1984, he was grounded, and, that he submitted to an investigation hoping that his mistake will not be taken against him but he received a letter terminating his services on June 26, 1984. He pointed out that it is unlikely that he would bargain his seven years of dedicated service to the Company for a measly sum of P100.00, and stated that the Company was bent on terminating his services because he was an active union officer.
prLL

To rebut Vega's allegations of honest mistake and oversight, however, Coca-Cola Bottlers Philippines, Inc. outlined the procedure for the liquidation of sales. It contended that because of the sensitive nature of a sales agent's job, a system of liquidation was required which consists of daily checks on the goods and accomplishment of several documents which are subject to regular audit. It narrated that on March 10, 1984, upon entering the company's premises, Vega had the contents of his truck examined by the guard; that he prepared three (3) copies of the Incoming Load Report (ILR), one copy for him, one copy for the guard, and one for the files in a box; that the copy in the files listed five (5) cases of empty bottles; that thereafter, when Vega entered the plant, the plant checker examined his cargo and prepared two copies of checker slips, one copy for the stock clerk and one for Vega; that once inside the plant, Vega prepared his Route Sales Report (RSR) and turned over to the cashier and finance officer the RSR, ILR, and checker slips together with the cash collection; that upon audit, it was discovered that while the ILR and checker slips listed only five (5) cases of empty bottles, the RSR listed fifteen (16) cases; that it was also learned that Vega's copy of the ILR and checker slips were altered and also listed fifteen (15) cases; that due to the discrepancy the company was defrauded in the amount of P100.00 more or less. Coca-Cola Bottlers Philippines, Inc. alleged that it cannot condone Vega's acts because his job exposes him to financial transactions everyday. It further averred that Vega's acts showed willful and malicious intent to defraud the company and rendered him unworthy of its trust and confidence. On July 24, 1986, the Labor Arbiter found in favor of Vega. He ruled that any error in the entries in the sales report was made unintentionally and may probably be due to the sudden brownout alleged by Vega. He opined that the penalty of dismissal was too severe considering Vega's seven years of dedicated service to the company. Thus, he ordered the company to reinstate Vega to his former position and to pay him full and complete backwages and other benefits at the rate of P2,280.00 a month until reinstated, 10% attorney's fees and the amount of P5,000.00 as transportation and other incidental expenses. On appeal to the National Labor Relations Commission; the decision was modified. The NLRC was not convinced that the falsification was unintentional. It further observed that under company rules, the infraction

calls for the penalty of dismissal. It, however, noted Vega's seven years of service to the company and accordingly ordered his reinstatement with only three (3) months backwages. Both parties appealed from the decision. Coca-Cola Bottlers Philippines, Inc. filed its petition for review docketed as G.R. No. 82580 on April 6, 1988 while Vega filed the present petition for review on certiorari docketed as G.R. No. 84075 on April 21, 1988.

In a resolution dated October 17, 1988, this Court ordered the two cases consolidated considering that the subject matter and the issues involved in the two cases emanated from the same decision of the NLRC. In accordance with the Manifestation filed by the Office of the Solicitor General for the respondent NLRC, the Comment filed in G.R. No. 82580 is considered as the Comment required by this Court in G.R. No. 84076. We treat the Comments as Answers and decide these petitions on their merits.
cdll

Coca-Cola Bottlers Philippines, Inc. alleges that the NLRC erred in ordering Vega's reinstatement notwithstanding its finding that falsification was clearly committed by Vega. It contends that length of service does not warrant an employee's reinstatement where there is a clear showing that he committed acts constituting just causes of termination.
cdphil

On the other hand, Vega alleges that the NLRC committed grave abuse of discretion in considering facts not alleged in the labor arbiter's decision. He further states that the NLRC erred in denying him full backwages in spite of the fact that the labor arbiter clearly found that Coca-Cola Bottlers Philippines, Inc. committed an unfair labor practice. We rule in favor of Coca-Cola Bottlers Philippines, Inc. The NLRC's order of reinstatement based on the sole ground of length of service does it find support in either law or jurisprudence. When adequately proven, the dual grounds of breach of trust and loss of confidence constitute valid and ample bases to warrant termination of an errant employee. (Manila Midtown Commercial Corporation v. Nuwhrain (Ramada Chapter), 159 SCRA 212 [1988]). The employer's obligation to give his workers just compensation and treatment carries with it the corollary right to expect from the workers adequate work, diligence and good conduct. (Firestone Tire and Rubber Co. of the Phils. v. Lariosa, 148 SCRA 187 [1987]). In the last cited case, this Court held:
"Although as a rule this Court leans over backwards to help workers and employees continue with their employment or to mitigate the penalties imposed on them, acts of dishonesty in the handling of company property are a different matter. "Thus under Article 283 of the Labor Code, an employer may terminate an employment for 'serious misconduct' or for fraud or willful breach by the employee of the trust reposed in him by his employer or representative. "If there is sufficient evidence that an employee has been guilty of a breach of trust or that his employer has ample reasons to distrust him, the labor tribunal cannot justly deny to the employer the authority to dismiss such an employee."

There is no question that Coca-Cola Bottlers Philippines, Inc., is correct when it states that Vega's position as a sales agent is of such a nature as to require a substantial amount of trust and confidence on the part of the employer. The work of a salesman exposes him to voluminous financial transactions involving his employer's goods. The life of the softdrinks company depends not so much on the bottling or production of the product since this is primarily done by automatic machines and personnel who are easily supervised but upon mobile and far ranging salesmen who go from store to store all over the country or region. Salesmen are highly

individualistic personnel who have to be trusted and left essentially on their own. A high degree of confidence is reposed in them when they are entrusted with funds or properties of their employer.
LexLib

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 employer's 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. (See Manila Midtown Commercial Corporation v. Nuwhrain (Ramada Chapter), supra). Thus, in the case of San Miguel Corp. v. National Labor Relations Commission (142 SCRA 376, 384 [1986]), this Court held:
"Private respondent represents petitioner in his dealings with the public. When charges of theft of customer's properties and misconduct on the job are imputed on the sales agent, and these charges are supported with evidence, they constitute sufficient reasons for termination of employment. Well established in our jurisprudence is the right of am employer to dismiss an employee whose continuance in the service is inimical to the employer's interest. (Manila Trading and Supply, Co. v. Philippine Labor Union, 71 Phil. 124; Engineering Equipment, Inc. v. NLRC, 133 SCRA 752)"

In this case, the employee's infraction was not his first offense. We note that he was suspended and grounded for other offenses he committed in 1978. We regret, then, that this Court is powerless to extend to him the remedy of reinstatement even on the ground of equity based on his length of service. As this Court held in the case of Piedad v. Lanao del Norte Electric Cooperative, Inc. (153 SCRA 500, 509 [1987]):
"The precedents on the issue before us are clear. Dismissal of a dishonest employee is to the best interest not only of management but also of labor (International Hardwood and Veneer Co. of the Phils. v. Leogardo, Jr., 117 SCRA 967). As a measure of self-protection against acts inimical to its interest, a company has the right to dismiss its erring employees (Dole Phils., Inc. v. National Labor Relations Commission, supra). An employer cannot be compelled to continue in employment an employee guilty of acts inimical to its interest, justifying loss of confidence in him (International Hardwood and Veneer Co., of the Philippines v. Leogardo, Jr. supra; National Service Corporation v. Leogardo, Jr; supra; Engineering Equipment, Inc. v. National Labor Relations Commission,supra). The law does not impose unjust situations on either labor or management."
cdrep

Because of the difference between the findings of the Labor Arbiter and the NLRC, we have examined this aspect of the petition carefully. We affirm the NLRC conclusion that there was a clear falsification of commercial documents in this case. The tampered documents in the hands of Mr. Vega and presented to the cashier and finance officer showed fifteen cases of soft drinks bottles while the earlier copies of the same documents in the hands of the gate guard and the stock clerk and in the files reflected only five cases returned to the employer. There was no brownout yet when the "incoming load report" was given at the guard house and the checker slip given to the stock clerk. It cannot be reason for the discrepancy. Besides, why should a salesman prepare basic reports in the dark? The tampering to reflect a bigger number of returns was effected when the salesman presented his reports for the cashier and finance officer. The allegation that the salesman would not risk his job for such a small amount is not a defense because minor pilferages or thefts carried on over a long period of time through false reports or juggling of funds and properties may, as intended by the employee, remain unnoticed but they would destroy the company nonetheless if unchecked or tolerated. The Labor Arbiter is wrong; the NLRC is correct insofar as the appreciation of facts is concerned. WHEREFORE, the assailed decision of the National Labor Relations Commission is hereby REVERSED and SET ASIDE. The dismissal of petitioner Fernando Vega from his employment by Coca-Cola Bottlers Philippines, Incorporated is AFFIRMED as valid and according to law. SO ORDERED.

Fernan, C.J., Feliciano, Bidin and Cortes, JJ., concur.

[G.R. No. L-52056. October 30, 1980.] BONIFACIO DE LEON, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, SUGAR PRODUCERS COOPERATIVE MARKETING ASSOCIATION, INC., ALFREDO U. BENEDICTO and GWENDOLYN H. GUSTILO, respondents.

DECISION

DE CASTRO, J :
p

Petition for certiorari with prayer to annul the decision of the National Labor Relations Commission reversing the decision of the Labor Arbiter which ordered respondents to reinstate petitioner to his former position as Assistant Vice-President-Manager of Sugar Producers Cooperative Marketing Association, Inc. without loss of seniority rights and with full backwages to be computed from the date of his dismissal. This case arose from a complaint for illegal dismissal instituted by herein petitioner against private respondents. Petitioner started working with said corporation as a messenger wayback in 1949. He held various positions therein, such as bookkeeper, accountant, general office supervisor and Assistant-Manager. He rose to the position as Assistant Vice-President-Manager (Makati Office) in 1973 and held it continuously up to 1977. Prior to his dismissal, he was in the service for more than 28 years. In October 1976, petitioner was sent to Korea on an official business for respondent corporation. Before that, respondent Alfredo Benedicto, president and general manager of the corporation, verbally intimated to petitioner that the latter would soon be appointed as Assistant Vice-President for Finance, preparatory to his assuming the position of Vice-President for Finance upon the resignation of the then incumbent. In early November 1976, petitioner was instructed to attend the staff meeting at Bacolod every second and fourth Tuesdays of every month starting January 1977. Arrangements were made to enable petitioner to go to Bacolod on January 7, 1977. On January 6, 1977, respondent Benedicto called petitioner and asked him to take a vacation leave of one (1) month to start on January 10, 1977. On January 31, 1977, said respondent wrote petitioner a letter stating "that because of necessity, complainant is to extend his vacation leave for another month." Then on February 28, 1977, petitioner again received a letter from respondent Benedicto advising the former that he is to resume his leave effective March 1, 1977 to April 30, 1977 and that his application for retirement has been accepted effective April 30, 1977. On April 25, 1977, respondent Corporation tendered to petitioner a check for P36,492.63 "representing (his) retirement gratuity pay and office consideration for P10,000." Petitioner returned the P10,000 and accepted only P26,492.63 explaining in his letter that "he was shocked, tortured and desperate because of his unceremonious dismissal without cause and being the only breadwinner which includes eight (8) children, he naturally grabbed any money offered by the company, and that his decision was without the benefit of a legal counsel." Petitioner in his complaint alleged that he had not at any time or in any manner applied for retirement; that the requirement of due process was not observed, hence his dismissal is illegal and unjustified; that he was

not confronted by respondents to explain to him any cause or reason for his dismissal; that no specific charges were made against him and no formal investigation was made to afford him opportunity to acquit himself of any charges; and finally, the money offered by the corporation does not constitute estoppel or waiver on his part, considering that his acceptance was without prejudice to all his rights resulting from his illegal dismissal.
LLpr

The Labor Arbiter ruled in favor of petitioner and ordered respondents to reinstate the latter to his former position without loss of seniority rights and with full backwages. He stated in his decision 1 that there was no showing that petitioner has applied for retirement, which was admitted by respondent Benedicto himself during one of the hearings when he testified, and that there is no disclosure in the record that petitioner had even the slightest intention to retire or to avail of any retrenchment program. In support of his stand, the labor arbiter quoted an opinion rendered by leading US Arbitrators, to wit:
". . . if intent to resign or to retire is not adequately evidenced or if a statement of intent to resign or to retire is involuntary or coerced, an alleged resignation or retirement will be treated as discharge for purposes of arbitral review." (Healy in 61LA557; Kates in 51LA 1090)

The Labor Arbiter, further found, in substance as follows:


1)The alleged retirement of petitioner is now treated as discharge for purposes of arbitral review and since discharge is recognized to be the extreme industrial penalty, the burden is held to be on the employer to prove guilt of wrongdoing and probably more so where the agreement requires "just cause" for discharge. 2)From the testimony of respondent Benedicto that the auditing of the Company's books was done in the absence of petitioner and that there was no need to confront petitioner with the actual reports, it is safe to conclude that respondents have violated the basic notions of fairness and due process. 3)The evidence on record disclosed that petitioner was not afforded even a single opportunity to defend himself against the adverse partial findings of the auditors and as reflected in the testimony of respondent Benedicto, the reports made by the auditors were verbal reports only and not reduced to writing. 4)Respondents failed to present such quantum of proof where the alleged offense involves an element of moral turpitude or criminal intent. Reasonable doubts raised by proofs should be resolved in favor of the accused. 5)Respondent's contention that petitioner being a Managerial employee, could be terminated for lack of confidence cannot be sustained since the alleged loss of confidence must necessarily have resulted from grounds which prompted petitioner's dismissal and in as much as said grounds are unsubstantiated, there can be no valid reason for loss of confidence. 6.The ground of retrenchment as the basis of petitioner's dismissal became a mere pretext and discriminatory considering that when petitioner was forced to go on vacation leave, respondent Benedicto appointed immediately respondent Gustilo to perform the functions of petitioner. 7)Respondents' allegation that petitioner is estopped from questioning the legality of his dismissal considering that he has accepted the retirement gratuity, runs counter to the ruling of the Supreme Court in the Mercury Drug Case (56 SCRA 694-713) wherein Justice Sanchez has said: ". . . those benefits would not amount to estoppel. . . . , employer and employee obviously do not stand on the same footing. The employer drove the employee to the wall. The latter must have in get hold of his money. Because, out of job, he had to face the harsh necessities of life. He thus found himself in no position to resist the money proferred him. He is then, a case of adherence, not of choice. One thing sure, however, is that petitioners did not relent on their claim. They pressed it. They are deemed not to have waived any right. . . ."

Private respondents appealed to the Commission which rendered a decision on July 12, 1979 reversing the Labor Arbiter's decision and dismissing the complaint. It was pointed out by the Commission that although no retirement application was filed, petitioner was agreeable to retirement since he accepted the retirement benefits; that petitioner should have insisted on an investigation upon learning of his involvement in the irregularities in the Company books, and under the circumstance, his position required a high degree of trust and confidence and he could no longer measure up to respondent Corporation's expectation. 2 Hence, the petition before Us raising the following assignment of errors:
1.Whether or not the NLRC can make findings or conclusions which are not supported by evidence presented. 2.Whether or not an employee is entitled to a formal investigation of whatever specific charges against him or whether or not his dismissal based on lack of confidence should be set aside. 3.Whether or not a retirement effected upon employer's initiative and insistence can be considered a free and voluntary act of an employee. 4.Whether or not acceptance by employee of benefits proferred by employer amounts to estoppel. 5.Whether or not dismissal for loss of confidence, to be warranted, should have some basis therefor.

Petitioner alleged that the "irregularities" charged were not explained or amplified in the text of the commission's decision; neither is there a reference to the nature of the evidence collated by the team of auditors; that there is no demonstration or explanation as to how such evidence established his personal involvement in said irregularities; that it is employer's duty to conduct an investigation into the anomalies imputed to an employee even if the latter does not expressly ask for it; and an employee is entitled to an investigation as a matter of right. Commenting on the petition, private respondents averred that they gave petitioner one month vacation leave to give the auditors a free hand in the audit of the books in the Makati Office; that petitioner authorized his brother to withdraw from the Company's bonded warehouse empty plastic bags which are normally sold for added income to the company but such withdrawal was not supported by sales invoices nor delivery orders contrary to the company's standard accounting principles; that petitioner caused the issuance to another check in addition to his loyalty bonus which was beyond board approval; that Mr. Benedicto informed petitioner in private that the initial findings of the auditor's team were adverse to him, and it was agreed that petitioner would just retire under the company's retrenchment program to save him from embarrassment attendant to a full-dress investigation; petitioner accepted the retirement gratuity and with that, he is estopped from claiming that he did not apply for retirement, and the involvement, of petitioner in the anomalies reported by the auditors is more than sufficient cause for his severance from the company on the ground of lack of confidence.
cdrep

We find merit in the petition. There is in this case a clear denial of due process, a constitutional right which must be safeguarded at all times specially when what is at stake is petitioner's position as his only means of livelihood. He has, in addition, a family to consider, and it is the right of every working man to assure himself and his family a life worthy of human dignity. It is therefore incumbent upon the employer to conduct a formal investigation and conform the employee of the specific charges against him. Respondents should be reminded that under our system of government, even the most hardened criminals are given their day in court. That petitioner was deprived of his right to be heard and acquit himself of the charges, finds support in the testimony of Mr. Benedicto. 3 The latter declared that there was no need to confront Mr. de Leon with the

actual reports, but he was told that partial audit reports were adverse to him. It must be stressed that the due process requirement is not a mere formality that may be dispensed with at will. Its disregard is a matter of serious concern since it is a constitutional safeguard of the highest order; and a response to man's innate sense of justice. 4 No interrogations or inquiries took place to due petitioner an opportunity to defend himself, as testified by Mr. Benedicto thus:
"Atty. de Castillo: Was there a time when these auditors requested the presence of Mr. de Leon so he could explain some items he was auditing? "Mr. Benedicto: No."
5

The act of respondents in dismissing petitioner without first conducting a formal investigation is arbitrary and unwarranted. The right of an employer to dismiss an employee differs from and should not be confused with the manner in which such right is exercised. 6 It must not be oppressive and abusive since it affects one's person and property. The Commission in its decision states that petitioner did not file any retirement application, a fact likewise admitted by Mr. Benedicto when he was interrogated by the Labor Arbiter. 7 We agree with the observation of the Labor Arbiter that if the intent to retire is not clearly established or if the retirement is involuntary, it is to be treated as a discharge. There is no showing that petitioner had the slightest intention to retire or avail of the retrenchment program as alleged by private respondents. The retirement of petitioner was, therefore, forced upon him by his employer and was not done voluntarily. 8 While a Managerial employee may be dismissed merely on the ground of loss of confidence, the matter of determining whether the cause for dismissing an employee is justified on ground of loss of confidence, cannot be left entirely to the employer. Impartial tribunals do not rely only on the statement made by employer that there is "loss of confidence" unless duly proved or sufficiently substantiated. We find no reason to disturb the findings of the Labor Arbiter that the charges against petitioner were not fully substantiated, and "there can be no valid reason for said loss of confidence. Anent the charges of unauthorized withdrawal of the plastic bags by petitioner's brother, and unauthorized additional bonus, the arbiter found no anomaly considering that the evidence presented during the proceedings discloses that the withdrawal and the granting of bonus were all approved and ratified by the board. Thus, the Commission erred in dismissing the complaint and acted with patent abuse of discretion. Its assailed decision fails to establish by substantial evidence the involvement of petitioner in the alleged anomalies imputed to him. Without such supporting evidence, the conclusions made by the Commission are not binding with this Court; they must be set aside. After having served the company for more than 20 years, dismissal would be too severe a penalty for petitioner who was not even afforded an opportunity to be heard. He was just a victim of the whims and malicious maneuver of private respondents.
cdphil

The contention of respondents that petitioner is barred from contesting the illegality of his dismissal since he has already received his separation pay cannot be sustained. Since he was forced to retire, he suddenly found himself jobless with a family of eight (8) children to support. He had no alternative but to accept what was offered to him. He needed money to support his family. He had to grab whatever was offered as he accepted less than what was offered to show his non-acquiescence to what amounted to dismissal. Employees who received their separation pay are not barred from contesting the legality of their dismissal. The acceptance of those benefits would not amount to estoppel as held in the leading case of Mercury Drug Co. vs. CIR 9 as aptly cited in the decision of the Labor Arbiter.

Having been illegally dismissed, petitioner is entitled to reinstatement with backwages corresponding to a period of three (3) years without qualification minus the amount of P26,492.63 he was forced to receive as retirement gratuity pay. WHEREFORE, the assailed decision dated July 12, 1979 of the National Labor Relations Commission is hereby SET ASIDE, and the Labor Arbiter's decision dated January 2, 1979 is REINSTATED with modification by ordering private respondents to immediately reinstate petitioner to his former position as Assistant VicePresident Manager (Makati Office) of respondent corporation without loss of seniority rights and other benefits and increases recognized by law or granted by private respondents during the period of his illegal dismissal corresponding to his position to which he is now ordered reinstated, with backwages equivalent to three years without qualification minus the amount of P26,492.63 he received as retirement gratuity pay. No costs. SO ORDERED.

Teehankee, Acting C.J., Makasiar, Fernandez, Guerrero and Melencio-Herrera, JJ ., concur.

[G.R. No. 157010. June 21, 2005.] PHILIPPINE NATIONAL BANK, petitioner, vs. FLORENCE O. CABANSAG, respondent.

DECISION

PANGANIBAN, J :
p

The Court reiterates the basic policy that all Filipino workers, whether employed locally or overseas, enjoy the protective mantle of Philippine labor and social legislations. Our labor statutes may not be rendered ineffective by laws or judgments promulgated, or stipulations agreed upon, in a foreign country.

The Case
Before us is a Petition for Review on Certiorari 1 under Rule 45 of the Rules of Court, seeking to reverse and set aside the July 16, 2002 Decision 2 and the January 29, 2003 Resolution 3 of the Court of Appeals (CA) in CA-GR SP No. 68403. The assailed Decision dismissed the CA Petition (filed by herein petitioner), which had sought to reverse the National Labor Relations Commission (NLRC)'s June 29, 2001 Resolution, 4 affirming Labor Arbiter Joel S. Lustria's January 18, 2000 Decision. 5 The assailed CA Resolution denied herein petitioner's Motion for Reconsideration.

The Facts
The facts are narrated by the Court of Appeals as follows:
"In late 1998, [herein Respondent Florence Cabansag] arrived in Singapore as a tourist. She applied for employment, with the Singapore Branch of the Philippine National Bank, a private banking corporation organized and existing under the laws of the Philippines, with principal offices at the PNB Financial Center, Roxas Boulevard, Manila. At the time, the Singapore PNB Branch was under the helm of Ruben C. Tobias, a lawyer, as General Manager, with the rank of Vice-President of the Bank. At the time, too, the Branch Office had two (2) types of employees: (a) expatriates or the regular employees, hired in

Manila and assigned abroad including Singapore, and (b) locally (direct) hired. She applied for employment as Branch Credit Officer, at a total monthly package of $SG4,500.00, effective upon assumption of duties after approval. Ruben C. Tobias found her eminently qualified and wrote on October 26, 1998, a letter to the President of the Bank in Manila, recommending the appointment of Florence O. Cabansag, for the position. xxx xxx xxx "The President of the Bank was impressed with the credentials of Florence O. Cabansag that he approved the recommendation of Ruben C. Tobias. She then filed an ' Application,' with the Ministry of Manpower of the Government of Singapore, for the issuance of an ' Employment Pass' as an employee of the Singapore PNB Branch. Her application was approved for a period of two (2) years. "On December 7, 1998, Ruben C. Tobias wrote a letter to Florence O. Cabansag offering her a temporary appointment, as Credit Officer, at a basic salary of Singapore Dollars 4,500.00, a month and, upon her successful completion of her probation to be determined solely, by the Bank, she may be extended at the discretion of the Bank, a permanent appointment and that her temporary appointment was subject to the following terms and conditions: '1.You will be on probation for a period of three (3) consecutive months from the date of your assumption of duty. '2.You will observe the Bank's rules and regulations and those that may be adopted from time to time. '3.You will keep in strictest confidence all matters related to transactions between the Bank and its clients. '4.You will devote your full time during business hours in promoting the business and interest of the Bank.
HICSTa

'5.You will not, without prior written consent of the Bank, be employed in anyway for any purpose whatsoever outside business hours by any person, firm or company. '6.Termination of your employment with the Bank may be made by either party after notice of one (1) day in writing during probation, one month notice upon confirmation or the equivalent of one (1) day's or month's salary in lieu of notice.' "Florence O. Cabansag accepted the position and assumed office. In the meantime, the Philippine Embassy in Singapore processed the employment contract of Florence O. Cabansag and, on March 8, 1999, she was issued by the Philippine Overseas Employment Administration, an ' Overseas Employment Certificate,' certifying that she was a bona fide contract worker for Singapore. xxx xxx xxx "Barely three (3) months in office, Florence O. Cabansag submitted to Ruben C. Tobias, on March 9, 1999, her initial 'Performance Report.' Ruben C. Tobias was so impressed with the 'Report' that he made a notation and, on said 'Report': 'GOOD WORK.' However, in the evening of April 14, 1999, while Florence O. Cabansag was in the flat, which she and Cecilia Aquino, the Assistant Vice-President and Deputy General Manager of the Branch and Rosanna Sarmiento, the Chief Dealer of the said Branch, rented, she was told by the two (2) that Ruben C. Tobias has asked them to tell Florence O. Cabansag to resign from her job. Florence O. Cabansag was perplexed at the sudden turn of events and the runabout way Ruben C. Tobias procured her resignation from the Bank. The next day, Florence O. Cabansag talked to Ruben C. Tobias and inquired if what Cecilia Aquino and Rosanna Sarmiento had told her was true. Ruben C. Tobias confirmed the veracity of the information, with the explanation that her resignation was imperative as a 'cost-cutting measure' of the Bank. Ruben C. Tobias, likewise, told Florence O. Cabansag that the PNB Singapore Branch will be sold or transformed into a remittance

office and that, in either way, Florence O. Cabansag had to resign from her employment. The more Florence O. Cabansag was perplexed. She then asked Ruben C. Tobias that she be furnished with a 'Formal Advice' from the PNB Head Office in Manila. However, Ruben C. Tobias flatly refused. Florence O. Cabansag did not submit any letter of resignation. "On April 16, 1999, Ruben C. Tobias again summoned Florence O. Cabansag to his office and demanded that she submit her letter of resignation, with the pretext that he needed a Chinesespeaking Credit Officer to penetrate the local market, with the information that a Chinese-speaking Credit Officer had already been hired and will be reporting for work soon. She was warned that, unless she submitted her letter of resignation, her employment record will be blemished with the notation 'DISMISSED' spread thereon. Without giving any definitive answer, Florence O. Cabansag asked Ruben C. Tobias that she be given sufficient time to look for another job. Ruben C. Tobias told her that she should be 'out' of her employment by May 15, 1999. "However, on April 19, 1999, Ruben C. Tobias again summoned Florence O. Cabansag and adamantly ordered her to submit her letter of resignation. She refused. On April 20, 1999, she received a letter from Ruben C. Tobias terminating her employment with the Bank. xxx xxx xxx "On January 18, 2000, the Labor Arbiter rendered judgment in favor of the Complainant and against the Respondents, the decretal portion of which reads as follows: 'WHEREFORE, considering the foregoing premises, judgment is hereby rendered finding respondents guilty of Illegal dismissal and devoid of due process, and are hereby ordered: 1.To reinstate complainant to her former or substantially equivalent position without loss of seniority rights, benefits and privileges; 2.Solidarily liable to pay complainant as follows: a)To pay complainant her backwages from 16 April 1999 up to her actual reinstatement. Her backwages as of the date of the promulgation of this decision amounted to SGD 40,500.00 or its equivalent in Philippine Currency at the time of payment; b)Mid-year bonus in the amount of SGD 2,250.00 or its equivalent in Philippine Currency at the time of payment; c)Allowance for Sunday banking in the amount of SGD 120.00 or its equivalent in Philippine Currency at the time of payment; d)Monetary equivalent of leave credits earned on Sunday banking in the amount of SGD 1,557.67 or its equivalent in Philippine Currency at the time of payment; e.)Monetary equivalent of unused sick leave benefits in the amount of SGD 1,150.60 or its equivalent in Philippine Currency at the time of payment. f.)Monetary equivalent of unused vacation leave benefits in the amount of SGD 319.85 or its equivalent in Philippine Currency at the time of payment. g.)13th month pay in the amount of SGD 4,500.00 or its equivalent in Philippine Currency at the time of payment;

3.Solidarily to pay complainant actual damages in the amount of SGD 1,978.00 or its equivalent in Philippine Currency at the time of payment, and moral damages in the amount of PhP 200,000.00, exemplary damages in the amount of PhP 100,000.00; 4.To pay complainant the amount of SGD 5,039.81 or its equivalent in Philippine Currency at the time of payment, representing attorney's fees.
TAIDHa

SO ORDERED." 6 [Emphasis in the original.]

PNB appealed the labor arbiter's Decision to the NLRC. In a Resolution dated June 29, 2001, the Commission affirmed that Decision, but reduced the moral damages to P100,000 and the exemplary damages to P50,000. In a subsequent Resolution, the NLRC denied PNB's Motion for Reconsideration.

Ruling of the Court of Appeals


In disposing of the Petition for Certiorari, the CA noted that petitioner bank had failed to adduce in evidence the Singaporean law supposedly governing the latter's employment Contract with respondent. The appellate court found that the Contract had actually been processed by the Philippine Embassy in Singapore and approved by the Philippine Overseas Employment Administration (POEA), which then used that Contract as a basis for issuing an Overseas Employment Certificate in favor of respondent. According to the CA, even though respondent secured an employment pass from the Singapore Ministry of Employment, she did not thereby waive Philippine labor laws, or the jurisdiction of the labor arbiter or the NLRC over her Complaint for illegal dismissal. In so doing, neither did she submit herself solely to the Ministry of Manpower of Singapore's jurisdiction over disputes arising from her employment. The appellate court further noted that a cursory reading of the Ministry's letter will readily show that no such waiver or submission is stated or implied.

Finally, the CA held that petitioner had failed to establish a just cause for the dismissal of respondent. The bank had also failed to give her sufficient notice and an opportunity to be heard and to defend herself. The CA ruled that she was consequently entitled to reinstatement and back wages, computed from the time of her dismissal up to the time of her reinstatement. Hence, this Petition.
7

Issues
Petitioner submits the following issues for our consideration:
"1.Whether or not the arbitration branch of the NLRC in the National Capital Region has jurisdiction over the instant controversy; "2.Whether or not the arbitration of the NLRC in the National Capital Region is the most convenient venue or forum to hear and decide the instant controversy; and "3.Whether or not the respondent was illegally dismissed, and therefore, entitled to recover moral and exemplary damages and attorney's fees." 8

In addition, respondent assails, in her Comment, 9 the propriety of Rule 45 as the procedural mode for seeking a review of the CA Decision affirming the NLRC Resolution. Such issue deserves scant consideration. Respondent miscomprehends the Court's discourse in St. Martin Funeral Home v. NLRC, 10 which has indeed

affirmed that the proper mode of review of NLRC decisions, resolutions or orders is by a special civil action for certiorari under Rule 65 of the Rules of Court. The Supreme Court and the Court of Appeals have concurrent original jurisdiction over such petitions for certiorari. Thus, in observance of the doctrine on the hierarchy of courts, these petitions should be initially filed with the CA. 11 Rightly, the bank elevated the NLRC Resolution to the CA by way of a Petition for Certiorari. In seeking a review by this Court of the CA Decision on questions of jurisdiction, venue and validity of employment termination petitioner is likewise correct in invoking Rule 45. 12 It is true, however, that in a petition for review on certiorari, the scope of the Supreme Court's judicial review of decisions of the Court of Appeals is generally confined only to errors of law. It does not extend to questions of fact. This doctrine applies with greater force in labor cases. Factual questions are for the labor tribunals to resolve. 13 In the present case, the labor arbiter and the NLRC have already determined the factual issues. Their findings, which are supported by substantial evidence, were affirmed by the CA. Thus, they are entitled to great respect and are rendered conclusive upon this Court, absent a clear showing of palpable error or arbitrary disregard of evidence. 14

The Court's Ruling


The Petition has no merit.

First Issue: Jurisdiction


The jurisdiction of labor arbiters and the NLRC is specified in Article 217 of the Labor Code as follows:
"ART. 217.Jurisdiction of Labor Arbiters and the Commission. (a) Except as otherwise provided under this Code the Labor Arbiters shall have original and exclusive jurisdiction to hear and decide, within thirty (30) calendar days after the submission of the case by the parties for decision without extension, even in the absence of stenographic notes, the following cases involving all workers, whether agricultural or non-agricultural: 1.Unfair labor practice cases; 2.Termination disputes; 3.If accompanied with a claim for reinstatement, those cases that workers may file involving wage, rates of pay, hours of work and other terms and conditions of employment 4.Claims for actual, moral, exemplary and other forms of damages arising from the employeremployee relations; 5.Cases arising from any violation of Article 264 of this Code, including questions involving the legality of strikes and lockouts; and 6.Except claims for Employees Compensation, Social Security, Medicare and maternity benefits, all other claims, arising from employer-employee relations, including those of persons in domestic or household service, involving an amount of exceeding five thousand pesos (P5,000.00) regardless of whether accompanied with a claim for reinstatement.
SaCIAE

(b)The commission shall have exclusive appellate jurisdiction over all cases decided by Labor Arbiters. xxx xxx xxx."

More specifically, Section 10 of RA 8042 reads in part:


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

Based on the foregoing provisions, labor arbiters clearly have original and exclusive jurisdiction over claims arising from employer-employee relations, includingtermination disputes involving all workers, among whom are overseas Filipino workers (OFW). 15 We are not unmindful of the fact that respondent was directly hired, while on a tourist status in Singapore, by the PNB branch in that city state. Prior to employing respondent, petitioner had to obtain an employment pass for her from the Singapore Ministry of Manpower. Securing the pass was a regulatory requirement pursuant to the immigration regulations of that country. 16 Similarly, the Philippine government requires non-Filipinos working in the country to first obtain a local work permit in order to be legally employed here. That permit, however, does not automatically mean that the noncitizen is thereby bound by local laws only, as averred by petitioner. It does not at all imply a waiver of one's national laws on labor. Absent any clear and convincing evidence to the contrary, such permit simply means that its holder has a legal status as a worker in the issuing country. Noteworthy is the fact that respondent likewise applied for and secured an Overseas Employment Certificate from the POEA through the Philippine Embassy in Singapore. The Certificate, issued on March 8, 1999, declared her a bona fide contract worker for Singapore. Under Philippine law, this document authorized her working status in a foreign country and entitled her to all benefits and processes under our statutes. Thus, even assuming arguendo that she was considered at the start of her employment as a "direct hire" governed by and subject to the laws, common practices and customs prevailing in Singapore 17 she subsequently became a contract worker or an OFW who was covered by Philippine labor laws and policies upon certification by the POEA. At the time her employment was illegally terminated, she already possessed the POEA employment Certificate. Moreover, petitioner admits that it is a Philippine corporation doing business through a branch office in Singapore. 18 Significantly, respondent's employment by the Singapore branch office had to be approved by Benjamin P. Palma Gil, 19 the president of the bank whose principal offices were in Manila. This circumstance militates against petitioner's contention that respondent was "locally hired"; and totally "governed by and subject to the laws, common practices and customs" of Singapore, not of the Philippines. Instead, with more reason does this fact reinforce the presumption that respondent falls under the legal definition of migrant worker, in this case one deployed in Singapore. Hence, petitioner cannot escape the application of Philippine laws or the jurisdiction of the NLRC and the labor arbiter. In any event, we recall the following policy pronouncement of the Court in Royal Crown Internationale v. NLRC: 20
". . . Whether employed locally or overseas, all Filipino workers enjoy the protective mantle of Philippine labor and social legislation, contract stipulations to the contrary notwithstanding. This pronouncement is in keeping with the basic public policy of the State to afford protection to labor, promote full employment, ensure equal work opportunities regardless of sex, race or creed, and regulate the relations between workers and employers. For the State assures the basic rights of all workers to self-organization, collective bargaining, security of tenure, and just and humane conditions of work [Article 3 of the Labor Code of the Philippines; See also Section 18, Article II and Section 3,

Article XIII, 1987 Constitution]. This ruling is likewise rendered imperative by Article 17 of the Civil Code which states that laws 'which have for their object public order, public policy and good customs shall not be rendered ineffective by laws or judgments promulgated, or by determination or conventions agreed upon in a foreign country."

Second Issue: Proper Venue


Section 1(a) of Rule IV of the NLRC Rules of Procedure reads:
"Section 1.Venue. (a) All cases which Labor Arbiters have authority to hear and decide may be filed in the Regional Arbitration Branch having jurisdiction over the workplace of the complainant/petitioner; Provided, however that cases of Overseas Filipino Worker (OFW) shall be filed before the Regional Arbitration Branch where the complainant resides or where the principal office of the respondent/employer is situated, at the option of the complainant. "For purposes of venue, workplace shall be understood as the place or locality where the employee is regularly assigned when the cause of action arose. It shall include the place where the employee is supposed to report back after a temporary detail, assignment or travel. In the case of field employees, as well as ambulant or itinerant workers, their workplace is where they are regularly assigned, or where they are supposed to regularly receive their salaries/wages or work instructions from, and report the results of their assignment to their employers."

Under the "Migrant Workers and Overseas Filipinos Act of 1995" (RA 8042), a migrant worker "refers to a person who is to be engaged, is engaged or has been engaged in a remunerated activity in a state of which he or she is not a legal resident; to be used interchangeably with overseas Filipino worker." 21 Undeniably, respondent was employed by petitioner in its branch office in Singapore. Admittedly, she is a Filipino and not a legal resident of that state. She thus falls within the category of "migrant worker" or "overseas Filipino worker." As such, it is her option to choose the venue of her Complaint against petitioner for illegal dismissal. The law gives her two choices: (1) at the Regional Arbitration Branch (RAB) where she resides or (2) at the RAB where the principal office of her employer is situated. Since her dismissal by petitioner, respondent has returned to the Philippines specifically to her residence at Filinvest II, Quezon City. Thus, in filing her Complaint before the RAB office in Quezon City, she has made a valid choice of proper venue.
cCSDTI

Third Issue: Illegal Dismissal


The appellate court was correct in holding that respondent was already a regular employee at the time of her dismissal, because her three-month probationary period of employment had already ended. This ruling is in accordance with Article 281 of the Labor Code: "An employee who is allowed to work after a probationary period shall be considered a regular employee." Indeed, petitioner recognized respondent as such at the time it dismissed her, by giving her one month's salary in lieu of a one-month notice, consistent with provision No. 6 of her employment Contract.

Notice and Hearing Not Complied With


As a regular employee, respondent was entitled to all rights, benefits and privileges provided under our labor laws. One of her fundamental rights is that she may not be dismissed without due process of law. The twin

requirements of notice and hearing constitute the essential elements of procedural due process, and neither of these elements can be eliminated without running afoul of the constitutional guarantee. 22 In dismissing employees, the employer must furnish them two written notices: 1) one to apprise them of the particular acts or omissions for which their dismissal is sought; and 2) the other to inform them of the decision to dismiss them. As to the requirement of a hearing, its essence lies simply in the opportunity to be heard. 23 The evidence in this case is crystal-clear. Respondent was not notified of the specific act or omission for which her dismissal was being sought. Neither was she given any chance to be heard, as required by law. At any rate, even if she were given the opportunity to be heard, she could not have defended herself effectively, for she knew no cause to answer to. All that petitioner tendered to respondent was a notice of her employment termination effective the very same day, together with the equivalent of a one-month pay. This Court has already held that nothing in the law gives an employer the option to substitute the required prior notice and opportunity to be heard with the mere payment of 30 days' salary. 24 Well-settled is the rule that the employer shall be sanctioned for noncompliance with the requirements of, or for failure to observe, due process that must be observed in dismissing an employee. 25

No Valid Cause for Dismissal


Moreover, Articles 282, 26 283 27 and 284 28 of the Labor Code provide the valid grounds or causes for an employee's dismissal. The employer has the burden of proving that it was done for any of those just or authorized causes. The failure to discharge this burden means that the dismissal was not justified, and that the employee is entitled to reinstatement and back wages. 29 Notably, petitioner has not asserted any of the grounds provided by law as a valid reason for terminating the employment of respondent. It merely insists that her dismissal was validly effected pursuant to the provisions of her employment Contract, which she had voluntarily agreed to be bound to.
cDIHES

Truly, the contracting parties may establish such stipulations, clauses, terms and conditions as they want, and their agreement would have the force of law between them. However, petitioner overlooks the qualification that those terms and conditions agreed upon must not be contrary to law, morals, customs, public policy or public order. 30 As explained earlier, the employment Contract between petitioner and respondent is governed by Philippine labor laws. Hence, the stipulations, clauses, and terms and conditions of the Contract must not contravene our labor law provisions. Moreover, a contract of employment is imbued with public interest. The Court has time and time again reminded parties that they "are not at liberty to insulate themselves and their relationships from the impact of labor laws and regulations by simply contracting with each other." 31 Also, while a contract is the law between the parties, the provisions of positive law that regulate such contracts are deemed included and shall limit and govern the relations between the parties. 32 Basic in our jurisprudence is the principle that when there is no showing of any clear, valid, and legal cause for the termination of employment, the law considers the matter a case of illegal dismissal. 33

Awards for Damages Justified


Finally, moral damages are recoverable when the dismissal of an employee is attended by bad faith or constitutes an act oppressive to labor or is done in a manner contrary to morals, good customs or public

policy. 34 Awards for moral and exemplary damages would be proper if the employee was harassed and arbitrarily dismissed by the employer. 35 In affirming the awards of moral and exemplary damages, we quote with approval the following ratiocination of the labor arbiter:
"The records also show that [respondent's] dismissal was effected by [petitioners'] capricious and highhanded manner, anti-social and oppressive, fraudulent and in bad faith, and contrary to morals, good customs and public policy. Bad faith and fraud are shown in the acts committed by [petitioners] before, during and after [respondent's] dismissal in addition to the manner by which she was dismissed. First, [respondent] was pressured to resign for two different and contradictory reasons, namely, cost-cutting and the need for a Chinese[-]speaking credit officer, for which no written advice was given despite complainant's request. Such wavering stance or vacillating position indicates bad faith and a dishonest purpose. Second, she was employed on account of her qualifications, experience and readiness for the position of credit officer and pressured to resign a month after she was commended for her good work. Third, the demand for [respondent's] instant resignation on 19 April 1999 to give way to her replacement who was allegedly reporting soonest, is whimsical, fraudulent and in bad faith, because on 16 April 1999 she was given a period of [sic] until 15 May 1999 within which to leave. Fourth, the pressures made on her to resign were highly oppressive, anti-social and caused her absolute torture, as [petitioners] disregarded her situation as an overseas worker away from home and family, with no prospect for another job. She was not even provided with a return trip fare. Fifth, the notice of termination is an utter manifestation of bad faith and whim as it totally disregards [respondent's] right to security of tenure and due process. Such notice together with the demands for [respondent's] resignation contravenes the fundamental guarantee and public policy of the Philippine government on security of tenure. "[Respondent] likewise established that as a proximate result of her dismissal and prior demands for resignation, she suffered and continues to suffer mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock and social humiliation. Her standing in the social and business community as well as prospects for employment with other entities have been adversely affected by her dismissal. [Petitioners] are thus liable for moral damages under Article 2217 of the Civil Code. xxx xxx xxx "[Petitioners] likewise acted in a wanton, oppressive or malevolent manner in terminating [respondent's] employment and are therefore liable for exemplary damages. This should served [sic] as protection to other employees of [petitioner] company, and by way of example or correction for the public good so that persons similarly minded as [petitioners] would be deterred from committing the same acts." 36

The Court also affirms the award of attorney's fees. It is settled that when an action is instituted for the recovery of wages, or when employees are forced to litigate and consequently incur expenses to protect their rights and interests, the grant of attorney's fees is legally justifiable. 37 WHEREFORE, the Petition is DENIED and the assailed Decision and Resolution AFFIRMED. Costs against petitioner. SO ORDERED.

Sandoval-Gutierrez, Corona, Carpio Morales and Garcia, JJ., concur.

[G.R. No. 155505. February 15, 2007.]

EMILIO M. CAPAROSO and JOEVE P. QUINDIPAN, petitioners, vs. COURT OF APPEALS, NATIONAL LABOR RELATIONS COMMISSION, COMPOSITE ENTERPRISES INCORPORATED, and EDITH TAN, respondents.

DECISION

CARPIO, J :
p

The Case Before the Court is a petition for review assailing the 27 June 2002 Decision 1 and 30 September 2002 Resolution 2 of the Court of Appeals in CA-G.R. SP No. 67156. The Antecedent Facts Composite Enterprises Incorporated (Composite) is engaged in the distribution and supply of confectioneries to various retail establishments within the Philippines. Emilio M. Caparoso (Caparoso) and Joeve P. Quindipan (Quindipan) were Composite's deliverymen. Caparoso alleged that he was hired on 8 November 1998 while Quindipan alleged that he was hired on intermittent basis since 1997. Quindipan further alleged that he had been working continuously with Composite since August 1998. On 8 October 1999, Caparoso and Quindipan (petitioners) were dismissed from the service. They filed a consolidated position paper before the Labor Arbiter charging Composite and its Personnel Manager Edith Tan (Tan) with illegal dismissal. Composite and Tan (respondents) alleged that petitioners were both hired on 11 May 1999 as deliverymen, initially for three months and then on a month-to-month basis. Respondents alleged that petitioners' termination from employment resulted from the expiration of their contracts of employment on 8 October 1999. The Labor Arbiter ruled that petitioners are regular employees of respondents. In his Decision 3 dated 15 June 2000, the Labor Arbiter held:
WHEREFORE, premises considered, judgment is hereby rendered declaring complainants to have been illegally dismissed from employment and consequently, respondent COMPOSITE ENTERPRISES CORPORATION is hereby ordered to immediately reinstate complainants to their respective former position[s] without loss of seniority rights and other privileges, with full backwages from the date of dismissal up to the actual date of reinstatement which, as of this date, amounts to P93,155.36, as above computed. SO ORDERED.
4

The Labor Arbiter ruled that by the very nature of respondents' business and the nature of petitioners' services, there is no doubt as to the employment status of petitioners.
aADSIc

Respondents appealed to the National Labor Relations Commission (NLRC). In its 9 May 2001 Decision, 5 the NLRC set aside the Labor Arbiter's Decision and dismissed petitioners' complaint for illegal dismissal. The NLRC ruled that the mere fact that the employees' duties are necessary or desirable in the business or trade of the employer does not mean that they are forbidden from stipulating the period of employment. The NLRC held that petitioners' contracts of employment are valid and binding between the contracting parties and shall be

considered as the law between them. The NLRC ruled that petitioners are bound by their employment contracts. Petitioners filed a motion for reconsideration. The NLRC denied the motion in its 9 August 2001 Resolution. Petitioners filed a petition for certiorari before the Court of Appeals. The Ruling of the Court of Appeals In its 27 June 2002 Decision, the Court of Appeals dismissed the petition and affirmed the NLRC's 9 May 2001 Decision and 9 August 2001 Resolution. The Court of Appeals held that respondents' manpower requirement varies from month to month depending on the demand from their clients for their products. Respondents' manpower requirement determines the period of their employees' services. Respondents employed petitioners for the purpose of addressing a temporary manpower shortage. Petitioners filed a motion for reconsideration. In its 30 September 2002 Resolution, the Court of Appeals denied the motion for reconsideration. Hence, the petition before this Court. The Issues The petition raises these issues: 1.Whether petitioners are regular employees of respondents; and 2.Whether respondents are guilty of illegal dismissal. The Ruling of this Court The petition has no merit.
6

Petitioners are Not Regular Employees


Article 280 of the Labor Code provides:
Art. 280.Regular and Casual Employment. The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season. An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That, any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such activity exists.
DSITEH

Under Article 280 of the Labor Code, a regular employee is (1) one who is engaged to perform activities that are necessary or desirable in the usual trade or business of the employer, or (2) a casual employee who has

rendered at least one year of service, whether continuous or broken, with respect to the activity in which he is employed. 7 However, even if an employee is engaged to perform activities that are necessary or desirable in the usual trade or business of the employer, it does not preclude the fixing of employment for a definite period. In Brent School, Inc. v. Zamora, 8 this Court ruled that the contract, which was entered into before the effectivity of the Labor Code on 1 November 1974, was valid under Republic Act No. 1052 or the Termination Pay Law, as amended. Although the contract was entered into before the effectivity of the Labor Code, the Court traced how the present Article 280 of the Labor Code, which deleted employment with fixed or definite period, evolved. In sustaining the validity of fixed-term employment, the Court explained in Brent:
Accordingly, and since the entire purpose behind the development of legislation culminating in the present Article 280 of the Labor Code clearly appears to have been, as already observed, to prevent circumvention of the employee's right to be secure in his tenure, the clause in said article indiscriminately and completely ruling out all written or oral agreements conflicting with the concept of regular employment as defined therein should be construed to refer to the substantive evil that the Code itself has singled out: agreements entered into precisely to circumvent security of tenure. It should have no application to instances where a fixed period of employment was agreed upon knowingly and voluntarily by the parties, without any force, duress or improper pressure being brought to bear upon the employee and absent any other circumstances vitiating his consent, or where it satisfactorily appears that the employer and employee dealt with each other on more or less equal terms with no moral dominance whatever being exercised by the former over the latter. Unless thus limited in its purview, the law would be made to apply to purposes other than those explicitly stated by its framers; it thus become pointless and arbitrary, unjust in its effects and apt to lead to absurd and unintended consequences. 9

The Court thus laid down the criteria under which fixed-term employment could not be said to be in circumvention of the law on security of tenure, thus:
1.The fixed period of employment was knowingly and voluntarily agreed upon by the parties without any force, duress, or improper pressure being brought to bear upon the employee and absent any other circumstances vitiating his consent; or 2.It satisfactorily appears that the employer and the employee dealt with each other on more or less equal terms with no moral dominance exercised by the former or the latter. 10

We agree with the Court of Appeals that in this case, the fixed period of employment was knowingly and voluntarily agreed upon by the parties. The Court of Appeals noted that there was no indication of force, duress, or improper pressure exerted on petitioners when they signed the contracts. Further, there was no proof that respondents were regularly engaged in hiring workers for work for a minimum period of five months to prevent the regularization of their employees.

Petitioners' Employment is akin to Probationary Employment


At most, petitioners' employment for less than six months can be considered probationary. Article 281 of the Labor Code provides:
Art. 281.Probationary Employment. Probationary employment shall not exceed six (6) months from the date the employee started working, unless it is covered by an apprenticeship agreement stipulating a longer period. The services of an employee who has been engaged on a probationary basis may be terminated for a just cause or when he fails to qualify as a regular employee in accordance with reasonable standards made known by the employer to the employee at the time of his engagement. An employee who is allowed to work after a probationary period shall be considered a regular employee.
acTDCI

Petitioners were hired on 11 May 1999, initially for three months. After the expiration of their contracts, petitioners were hired on a month-to-month basis. Their contracts of employment ended on 8 October 1999. Hence, they were employed for a total of five months. Their employment did not even exceed six months to entitle them to become regular employees. We cannot accept petitioners' bare allegations that Caparoso was hired on 8 November 1998 while Quindipan was hired on intermittent basis since 1997. Petitioners failed to substantiate their allegations. The payslips submitted by petitioners to prove their prior employment with respondents are handwritten and indicate only the date and amount of pay. They do not even indicate the name of the employer. The printed payslips during the period of the contracts indicate not only the name of the employer but also the breakdown of petitioners' net pay.

Petitioners were not Illegally Dismissed from Employment


Petitioners' terms of employment are governed by their fixed-term contracts. Petitioners' fixed-term employment contracts had expired. They were not illegally dismissed from employment. This Court has ruled that "if from the circumstances it is apparent that periods have been imposed to preclude acquisition of tenurial security by the employee, they should be disregarded for being contrary to public policy." 11 In this case, it was not established that respondents intended to deny petitioners their right to security of tenure. Besides, petitioners' employment did not exceed six months. Thus, the Court of Appeals did not err in sustaining petitioners' dismissal from employment. WHEREFORE, we DENY the petition. We AFFIRM the 27 June 2002 Decision and 30 September 2002 Resolution in CA-G.R. SP No. 67156. SO ORDERED.

Quisumbing, Carpio-Morales, Tinga and Velasco, Jr., JJ., concur.

[G.R. No. 177937. January 19, 2011.] ROBINSONS GALLERIA/ROBINSONS SUPERMARKET CORPORATION ET AL. and/or JESS MANUEL, petitioners, vs. IRENE R. RANCHEZ,respondent.

DECISION

NACHURA, J :
p

Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court, assailing the Decision 1 dated August 29, 2006 and the Resolution 2 dated May 16, 2007 of the Court of Appeals (CA) in CAG.R. SP No. 91631.

The Facts
The facts of the case are as follows.

Respondent was a probationary employee of petitioner Robinsons Galleria/Robinsons Supermarket Corporation (petitioner Supermarket) for a period of five (5) months, or from October 15, 1997 until March 14, 1998. 3 She underwent six (6) weeks of training as a cashier before she was hired as such on October 15, 1997. 4 Two weeks after she was hired, or on October 30, 1997, respondent reported to her supervisor the loss of cash amounting to Twenty Thousand Two Hundred Ninety-Nine Pesos (P20,299.00) which she had placed inside the company locker. Petitioner Jess Manuel (petitioner Manuel), the Operations Manager of petitioner Supermarket, ordered that respondent be strip-searched by the company guards. However, the search on her and her personal belongings yielded nothing. 5 Respondent acknowledged her responsibility and requested that she be allowed to settle and pay the lost amount. However, petitioner Manuel did not heed her request and instead reported the matter to the police. Petitioner Manuel likewise requested the Quezon City Prosecutor's Office for an inquest. 6 On November 5, 1997, an information for Qualified Theft was filed with the Quezon City Regional Trial Court. Respondent was constrained to spend two weeks in jail for failure to immediately post bail in the amount of Forty Thousand Pesos (P40,000.00). 7 On November 25, 1997, respondent filed a complaint for illegal dismissal and damages.
8

On March 12, 1998, petitioners sent to respondent by mail a notice of termination and/or notice of expiration of probationary employment dated March 9, 1998. 9
HIaTCc

On August 10, 1998, the Labor Arbiter rendered a decision,

10

the fallo of which reads:

CONFORMABLY WITH THE FOREGOING, judgment is hereby rendered dismissing the claim of illegal dismissal for lack of merit. Respondents are ordered to accept complainant to her former or equivalent work without prejudice to any action they may take in the premises in connection with the missing money of P20,299.00. SO ORDERED.
11

In dismissing the complaint for illegal dismissal, the Labor Arbiter ratiocinated that at the time respondent filed the complaint for illegal dismissal, she was not yet dismissed by petitioners. When she was strip-searched by the security personnel of petitioner Supermarket, the guards were merely conducting an investigation. The subsequent referral of the loss to the police authorities might be considered routine. Respondent's nonreporting for work after her release from detention could be taken against her in the investigation that petitioner supermarket would conduct. 12 On appeal, the National Labor Relations Commission (NLRC) reversed the decision of the Labor Arbiter in a decision 13 dated October 20, 2003. The dispositive portion of the decision reads:
WHEREFORE, the appealed decision is SET ASIDE. The respondents are hereby ordered to immediately reinstate complainant to her former or equivalent position without loss of seniority rights and privileges and to pay her full backwages computed from the time she was constructively dismissed on October 30, 1997 up to the time she is actually reinstated. SO ORDERED.
14

In reversing the decision of the Labor Arbiter, the NLRC ruled that respondent was denied due process by petitioners. Strip-searching respondent and sending her to jail for two weeks certainly amounted to constructive dismissal because continued employment had been rendered impossible, unreasonable, and unlikely. The wedge that had been driven between the parties was impossible to ignore. 15 Although

respondent was only a probationary employee, the subsequent lapse of her probationary contract of employment did not have the effect of validly terminating her employment because constructive dismissal had already been effected earlier by petitioners. 16 Petitioners filed a motion for reconsideration, which was denied by the NLRC in a resolution 2005.
17

dated July 21,

Petitioners filed a petition for certiorari under Rule 65 of the Rules of Court before the CA. On August 29, 2006, the CA rendered a Decision, the dispositive portion of which reads:
WHEREFORE, premises considered, the challenged Decision of the National Labor Relations Commission is AFFIRMED with MODIFICATION in that should reinstatement be no longer possible in view of the strained relation between the parties, Petitioners are ordered to pay Respondent separation pay equivalent to one (1) month pay in addition to backwages from the date of dismissal until the finality of the assailed decision. SO ORDERED.
18

Petitioners filed a motion for reconsideration. However, the CA denied the same in a Resolution dated May 16, 2007. Hence, this petition. Petitioners assail the reinstatement of respondent, highlighting the fact that she was a probationary employee and that her probationary contract of employment lapsed on March 14, 1998. Thus, her reinstatement was rendered moot and academic. Furthermore, even if her probationary contract had not yet expired, the offense that she committed would nonetheless militate against her regularization. 19 On the other hand, respondent insists that she was constructively dismissed by petitioner Supermarket when she was strip-searched, divested of her dignity, and summarily thrown in jail. She could not have been expected to go back to work after being allowed to post bail because her continued employment had been rendered impossible, unreasonable, and unlikely. She stresses that, at the time the money was discovered missing, it was not with her but locked in the company locker. The company failed to provide its cashiers with strong locks and proper security in the work place. Respondent argues that she was not caught in the act and even reported that the money was missing. She claims that she was denied due process. 20
ETIDaH

The Issue
The sole issue for resolution is whether respondent was illegally terminated from employment by petitioners.

The Ruling of the Court


We rule in the affirmative. There is probationary employment when the employee upon his engagement is made to undergo a trial period during which the employer determines his fitness to qualify for regular employment based on reasonable standards made known to him at the time of engagement. 21 A probationary employee, like a regular employee, enjoys security of tenure. 22 However, in cases of probationary employment, aside from just or authorized causes of termination, an additional ground is provided under Article 281 of the Labor Code, i.e., the probationary employee may also be terminated for failure to qualify as a regular employee in accordance with reasonable standards made known by the employer to the employee at the time of the engagement. Thus, the services of an employee who has been engaged on

probationary basis may be terminated for any of the following: (1) a just or (2) an authorized cause; and (3) when he fails to qualify as a regular employee in accordance with reasonable standards prescribed by the employer. 23 Article 277 (b) of the Labor Code mandates that subject to the constitutional right of workers to security of tenure and their right to be protected against dismissal, except for just and authorized cause and without prejudice to the requirement of notice under Article 283 of the same Code, the employer shall furnish the worker, whose employment is sought to be terminated, a written notice containing a statement of the causes of termination, and shall afford the latter ample opportunity to be heard and to defend himself with the assistance of a representative if he so desires, in accordance with company rules and regulations pursuant to the guidelines set by the Department of Labor and Employment. In the instant case, based on the facts on record, petitioners failed to accord respondent substantive and procedural due process. The haphazard manner in the investigation of the missing cash, which was left to the determination of the police authorities and the Prosecutor's Office, left respondent with no choice but to cry foul. Administrative investigation was not conducted by petitioner Supermarket. On the same day that the missing money was reported by respondent to her immediate superior, the company already pre-judged her guilt without proper investigation, and instantly reported her to the police as the suspected thief, which resulted in her languishing in jail for two weeks. As correctly pointed out by the NLRC, the due process requirements under the Labor Code are mandatory and may not be supplanted by police investigation or court proceedings. The criminal aspect of the case is considered independent of the administrative aspect. Thus, employers should not rely solely on the findings of the Prosecutor's Office. They are mandated to conduct their own separate investigation, and to accord the employee every opportunity to defend himself. Furthermore, respondent was not represented by counsel when she was strip-searched inside the company premises or during the police investigation, and in the preliminary investigation before the Prosecutor's Office. Respondent was constructively dismissed by petitioner Supermarket effective October 30, 1997. It was unreasonable for petitioners to charge her with abandonment for not reporting for work upon her release in jail. It would be the height of callousness to expect her to return to work after suffering in jail for two weeks. Work had been rendered unreasonable, unlikely, and definitely impossible, considering the treatment that was accorded respondent by petitioners. As to respondent's monetary claims, Article 279 of the Labor Code provides that an employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges, to full backwages, inclusive of allowances, and to 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, due to the strained relations of the parties, the payment of separation pay has been considered an acceptable alternative to reinstatement, when the latter option is no longer desirable or viable. On the one hand, such payment liberates the employee from what could be a highly oppressive work environment. On the other, the payment releases the employer from the grossly unpalatable obligation of maintaining in its employ a worker it could no longer trust. 24
IaESCH

Thus, as an illegally or constructively dismissed employee, respondent is entitled to: (1) either reinstatement, if viable, or separation pay, if reinstatement is no longer viable; and (2) backwages. These two reliefs are separate and distinct from each other and are awarded conjunctively. 25 In this case, since respondent was a probationary employee at the time she was constructively dismissed by petitioners, she is entitled to separation pay and backwages. Reinstatement of respondent is no longer viable considering the circumstances.

However, the backwages that should be awarded to respondent shall be reckoned from the time of her constructive dismissal until the date of the termination of her employment, i.e., from October 30, 1997 to March 14, 1998. The computation should not cover the entire period from the time her compensation was withheld up to the time of her actual reinstatement. This is because respondent was a probationary employee, and the lapse of her probationary employment without her appointment as a regular employee of petitioner Supermarket effectively severed the employer-employee relationship between the parties. In all cases involving employees engaged on probationary basis, the employer shall make known to its employees the standards under which they will qualify as regular employees at the time of their engagement. Where no standards are made known to an employee at the time, he shall be deemed a regular employee, 26unless the job is self-descriptive, like maid, cook, driver, or messenger. However, the constitutional policy of providing full protection to labor is not intended to oppress or destroy management. 27 Naturally, petitioner Supermarket cannot be expected to retain respondent as a regular employee considering that she lost P20,299.00 while acting as a cashier during the probationary period. The rules on probationary employment should not be used to exculpate a probationary employee who acts in a manner contrary to basic knowledge and common sense, in regard to which, there is no need to spell out a policy or standard to be met. 28 WHEREFORE, in view of the foregoing, the petition is DENIED. The Decision of the Court of Appeals in CAG.R. SP No. 91631 is hereby AFFIRMED with theMODIFICATION that petitioners are hereby ordered to pay respondent Irene R. Ranchez separation pay equivalent to one (1) month pay and backwages from October 30, 1997 to March 14, 1998. Costs against petitioners. SO ORDERED.

Carpio, Leonardo-de Castro, * Abad and Mendoza, JJ., concur.

[G.R. No. 186169. August 1, 2012.] MYLENE CARVAJAL, petitioner, vs. LUZON DEVELOPMENT BANK AND/OR OSCAR Z. RAMIREZ, respondents.

DECISION

PEREZ, J :
p

In this Petition for Review on Certiorari, petitioner Mylene Carvajal assails the Decision 1 of the Court of Appeals, Second Division, dated 20 August 2008 which dismissed her complaint for illegal dismissal. The Court of Appeals reversed and set aside the Resolution 2 of the National Labor Relations Commission (NLRC) affirming with modification the Labor Arbiter's Decision 3 finding petitioner's dismissal as illegal and ordering reinstatement or payment of backwages and attorney's fees. The facts are as follows:

Petitioner Mylene Carvajal was employed as a trainee-teller by respondent Luzon Development Bank (Bank) on 28 October 2003 under a six-month probationary employment contract, with a monthly salary of P5,175.00. Respondent Oscar Ramirez is the President and Chief Executive Officer of the Bank. On 10 December 2003, the Bank sent petitioner a Memorandum 4 directing her to explain in writing why she should not be subjected to disciplinary action for "chronic tardiness" on November 3, 5, 6, 14, 18, 20, 21 and 28, 2003 or for a total of eight (8) times. Petitioner apologized in writing and explained that she was in the process of making adjustments regarding her work and house chores. 5 She was thus reprimanded in writing and reminded of her status as a probationary employee. 6 Still, on 6 January 2004, a second Memorandum was sent to petitioner directing her to explain why she should not be suspended for "chronic tardiness" on 13 occasions or on December 2, 3, 4, 5, 8, 10, 11, 12, 15, 16, 18, 22, and 23, 2003. On 7 January 2004, petitioner submitted her written explanation and manifested her acceptance of the consequences of her actions. 7 On 12 January 2004, petitioner was informed, through a Memorandum, 8 of her suspension for three (3) working days without pay effective 21 January 2004. Finally, in a Memorandum dated 22 January 2004, petitioner's suspension was lifted but in the same breath, her employment was terminated effective 23 January 2004. 9
IDcTEA

Hence, petitioner's filing of the Complaint for illegal dismissal before the Labor Arbiter. Petitioner alleged, in her position paper, that the following were the reasons for her termination: 1) she is not an effective frontliner; 2) she has mistakenly cleared a check; 3) tardiness; 4) absenteeism; and 5) shortage. 10 In their position paper, respondents averred that petitioner was terminated as a probationary employee on three grounds, namely: 1) chronic tardiness; 2) unauthorized absence; and 3) failure to perform satisfactorily as a probationary employee. Respondents explained that petitioner was a chronic violator of the bank's rules and regulations on tardiness and absenteeism. Aside from her numerous tardiness, petitioner was absent without leave for 2 days. She also cleared a check which later turned out to be a bounced check. Finally, petitioner garnered only a rating of 2.17, with 4 being the highest and 1 the lowest, in her performance evaluation. On 9 June 2005, the Labor Arbiter ruled that petitioner was illegally dismissed. Respondents were held solidarily liable for payment of money claims. The dispositive portion of the Decision reads:
WHEREFORE, premises considered, judgment is rendered declaring that complainant as probationary employee was illegally dismissed. Respondents are ordered to immediately reinstate complainant to her former position, without loss of any seniority rights and other monetary benefits. However, if reinstatement is no longer feasible due to strained relationship between the parties, respondents are further ordered to pay complainant, jointly and severally the amount of P20,070.38, representing full backwages of complainant from the time of her illegal dismissal up to the end of her probationary contract of employment with respondent bank. Plus, 10% of the monetary award as attorney's fee. 11

The Labor Arbiter found that petitioner was dismissed without due process because "she was not afforded the notice in writing informing her of what respondent (the Bank) would like to bring out to her for the latter to answer in writing." The Labor Arbiter also did not consider "unsatisfactory performance" as a valid ground to shorten the six-month contract of petitioner with the Bank. 12
IaEScC

The decision of the Labor Arbiter was partially appealed to the NLRC by petitioner. Petitioner contended that she should be considered a regular employee and that the computation by the Labor Arbiter of backwages up to the end of her probationary contract is without basis. In its Comment, respondent argued against the illegality of petitioner's dismissal and their joint and solidary liability to pay complainant's monetary claims. On 31 May 2006, the NLRC affirmed with modification the Labor Arbiter's Decision and ordered for petitioner's reinstatement, to wit:
WHEREFORE, premises considered, the assailed decision is hereby affirmed with MODIFICATION ordering the respondents to reinstate the complainant to her former position, without loss of any

seniority rights and other monetary benefits and to pay her full backwages from the date of her dismissal to the date of her reinstatement, actual or in payroll. All other aspect[s] of the assailed decision stands.
13

Respondents filed a motion for reconsideration but the NLRC denied the same in a Resolution 2006.

14

dated 20 July

In a petition for certiorari filed by respondents, the Court of Appeals rendered the 20 August 2008 Decision reversing the NLRC ruling, thus:
IN VIEW OF ALL THE FOREGOING, the instant petition is GRANTED. The assailed NLRC Resolution in NLRC CA No. 046866-05 dated May 31, 2006 which affirmed with modification the Decision of the Labor Arbiter in NLRC Case No. RAB IV-2-18910-04-L dated June 9, 2005 is hereby REVERSED and SET ASIDE. All monetary liabilities decreed in the Labor Arbiter's Decision against petitioners are hereby SET ASIDE. The Complaint for illegal dismissal, money claims and damages is ORDERED DISMISSED. 15

The Court of Appeals found that petitioner is not entitled to backwages because she was rightfully dismissed for failure to meet the employment standards. The motion for reconsideration filed by petitioner was likewise dismissed. Petitioner elevated the case to this Court via petition for review on certiorari, raising the following errors allegedly committed by the Court of Appeals:
CETIDH

THE HON. COURT OF APPEALS COMMITTED ERRORS IN LAW IN DECIDING THE ISSUE ON PETITIONER'S VALIDITY OF DISMISSAL DESPITE SUCH ISSUE HAD LONG BEC[O]ME FINAL AND EXECUTORY FOR FAILURE OF PRIVATE RESPONDENT LUZON DEVELOPMENT BANK TO APPEAL THE DECISION OF THE LABOR ARBITER FINDING PETITIONER'S DISMISSAL ILLEGAL. THE HON. COURT OF APPEALS COMMITTED ERROR IN LAW IN DECIDING ISSUES WHICH WERE NOT RAISED BEFORE THE NLRC ON APPEAL. 16

Petitioner harps on the finality of the Labor Arbiter's ruling on illegal dismissal and questions the judgment of the Court of Appeals in discussing and upholding the validity of her dismissal. Indeed, respondents did not assail the ruling of the Labor Arbiter. It was in fact petitioner who partially appealed the Labor Arbiter's computation of backwages. Provided with the opportunity, respondents assailed the Labor Arbiter's Decision in their Comment to the Partial Appeal. Upon affirmance of the Labor Arbiter's Decision by the NLRC, respondent filed a petition for certiorari with the Court of Appeals insisting on the validity of the dismissal. Petitioner seeks to limit the issues to her employment status and backwages, her basis being that the illegality of her dismissal has already been finally determined by the Labor Arbiter. We disagree. As We noted, the facts show that the illegality of petitioner's dismissal was an issue that was squarely before the NLRC. When the NLRC decision was reversed by the Court of Appeals, from which the issue was elevated to us, we had a situation where "the findings of facts are conflicting." Thus, we find applicable the rule that while generally, only questions of law can be raised in a petition for review on certiorari under Rule 45 of the Rules of Court, the rule admits of certain exceptions, namely: (1) when the findings are grounded entirely on speculations, surmises, or conjectures; (2) when the inference made is manifestly mistaken, absurd, or impossible; (3) when there is a grave abuse of discretion; (4) when the judgment is based on misappreciation of facts; (5) when the findings of fact are conflicting; (6) when in making its findings, the same are contrary to the admissions of both appellant and appellee; (7) when the

findings are contrary to those of the trial court; (8) when the findings are conclusions without citation of specific evidence on which they are based; (9) when the facts set forth in the petition as well as in the petitioner's main and reply briefs are not disputed by the respondent; and (10) when the findings of fact are premised on the supposed absence of evidence and contradicted by the evidence on record. 17
EDIaSH

The petition comes within the purview of exception (5) and by analogy, exception (7). Hence, the Court resolves to scour the records of this case. Truly, it is axiomatic that an appeal, once accepted by this Court, throws the entire case open to review, and that this Court has the authority to review matters not specifically raised or assigned as error by the parties, if their consideration is necessary in arriving at a just resolution of the case. 18 Petitioner premised her appeal on Article 279 of the Labor Code which provides:
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 other monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement.

Petitioner maintained that she became a regular employee by virtue of Book VI, Rule 1, Section 6 (d) of the Implementing Rules of the Labor Code which states:
(d)In all cases of probationary employment, the employer shall make known to the employee the standards under which he will qualify as a regular employee at the time of his engagement. Where no standards are made known to the employee at that time, he shall be deemed a regular employee.

It is beyond dispute that petitioner was hired as a probationary employee. Whether her employment status ripened into a regular one is the point of contention. Under the very provision cited by petitioner, we cannot, by any hermeneutics, see petitioner's employment status as regular. At the time of her engagement and as mandated by law, petitioner was informed in writing of the standards necessary to qualify her as a regular employee. Her appointment letter 19 reads:
TCADEc

Dear Ms. Carvajal: We are pleased to confirm your appointment as follows: Position:Trainee-Teller Assignment:Main Branch Status:Probationary (6 months) Effectivity:October 28, 2003 Remuneration:P5,175.00 (262) Possible extension of this contract will depend on the job requirements of the Bank and your overall performance. Performance review will be conducted before possible renewal can take effect.

The Bank reserves the right to immediately terminate this contract in the event of a below satisfactory performance, serious disregard of company rules and policies and other reasons critical to its interests. Kindly sign below if the above conditions are acceptable. We look forward to a performance commensurate to your presented capabilities. Very truly yours, [sgd] Oscar S. Ramirez Vice President CONFORME: [sgd] Mylene T. Carvajal [Emphasis Supplied]

Petitioner knew, at the time of her engagement, that she must comply with the standards set forth by respondent and perform satisfactorily in order to attain regular status. She was apprised of her functions and duties as a trainee-teller. Respondent released to petitioner its evaluation 20 of her performance. Petitioner was found wanting. Even the NLRC upheld petitioner's probationary status, thus:
During the time that the complainant was dismissed by respondents, she was holding the position of a trainee-teller on probationary status. Thus, with the Labor Arbiter's finding of illegal dismissal, which the respondent left unchallenged, the complainant is entitled to be reinstated to resume the functions of a trainee-teller, no more no less. Reinstatement is not synonymous with regularization. The determination of whether the complainant can qualify to become one of respondent bank's regular employees is still within the well recognized management's prerogative. 21 [Emphasis Supplied]
CHDAaS

A probationary employee, like a regular employee, enjoys security of tenure. However, in cases of probationary employment, aside from just or authorized causes of termination, an additional ground is provided under Article 281 of the Labor Code, i.e., the probationary employee may also be terminated for failure to qualify as a regular employee in accordance with reasonable standards made known by the employer to the employee at the time of the engagement. Thus, the services of an employee who has been engaged on probationary basis may be terminated for any of the following: (1) a just or (2) an authorized cause and (3) when he fails to qualify as a regular employee in accordance with reasonable standards prescribed by the employer. 22 It is evident that the primary cause of respondent's dismissal from her probationary employment was her "chronic tardiness." At the very start of her employment, petitioner already exhibited poor working habits. Even during her first month on the job, she already incurred eight (8) tardiness. In a Memorandum dated 11 December 2003, petitioner was warned that her tardiness might affect her opportunity to become a permanent or regular employee. And petitioner did not provide a satisfactory explanation for the cause of her tardiness. Punctuality is a reasonable standard imposed on every employee, whether in government or private sector. As a matter of fact, habitual tardiness is a serious offense that may very well constitute gross or habitual neglect of duty, a just cause to dismiss a regular employee. Assuming that petitioner was not apprised of the standards concomitant to her job, it is but common sense that she must abide by the work hours imposed by the bank. As we have aptly stated in Aberdeen Court, Inc. v. Agustin, Jr., 23 the rule on reasonable standards made known to the employee prior to engagement should not be used to exculpate a probationary employee who acts in a manner contrary to basic knowledge and common sense, in regard to which there is no need to spell out a policy or standard to be met.

Respondent also cited other infractions such as unauthorized leaves of absence, mistake in clearing of a check, and underperformance. All of these infractions were not refuted by petitioner. The Labor Arbiter failed to discuss the veracity of these grounds. It focused on unsatisfactory performance and concluded that such is not a sufficient ground to terminate the probationary employment. The Labor Arbiter relied on its own misappreciation of facts for a finding that, resultingly, is contradicted by the evidence on record.
caIDSH

More importantly, satisfactory performance is and should be one of the basic standards for regularization. Naturally, before an employer hires an employee, the former can require the employee, upon his engagement, to undergo a trial period during which the employer determines his fitness to qualify for regular employment based on reasonable standards made known to him at the time of engagement. This is the concept of probationary employment which is intended to afford the employer an opportunity to observe the fitness of a probationary employee while at work, and to ascertain whether he will become an efficient and productive employee. While the employer observes the fitness, propriety and efficiency of a probationer to ascertain whether he is qualified for permanent employment, the probationer, on the other hand, seeks to prove to the satisfaction of the employer that he has the qualifications to meet the reasonable standards for permanent employment. 24 Moreover, in the letter of appointment, respondents reserved the right to "immediately terminate this contract in the event of a below satisfactory performance, serious disregard of company rules and policies and other reasons critical to its interests." In finding for illegal dismissal, the Labor Arbiter held that the dismissal was without due process. We hold otherwise. As elucidated by this Court in Philippine Daily Inquirer, Inc. v. Magtibay, Jr.: 25
Unlike under the first ground for the valid termination of probationary employment which is for just cause, the second ground [failure to qualify in accordance with the standards prescribed by employer] does not require notice and hearing. Due process of law for this second ground consists of making the reasonable standards expected of the employee during his probationary period known to him at the time of his probationary employment. By the very nature of a probationary employment, the employee knows from the very start that he will be under close observation and his performance of his assigned duties and functions would be under continuous scrutiny by his superiors. It is in apprising him of the standards against which his performance shall be continuously assessed where due process regarding the second ground lies, and not in notice and hearing as in the case of the first ground. 26
ADHaTC

As we have underscored, respondent complied with the basic requirements of due process as defined in Magtibay, Jr. Petitioner had more than sufficient knowledge of the standards her job entails. Respondent had not been remiss in reminding petitioner, through memoranda, of the standards that should be observed in aspiring for regularization. Petitioner was even notified in two (2) memoranda regarding the bank's displeasure over her chronic tardiness. Every memorandum directed petitioner to explain in writing why she should not be subjected to disciplinary action. Each time, petitioner acknowledged her fault and assured the bank that she would, in her daily schedules, make adjustments to make amends. This certainly is compliance with due process. Taken together with her low performance rating and other infractions, petitioner was called by the head of Human Resources who discussed with her the reasons for the discontinuance of her probationary appointment before she was formally served the termination letter on that very same day. There was, in this case, full accordance to petitioner of the opportunity to be heard. In sum, petitioner was validly dismissed from probationary employment before the expiration of her 6-month probationary employment contract. If the termination is for cause, it may be done anytime during the probation; the employer does not have to wait until the probation period is over. 27 With a valid reason for petitioner's dismissal coupled with the proper observance of due process, the claim for backwages must necessarily fail.

In view of the foregoing, we find no reason to disturb the findings and conclusions of the Court of Appeals. WHEREFORE, the petition is DENIED. SO ORDERED.

Carpio, Abad, *Villarama, Jr.

**and

Reyes, JJ., concur.

[G.R. No. 167714. March 7, 2007.] ROWELL INDUSTRIAL CORPORATION, petitioner, vs. HON. COURT OF APPEALS and JOEL TARIPE, respondents.

DECISION

CHICO-NAZARIO, J :
p

This case is a Petition for Review under Rule 45 of the 1997 Revised Rules of Civil Procedure seeking to set aside the Decision 1 and Resolution 2 of the Court of Appeals in CA-G.R. SP No. 74104, entitled, Rowell Industrial Corp., and/or Edwin Tang vs. National Labor Relations Commission and Joel Taripe, dated 30 September 2004 and 1 April 2005, respectively, which affirmed the Resolutions 3 of the National Labor Relations Commission (NLRC) dated 7 June 2002 and 20 August 2002, finding herein respondent Joel Taripe (Taripe) as a regular employee who had been illegally dismissed from employment by herein petitioner Rowell Industrial Corp. (RIC), thereby ordering petitioner RIC to reinstate respondent Taripe with full backwages, subject to the modification of exonerating Edwin Tang, the RIC General Manager and Vice President, from liability and computing the backwages of herein respondent Taripe based on the prevailing salary rate at the time of his dismissal. The NLRC Resolutions reversed the Decision 4 of the Labor Arbiter dated 29 September 2000, which dismissed respondent Taripe's complaint.
aIAEcD

Petitioner RIC is a corporation engaged in manufacturing tin cans for use in packaging of consumer products, e.g., foods, paints, among other things. Respondent Taripe was employed by petitioner RIC on 8 November 1999 as a "rectangular power press machine operator" with a salary of P223.50 per day, until he was allegedly dismissed from his employment by the petitioner on 6 April 2000. The controversy of the present case arose from the following facts, as summarized by the NLRC and the Court of Appeals:
On [17 February 2000], [herein respondent Taripe] filed a [C]omplaint against [herein petitioner RIC] for regularization and payment of holiday pay, as well as indemnity for severed finger, which was amended on [7 April 2000] to include illegal dismissal. [Respondent Taripe] alleges that [petitioner RIC] employed him starting [8 November 1999] as power press machine operator, such position of which was occupied by [petitioner RIC's] regular employees and the functions of which were necessary to the latter's business. [Respondent Taripe] adds that upon employment, he was made to sign a document, which was not explained to him but which was made a condition for him to be taken in and for which he was not furnished a copy. [Respondent Taripe] states that he was not extended full benefits granted under the law and the [Collective Bargaining Agreement] and that on [6 April 2000], while the case for regularization was pending, he was summarily dismissed from his job although he never violated any of the [petitioner RIC's] company rules and regulations.

[Petitioner RIC], for [its] part, claim[s] that [respondent Taripe] was a contractual employee, whose services were required due to the increase in the demand in packaging requirement of [its] clients for Christmas season and to build up stock levels during the early part of the following year; that on [6 March 2000], [respondent Taripe's] employment contract expired. [Petitioner RIC] avers that the information update for union members, which was allegedly filled up by [respondent Taripe] and submitted by the Union to [petitioner] company, it is stated therein that in the six (6) companies where [respondent Taripe] purportedly worked, the latter's reason for leaving was "finished contract," hence, [respondent Taripe] has knowledge about being employed by contract contrary to his allegation that the document he was signing was not explained to him. [Petitioner RIC] manifest[s] that all benefits, including those under the [Social Security System], were given to him on [12 May 2000]. 5

On 29 September 2000, the Labor Arbiter rendered a Decision dismissing respondent Taripe's Complaint based on a finding that he was a contractual employee whose contract merely expired. The dispositive portion of the said Decision reads, thus:
WHEREFORE, premises considered, judgment is hereby rendered declaring this complaint of [herein respondent Taripe] against [herein petitioner RIC] and Mr. Edwin Tang for illegal dismissal DISMISSED for lack of merit. However, on ground of compassionate justice, [petitioner RIC and Mr. Edwin Tang] are hereby ordered to pay [respondent Taripe] the sum of PHP5,811.00 or one month's salary as financial assistance and holiday pay in the sum of PHP894.00, as well as attorney's fees of 10% based on holiday pay (Article 110, Labor Code). 6

Aggrieved, respondent Taripe appealed before the NLRC. In a Resolution dated 7 June 2002, the NLRC granted the appeal filed by respondent Taripe and declared that his employment with the petitioner was regular in status; hence, his dismissal was illegal. The decretal portion of the said Resolution reads as follows:
WHEREFORE, premises considered, [herein respondent Taripe's] appeal is GRANTED. The Labor Arbiter's [D]ecision in the above-entitled case is herebyREVERSED. It is hereby declared that [respondent Taripe's] employment with [herein petitioner RIC and Mr. Edwin Tang] is regular in status and that he was illegally dismissed therefrom.
STHAID

[Petitioner RIC and Mr. Edwin Tang] are hereby ordered to reinstate [respondent Taripe] and to jointly and severally pay him full backwages from the time he was illegally dismissed up to the date of his actual reinstatement, less the amount of P1,427.67. The award of P894.00 for holiday pay is AFFIRMED but the award of P5,811.00 for financial assistance is deleted. The award for attorney's fees is hereby adjusted to ten percent (10%) of [respondent Taripe's] total monetary award. 7

Dissatisfied, petitioner RIC moved for the reconsideration of the aforesaid Resolution but it was denied in the Resolution of the NLRC dated 20 August 2002. Consequently, petitioner filed a Petition for Certiorari under Rule 65 of the 1997 Revised Rules of Civil Procedure before the Court of Appeals with the following assignment of errors:
I.THE [NLRC] GRAVELY ABUSED ITS DISCRETION AND IS IN EXCESS OF ITS JURISDICTION WHEN IT MISINTERPRETED ARTICLE 280 OF THE LABOR CODE AND IGNORED JURISPRUDENCE WHEN IT DECIDED THAT [RESPONDENT TARIPE] IS A REGULAR EMPLOYEE AND THUS, ILLEGALLY DISMISSED. II.THE [NLRC] GRAVELY ABUSED ITS DISCRETION AND IS IN EXCESS OF ITS JURISDICTION WHEN IT ORDERED [EDWIN TANG] TO (sic) JOINTLY AND SEVERALLY LIABLE FOR MONETARY CLAIMS OF [RESPONDENT TARIPE]. III.THE [NLRC] GRAVELY ABUSED ITS DISCRETION AND IS IN EXCESS OF ITS JURISDICTION WHEN IT ORDERED PAYMENT OF MONETARY CLAIMS COMPUTED ON AN ERRONEOUS WAGE RATE. 8

The Court of Appeals rendered the assailed Decision on 30 September 2004, affirming the Resolution of the NLRC dated 7 June 2002, with modifications. Thus, it disposed
WHEREFORE, the Resolutions dated [7 June 2002] and [20 August 2002] of [the NLRC] are affirmed, subject to the modification that [Edwin Tang] is exonerated from liability and the computation of backwages of [respondent Taripe] shall be based on P223.50, the last salary he received. 9

A Motion for Reconsideration of the aforesaid Decision was filed by petitioner RIC, but the same was denied for lack of merit in a Resolution 10 of the Court of Appeals dated 1 April 2005.
acCTSE

Hence, this Petition. Petitioner RIC comes before this Court with the lone issue of whether the Court of Appeals misinterpreted Article 280 of the Labor Code, as amended, and ignored jurisprudence when it affirmed that respondent Taripe was a regular employee and was illegally dismissed. Petitioner RIC, in its Memorandum, 11 argues that the Court of Appeals had narrowly interpreted Article 280 of the Labor Code, as amended, and disregarded a contract voluntarily entered into by the parties. Petitioner RIC emphasizes that while an employee's status of employment is vested by law pursuant to Article 280 of the Labor Code, as amended, said provision of law admits of two exceptions, to wit: (1) those employments which have been fixed for a specific project or undertaking, the completion or termination of which has been determined at the time of the engagement of the employment; and (2) when the work or services to be performed are seasonal; hence, the employment is for the duration of the season. Thus, there are certain forms of employment which entail the performance of usual and desirable functions and which exceed one year but do not necessarily qualify as regular employment under Article 280 of the Labor Code, as amended. The Petition is unmeritorious. A closer examination of Article 280 of the Labor Code, as amended, is imperative to resolve the issue raised in the present case. In declaring that respondent Taripe was a regular employee of the petitioner and, thus, his dismissal was illegal, the Court of Appeals ratiocinated in this manner:
In determining the employment status of [herein respondent Taripe], reference must be made to Article 280 of the Labor Code, which provides: xxx xxx xxx Thus, there are two kinds of regular employees, namely: (1) those who are engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer; and (2) those who have rendered at least one year of service, whether continuous or broken, with respect to the activity in which they are employed. [Respondent Taripe] belonged to the first category of regular employees. The purported contract of employment providing that [respondent Taripe] was hired as contractual employee for five (5) months only, cannot prevail over the undisputed fact that [respondent Taripe] was hired to perform the function of power press operator, a function necessary or desirable in [petitioner's] business of manufacturing tin cans. [Herein petitioner RIC's] contention that the four (4) months length of service of [respondent Taripe] did not grant him a regular status is inconsequential, considering that length of service assumes importance only when the activity in which the employee

has been engaged to perform is not necessary or desirable to the usual business or trade of the employer.

As aptly ruled by [the NLRC]: "In the instant case, there is no doubt that [respondent Taripe], as power press operator, has been engaged to perform activities which are usually necessary or desirable in [petitioner RIC's] usual business or trade of manufacturing of tin cans for use in packaging of food, paint and others. We also find that [respondent Taripe] does not fall under any of the abovementioned exceptions. Other that (sic) [petitioner RIC's] bare allegation thereof, [it] failed to present any evidence to prove that he was employed for a fixed or specific project or undertaking the completion of which has been determined at the time of his engagement or that [respondent Taripe's] services are seasonal in nature and that his employment was for the duration of the season." 12

Article 280 of the Labor Code, as amended, provides:


ART. 280.REGULAR AND CASUAL EMPLOYMENT. The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season. An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That, any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such activity exists. [Emphasis supplied]

The aforesaid Article 280 of the Labor Code, as amended, classifies employees into three categories, namely: (1) regular employees or those whose work is necessary or desirable to the usual business of the employer; (2) project employees or those whose employment has been fixed for a specific project or undertaking, the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season; and (3) casual employees or those who are neither regular nor project employees. 13 Regular employees are further classified into: (1) regular employees by nature of work; and (2) regular employees by years of service. 14 The former refers to those employees who perform a particular activity which is necessary or desirable in the usual business or trade of the employer, regardless of their length of service; while the latter refers to those employees who have been performing the job, regardless of the nature thereof, for at least a year. 15 The aforesaid Article 280 of the Labor Code, as amended, however, does not proscribe or prohibit an employment contract with a fixed period. It does not necessarily follow that where the duties of the employee consist of activities usually necessary or desirable in the usual business of the employer, the parties are forbidden from agreeing on a period of time for the performance of such activities. There is nothing essentially contradictory between a definite period of employment and the nature of the employee's duties. 16 What Article 280 of the Labor Code, as amended, seeks to prevent is the practice of some unscrupulous and covetous employers who wish to circumvent the law that protects lowly workers from capricious dismissal from their employment. The aforesaid provision, however, should not be interpreted in such a way as to deprive employers of the right and prerogative to choose their own workers if they have sufficient basis to refuse an employee a regular status. Management has rights which should also be protected. 17

In the case at bar, respondent Taripe signed a contract of employment prior to his admission into the petitioner's company. Said contract of employment provides, among other things:
4.That my employment shall be contractual for the period of five (5) months which means that the end of the said period, I can (sic) discharged unless this contract is renewed by mutual consent or terminated for cause. 18

Based on the said contract, respondent Taripe's employment with the petitioner is good only for a period of five months unless the said contract is renewed by mutual consent. And as claimed by petitioner RIC, respondent Taripe, along with its other contractual employees, was hired only to meet the increase in demand for packaging materials during the Christmas season and also to build up stock levels during the early part of the year. Although Article 280 of the Labor Code, as amended, does not forbid fixed term employment, it must, nevertheless, meet any of the following guidelines in order that it cannot be said to circumvent security of tenure: (1) that the fixed period of employment was knowingly and voluntarily agreed upon by the parties, without any force, duress or improper pressure being brought to bear upon the employee and absent any other circumstances vitiating his consent; or (2) it satisfactorily appears that the employer and employee dealt with each other on more or less equal terms with no moral dominance whatever being exercised by the former on the latter. 19 In the present case, it cannot be denied that the employment contract signed by respondent Taripe did not mention that he was hired only for a specific undertaking, the completion of which had been determined at the time of his engagement. The said employment contract neither mentioned that respondent Taripe's services were seasonal in nature and that his employment was only for the duration of the Christmas season as purposely claimed by petitioner RIC. What was stipulated in the said contract was that respondent Taripe's employment was contractual for the period of five months. Likewise, as the NLRC mentioned in its Resolution, to which the Court of Appeals agreed, other than the bare allegations of petitioner RIC that respondent Taripe was hired only because of the increase in the demand for packaging materials during the Christmas season, petitioner RIC failed to substantiate such claim with any other evidence. Petitioner RIC did not present any evidence which might prove that respondent Taripe was employed for a fixed or specific project or that his services were seasonal in nature. Also, petitioner RIC failed to controvert the claim of respondent Taripe that he was made to sign the contract of employment, prepared by petitioner RIC, as a condition for his hiring. Such contract in which the terms are prepared by only one party and the other party merely affixes his signature signifying his adhesion thereto is called contract of adhesion. 20 It is an agreement in which the parties bargaining are not on equal footing, the weaker party's participation being reduced to the alternative "to take it or leave it." 21 In the present case, respondent Taripe, in need of a job, was compelled to agree to the contract, including the five-month period of employment, just so he could be hired. Hence, it cannot be argued that respondent Taripe signed the employment contract with a fixed term of five months willingly and with full knowledge of the impact thereof. With regard to the second guideline, this Court agrees with the Court of Appeals that petitioner RIC and respondent Taripe cannot be said to have dealt with each other on more or less equal terms with no moral dominance exercised by the former over the latter. As a power press operator, a rank and file employee, he can hardly be on equal terms with petitioner RIC. As the Court of Appeals said, "almost always, employees agree to any terms of an employment contract just to get employed considering that it is difficult to find work given their ordinary qualifications." 22 Therefore, for failure of petitioner RIC to comply with the necessary guidelines for a valid fixed term employment contract, it can be safely stated that the aforesaid contract signed by respondent Taripe for a period of five months was a mere subterfuge to deny to the latter a regular status of employment.

Settled is the rule that the primary standard of determining regular employment is the reasonable connection between the particular activity performed by the employee in relation to the casual business or trade of the employer. The connection can be determined by considering the nature of the work performed and its relation to the scheme of the particular business or trade in its entirety. 23 Given the foregoing, this Court agrees in the findings of the Court of Appeals and the NLRC that, indeed, respondent Taripe, as a rectangular power press machine operator, in charge of manufacturing covers for "four liters rectangular tin cans," was holding a position which is necessary and desirable in the usual business or trade of petitioner RIC, which was the manufacture of tin cans. Therefore, respondent Taripe was a regular employee of petitioner RIC by the nature of work he performed in the company. Respondent Taripe does not fall under the exceptions mentioned in Article 280 of the Labor Code, as amended, because it was not proven by petitioner RIC that he was employed only for a specific project or undertaking or his employment was merely seasonal. Similarly, the position and function of power press operator cannot be said to be merely seasonal. Such position cannot be considered as only needed for a specific project or undertaking because of the very nature of the business of petitioner RIC. Indeed, respondent Taripe is a regular employee of petitioner RIC and as such, he cannot be dismissed from his employment unless there is just or authorized cause for his dismissal.

Well-established is the rule that regular employees enjoy security of tenure and they can only be dismissed for just cause and with due process, notice and hearing.24 And in case of employees' dismissal, the burden is on the employer to prove that the dismissal was legal. Thus, respondent Taripe's summary dismissal, not being based on any of the just or authorized causes enumerated under Articles 282, 25 283, 26 and 284 27 of the Labor Code, as amended, is illegal. Before concluding, we once more underscore the settled precept that factual findings of the NLRC, having deemed to acquire expertise in matters within its jurisdiction, are generally accorded not only respect but finality especially when such factual findings are affirmed by the Court of Appeals; 28 hence, such factual findings are binding on this Court. WHEREFORE, premises considered, the instant Petition is hereby DENIED. The Decision and Resolution of the Court of Appeals dated 30 September 2004 and 1 April 2005, respectively, which affirmed with modification the Resolutions of the NLRC dated 7 June 2002 and 20 August 2002, respectively, finding herein respondent Taripe as a regular employee who had been illegally dismissed from employment by petitioner RIC, are hereby AFFIRMED. Costs against petitioner RIC. SO ORDERED.

Ynares-Santiago, Austria-Martinez and Nachura, JJ., concur. Callejo, Sr., J., is on leave.

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