Republic of the Philippines

SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 85985 August 13, 1993

PHILIPPINE AIRLINES, INC. (PAL), petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION, LABOR ARBITER ISABEL P.
ORTIGUERRA and PHILIPPINE AIRLINES EMPLOYEES ASSOCIATION
(PALEA), respondents.

Solon Garcia for petitioner.

Adolpho M. Guerzon for respondent PALEA.

MELO, J.:

In the instant petition for certiorari, the Court is presented the issue of whether or not the
formulation of a Code of Discipline among employees is a shared responsibility of the employer
and the employees.

On March 15, 1985, the Philippine Airlines, Inc. (PAL) completely revised its 1966 Code of
Discipline. The Code was circulated among the employees and was immediately implemented,
and some employees were forthwith subjected to the disciplinary measures embodied therein.

Thus, on August 20, 1985, the Philippine Airlines Employees Association (PALEA) filed a
complaint before the National Labor Relations Commission (NLRC) for unfair labor practice
(Case No. NCR-7-2051-85) with the following remarks: "ULP with arbitrary implementation of
PAL's Code of Discipline without notice and prior discussion with Union by Management"
(Rollo, p. 41). In its position paper, PALEA contended that PAL, by its unilateral
implementation of the Code, was guilty of unfair labor practice, specifically Paragraphs E and G
of Article 249 and Article 253 of the Labor Code. PALEA alleged that copies of the Code had
been circulated in limited numbers; that being penal in nature the Code must conform with the
requirements of sufficient publication, and that the Code was arbitrary, oppressive, and
prejudicial to the rights of the employees. It prayed that implementation of the Code be held in
abeyance; that PAL should discuss the substance of the Code with PALEA; that employees
dismissed under the Code be reinstated and their cases subjected to further hearing; and that PAL
be declared guilty of unfair labor practice and be ordered to pay damages (pp. 7-14, Record.)
PAL filed a motion to dismiss the complaint, asserting its prerogative as an employer to prescibe
rules and regulations regarding employess' conduct in carrying out their duties and functions, and
alleging that by implementing the Code, it had not violated the collective bargaining agreement
(CBA) or any provision of the Labor Code. Assailing the complaint as unsupported by evidence,
PAL maintained that Article 253 of the Labor Code cited by PALEA reffered to the requirements
for negotiating a CBA which was inapplicable as indeed the current CBA had been negotiated.

In its reply to PAL's position paper, PALEA maintained that Article 249 (E) of the Labor Code
was violated when PAL unilaterally implemented the Code, and cited provisions of Articles IV
and I of Chapter II of the Code as defective for, respectively, running counter to the construction
of penal laws and making punishable any offense within PAL's contemplation. These provisions
are the following:

Sec. 2. Non-exclusivity. — This Code does not contain the entirety of the rules
and regulations of the company. Every employee is bound to comply with all
applicable rules, regulations, policies, procedures and standards, including
standards of quality, productivity and behaviour, as issued and promulgated by
the company through its duly authorized officials. Any violations thereof shall be
punishable with a penalty to be determined by the gravity and/or frequency of the
offense.

Sec. 7. Cumulative Record. — An employee's record of offenses shall be

cumulative. The penalty for an offense shall be determined on the basis of his past
record of offenses of any nature or the absence thereof. The more habitual an
offender has been, the greater shall be the penalty for the latest offense. Thus, an
employee may be dismissed if the number of his past offenses warrants such
penalty in the judgment of management even if each offense considered
separately may not warrant dismissal. Habitual offenders or recidivists have no
place in PAL. On the other hand, due regard shall be given to the length of time
between commission of individual offenses to determine whether the employee's
conduct may indicate occasional lapses (which may nevertheless require sterner
disciplinary action) or a pattern of incorrigibility.

Labor Arbiter Isabel P. Ortiguerra handling the case called the parties to a conference but they
failed to appear at the scheduled date. Interpreting such failure as a waiver of the parties' right to
present evidence, the labor arbiter considered the case submitted for decision. On November 7,
1986, a decision was rendered finding no bad faith on the part of PAL in adopting the Code and
ruling that no unfair labor practice had been committed. However, the arbiter held that PAL was
"not totally fault free" considering that while the issuance of rules and regulations governing the
conduct of employees is a "legitimate management prerogative" such rules and regulations must
meet the test of "reasonableness, propriety and fairness." She found Section 1 of the Code
aforequoted as "an all embracing and all encompassing provision that makes punishable any
offense one can think of in the company"; while Section 7, likewise quoted above, is
"objectionable for it violates the rule against double jeopardy thereby ushering in two or more
punishment for the same misdemeanor." (pp. 38-39, Rollo.)
The labor arbiter also found that PAL "failed to prove that the new Code was amply circulated."
Noting that PAL's assertion that it had furnished all its employees copies of the Code is
unsupported by documentary evidence, she stated that such "failure" on the part of PAL resulted
in the imposition of penalties on employees who thought all the while that the 1966 Code was
still being followed. Thus, the arbiter concluded that "(t)he phrase ignorance of the law excuses
no one from compliance . . . finds application only after it has been conclusively shown that the
law was circulated to all the parties concerned and efforts to disseminate information regarding
the new law have been exerted. (p. 39, Rollo.) She thereupon disposed:

WHEREFORE, premises considered, respondent PAL is hereby ordered as

follows:

1. Furnish all employees with the new Code of Discipline;

2. Reconsider the cases of employees meted with penalties under the New Code
of Discipline and remand the same for further hearing; and

3. Discuss with PALEA the objectionable provisions specifically tackled in the

body of the decision.

All other claims of the complainant union (is) [are] hereby, dismissed for lack of
merit.

SO ORDERED. (p. 40, Rollo.)

PAL appealed to the NLRC. On August 19, 1988, the NLRC through Commissioner
Encarnacion, with Presiding Commissioner Bonto-Perez and Commissioner Maglaya concurring,
found no evidence of unfair labor practice committed by PAL and affirmed the dismissal of
PALEA's charge. Nonetheless, the NLRC made the following observations:

Indeed, failure of management to discuss the provisions of a contemplated code of

discipline which shall govern the conduct of its employees would result in the
erosion and deterioration of an otherwise harmonious and smooth relationship
between them as did happen in the instant case. There is no dispute that adoption
of rules of conduct or discipline is a prerogative of management and is imperative
and essential if an industry, has to survive in a competitive world. But labor
climate has progressed, too. In the Philippine scene, at no time in our
contemporary history is the need for a cooperative, supportive and smooth
relationship between labor and management more keenly felt if we are to survive
economically. Management can no longer exclude labor in the deliberation and
adoption of rules and regulations that will affect them.

The complainant union in this case has the right to feel isolated in the adoption of
the New Code of Discipline. The Code of Discipline involves security of tenure
and loss of employment — a property right! It is time that management realizes
that to attain effectiveness in its conduct rules, there should be candidness and
 openness by Management and participation by the union, representing its
members. In fact, our Constitution has recognized the principle of "shared
responsibility" between employers and workers and has likewise recognized the
right of workers to participate in "policy and decision-making process affecting
their rights . . ." The latter provision was interpreted by the Constitutional
Commissioners to mean participation in "management"' (Record of the
Constitutional Commission, Vol. II).

In a sense, participation by the union in the adoption of the code if conduct could
have accelerated and enhanced their feelings of belonging and would have
resulted in cooperation rather than resistance to the Code. In fact, labor-
management cooperation is now "the thing." (pp. 3-4, NLRC Decision ff. p. 149,
Original Record.)

Respondent Commission thereupon disposed:

WHEREFORE, premises considered, we modify the appealed decision in the

sense that the New Code of Discipline should be reviewed and discussed with
complainant union, particularly the disputed provisions [.] (T)hereafter,
respondent is directed to furnish each employee with a copy of the appealed Code
of Discipline. The pending cases adverted to in the appealed decision if still in the
arbitral level, should be reconsidered by the respondent Philippine Air Lines.
Other dispositions of the Labor Arbiter are sustained.

SO ORDERED. (p. 5, NLRC Decision.)

PAL then filed the instant petition for certiorari charging public respondents with grave abuse of
discretion in: (a) directing PAL "to share its management prerogative of formulating a Code of
Discipline"; (b) engaging in quasi-judicial legislation in ordering PAL to share said prerogative
with the union; (c) deciding beyond the issue of unfair labor practice, and (d) requiring PAL to
reconsider pending cases still in the arbitral level (p. 7, Petition; p. 8, Rollo.)

As stated above, the Principal issue submitted for resolution in the instant petition is whether
management may be compelled to share with the union or its employees its prerogative of
formulating a code of discipline.

PAL asserts that when it revised its Code on March 15, 1985, there was no law which mandated
the sharing of responsibility therefor between employer and employee.

Indeed, it was only on March 2, 1989, with the approval of Republic Act No. 6715, amending
Article 211 of the Labor Code, that the law explicitly considered it a State policy "(t)o ensure the
participation of workers in decision and policy-making processes affecting the rights, duties and
welfare." However, even in the absence of said clear provision of law, the exercise of
management prerogatives was never considered boundless. Thus, in Cruz vs. Medina (177 SCRA
565 [1989]) it was held that management's prerogatives must be without abuse of discretion.
In San Miguel Brewery Sales Force Union (PTGWO) vs. Ople (170 SCRA 25 [1989]), we
upheld the company's right to implement a new system of distributing its products, but gave the
following caveat:

So long as a company's management prerogatives are exercised in good faith for

the advancement of the employer's interest and not for the purpose of defeating or
circumventing the rights of the employees under special laws or under valid
agreements, this Court will uphold them.
(at p. 28.)

All this points to the conclusion that the exercise of managerial prerogatives is not unlimited. It
is circumscribed by limitations found in law, a collective bargaining agreement, or the general
principles of fair play and justice (University of Sto. Tomas vs. NLRC, 190 SCRA 758 [1990]).
Moreover, as enunciated in Abbott Laboratories (Phil.), vs. NLRC (154 713 [1987]), it must be
duly established that the prerogative being invoked is clearly a managerial one.

A close scrutiny of the objectionable provisions of the Code reveals that they are not purely
business-oriented nor do they concern the management aspect of the business of the company as
in the San Miguel case. The provisions of the Code clearly have repercusions on the employee's
right to security of tenure. The implementation of the provisions may result in the deprivation of
an employee's means of livelihood which, as correctly pointed out by the NLRC, is a property
right (Callanta, vs Carnation Philippines, Inc., 145 SCRA 268 [1986]). In view of these aspects
of the case which border on infringement of constitutional rights, we must uphold the
constitutional requirements for the protection of labor and the promotion of social justice, for
these factors, according to Justice Isagani Cruz, tilt "the scales of justice when there is doubt, in
favor of the worker" (Employees Association of the Philippine American Life Insurance
Company vs. NLRC, 199 SCRA 628 [1991] 635).

Verily, a line must be drawn between management prerogatives regarding business

operations per se and those which affect the rights of the employees. In treating the latter,
management should see to it that its employees are at least properly informed of its decisions or
modes action. PAL asserts that all its employees have been furnished copies of the Code. Public
respondents found to the contrary, which finding, to say the least is entitled to great respect.

PAL posits the view that by signing the 1989-1991 collective bargaining agreement, on June 27,
1990, PALEA in effect, recognized PAL's "exclusive right to make and enforce company rules
and regulations to carry out the functions of management without having to discuss the same
with PALEA and much less, obtain the latter's conformity thereto" (pp. 11-12, Petitioner's
Memorandum; pp 180-181, Rollo.) Petitioner's view is based on the following provision of the
agreement:

The Association recognizes the right of the Company to determine matters of

management it policy and Company operations and to direct its manpower.
Management of the Company includes the right to organize, plan, direct and
control operations, to hire, assign employees to work, transfer employees from
one department, to another, to promote, demote, discipline, suspend or discharge
 employees for just cause; to lay-off employees for valid and legal causes, to
introduce new or improved methods or facilities or to change existing methods or
facilities and the right to make and enforce Company rules and regulations to
carry out the functions of management.

The exercise by management of its prerogative shall be done in a just reasonable,

humane and/or lawful manner.

Such provision in the collective bargaining agreement may not be interpreted as cession of
employees' rights to participate in the deliberation of matters which may affect their rights and
the formulation of policies relative thereto. And one such mater is the formulation of a code of
discipline.

Indeed, industrial peace cannot be achieved if the employees are denied their just participation in
the discussion of matters affecting their rights. Thus, even before Article 211 of the labor Code
(P.D. 442) was amended by Republic Act No. 6715, it was already declared a policy of the State,
"(d) To promote the enlightenment of workers concerning their rights and obligations . . . as
employees." This was, of course, amplified by Republic Act No 6715 when it decreed the
"participation of workers in decision and policy making processes affecting their rights, duties
and welfare." PAL's position that it cannot be saddled with the "obligation" of sharing
management prerogatives as during the formulation of the Code, Republic Act No. 6715 had not
yet been enacted (Petitioner's Memorandum, p. 44; Rollo, p. 212), cannot thus be sustained.
While such "obligation" was not yet founded in law when the Code was formulated, the
attainment of a harmonious labor-management relationship and the then already existing state
policy of enlightening workers concerning their rights as employees demand no less than the
observance of transparency in managerial moves affecting employees' rights.

Petitioner's assertion that it needed the implementation of a new Code of Discipline considering
the nature of its business cannot be overemphasized. In fact, its being a local monopoly in the
business demands the most stringent of measures to attain safe travel for its patrons. Nonetheless,
whatever disciplinary measures are adopted cannot be properly implemented in the absence of
full cooperation of the employees. Such cooperation cannot be attained if the employees are
restive on account, of their being left out in the determination of cardinal and fundamental
matters affecting their employment.

WHEREFORE, the petition is DISMISSED and the questioned decision AFFIRMED. No special
pronouncement is made as to costs.

SO ORDERED.

Feliciano, Bidin, Romero and Vitug, JJ., concur.

Case Digest

PHILIPPINE AIRLINES vs. NLRC et al

G.R. No. 132805
Feb. 2, 1999

FACTS: Private respondent Dr. Fabros was employed as flight surgeon at petitioner company.
He was assigned at the PAL Medical Clinic and was on duty from 4:00 in the afternoon until
12:00 midnight.
On Feb.17, 1994, at around 7:00 in the evening, Dr. FAbros left the clinic to have his dinner at
his residence, which was abou t5-minute drive away. A few minutes later, the clinic received an
emergency call from the PAL Cargo Services. One of its employeeshad suffered a heart attack.
The nurse on duty, Mr. Eusebio, called private respondent at home to inform him of the
emergency. The patient arrived at the clinic at 7:50 in the evening and Mr. Eusebio immediately
rushed him to the hospital. When Dr. Fabros reached the clinic at around 7:51 in the evening,
Mr. Eusebio had already left with the patient to the hospital. The patient died the following day.
Upon learning about the incident, PAL Medical Director ordered the Chief Flight Surgeon to
conduct an investigation. In his explanation, Dr. Fabros asserted that he was entitled to a thirty-
minute meal break; that he immediately left his residence upon being informed by Mr. Eusebio
about the emergency and he arrived at the clinic a few minutes later; that Mr. Eusebio panicked
and brought the patient to the hospital without waiting for him.

Finding private respondent’s explanation unacceptable, the management charged private

respondent with abandonment of post while on duty. He denied that he abandoned his post on
February 17, 1994. He said that he only left the clinic to have his dinner at home. In fact, he
returned to the clinic at 7:51 in the evening upon being informed of the emergency.

After evaluating the charge as well as the answer of private respondent, he was given a
suspension for three months effective December 16, 1994.

Private respondent filed a complaint for illegal suspension against petitioner.

On July 16, 1996, the Labor Arbiter rendered a decision declaring the suspension of private
respondent illegal. It also ordered petitioner to pay private respondent the amount equivalent to
all the benefits he should have received during his period of suspension plus P500,000.00 moral
damages.

Petitioner appealed to the NLRC.

The NLRC, however, dismissed the appeal after finding that the decision of the Labor Arbiter is
supported by the facts on record and the law on the matter. The NLRC likewise denied
petitioner’s motion for reconsideration.

Hence, this petition.

ISSUE:
1. WON the nullifying of the 3-month suspension by the NLRC erroneous.

2. WON the awarding of moral damages is proper.

HELD: The petition is PARTIALLY GRANTED. The portion of the assailed decision
awarding moral damages to private respondent is DELETED. All other aspects of the decision
are AFFIRMED
1. The legality of private respondent’s suspension: Dr. Fabros left the clinic that night only to
have his dinner at his house, which was only a few minutes’ drive away from the clinic. His
whereabouts were known to the nurse on duty so that he could be easily reached in case of
emergency. Upon being informed of Mr. Acosta’s condition, private respondent immediately left
his home and returned to the clinic. These facts belie petitioner’s claim of abandonment.
Petitioner argues that being a full-time employee, private respondent is obliged to stay in the
company premises for not less than eight (8) hours. Hence, he may not leave the company
premises during such time, even to take his meals. We are not impressed. Art. 83 and 85 of the
Labor Code read: Art. 83. Normal hours of work. — The normal hours of work of any employee
shall not exceed eight (8) hours a day. Health personnel in cities and municipalities with a
population of at least one million (1,000,000) or in hospitals and clinics with a bed capacity of at
least one hundred (100) shall hold regular office hours for eight (8) hours a day, for five (5) days
a week, exclusive of time for meals, except where the exigencies of the service require that such
personnel work for six (6) days or forty-eight (48) hours, in which case they shall be entitled to
an additional compensation of at least thirty per cent (30%) of their regular wage for work on the
sixth day. For purposes of this Article, “health personnel” shall include: resident physicians,
nurses, nutritionists, dieticians, pharmacists, social workers, laboratory technicians, paramedical
technicians, psychologists, midwives, attendants and all other hospital or clinic personnel.
(emphasis supplied) Art. 85. Meal periods. — Subject to such regulations as the Secretary of
Labor may prescribe, it shall be the duty of every employer to give his employees not less than
sixty (60) minutes time-off for their regular meals. Sec. 7, Rule I, Book III of the Omnibus Rules
Implementing the Labor Code further states: Sec. 7. Meal and Rest Periods. — Every employer
shall give his employees, regardless of sex, not less than one (1) hour time-off for regular meals,
except in the following cases when a meal period of not less than twenty (20) minutes may be
given by the employer provided that such shorter meal period is credited as compensable hours
worked of the employee; (a) Where the work is non-manual work in nature or does not involve
strenuous physical exertion; (b) Where the establishment regularly operates not less than sixteen
hours a day; (c) In cases of actual or impending emergencies or there is urgent work to be
performed on machineries, equipment or installations to avoid serious loss which the employer
would otherwise suffer; and (d) Where the work is necessary to prevent serious loss of perishable
goods. Rest periods or coffee breaks running from five (5) to twenty (20) minutes shall be
considered as compensable working time. Thus, the eight-hour work period does not include the
meal break. Nowhere in the law may it be inferred that employees must take their meals within
the company premises. Employees are not prohibited from going out of the premises as long as
they return to their posts on time. Private respondent’s act, therefore, of going home to take his
dinner does not constitute abandonment. 2. The award of moral damages: Not every employee
who is illegally dismissed or suspended is entitled to damages. As a rule, moral damages are
recoverable only where the dismissal or suspension of the employee was attended by bad faith or
fraud, or constituted an act oppressive to labor, or was done in a manner contrary to morals, good
customs or public policy In the case at bar, there is no showing that the management of petitioner
company was moved by some evil motive in suspending private respondent. It suspended private
respondent on an honest, albeit erroneous, belief that private respondent’s act of leaving the
company premises to take his meal at home constituted abandonment of post which warrants the
penalty of suspension. Under the circumstances, we hold that private respondent is not entitled to
moral damages.
G.R. No. 106370 September 8, 1994

PHILIPPINE GEOTHERMAL, INC., petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION and EDILBERTO M. ALVAREZ, respondents.

Romulo, Mabanta, Buenaventura, Sayoc & De Los Angeles for petitioner.

Fidel Angelito I. Arias for private respondent.

PADILLA, J.:

Petitioner Philippine Geothermal, Incorporated filed the present petition for certiorari seeking the reversal of
the decision of public respondent National Labor Relation Commision In NLRC CA No. L-000295-91/RB-IV-
1-3583-91 entitled "Edilberto M. Alvarez v. Philippine Geothermal, Inc. et al."

The relevant facts of this case are as follows:

Private respondent Edilberto M. Alvarez was first employed by petitioner on 2 July 1979. On 31 May 1989,
private respondent, who was then occupying the position of Steam Test Operator II, injured his right wrist
when a steam-pressured "chicksan swivel joint assembly" exploded while he was checking a geothermal well
operated by petitioner. As a result, private respondent's right arm was placed in a plaster cast and he was
confined at the San Pablo Doctor's Hospital from 31 May 1989 to 3 June 1989.

Dr. Oscar M. Brion, the attending physician, diagnosed private respondent's injuries to be:

1) Complete fracture/dislocation distal radius (r);

2) Complete fracture styloid process and dislocation of the ulna;

3) Right pelvic contusion, which required a recuperation period of approximately forty-five

(45) days.

Petitioner thus gave private respondent a fifty (50) days "work-connected accident" (WCA) leave with pay
until 29 July 1989. Petitioner also referred private respondent's case to Dr. Liberato A.C. Leagogo, Jr. of the
Philippine Orthopedic Institute, at petitioner's expense.

On 26 July 1989, Dr. Leagogo certified that private respondent was fit to return to work with the qualification
however, that he could only perform light work. Thus, on 31 July 1989, when respondent Alvarez returned to
work, he was assigned to "caliberation of barton recorders", in accordance with the doctor's recommendations.

On 13 November 1989, Alvarez was again examined by Dr. Leagogo who issued a medical certificate which
reads: 1

This is with regards [sic] the work recommendation for Mr. Bert Alvarez.

At this point in time, 5 months post-injury, he can be given moderate working activities,
pulling, pushing, carrying and turning a 20 lbs.-25 lbs. weight/force.
 On the 6th month, he can go back to his previous job.

Despite this certification, respondent Alvarez continued to absent himself from work and by the end of 1989 he
had used ten (10) days of vacation leave, eighteen (18) days of sick leave, fifteen (15) days of WCA leave and
four (4) days of emergency leave for the period starting 31 July 1989.

On 28 December 1989, Dr. Leagogo, after examining Alvarez, certified that the latter's injury had healed
completely and that he could thus return to his pre-injury work.

On the same day, Alvarez consulted another doctor, Dr. Angela D.V. Garcia, a private physician, who likewise
confirmed that there were "no contraindications for him (Alvarez) not to attend to his work."

On 29 December 1989, based on Dr. Leagogo's findings, petitioner wrote Alvarez stating:

This is to inform you that based on the examination performed on December 28, 1989 by
your attending physician, Dr. Liberato Antonio C. Leagogo, Jr., your right wrist fracture is
completely healed as stated in the attached medical certificate. Therefore, you are advised to
go back to your regular duty as an Operator II at the Well Testing Section effective
immediately.

xxx xxx xxx

Any absences you may incur in the future will be subject to our existing policy on leaves and
absences. . . . 2

Since Alvarez failed to report for work from 2 to 10 January 1990, petitioner again wrote him stating:

. . . it is indicated that your therapy has no contraindication for you not to attend to your work.
However, from that date up to now, January 11, you have not reported for work. . . .

Therefore, as of January 11, 1990, you are considered to be "Absent Without Official Leave
(AWOL) and Without Pay". This letter serves as a warning letter per our rules and
regulations, Unauthorized absences, rule 3, par. i, page 31.

You are advised to immediately report for work or further disciplinary action will be taken. 3

After reading the letter. Alvarez wrote a hand-written note on petitioner's copy of the letter, stating "Please
wait for my doctor's medical certificate from Dr. Relampagos."

On 19 January 1990, Dr. Victoria Pineda, an orthopedic doctor of the National Orthopedic Hospital whom
Alvarez also consulted issued the following medical certificate:

Patient has reached a plateau in his rehabilitation with limitations of wrist motion (r) as
regular. Fit for work. 4

On 20 January 1990, Alvarez consulted Dr. Francisco, another orthopedic doctor at the Polymedic General
Hospital, who recommended a set of laboratory tests to be conducted on Alvarez' right wrist.

On 1 February 1990, Dr. Relampagos of the National Orthopedic Hospital certified Alvarez to be "Fit for light
job." 5
On 6 February 1990, Dr. Francisco, who read and interpreted the results of the tests undertaken on Alvarez at
the St. Luke's Medical Center, certified that there is no "hindrance for him (Mr. Alvarez) to do his office
work." 6

Notwithstanding the above medical findings, respondent Edilberto M. Alvarez continued to incur numerous
absences. He did not report for work in the months of January and February 1990.

On 7 February 1990, petitioner addressed its third letter to Alvarez stating:

The attached medical certificates from Dr. Garcia, Dr. Pineda,

Dr. Relampagos, Dr. Francisco, and Dr. Leagogo all indicate that you are fit to work. Based
on these medical certificates, your absences from January 11 to February 6 1990 (23 working
days) will be charged to your sick leave credits. Be advised that your sick leave credits will be
exhausted on February 8, 1990 therefore, you will not be paid for subsequent absences.

In addition, if you fail to report to work and are unable to present a medical certificate
explaining your absences, you will face disciplinary action. I am enclosing the statement of
company policy on absences for your information and would strongly suggest that you report
to work immediately. 7

Under petitioner's company rules, employees who incur unauthorized absences of six (6) days or more are
subject to dismissal. Thus, when Alvarez failed to report for work from 8 to 28 February 1990, a total of
eighteen (18) working days with three (3) days off, petitioner wrote Alvarez a fourth time stating in part:

This refers to your continued refusal to report back to work following your recovery from a
work-related accident involving your right wrist last May 31, 1989. That you have recovered
is based on the certification of four (4) physicians, including the company-retained orthopedic
doctor and three (3) other orthopedic specialists whom you personally chose and consulted.

xxx xxx xxx

In order not to lose your income, the company has allowed you to charge all these
unwarranted absences against your accumulated sick leave credits. Our records show that as
of February 7, 1990, you have used up all your remaining sick leaves. We would like to
emphasize that from February 8 to 28, all your absences are considered unauthorized and
without pay. Please be reminded that, according to company rules, employees who go on
unauthorized absences of six (6) or more days are subject to dismissal.

The company, therefore, believes that it has given all the time, help, and considerations in
your case. We go by the doctor's certifications that you are already fit to work.

In view of the above, we are giving you a final warning. Should you fail to report to work on
Monday, March 5, 1990 your employment with the company will be terminated. 8

This fourth warning letter of petitioner was unheeded. Alvarez failed to report for work; neither did he inform
petitioner of the reason for his continued absences.

As a consequence, petitioner terminated Alvarez, employment on

9 March 1990.
On 19 June 1990, Alvarez filed a complaint for illegal dismissal against petitioner with the Regional
Arbitration Branch, Region IV.

On 19 December 1990, the labor arbiter dismissed the complaint, without prejudice, for failure of the
complainant to submit his position paper despite repeated orders from the labor arbiter.

On 16 January 1991, private respondent refiled his complaint for illegal dismissal.

On 6 September 1991 the labor arbiter rendered a decision holding private respondent's termination from
employment as valid and justified.

On appeal to the public respondent National Labor Relations Commission (NLRC), the decision was reserved
and set aside. Petitioner was ordered to reinstate Edilberto M. Alvarez to his former position without loss of
seniority rights but without backwages.

A Motion for Reconsideration was denied on 15 May 1992. Petitioner then filed the present petition
for certiorari, based on two (2) grounds namely:

RESPONDENT COMMISSION ABUSED ITS DISCRETION AND ACTED BEYOND ITS

JURISDICTION BY ENTERTAINING AN APPEAL THAT WAS FILED OUT OF TIME

EVEN ON THE MERITS OF THE CASE, RESPONDENT COMMISSION ABUSED ITS

DISCRETION BY FAILING TO APPRECIATE OVERWHELMING EVIDENCE
UNIFORMLY SHOWING THAT THE TERMINATION OF MR. ALVAREZ WAS VALID
AND JUSTIFIED. 9

On the issue of whether or not the appeal from the decision of the labor arbiter to the NLRC was filed within
the ten (10) day reglementary period, it is undisputed that private respondent received a copy of the labor
arbiter's decision on 5 September 1991. Alvarez thus had up to 15 September 1991 to perfect his appeal. Since
this last mentioned date was a Sunday, private respondent had to file his appeal on the next business day, 16
September 1991.

Petitioner contends that the appeal was filed only on 20 September 1991. Respondent NLRC however found
that private respondent filed his appeal by registered mail on 16 September 1991, the same day that petitioner's
counsel was furnished copies of said appeal. 10

We will not disturb this factual finding of the NLRC.

The contention that even assuming arguendo that the appeal was filed on time, the appeal fee was paid four (4)
days late (and, therefore, the appeal to the NLRC should be dismissed) likewise fails to entirely empress us.
In C.W. Tan Manufacturing v. NLRC, 11 we held that "the broader interest of justice and the desired objective of
deciding the case on the merits demand that the appeal be given due course."

On the issue of whether or not Edilberto M. Alvarez was validly dismissed, we rule in the affirmative and
consequently the decision of respondent NLRC is set aside.

Article 282(b) of the Labor Code provides that an employer may validly dismiss an employee for gross and
habitual neglect by the employee of his duties. In the present case, it is clear that private respondent was guilty
of seriously neglecting his duties.
The records establish that as early as 26 July 1989, Dr. Leagogo already had certified that Alvarez could
perform light work. On 13 November 1989,
Dr. Leagogo certified that Alvarez could perform moderate work and it was further certified that by December
1989, Alvarez could return to his pre-injury duties. Notwithstanding these certifications, Alvarez continued to
incur unexplained absences until his dismissal on 9 March 1990.

A review of Alvarez' record of attendance shows that from August to December 1989, he reported for work
only seventy-seven (77) times while he incurred forty-seven (47) absences.

An employee who earnestly desires to resume his regular duties after recovering from an injury undoubtedly
will not go through the trouble of getting opinions from five (5) different of getting opinions from five (5)
different physicians before going back to work after he has been certified to be fit to return to his regular
duties.

Petitioner has not been shown to be without sympathy or concern for Alvarez. He was given fifty (50) days
work-connected accident (WCA) leave with pay to allow him to recuperate from his injury without loss of
earnings. He was allowed to use his leave credits and was actually given an additional fifteen (15) days WCA
leave to allow him to consult his doctors and fully recover from his injuries. Moreover, petitioner gave Alvarez
several warnings to report for work, otherwise, he would face disciplinary sanctions. In spite of these
warnings, Alvarez was absent without official leave (AWOL) for eighteen (18) days. Under company policy,
of which Alvarez was made aware, employees who incur without valid reason six (6) or more absences are
subject to dismissal.

Petitioner, in its fourth and last warning letter to Alvarez, was willing to allow him to resume his work in spite
of the eighteen (18) days he went on AWOL. It was made clear, however, that should private respondent still
fail to report for work on 5 March 1990, his employment would be terminated.

Private respondent failed to report for work on 5 March 1990. Petitioner validly dismissed him not only for
violation of company policy but also for violation of Section 282(c) of the Labor Code aforecited.

While it is true that compassion and human consideration should guide the disposition of casses involving
termination of employment since it affects one's source or means of livelihood, it should not be overlooked that
the benefits accorded to labor do not include compelling an employer to retain the services of an employee
who has been shown to be a gross liability to the employer. The law in protecting the rights of the employees
authorizes neither oppression nor self-destruction of the employer. 12 It should be made clear that when the law
tilts the scale of justice in favor of labor, it is but a recognition of the inherent economic inequality between
labor and management. The intent is to balance the scale of justice; to put the two parties on relatively equal
positions. There may be cases where the circumstances warrant favoring labor over the interests of
management but never should the scale be so tilted if the result is an injustice to the employer. Justitia nemini
neganda est (Justice is to be denied to none).

In Cando v. National Labor Relations Commission 13 the Court awarded separation pay to an employee who
was terminated for unuathorized absences. We believe that separation pay of one-half (1/2) month salary for
every year of service is adequate in this case.

WHEREFORE, the decision of respondent National Labor Relations Commision is hereby SET ASIDE and
the decision of the Labor Arbiter is reinstated with the MODIFICATION that petitioner Philippine
Geothermal, Inc. is ordered to pay private respondent Edilberto M. Alvarez separation pay equivalent to one-
half (1/2) month salary for every year of service starting from 2 July 1979 until his dismissal on 9 March 1990.

SO ORDERED.
Case Digest

FACTS:

Alvarez having recovered from a work-

related accident, failed to report to work for a total of eighteen (18) working days with three (3) d
ays off. Under petitioner’s company rules, employees who incur unauthorized absences of six (6)
days or more are subject to dismissal. After the fourth warning, he was then terminated. Private r
espondent filed his complaint for illegal dismissal and the labor arbiter rendered a decision holdi
ng private respondent’s termination from employment as valid and justified.On appeal, NLRC, r
eserved and set aside the decision of the Labor Arbiter. Petitioner was ordered to reinstate Edilbe
rto M. Alvarez to his former position without loss of seniority rights but without backwages.

ISSUE:

Whether or not NLRC abused its discretion and acted beyond its jurisdiction by entertaining an a
ppeal that was filed out of time.

HELD:

On the issue of whether or not the appeal from the decision of the labor arbiter to the NLRC was
filed within the ten (10) day reglementary period, it is undisputed that private respondent receive
d a copy of the labor arbiter’s decision on 5 September 1991. Alvarez thus had up to 15 Septemb
er 1991 to perfect his appeal. Since this last mentioned date was a Sunday, private respondent ha
d to file his appeal on the next business day, 16 September 1991. Petitioner contends that the app
eal was filed only on 20 September 1991. Respondent NLRC however found that private respond
ent filed his appeal by registered mail on 16 September 1991, the same day that petitioner’s coun
sel was furnished copies of said appeal.

The contention that even assuming arguendo that the appeal was filed on time, the appeal fee wa
s paid four (4) days late (and, therefore, the appeal to the NLRC should be dismissed) likewise fa
ils to entirely empress us. In C.W. Tan Manufacturing v. NLRC, we held that “the broader intere
st of justice and the desired objective of deciding the case on the merits demand that the appeal b
e given due course.”

G.R. No. 165960 February 8, 2007

JEFFREY O. TORREDA, Petitioner,
vs.
TOSHIBA INFORMATION EQUIPMENT (PHILS.), INC., and GERARDO C. CRISTOBAL,
JR., Respondents.

DECISION

CALLEJO, SR., J.:

Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court questioning the
Decision1of the Court of Appeals (CA) in CA-G.R. SP No. 76289 and the Resolution2 denying the motion for
reconsideration thereof. The appellate court affirmed the November 15, 2002 Resolution3 of the National
Labor Relations Commission (NLRC) in NLRC RAB IV Case No. 3-10931-99-L (CA No. 023462-2000).

The Antecedents

Jeffrey O. Torreda was employed by Toshiba Information Equipment (Phils.), Inc. as a finance assistant4 (on a
probationary basis) on July 1, 1997. He was mainly responsible for payroll processing and management, and
for the bookkeeping of T&P Properties, Inc.5 Effective January 1, 1998, he was employed on a regular basis as
finance accountant6 under the Finance and Accounting Department headed by Kazuo Kobayashi, Vice-
President, and Teresita Sepulveda, Finance Manager.7 He was tasked to do the following:

(i) processing of the payrolls of the employees of the Company, (ii) maintenance of reports on year-to-date
earnings and taxes withheld, monetary benefits, and government contributions, (iii) preparation of vouchers
related to payroll accounts of the employees, (iv) preparation and reconciliation of payment of taxes withheld
and file tax returns, and (v) preparation of reportorial requirements of government agencies and regulatory
bodies.8

On May 22, 1998, Torreda and his four co-employees in the Finance and Accounting Department reported to
Senior Vice-President Hisao Tanaka that, before and after the reorganization, Finance Manager Teresita
Sepulveda had ordered them to prepare petty cash vouchers in their names and that the sums covered by the
vouchers were received by Sepulveda for her own personal use.9 Tanaka told them that he would bring the
matter to Gerardo Cristobal, Jr., the Manager of the Human Resources Department.10 Consequently, Sepulveda
was barred from approving petty cash vouchers with an amount beyond ₱1,000.00. She was also required to
make monthly reports of petty cash vouchers to the Senior Vice-President. Thus, restrictions were imposed on
Sepulveda’s authority to approve petty cash vouchers.11

On July 22, 1998, Sepulveda opened Torreda’s personal computer and read his Lotus Notes mail and other
personal files, specifically the report he had sent to Tanaka about her. She reprimanded Torreda and told him
that he should not send mails to Tanaka without her approval.12 Upset over Sepulveda’s actuations, Torreda
reported the incident via electronic mail (e-mail) to Tanaka13 on the same day. He complained that Sepulveda
had no right to open the computer because it was his, and it contained his personal files. He told Tanaka that
Sepulveda used to open the employees’ computers; hence, she could no longer be trusted.14

Sepulveda filed a complaint against Torreda with the Human Resources Department (HRD) for repeated
tardiness during the period of April to July 1998.

On August 27, 1998, Sepulveda ordered Torreda to make a summary of payroll overpayments from October
1996 to June 1998.15 Torreda refused and informed Sepulveda that all countermeasures for immediate and
long-term solutions had been identified, and that what was needed was a strict implementation of
countermeasures.16 He further questioned the propriety of his being ordered to prepare financial summaries
starting October 1996, when he was employed only on July 1, 1997.17
From September 1 to 3, 1998, Sepulveda received complaints from separated employees regarding full salary
claims, and from incumbent employees on maternity and other benefits. Torreda failed to process the claims
before taking a leave of absence on September 3, 1998. In order to retrieve the claimants’ payrolls and Social
Security Services (SSS) files, which Torreda kept in his drawer, Sepulveda, with prior approval from
Kobayashi, had the drawer forcibly opened by Ruben delos Santos, a staff member of the General
Administration Section. The drawer was opened in the presence of Oscar Eusebio, Noralyn Florencio and Flor
Berdin of the Finance Department. The claims of the employees were later processed and released.18 As shown
by official records, Torreda went to his office on September 5, 1998, a Saturday, and stayed thereat for several
hours.

On September 7, 1998, Sepulveda requested Torreda to submit his key for duplication to prevent similar
incidents.19Torreda refused. Sepulveda sent a formal request via e-mail directing him to turn over his drawer
key to the General Administrator of the company for duplication and to explain in writing why he refused to
surrender his key.20 Torreda replied via e-mail to Sepulveda, to wit:

I WILL ONLY GIVE YOU THE DUPLICATE COPY (sic) IF YOU CAN PROVIDE ME WITH OR (SIC)
AN EXPLANATION OF THE FOLLOWING:

1.) TIP policy on Key duplication to be submitted to your possession (sic).

2.) Why is is (sic) that my Php 200.00 pesos (sic) in my drawer is missing (or STOLEN, by WHO
ELSE____)?? Because you are the only one who FORCIBLY open (sic) my drawer without my
knowledge. This is a plain and simple robbery on your part…21

Torreda furnished copies of this e-mail to Cristobal, Kobayashi, Tanaka and N. Florencio, the Senior Manager
of the HRD, Manager of General Administration, Vice-President for Finance, Senior Vice-President and
Financial Analyst of the company, respectively.

Torreda then accomplished the company complaint form against Sepulveda declaring that at 8:00 a.m. on
September 7, 1998, he discovered that two ₱100.00 bills he kept in his drawer were missing. He noted that his
drawer had been forcibly opened before by Ruben delos Santos on Sepulveda’s orders.22

On the same day, Sepulveda sent to the HRD a complaint/request for investigation (via e-mail) regarding
Torreda’s accusation and his abusive and rude behavior.23 The complaint reads:

This is to formally file a complaint against one of my staff, Mr. Jeffrey Torreda. In this statement below, he
blatantly accused me of robbery for the ₱200.00 missing in his drawer. This is a fabrication of a story and I felt
very much humiliated by his words.

Would like to request for an investigation to be conducted to clear my name of this incident. I cannot be silent
and accept this as simple error when my name and career are at stake. This is a clear case of misrepresentation.
In my position as the Finance Manager of TIP, integrity is the most important virtue that I have to project and
protect. Mr. Torreda, thru his misrepresentation particularly to top management, caused damage to my image.

I pray for justice. Lest this act of Mr. Jeffrey Torreda will happen again.24

On September 7, 1998, a conference was held in the office of Kobayashi between Torreda, Cristobal and
Sepulveda. Torreda claimed that Sepulveda never informed him that his drawer needed to be opened. He
pointed out that some employees of the Finance and Accounting Section knew his contact numbers.
Sepulveda, for her part, claimed that she did not have the contact numbers of Torreda, hence, was unable to
contact him before his drawer was opened. Kobayashi told Sepulveda that she should have the contact numbers
of those in the Finance and Accounting Section.

Maximo Dones of the General Administration Section conducted an investigation of the complaint against
Sepulveda. On September 8, 1998, he submitted a Report where he declared that there was no factual basis for
Torreda’s "robbery" charge against Sepulveda.

In a separate development, the HRD issued a "written warning" on September 10, 1998 to Torreda, in
reference to his tardiness from April to July 1998 (the matter Sepulveda had earlier complained of).25

The next day, September 11, 1998, Sepulveda and Kobayashi directed Torreda to explain, in writing, within 48
hours why no disciplinary action should be taken against him for the following violation against the
company:26

Offenses against the Company: Insubordination – Refusal or neglecting to obey the order of the supervisor or
superior x x x. in reference to the Sept. 10 incident.27

He was warned that failure to submit the Employee’s Written Explanation Form within the given period would
be considered as an admission of the offense.28

Torreda, for his part, sent an e-mail message to Hisao Tanaka on September 11, 1998, where he complained
against Sepulveda for the following offenses/violations:

A.) ABUSE OF POSITION IN THE COMPANY TO GAIN PROFIT OR ADVANTAGE FROM

THE EMPLOYEE UNDER HER SUPERVISION. – 1st Offense DISMISSAL

B.) UNAUTHORIZED OPENING OF ANOTHER’S LOCKER, DRAWER OR OFFICE – 1st

Offense DISMISSAL

C.) FALSIFYING COMPANY RECORDS AND OR DOCUMENTS – 1st Offense DISMISSAL

D.) FALSE REPORTING – 1st Offense DISMISSAL

E.) OTHER CASE OF DISHONESTY AND MISREPRESENTATION – 1st OFFENSE DISMISSAL

F.) COERCING, INTIMIDATING AND THREATENING – 1st Offense SUSPENSION

G.) CARELESSNESS OR NEGLIGENT SUBMISSION OF ANY ITEM OF EXPENSE. 1st Offense

DISMISSAL29

Meanwhile, Sepulveda approved Torreda’s paternity leave from September 12 to September 21,
1998.30 Torreda received the directive of Sepulveda and Kobayashi on September 13, 1998, but failed to
submit his written explanation on the charges against him.

Torreda then applied for leave for the period beginning September 22, 1998 up to October 2, 1998, but
Sepulveda disapproved the same.31

On October 2, 1998, the General Administration (GA) Department recommended that Torreda be dismissed
conformably with its findings that he committed grave slander under the company’s Employee Handbook.
Torreda submitted his written explanation32 to Sepulveda’s complaint for grave slander only on October 6,
1998. He alleged that he had the right to accuse Sepulveda of stealing because she was the one who ordered his
drawer forcibly opened. His charge of robbery against her was the normal reaction of one who finds out that
something he owns is missing due to an unlawful act. He pointed out that he had been a victim of Sepulveda’s
unauthorized acts on prior occasions. She repeatedly opened his computer and his drawer on September 10 and
11, 1998 while he was on leave. Had Sepulveda acted rightly, he (Torreda) would not have committed grave
slander against her.33 He also pointed out that since his contact numbers were known to his officemates,
Sepulveda should have called him up before ordering the opening of his drawer on September 3, 1998.34

In a letter35 addressed to Hisao Tanaka dated October 7, 1998, Torreda, Finance Supervisor Visitacion Agustin,
and Finance Assistant Rowena Alinas demanded that appropriate action be taken against Sepulveda for various
offenses or violations. They alleged that Sepulveda had degraded and humiliated them (specifically Torreda);
that she looked into their personal computer files without authority; that she mishandled and appropriated for
herself the company’s petty cash; that she forcibly opened the drawer of Torreda resulting in the loss of
documents and money; that there were cases of negligent payment of SSS contribution and under-declaration
of withholding tax due to Sepulveda’s fault; that Torreda was warned for tardiness without due process; that
Sepulveda unjustifiably disapproved Torreda’s leave application; that Torreda was stripped of his duties and
responsibilities and given new ones alien to him; that she intimidated Torreda by ordering the removal of his
Lotus Notes Software from his computer without any explanation; that she deliberately caused the payments of
allowances to employees who were not entitled thereto and the deduction of performance bonuses from
employees so entitled; and that overpayments of salaries to several employees occurred due to Sepulveda’s
negligence in checking the payroll.

On October 14, 1998, Torreda received a letter36 from Gerardo Cristobal, Jr. informing him that his
employment had been terminated effective at the end of official working hours on that day, for grave slander,
which under the Employee Handbook is punishable by dismissal.37 The letter of termination reads:

After a thorough review and evaluation of the Grave Slander charge by your superior and your
reply/explanation, the following points become relevant; (sic)

1. While we have a policy prohibiting unauthorized opening of Employee lockers/drawers, your

superior, Ms. Teresita Sepulveda sought the approval of your Department Head/Vice President. This
approval made the action of opening your drawer authorized and official.

2. Your Department Head/Vice President authorized the opening of your drawer to locate and retrieve
vital documents needed last September which was (sic) under your custody.

3. Several employees witnessed the opening and the retrieval of the said vital documents from your
drawer by your superior and testified they did not see any money inside the drawer nor any taken by
your superior.

4. Your claim that there was (sic) Pesos 200 in your drawer is not substantiated.

5. You reported the alleged loss to GA on Monday, September 7, 1998 yet you spent several hours at
the office the previous Saturday, September 5, 1998 per our official records. Mr. Maximino Dones of
General Affairs did not receive any report of loss then. It would seem natural for an Employee to
report immediately the loss of his money upon discovering that his drawer was opened.

6. Prudence and common sense dictate that personal properties including money should not be left
behind (sic) in drawers and lockers which are Company properties.
Based on the Investigation Report submitted by Mr. Maximino Dones on September 8, 1998 of General
Affairs on your alleged theft complaint and the above considerations, we find your complaint against Ms.
Sepulveda without basis and merit. Consequently, there is basis in the charge of Grave Slander against you by
Ms. T. Sepulveda when you called her a ‘robber’ in your e-mail dated September 7, 1998 addressed to her.

Your false accusation has caused her undue embarrassment and has cast aspersion on her character as Manager
of TIP. This is strengthened by the fact that you furnished a copy of the said e-mail to other parties, e.g., K.
Kobayashi, R. Suarez, N. Florencio and H. Tanaka.

As a subordinate, you (sic) action shows an utter disrespect and disregard to her as a person of authority and
the Company considers this a grave and serious violation of our existing policies on Offenses Related to
Conduct and Behavior. And as stated in our Employee Handbook, the penalty for Grave Slander is Dismissal
for the first offense.

In view hereof, you are hereby formally informed that your employment with Toshiba Information Equipment
(Phils.), is terminated effective at the end of official working hours today October 14, 1998.

Please comply with the relevant post-employment requirement of the Company by surrendering your
accountabilities to HRA through Ms. Candice Cipriano to enable us to process your last salary.

(Sgd.) GERARDO C. CRISTOBAL, JR.

Senior Manager, HRA38

On March 23, 1999, Torreda filed a complaint39 for illegal dismissal against Cristobal and Toshiba. The case
was docketed as NLRC RAB IV Case No. 3-10931-99-L.

On February 15, 2000, the Labor Arbiter rendered a Decision,40 declaring that Torreda’s dismissal from
employment was unjustified. The series of events indicated that Torreda was harassed by Sepulveda because of
his exposé of irregularities she had committed. The opening of his drawer formed part of her harassment
tactics.41 Thus, Torreda had all the right to demand an explanation for the forcible opening of his computer
files and drawer which resulted in the loss of some amount of money.42 1a wphi1.net

The Labor Arbiter also ruled that respondent Toshiba did not observe the rudiments of due process in
terminating Torreda’s employment. The result of the investigation on the charges against him came out on
October 2, 1998, or four days before Torreda submitted his written explanation to the charges.43 The fallo of
the decision reads:

WHEREFORE, foregoing premises considered, respondent company is found guilty of illegal dismissal and is
hereby ordered to reinstate the complainant to his former position without loss of seniority rights and to pay
him backwages in the amount of ₱238,745.00 [(₱14,692.00 x 15 months = ₱220,380.00) + (13th month pay
₱220,380.00/12 = ₱18,365.00)] computed from the time of dismissal up to the date of this decision. In the
event that reinstatement is no longer possible, respondent company is hereby ordered to pay complainant
separation pay in the amount of ₱44,076.00 (₱14,692.00 x 3 years) plus backwages.

SO ORDERED.44 1awphil.net

Aggrieved by the decision, respondents appealed the case to the NLRC.45 They maintained that the sending of
an e-mail message containing insulting and offensive words, and false and malicious statements against his
immediate superior (Sepulveda), clearly intended to cause dishonor, is not only destructive of the morale of his
co-employees and violative of company rules and regulations; it also constitutes serious misconduct that would
justify dismissal from employment.46 The requirement of due process was further met, since the termination of
the complainant was made on October 14, 1998, or eight (8) days after the company received his explanation
to the charges against him.47

On November 15, 2002, the NLRC reversed the decision of the Labor Arbiter.48 The NLRC ratiocinated that
the complainant committed the infraction of accusing his immediate superior of stealing ₱200.00 and calling
her a robber (through an e-mail message), without any evidence at all, and forwarding copies to the other
officers of the company. The NLRC declared that this infraction constitutes serious misconduct, a just cause
for dismissal under Article 282(a) of the Labor Code, as amended.

The NLRC declared that considering the urgency of the situation, it was necessary to open the drawer of
Torreda: there had been numerous follow-ups from separated employees regarding their pending final salary
payments, and from incumbent employees claiming maternity and sickness benefits under the SSS, and
processing these applications was part of complainant’s responsibilities. Moreover, the opening of the drawer
was conducted in the presence of Oscar Eusebio, Noralyn Florencio and Flor Berdin, who were employees of
the Finance Section, with prior notice to Kobayashi, Vice-President for Finance.49

The NLRC further held that disrespect to company officials and staff members constitutes serious misconduct
which means a transgression of some established rule of action, a forbidden act, a dereliction. Consequently,
pursuant to Article 279 of the Labor Code of the Philippines, as amended, the complainant is not entitled to
reinstatement to his former position without loss of seniority rights and privileges, or to payment of any
separation pay, in lieu of reinstatement, or payment of any backwages and other benefits.50 The NLRC cited
the ruling of this Court in Gutierrez v. Baron.51 The dispositive portion of the decision reads:

WHEREFORE, premises considered, the Appeal is hereby GRANTED. Accordingly, the Decision appealed
from is VACATED and a new one ENTERED dismissing the instant case for lack of merit.

SO ORDERED.52

When his motion for reconsideration53 was denied by the NLRC in its January 27, 2003 Resolution,54 Torreda
filed a petition for certiorari55 before the CA on April 1, 2003. He alleged that the NLRC committed grave and
patent abuse of discretion amounting to lack or excess of jurisdiction in setting aside the Labor Arbiter’s
decision and in finding that his dismissal was justified.56

Unpersuaded, the CA rendered judgment dismissing the petition on February 27, 2004.57 It affirmed the NLRC
ruling dismissing petitioner’s complaint. However, the appellate court found that petitioner committed grave
slander when he concocted the charge of theft against Sepulveda, the penalty for which, under the Employee’s
Handbook, is dismissal.58

Petitioner timely filed his motion for reconsideration59 which the appellate court denied in its May 13, 2004
resolution.60

Petitioner, thus, filed the instant petition insisting that the Court of Appeals seriously erred in holding that the
dismissal of the petitioner was legal.61

Petitioner contends that the ground for his termination does not fall among the just causes stated in Article 282
of the Labor Code, as amended.62 The alleged grave slander was in response to Sepulveda’s September 7, 1998
e-mail requesting him to submit the key of his drawer for duplication.63 He reacted in that manner because
Sepulveda had previously harassed him.64 In fact, he wrote Tanaka, on September 11, 1998, requesting for
assistance on the offenses committed by his direct superior. Instead of penalizing Sepulveda, however,
respondent Toshiba dismissed him from the service for alleged grave slander.65
In their Comment,66 respondents Toshiba and HR Manager Cristobal assert that the issues raised by petitioner
involve questions of fact and not of law, which are improper in an appeal by certiorari under Rule 45.67 The
factual findings and conclusion of the NLRC, which were affirmed by the CA, should be accorded with respect
and finality.68

The petition is denied for lack of merit.

It bears stressing that what petitioner filed before the CA was one for certiorari under Rule 65 of the Rules of
Court. Thus, he was burdened to prove that the NLRC committed grave abuse of discretion amounting to
excess or lack of jurisdiction when it dismissed his petition. The Court has invariably defined "grave abuse of
discretion," thus:

x x x By grave abuse of discretion is meant such capricious and whimsical exercise of judgment as is
equivalent to lack of jurisdiction, and it must be shown that the discretion was exercised arbitrarily or
despotically. For certiorari to lie, there must be a capricious, arbitrary and whimsical exercise of power, the
very antithesis of the judicial prerogative in accordance with centuries of both civil law and common law
traditions.69

Mere abuse of discretion is not enough.70 The only question involved is jurisdiction, either the lack or excess
thereof, and abuse of discretion warrants the issuance of the extraordinary remedy of certiorari only when the
same is grave, as when the power is exercised in an arbitrary or despotic manner by reason of passion,
prejudice or personal hostility. A writ of certiorari is a remedy designed for the correction of errors of
jurisdiction and not errors of judgment.71 An error of judgment is one which the court may commit in the
exercise of its jurisdiction, which error is reversible only by an appeal.72 In Cosep v. NLRC,73 this Court held
that decisions of administrative agencies which are declared final by law are not exempt from judicial review
for want of substantial basis in fact and in law.

A careful review of the decisions of the NLRC and the CA reveal that they differ on their bases for the
dismissal of petitioner’s complaint. The NLRC declared that the charge of robbery which was fabricated by
petitioner against his immediate superior, Sepulveda, constitutes serious misconduct punishable by dismissal
under Article 282(a) of the Labor Code; in contrast, the CA ruled that petitioner committed grave slander - an
act punishable by dismissal under the Employee’s Handbook.

We hold that the CA correctly affirmed the NLRC Resolution ordering the Labor Arbiter to dismiss
petitioner’s complaint. However, the appellate court erred in ruling that petitioner committed grave slander
against Sepulveda and in applying the Employee’s Handbook as basis for his dismissal.

The rule in labor cases is that the burden is on the employer to prove that the dismissal of an employee is for a
just or valid cause. Evidence must be clear, convincing and free from any inference that the prerogative to
dismiss an employee was abused and unjustly used by the employer to further any vindictive end.74 In this
case, respondent Toshiba adequately proved that petitioner was dismissed for just cause.

The NLRC did not err much less commit grave abuse of its discretion when it based its ruling on Article
282(a) of the Labor Code on its finding that petitioner committed serious misconduct for falsely accusing his
immediate superior of robbery. As the Court held in Villanueva v. People:75

Slander is libel committed by oral (spoken) means, instead of in writing. The term oral defamation or slander
as now understood, has been defined as the speaking of base and defamatory words which tend to prejudice
another in his reputation, office, trade, business or means of livelihood.

There is grave slander when it is of a serious and insulting nature. The gravity of the oral defamation depends
not only (1) upon the expressions used, but also (2) on the personal relations of the accused and the offended
party, and (3) the circumstances surrounding the case. Indeed, it is a doctrine of ancient respectability that
defamatory words will fall under one or the other, depending not only upon their sense, grammatical
significance, and accepted ordinary meaning judging them separately, but also upon the special circumstances
of the case, antecedents or relationship between the offended party and the offender, which might tend to prove
the intention of the offender at the time.76

The false attribution by the petitioner of robbery (theft) against Sepulveda was made in writing; patently then,
petitioner committed libel, not grave slander against Sepulveda. The malicious and public imputation in
writing by one of a crime on another is libel under Article 353, in relation to Article 355, of the Revised Penal
Code which reads:

Art. 353. Definition of libel. – A libel is a public and malicious imputation of a crime, or of a vice or defect,
real or imaginary, or any act, omission, condition, status, or circumstance tending to cause the dishonor,
discredit, or contempt of a natural or juridical person, or to blacken the memory of one who is dead.

xxx

Art. 355. Libel by means of writings or similar means. – A libel committed by means of writing, printing,
lithography, engraving, radio, phonograph, painting, theatrical exhibition, cinematographic exhibition, or any
similar means, shall be punished by prision correccional in its minimum and medium periods or a fine ranging
from 200 to 6,000 pesos, or both, in addition to the civil action which may be brought by the offended party.

Indeed, an employee may be dismissed from employment for acts punishable by dismissal under Article 282(a)
of the Labor Code, which reads:

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
representative in connection with his work; x x x

In Fujitsu Computer Products Corporation of the Philippines v. Court of Appeals,77 the Court explained the
nature of serious misconduct as a ground for dismissal from employment:

Misconduct has been defined as improper or wrong conduct. It is the transgression of some established and
definite rule of action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent
and not mere error of judgment. The misconduct to be serious must be of such grave and aggravated character
and not merely trivial and unimportant. Such misconduct, however, serious, must nevertheless be in
connection with the employee’s work to constitute just cause for his separation. Thus, for misconduct or
improper behavior to be a just cause for dismissal, (a) it must be serious; (b) must relate to the performance of
the employee’s duties; and (c) must show that the employee has become unfit to continue working for the
employer. Indeed, an employer may not be compelled to continue to employ such person whose continuance in
the service would be patently inimical to his employer’s interest.78

There is abundant evidence on record showing that petitioner committed libel against his immediate superior,
Sepulveda, an act constituting serious misconduct which warrants the dismissal from employment.

Petitioner maliciously and publicly imputed on Sepulveda the crime of robbery of ₱200.00. As gleaned from
his Complaint dated September 7, 1999 which he filed with the General Administration, he knew that it was
Delos Santos who opened his drawer and not Sepulveda. Thus, by his own admission, petitioner was well
aware that the robbery charge against Sepulveda was a concoction, a mere fabrication with the sole purpose of
retaliating against Sepulveda’s previous acts.

The records show that Sepulveda was impelled to forcibly open petitioner’s drawer. She needed to retrieve the
benefits applications of retirees and incumbent employees of respondent-corporation, which petitioner had
failed to process for payment before his leave. The claimants sought to have their claims approved and
released with dispatch. Before opening petitioner’s drawer, Sepulveda saw to it that she had Kobayashi’s
approval. Delos Santos opened the drawer of petitioner in the presence of his co-employees in the Financial
Section. Thereafter, the claims were processed and payments were effected. Thus, Sepulveda acted in good
faith.79

Petitioner admitted that his charge of robbery/theft against Sepulveda was baseless, but claimed that he
fabricated the charge because of his exasperation and anger at Sepulveda’s repeated acts of opening his drawer
without prior permission while he was on leave, not only on September 7, 1998 but also on September 10 and
11, 1998; he also pointed out that Sepulveda looked into his personal files in his computer. In fine, by falsely
ascribing a crime to Sepulveda, petitioner was merely retaliating against perceived misdeeds she had
committed against him. However, the manner resorted to by petitioner of redressing the wrong committed by
Sepulveda is a criminal act. As the adage goes, the end cannot justify the means used by petitioner.

In St. Michael’s Institute v. Santos,80 this Court held that the employer’s right to conduct the affairs of his
business, according to its own discretion and judgment, is well-recognized. An employer has a free reign and
enjoys wide latitude of discretion to regulate all aspects of employment, including the prerogative to instill
discipline in its employees and to impose penalties, including dismissal, upon erring employees. This is a
management prerogative, where the free will of management to conduct its own affairs to achieve its purpose
takes form.81 The law, in protecting the rights of workers, authorizes neither oppression nor self-destruction of
the employer.82

IN LIGHT OF ALL THE FOREGOING, the petition is DENIED. The Decision of the appellate court in CA-
G.R. SP No. 76289 is AFFIRMED.

SO ORDERED.
Case Digest

Facts:
Jeffrey O. Torreda was employed by Toshiba Information Equipment (Phils.), Inc. as a finance
assistant[4] (on a probationary basis) on July 1, 1997. He was mainly responsible for payroll
processing and management, and for the bookkeeping of T&P
Properties, Inc.[5] Effective January 1, 1998, he was employed on a regular basis as finance
accountant[6] under the Finance and Accounting Department headed by Kazuo Kobayashi, Vice-
President, and Teresita Sepulveda,... Finance Manager.
On May 22, 1998, Torreda and his four co-employees in the Finance and Accounting Department
reported to Senior Vice-President Hisao Tanaka that, before and after the reorganization, Finance
Manager Teresita Sepulveda had ordered them to prepare petty cash vouchers in their names... and
that the sums covered by the vouchers were received by Sepulveda for her own personal use.[
Sepulveda opened Torreda's personal computer and read his Lotus Notes mail and other personal
files, specifically the report he had sent to Tanaka about her. She reprimanded Torreda and told him
that he should not send mails to Tanaka without her... approval
In order to retrieve the claimants' payrolls and Social Security Services (SSS) files, which Torreda
kept in his drawer, Sepulveda, with prior approval from Kobayashi, had the drawer forcibly opened
by Ruben delos Santos, a staff member of the General
Administration Section. The drawer was opened in the presence of Oscar Eusebio, Noralyn Florencio
and Flor Berdin of the Finance Department. The claims of the employees were later processed and
released.
In a separate development, the HRD issued a "written warning" on September 10, 1998 to Torreda, in
reference to his tardiness from April to July 1998 (the matter Sepulveda had earlier complained
of).[25]
The next day, September 11, 1998, Sepulveda and Kobayashi directed Torreda to explain, in writing,
within 48 hours why no disciplinary action should be taken against him for
Insubordination
Sepulveda approved Torreda's paternity leave from September 12 to September 21, 1998.[30]
Torreda received the directive of Sepulveda and Kobayashi on September 13, 1998, but failed to
submit his written explanation on the charges against... him.
Torreda filed a complaint[39] for illegal dismissal against Cristobal and Toshiba.
the Labor Arbiter rendered a Decision,[40] declaring that Torreda's dismissal from employment was
unjustified.
Issues:
the NLRC committed grave and patent abuse of discretion amounting to lack or excess of jurisdiction
in setting aside the Labor Arbiter's decision and in finding that his dismissal was justified.
the appellate court erred in ruling that petitioner committed grave slander against Sepulveda and in
applying the Employee's Handbook as basis... for his dismissal
Ruling:
The rule in labor cases is that the burden is on the employer to prove that the dismissal of an
employee is for a just or valid cause. Evidence must be clear, convincing and free from any
inference that the prerogative to dismiss an employee was abused and unjustly used by... the
employer to further any vindictive end.[74] In this case, respondent Toshiba adequately proved that
petitioner was dismissed for just cause.
The NLRC did not err much less commit grave abuse of its discretion when it based its ruling on
Article 282(a) of the Labor Code on its finding that petitioner committed serious misconduct for
falsely accusing his immediate superior of robbery.
As the Court held in
Villanueva v. People: [75]
Slander is libel committed by oral (spoken) means, instead of in writing. The term oral defamation or
slander as now understood, has been defined as the speaking of base and defamatory words which
tend to prejudice another in his reputation, office, trade, business... or means of livelihood.
There is grave slander when it is of a serious and insulting nature. The gravity of the oral defamation
depends not only (1) upon the expressions used, but also (2) on the personal relations of the accused
and the offended party, and (3) the circumstances surrounding the case.
Indeed, it is a doctrine of ancient respectability that defamatory words will fall under one or the
other, depending not only upon their sense, grammatical significance, and accepted ordinary meaning
judging them separately, but also upon the special circumstances of the case,... antecedents or
relationship between the offended party and the offender, which might tend to prove the intention of
the offender at the time. [76]
The false attribution by the petitioner of robbery (theft) against Sepulveda was made in writing;
patently then, petitioner committed libel, not grave slander against Sepulveda.
The malicious and public imputation in writing by one of a crime on another is... libel under Article
353, in relation to Article 355, of the Revised Penal Code which reads:
Art. 353. Definition of libel. - A libel is a public and malicious imputation of a crime, or of a vice or
defect, real or imaginary, or any act, omission, condition, status, or circumstance tending to cause the
dishonor, discredit, or contempt of a... natural or juridical person, or to blacken the memory of one
who is dead.
There is abundant evidence on record showing that petitioner committed libel against his immediate
superior, Sepulveda, an act constituting serious misconduct which warrants the dismissal from
employment.
ALBERT O. TINIO, G.R. No. 171764
Petitioner,
Present:
- versus - Ynares-Santiago, J. (Chairperson),
Austria-Martinez,
Chico-Nazario, and
Nachura, JJ.
COURT OF APPEALS, SMART
COMMUNICATIONS, INC.,
ALEX O. CAEG and Promulgated:
ANASTACIO MARTIREZ,
Respondents. June 8, 2007

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

DECISION
YNARES-SANTIAGO, J.:

This petition for review on certiorari seeks to annul and set aside the Decision and
Resolution of the Court of Appeals dated October 25, 2005[1] and March 2,
2006,[2] respectively, in CA-G.R. SP No. 90677 which reversed and set aside the
Decision of the National Labor Relations Commission (NLRC) dated July 30,
2004,[3] and its Resolution dated April 20, 2005,[4] for having been issued with
grave abuse of discretion amounting to lack or excess of jurisdiction. The appellate
court reinstated the Decision of the Labor Arbiter dated December 9, 2003 [5] which
dismissed petitioners complaint for lack of merit.

On December 1, 2002, Smart Communications, Inc. (SMART) employed

petitioner Albert O. Tinio as its General Manager for Visayas/Mindanao (VISMIN)
Sales and Operations based in Cebu.[6]

On May 14, 2003, private respondent Alex O. Caeg, Group Head, Sales and
Distribution of SMART, under the supervision of co-respondent Anastacio
Martirez, informed petitioner of his new assignment as Sales Manager for
Corporate Sales in SMARTs Head Office in Makati City, effective June 1,
2003. However, petitioner deferred action on his assignment until he had been
apprised of the duties and responsibilities of his new position and the terms and
conditions of his relocation. In a memorandum dated May 26, 2003, Caeg
informed petitioner that his transfer was for the greater business interest of the
company; that petitioner is expected to meet at least 80% of his sales and
collection targets; and that financial assistance shall be provided for his physical
transfer to Manila.

On June 2, 2003, petitioner reported to SMARTs Head Office in Makati and

discussed with Ann Margaret V. Santiago, HRD Group Head, his job description,
functions, responsibilities, salary and benefits, as well as options for
relocation/transfer of his family to Manila. The Department Head for Corporate
Business Group, VIP Accounts Management and Marketing PR, Julie C. Carceller,
likewise explained to him details of his new assignment such as job description,
scope of the position, objectives and goals of the department, key responsibilities
as well as targets and expectations of SMART from the Corporate Business
Group. The next day, June 3, 2003, petitioner and Caeg met to discuss further
details of petitioners new position.[7]

Thereafter, petitioner did not report for work. He instead filed a complaint for
constructive dismissal with claims for moral and exemplary damages and attorneys
fees against SMART and private respondents Caeg and Martirez. On June 16,
2003, Caeg required petitioner to explain his continuing refusal to transfer to his
new assignment, but instead of giving an explanation, petitioner referred Caeg to
his complaint for constructive dismissal.[8] Private respondents also scheduled a
hearing on June 23, 2003 but petitioner failed to attend. Thus, private respondents
terminated petitioners employment effective June 25, 2003 for insubordination.[9]

On December 9, 2003, the Labor Arbiter rendered judgment finding that petitioner
was not constructively or illegally dismissed; hence, the complaint was ordered
dismissed. But the Labor Arbiter awarded financial assistance to petitioner in the
amount of P235,400.00.[10]

On appeal, the NLRC reversed the Labor Arbiters decision and declared that
petitioner was illegally dismissed, awarded him full backwages, including the
corresponding 13th month pay, moral and exemplary damages, as well as attorneys
fees. Private respondents motion for reconsideration was denied.[11]

On a petition for certiorari under Rule 65 to the Court of Appeals, private

respondents alleged that the NLRC committed grave abuse of discretion amounting
to lack or excess of jurisdiction in ruling that: (1) the transfer of Tinio resulted in a
demotion in rank; (2) the transfer was not a valid exercise of management
prerogative; (3) SMART did not comply with the procedural requirements of due
process, and Tinios termination was made with malice and in bad faith; and (4)
Tinio is entitled to reinstatement and full backwages.[12]

On October 25, 2005, the Court of Appeals reversed and set aside the Decision of
the NLRC and reinstated the Decision of the Labor Arbiter dismissing the
complaint for lack of merit.[13] Petitioners motion for reconsideration was denied;
hence, this appeal.[14]

The twin issues for resolution are: (1) whether private respondents act of
transferring petitioner to its Head Office in Makati was a valid exercise of
management prerogative; and (2) whether petitioner was constructively dismissed.

This Court has consistently recognized and upheld the prerogative of management
to transfer an employee from one office to another within the business
establishment, provided there is no demotion in rank or a diminution of salary,
benefits and other privileges.[15] As a rule, the Court will not interfere with an
employers prerogative to regulate all aspects of employment which include among
others, work assignment, working methods and place and manner of work. Labor
laws discourage interference with an employers judgment in the conduct of his
business.[16]

The doctrine is well-settled that it is the employers prerogative, based on its

assessment and perception of its employees qualifications, aptitudes and
competence, to move them around in the various areas of its business operations in
order to ascertain where they will function with maximum benefit to the
company.[17] This is a privilege inherent in the employers right to control and
manage his enterprise effectively. The freedom of management to conduct its
business operations to achieve its purpose cannot be denied.[18]
 An employees right to security of tenure does not give him a vested right to
his position as would deprive the company of its prerogative to change his
assignment or transfer him where he will be most useful. When his transfer is not
unreasonable, or inconvenient, or prejudicial to him, and it does not involve a
demotion in rank or a diminution of his salaries, benefits and other privileges, the
employee may not complain that it amounts to a constructive dismissal.[19]

But, like other rights, there are limits thereto. The managerial prerogative to
transfer personnel must be exercised without grave abuse of discretion, bearing in
mind the basic elements of justice and fair play. Having the right should not be
confused with the manner in which the right is exercised. Thus, it cannot be used
as a subterfuge by the employer to rid himself of an undesirable worker. The
employer must be able to show that the transfer is not unreasonable, inconvenient,
or prejudicial to the employee; nor does it involve a demotion in rank or a
diminution of his salaries, privileges, and other benefits. Should the employer fail
to overcome this burden of proof, the employees transfer shall be tantamount to
constructive dismissal, which has been defined as a quitting because continued
employment is rendered impossible, unreasonable or unlikely; as an offer
involving a demotion in rank and diminution of pay. Likewise, constructive
dismissal exists when an act of clear discrimination, insensibility or disdain by an
employer has become so unbearable to the employee leaving him with no option
but to forego his continued employment.[20]

A transfer is a movement from one position to another which is of equivalent

rank, level or salary, without break in service. Promotion, on the other hand, is the
advancement from one position to another with an increase in duties and
responsibilities as authorized by law, and usually accompanied by an increase in
salary.[21] Conversely, demotion involves a situation where 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.

The burden of proof in constructive dismissal cases is on the employer to establish

that the transfer of an employee is for valid and legitimate grounds, i.e., that the
transfer is not unreasonable, inconvenient or prejudicial to the employee; nor does
it involve a demotion in rank or a diminution of salaries, privileges and other
benefits.

Hence, it may be gleaned from the foregoing discourse that a transfer is

deemed to be constructive dismissal when three conditions concur: first, when the
transfer is unreasonable, inconvenient or prejudicial to the employee; second,
when the transfer involves a demotion in rank or diminution of salaries, benefits
and other privileges; and third, when the employer performs a clear act of
discrimination, insensibility, or disdain towards the employee, which forecloses
any choice by the latter except to forego his continued employment.

In the instant case, the transfer from Cebu to Makati was not unreasonable,
inconvenient or prejudicial to the petitioner considering that it was a transfer from
the provincial office to the main office of SMART. The position would entail
greater responsibilities because it would involve corporate accounts of top
establishments in Makati which are significantly greater in value than the
individual accounts in Visayas and Mindanao. In terms of career advancement, the
transfer was even beneficial and advantageous since he was being assigned the
corporate accounts of the choice clients of SMART. Moreover, the transfer was not
economically inconvenient because all expenses relative thereto were to be borne
by SMART.

Also, the transfer from Cebu to Makati does not represent a demotion in
rank or diminution of salaries, benefits and other privileges. It was a lateral transfer
with the same salaries, benefits and privileges. The title of Corporate Sales
Manager, as correctly pointed out by the appellate court, is not derogatory to the
petitioner considering that he will still receive the same benefits and salary he
received as Senior Manager.[22] The position is deemed in the level of Senior
Manager considering that the skills and competencies required involve handling
the accounts of top corporate clients of the company, representing some of the
largest corporations in the Philippines.

Mere title or position held by an employee in a company does not determine

whether a transfer constitutes a demotion. Rather, it is the totality of the following
circumstances, to wit: economic significance of the work, the duties and
responsibilities conferred, as well as the same rank and salary of the employee,
among others, that establishes whether a transfer is a demotion.

We find that petitioner was not demoted since his transfer from Cebu to
Makati was being implemented due to a valid corporate reorganization to
streamline management operations. The act of management in reorganizing as well
as transferring its employees to achieve its stated objectives is a legitimate exercise
of their management prerogatives, barring any showing of bad faith which is
absent in the instant case. Despite the change of petitioners title from Senior
Manager to Corporate Sales Manager, he still enjoyed the same rank and
salary. Although Cebu operations of SMART constitute a large individual client
base representing both Visayas and Mindanao, the Makati operations deal with
higher corporate or business sales due to the larger concentration of top Philippine
and multinational corporations. In other words, petitioner will be managing the
select client base that produces the bulk of the corporate sales income of
SMART. We ruled in Philippine Wireless Inc. v. National Labor Relations
Commission[23] that there is no demotion where there is no reduction in position,
rank or salary as a result of the transfer.[24]

Moreover, private respondents did not act with discrimination, insensibility,

or disdain towards petitioner, which foreclosed any choice by the latter except to
forego his continued employment. SMART, through its representatives, attempted
to address petitioners grievances by meeting with the latter on several occasions
thus addressing this internal problem utilizing the proper corporate
channels. Several meetings were held between petitioner and private respondents
with a view to clarifying the details of petitioners new assignment, such as job
description, relation to corporate structure, functions, responsibilities, salary and
benefits. Meetings were on-going when petitioner opted to file a complaint for
constructive dismissal.

We agree with the Court of Appeals ruling that private respondent SMART
exercised its management prerogative in transferring petitioner from Cebu to
Makati as the person in charge of the post-paid sales accounts. SMART
management has the prerogative to transfer or re-assign its employees to a position
where they can contribute significantly to the company objectives in line with its
corporate reorganization. Petitioners argument that the transfer was hastily arrived
at, considering that he was being ordered to transfer within 15 days from notice
and that the Makati head office personnel were unaware thereof is
untenable. Moreover, petitioner knew of the management prerogative to re-assign
its employees as expressly stipulated in petitioners employment contract.

No evidence was presented to substantiate petitioners claim that the transfer was
punitive or that private respondents were in bad faith. The failure of private
respondent Caeg to directly address the supposed punitive nature of the transfer
cannot establish bad faith, without independent evidence to prove this allegation.

We held in Abbott Laboratories (Phils.), Inc. v. National Labor Relations

Commission,[25] that an employee has no valid reason to disobey the order of
transfer given by management, especially if he has tacitly given his consent thereto
when he acceded to the companys policy of hiring sales staff who are willing to be
assigned anywhere in the Philippines which is demanded by the employers
business.[26]

By the very nature of their employment, sales executives are expected to

travel. They should anticipate re-assignment according to the demands of the
employers business. Companies which rely heavily on sales such as private
respondent SMART are expected to assign their employees to areas where markets
may be expanded or places where their sales could be improved. The right to
transfer or reassign an employee is thus a reasonable exercise of management
prerogatives and is recognized as an employers exclusive right in running its
company.[27]

In the instant case, petitioner premised his deliberate and unjustified refusal to
return to work on the belief that he had been constructively dismissed, despite
attempts by SMART to accommodate his demands. Petitioners deliberate and
unjustified refusal to resume his employment, a form of neglect of duty, despite
attempts by the company to hear out his grievances, constitutes
abandonment. Petitioners failure to report for work, or absence without valid or
justifiable reason, coupled with a clear intention to sever employer-employee
relationship, leads us to no other conclusion than that he abandoned his work. As
such, the award of financial assistance in the amount of P235,400 given by the
Labor Arbiter and affirmed by the appellate court must be deleted for lack of basis.
WHEREFORE, the petition is DENIED. The Decision and Resolution of the
Court of Appeals dated October 25, 2005 and March 2, 2006, respectively, in CA-
G.R. SP No. 90677, dismissing the complaint for constructive dismissal against
private respondents Smart Communications, Inc., Alex O. Caeg and Anastacio
Martirez are AFFIRMED with the MODIFICATION that the award of financial
assistance be DELETED for lack of basis. No pronouncement as to costs.

SO ORDERED.
Case Digest

TINIO VS. CA ET AL DIGEST

DECEMBER 21, 2016 ~ VBDIAZ

TINIO VS. CA AND SMART, CAEG AND MARTINEZ

G.R. No. 171764

JUNE 8, 2007

FACTS: SMART employed Tinio as its GM for VISMIN Sales and Operations based
in Cebu. Later, private respondent Caeg, Group Head, Sales and Distribution of
SMART, under the supervision of co-respondent Martirez, informed petitioner of his
new assignment as Sales Manager for Corporate Sales in SMART’s Head Office in
Makati City.
Petitioner reported to SMART’s Head Office and discussed with the HRD Group
Head, his job description, functions, responsibilities, salary and benefits, as well as
options for relocation/transfer of his family to Manila. The next day, petitioner and
Caeg met to discuss further details of petitioner’s new position.
Thereafter, petitioner did not report for work. He instead filed a complaint for
constructive dismissal with claims for moral and exemplary damages and attorney’s
fees against SMART and private respondents Caeg and Martirez. Caeg required
petitioner to explain his continuing refusal to transfer to his new assignment, but
instead of giving an explanation, petitioner referred Caeg to his complaint for
constructive dismissal. Private respondents also scheduled a hearing but petitioner
failed to attend. Thus, private respondents terminated petitioner’s employment for
insubordination.
the Labor Arbiter rendered judgment finding that petitioner was not constructively or
illegally dismissed; hence, the complaint was ordered dismissed. But the Labor
Arbiter awarded financial assistance to petitioner. On appeal, the NLRC reversed the
Labor Arbiter’s decision and declared that petitioner was illegally dismissed. Private
respondents’ MR was denied.
On a petition for certiorari under Rule 65 to the CA, private respondents alleged that
the NLRC committed grave abuse of discretion amounting to lack or excess of
jurisdiction. The CA reversed and set aside the Decision of the NLRC and reinstated
the Decision of the Labor Arbiter dismissing the complaint for lack of merit.
Petitioner’s MR was denied; hence, this appeal.
ISSUE: WON private respondents’ act of transferring petitioner to its Head Office
was a valid exercise of management prerogative; and
HELD: WHEREFORE, the petition is DENIED. The Decision and Resolution of the
CA dismissing the complaint for constructive dismissal against private respondents
Smart Communications, Inc., Caeg and Martirez are AFFIRMED with the
MODIFICATION that the award of financial assistance be DELETED for lack of
basis. **
YES

This Court has consistently recognized and upheld the prerogative of management to
transfer an employee from one office to another within the business establishment,
provided there is no demotion in rank or a diminution of salary, benefits and other
privileges. As a rule, the Court will not interfere with an employer’s prerogative to
regulate all aspects of employment which include among others, work assignment,
working methods and place and manner of work. Labor laws discourage interference
with an employer’s judgment in the conduct of his business.
But, like other rights, there are limits thereto. The managerial prerogative to transfer
personnel must be exercised without grave abuse of discretion, bearing in mind the
basic elements of justice and fair play.
Hence, it may be gleaned from the foregoing discourse that a transfer is deemed to be
constructive dismissal when three conditions concur:
first, when the transfer is unreasonable, inconvenient or prejudicial to the employee;
second, when the transfer involves a demotion in rank or diminution of salaries,
benefits and other privileges; and
third, when the employer performs a clear act of discrimination, insensibility, or
disdain towards the employee, which forecloses any choice by the latter except to
forego his continued employment.
We find that petitioner was not demoted since his transfer from Cebu to Makati was
being implemented due to a valid corporate reorganization to streamline management
operations. In terms of career advancement, the transfer was EVEN beneficial and
advantageous since he was being assigned the corporate accounts of the choice clients
of SMART
NOTES:
** Petitioner’s failure to report for work, or absence without valid or justifiable
reason, coupled with a clear intention to sever employer-employee relationship, leads
us to no other conclusion than that he abandoned his work. As such, the award of
financial assistance given by the Labor Arbiter and affirmed by the appellate court
must be deleted for lack of basis.
1. Definition of terms
A transfer is a “movement from one position to another which is of equivalent rank,
level or salary, without break in service.”
Promotion is the “advancement from one position to another with an increase in duties
and responsibilities as authorized by law, and usually accompanied by an increase in
salary.”
Demotion involves a situation where 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.
2. The burden of proof in constructive dismissal cases is on the employer to establish
that the transfer of an employee is for valid and legitimate grounds
3. An employee’s right to security of tenure does not give him a vested right to his
position as would deprive the company of its prerogative to change his assignment
or transfer him where he will be most useful.
4. accdg to SC: Despite the change of petitioner’s title from “Senior Manager” to
“Corporate Sales Manager,” he still enjoyed the same rank and salary.
Mere title or position held by an employee in a company does not determine whether
a transfer constitutes a demotion. Rather, it is the totality of the following
circumstances, to wit:
economic significance of the work,
the duties and responsibilities conferred,
as well as the same rank and salary of the employee, among others, that establishes
whether a transfer is a demotion.
 [G.R. No. 151379. January 14, 2005]

UNIVERSITY OF IMMACULATE, CONCEPCION,

INC., petitioner, vs. THE HONORABLE SECRETARY OF LABOR,
THE UIC TEACHING AND NON-TEACHING PERSONNEL AND
EMPLOYEES UNION, LELIAN CONCON, MARY ANN DE RAMOS,
JOVITA MAMBURAM, ANGELINA ABADILLA, MELANIE DE LA
ROSA, ZENAIDA CANOY, ALMA VILLACARLOS, JOSIE
BOSTON, PAULINA PALMA GIL, GEMMA GALOPE, LEAH
CRUZA, DELFA DIAPUEZ, respondent.

DECISION
AZCUNA, J.:

This is a petition for review of a decision of the Court of Appeals and the
resolution denying reconsideration thereof. The principal issue to be resolved in this
recourse is whether or not the Secretary of Labor, after assuming jurisdiction over a
labor dispute involving an employer and the certified bargaining agent of a group of
employees in the workplace, may legally order said employer to reinstate employees
terminated by the employer even if those terminated employees are not part of the
bargaining unit.
This case stemmed from the collective bargaining negotiations between petitioner
University of Immaculate Concepcion, Inc. (UNIVERSITY) and respondent The UIC
Teaching and Non-Teaching Personnel and Employees Union (UNION). The
UNION, as the certified bargaining agent of all rank and file employees of the
UNIVERSITY, submitted its collective bargaining proposals to the latter on February
16, 1994. However, one item was left unresolved and this was the inclusion or
exclusion of the following positions in the scope of the bargaining unit:

a. Secretaries
b. Registrars
c. Accounting Personnel
d. Guidance Counselors [1]

This matter was submitted for voluntary arbitration. On November 8, 1994, the
panel of voluntary arbitrators rendered a decision, the dispositive portion of which
states:
WHEREFORE, premises considered, the Panel hereby resolves to exclude the above-
mentioned secretaries, registrars, chief of the accounting department, cashiers and
guidance counselors from the coverage of the bargaining unit. The accounting clerks
and the accounting staff member are hereby ordered included in the bargaining unit. [2]

The UNION moved for the reconsideration of the above decision. Pending,
however, the resolution of its motion, on December 9, 1994, it filed a notice of strike
with the National Conciliation and Mediation Board (NCMB) of Davao City, on the
grounds of bargaining deadlock and unfair labor practice. During the thirty (30) day
cooling-off period, two union members were dismissed by petitioner. Consequently,
the UNION went on strike on January 20, 1995.
On January 23, 1995, the then Secretary of Labor, Ma. Nieves R. Confessor,
issued an Order assuming jurisdiction over the labor dispute. The dispositive portion
of the said Order states:

WHEREFORE, ABOVE PREMISES CONSIDERED, and pursuant to Article 263 (g)

of the Labor Code, as amended, this Office hereby assumes jurisdiction over the entire
labor dispute at the University of the Immaculate Concepcion College.

Accordingly, all workers are directed to return to work within twenty-four (24) hours
upon receipt of this Order and for Management to accept them back under the same
terms and conditions prevailing prior to the strike.

Parties are further directed to cease and desist from committing any or all acts that
might exacerbate the situation.

Finally, the parties are hereby directed to submit their respective position papers
within ten (10) days from receipt hereof.

SO ORDERED. [3]

On February 8, 1995, the panel of voluntary arbitrators denied the motion for
reconsideration filed by the UNION. The UNIVERSITY then furnished copies of the
panels denial of the motion for reconsideration and the Decision dated November 8,
1995 to the individual respondents herein:
1. Lelian Concon Grade School Guidance Counselor
2. Mary Ann de Ramos High School Guidance Counselor
3. Jovita Mamburam Secretary to [the] Vice President for Academic
Affairs/ Dean of College
4. Angelina Abadilla Secretary to [the] Vice President for Academic
Affairs/ Dean of College
 5. Melanie de la Rosa Secretary to [the] Dean of [the] College of
Pharmacy/ Academic Affairs/ Dean of College
6. Zenaida Canoy Secretary to [the] Vice President for Academic Affairs/
Dean of College
7. Alma Villacarlos Guidance Counselor (College)
8. Josie Boston Grade School Psychometrician
9. Paulina Palma Gil Cashier
10. Gemma Galope High School Registrar
11. Leah Cruza Guidance Counselor (College)
12. Delfa Diapuez High School Psychometrician [4]

Thereafter, the UNIVERSITY gave the abovementioned individual respondents

two choices: to resign from the UNION and remain employed as confidential
employees or resign from their confidential positions and remain members of the
UNION. The UNIVERSITY relayed to these employees that they could not remain as
confidential employees and at the same time as members or officers of the Union.
However, the individual respondents remained steadfast in their claim that they could
still retain their confidential positions while being members or officers of the Union.
Hence, on February 21, 1995, the UNIVERSITY sent notices of termination to the
individual respondents.
On March 10, 1995, the UNION filed another notice of strike, this time citing as a
reason the UNIVERSITYs termination of the individual respondents. The UNION
alleged that the UNIVERSITYs act of terminating the individual respondents is in
violation of the Order of the Secretary of Labor dated January 23, 1995.
On March 28, 1995, the Secretary of Labor issued another Order reiterating the
directives contained in the January 23, 1995 Order. The Secretary also stated therein
that the effects of the termination from employment of these individual respondents be
suspended pending the determination of the legality thereof. Hence, the
UNIVERSITY was directed to reinstate the individual respondents under the same
terms and conditions prevailing prior to the labor dispute.
The UNIVERSITY, thereafter, moved to reconsider the aforesaid Order on March
28, 1995. It argued that the Secretarys Order directing the reinstatement of the
individual respondents would render nugatory the decision of the panel of voluntary
arbitrators to exclude them from the collective bargaining unit. The UNIVERSITYs
motion was denied by the Secretary in an Order dated June 16, 1995, wherein the
Secretary declared that the decision of the panel of voluntary arbitrators to exclude the
individual respondents from the collective bargaining unit did not authorize the
UNIVERSITY to terminate their employment. The UNIVERSITY filed a second
motion for reconsideration, which was again denied in an Order dated July 19, 1995.
Undeterred, the UNIVERSITY filed a third motion for reconsideration. In the Order
dated August 18, 1995, then Acting Secretary Jose S. Brilliantes denied the third
motion for reconsideration, but modified the two previous Orders by adding:
xxx

Anent the Unions Motion, we find that superseding circumstances would not warrant
the physical reinstatement of the twelve (12) terminated employees. Hence, they are
hereby ordered placed under payroll reinstatement until the validity of their
termination is finally resolved. [5]

xxx
Still unsatisfied with the Order of the Secretary of Labor, the UNIVERSITY filed
a petition for certiorari with this Court on September 15, 1995. However, its petition
was referred to the Court of Appeals, following the ruling in St. Martin Funeral
Homes v. Court of Appeals. [6]

On October 8, 2001, the Court of Appeals promulgated its Decision, affirming the
questioned Orders of the Secretary of Labor. The dispositive portion of the Decision
states:

WHEREFORE, the instant petition is DISMISSED for lack of merit. [7]

The UNIVERSITY then moved for the reconsideration of the abovementioned

Decision, but on January 10, 2002, the Court of Appeals denied the motion on the
[8]

ground that no new matters were raised therein that would warrant a reconsideration. [9]

Hence, this petition.

The UNIVERSITY assigns the following error:

THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN

AFFIRMING THE ORDERS OF THE SECRETARY OF LABOR THAT
SUSPENDED THE EFFECTS OF THE TERMINATION OF TWELVE
EMPLOYEES WHO WERE NOT PART OF THE BARGAINING
UNITINVOLVED IN A LABOR DISPUTE OVER WHICH THE SECRETARY OF
LABOR ASSUMED JURISDICTION. [10]

The Court of Appeals relied upon the doctrine in St. Scholasticas College v.
Torres. In the case therein, this Court, citing International Pharmaceuticals
[11]

Incorporated v. the Secretary of Labor, declared that:

[12]

x x x [T]he Secretary was explicitly granted by Article 263(g) of the Labor Code the
authority to assume jurisdiction over a labor dispute causing or likely to cause a strike
or lockout in an industry indispensable to the national interest, and decide the same
accordingly. Necessarily, the authority to assume jurisdiction over the said labor
dispute must include and extend to all questions and controversies arising therefrom,
including cases over which the Labor Arbiter has exclusive jurisdiction.

The UNIVERSITY contends that the Secretary cannot take cognizance of an issue
involving employees who are not part of the bargaining unit. It insists that since the
individual respondents had already been excluded from the bargaining unit by a final
and executory order by the panel of voluntary arbitrators, then they cannot be covered
by the Secretarys assumption order.
This Court finds no merit in the UNIVERSITYs contention. In Metrolab
Industries, Inc. v. Roldan-Confessor, this Court declared that it recognizes the
[13]

exercise of management prerogatives and it often declines to interfere with the

legitimate business decisions of the employer. This is in keeping with the general
principle embodied in Article XIII, Section 3 of the Constitution, which is further
[14]

echoed in Article 211 of the Labor Code. However, as expressed in PAL v. National
[15]

Labor Relations Commission, this privilege is not absolute, but subject to

[16]

exceptions. One of these exceptions is when the Secretary of Labor assumes

jurisdiction over labor disputes involving industries indispensable to the national
interest under Article 263(g) of the Labor Code. This provision states:

(g) When, in his opinion, there exists a labor dispute causing or likely to cause a strike
or lockout in an industry indispensable to the national interest, the Secretary of Labor
and Employment may assume jurisdiction over the dispute and decide it or certify the
same to the Commission for compulsory arbitration. Such assumption or certification
shall have the effect of automatically enjoining the intended or impending strike or
lockout as specified in the assumption or certification order. If one has already taken
place at the time of assumption or certification, all striking or locked out employees
shall immediately return to work and the employer shall immediately resume
operations and readmit all workers under the same terms and conditions prevailing
before the strike or lockout. x x x

When the Secretary of Labor ordered the UNIVERSITY to suspend the effect of
the termination of the individual respondents, the Secretary did not exceed her
jurisdiction, nor did the Secretary gravely abuse the same. It must be pointed out that
one of the substantive evils which Article 263(g) of the Labor Code seeks to curb is
the exacerbation of a labor dispute to the further detriment of the national interest. In
her Order dated March 28, 1995, the Secretary of Labor rightly held:

It is well to remind both parties herein that the main reason or rationale for the
exercise of the Secretary of Labor and Employments power under Article 263(g) of
the Labor Code, as amended, is the maintenance and upholding of the status quo while
the dispute is being adjudicated. Hence, the directive to the parties to refrain from
performing acts that will exacerbate the situation is intended to ensure that the dispute
does not get out of hand, thereby negating the direct intervention of this office.

The Universitys act of suspending and terminating union members and the Unions act
of filing another Notice of Strike after this Office has assumed jurisdiction are
certainly in conflict with the status quo ante. By any standards[,] these acts will not in
any way help in the early resolution of the labor dispute. It is clear that the actions of
both parties merely served to complicate and aggravate the already strained labor-
management relations. [17]

Indeed, it is clear that the act of the UNIVERSITY of dismissing the individual
respondents from their employment became the impetus for the UNION to declare a
second notice of strike. It is not a question anymore of whether or not the terminated
employees, the individual respondents herein, are part of the bargaining unit. Any act
committed during the pendency of the dispute that tends to give rise to further
contentious issues or increase the tensions between the parties should be considered
an act of exacerbation and should not be allowed.
With respect to the Secretarys Order allowing payroll reinstatement instead of
actual reinstatement for the individual respondents herein, an amendment to the
previous Orders issued by her office, the same is usually not allowed. Article 263(g)
of the Labor Code aforementioned states that all workers must immediately return to
work and all employers must readmit all of them under the same terms and conditions
prevailing before the strike or lockout. The phrase under the same terms and
conditions makes it clear that the norm is actual reinstatement. This is consistent with
the idea that any work stoppage or slowdown in that particular industry can be
detrimental to the national interest.
In ordering payroll reinstatement in lieu of actual reinstatement, then Acting
Secretary of Labor Jose S. Brillantes said:

Anent the Unions Motion, we find that superseding circumstances would not warrant
the physical reinstatement of the twelve (12) terminated employees. Hence, they are
hereby ordered placed under payroll reinstatement until the validity of their
termination is finally resolved.[18]

As an exception to the rule, payroll reinstatement must rest on special

circumstances that render actual reinstatement impracticable or otherwise not
conducive to attaining the purposes of the law. [19]

The superseding circumstances mentioned by the Acting Secretary of Labor no

doubt refer to the final decision of the panel of arbitrators as to the confidential nature
of the positions of the twelve private respondents, thereby rendering their actual and
physical reinstatement impracticable and more likely to exacerbate the situation. The
payroll reinstatement in lieu of actual reinstatement ordered in these cases, therefore,
appears justified as an exception to the rule until the validity of their termination is
finally resolved. This Court sees no grave abuse of discretion on the part of the Acting
Secretary of Labor in ordering the same. Furthermore, the issue has not been raised by
any party in this case.
WHEREFORE, the Decision of the Court of Appeals dated October 8, 2001 and
its Resolution dated January 10, 2002 in CA-G.R. SP No. 61693 are AFFIRMED.
No costs.
SO ORDERED.
Case Digest

University of the Immaculate Conception vs Sec of Labor

OCTOBER 23, 2012 ~ VBDIAZ

University of the Immaculate Conception vs Sec of Labor

GR 151379
Facts:
This case stemmed from the collective bargaining negotiations between petitioner
University of Immaculate Concepcion, Inc. (UNIVERSITY) and respondent The UIC
Teaching and Non- Teaching Personnel and Employees Union (UNION). The
UNION, as the certified bargaining
agent of all rank and file employees of the UNIVERSITY, submitted its collective
bargaining proposals to the latter on February 16, 1994. However, one item was left
unresolved and this was the inclusion or exclusion of some positions in the scope of
the bargaining unit.

The UNION it filed a notice of strike on the grounds of bargaining deadlock and ULP.
During the thirty (30) day cooling-off period, two union members were dismissed
by petitioner. Consequently, the UNION went on strike.

On January 23, 1995, the then Secretary of Labor, Ma. Nieves R. Confessor, issued an
Order assuming jurisdiction over the labor dispute.

On March 10, 1995, the UNION filed another notice of strike, this time citing as a
reason the UNIVERSITY’s termination of the individual respondents. The UNION
alleged that the UNIVERSITY’s act of terminating the individual respondents is in
violation of the Order of the Secretary of Labor.

On March 28, 1995, the Secretary of Labor issued another Order reiterating the
directives contained in the January 23, 1995 Order. Hence, the UNIVERSITY was
directed to reinstate the individual respondents under the same terms and conditions
prevailing prior to the labor dispute.

The UNIVERSITY filed a MR. In the Order dated August 18, 1995, then Acting
Secretary Jose S. Brilliantes denied the MR, but modified the two previous Orders by
adding:

Anent the Union’s Motion, we find that superseding circumstances would not warrant
the physical reinstatement of the twelve (12) terminated employees.

Hence, they are hereby ordered placed under payroll reinstatement until thevalidity of
their termination is finally resolved.

Issue: WON payroll reinstatement, instead of actual reinstatement, is proper.

Held:
With respect to the Secretary’s Order allowing payroll reinstatement instead of actual
reinstatement for the individual respondents herein, an amendment to the previous
Orders issued by her office, the same is usually not allowed. Article 263(g) of the
Labor Code aforementioned states that all workers must immediately return to work
and all employers
must readmit all of them under the same terms and conditions prevailing before the
strike or lockout. The phrase “under the same terms and conditions” makes it clear
that the norm is actual reinstatement. This is consistent with the idea that any work
stoppage or slowdown in that
particular industry can be detrimental to the national interest.

In ordering payroll reinstatement in lieu of actual reinstatement, then Acting Secretary

of Labor Jose S. Brillantes said:

Anent the Union’s Motion, we find that superseding circumstances would not warrant
the physical reinstatement of the twelve (12) terminated employees. Hence, they are
hereby ordered placed under payroll reinstatement until the validity of their
termination is finally resolved.

As an exception to the rule, payroll reinstatement must rest on special circumstances

that render actual reinstatement impracticable or otherwise not conducive to attaining
the purposes of the law.

The “superseding circumstances” mentioned by the Acting Secretary of Labor no

doubt refer to the final decision of the panel of arbitrators as to the confidential nature
of the positions of the twelve private respondents, thereby rendering their actual and
physical reinstatement impracticable and more likely to exacerbate the situation. The
payroll reinstatement in lieu of actual reinstatement ordered in these cases, therefore,
appears justified as an exception to the rule until the validity of their termination is
finally resolved. This Court sees no grave abuse of discretion on the part of the Acting
Secretary of Labor in ordering the same. Furthermore, the issue has not been raised by
any party in this case.

Petition denied.
 THIRD DIVISION

[G.R. No. 105963. August 22, 1996]

PAL EMPLOYEES SAVINGS AND LOAN ASSOCIATION, INC.

(PESALA), petitioner, vs. NATIONAL LABOR RELATIONS
COMMISSION and ANGEL V. ESQUEJO, respondent.

DECISION
PANGANIBAN, J.:

Is an employee entitled to overtime pay for work rendered in excess of eight hours a
day, given the fact that his employment contract specifies a twelve-hour workday at a
fixed monthly salary rate that is above the legal minimum wage? This is the principal
question answered by this Court in resolving this petition which challenges the
validity and legality of the Decision of public respondent National Labor Relations
[1]

Commission promulgated on April 23, 1992 in NLRC NCR CA No. 002522-91

[2]

entitled Angel V. Esquejo vs. PAL Employees Savings and Loan Association which
Decision modified (slightly as to amount) the earlier decision dated November 11,
[3]

1991 of the labor arbiter granting private respondents claim for overtime pay.

The Facts and the Case Below

On October 10, 1990, private respondent filed with public respondent a complaint
docketed as NLRC NCR Case No. 10-05457-90 for non-payment of overtime pay and
non-payment of the P25.00 statutory minimum wage increase mandated by Republic
Act No. 6727.
Subsequently, private respondent filed a supplemental complaint for illegal
suspension with prayer for reinstatement and payment of backwages. However, before
the case was submitted for resolution, private respondent filed a Motion to Withdraw
Supplemental Complaint on the ground that a separate action for illegal suspension,
illegal dismissal, etc. had been filed and was pending before another labor
arbiter. Hence, the issue decided by public respondent and which is under review by
this Court in this petition involves only his claim for overtime pay.
On November 26, 1990, private respondent filed his position paper with the labor
[4]

arbiter alleging the following facts constituting his cause of action:

 Complainant (herein private respondent) started working with respondent
(PESALA) sometime last March 1, 1986 as a company guard and was receiving a
monthly basic salary of P1,990.00 plus an emergency allowance in the amount of
P510.00. He was required to work a (sic) twelve (12) hours a day, a (sic) xerox copies
of his appointment are hereto attached and marked as Annexes C and D of this
position paper;

That on December 10, 1986, respondent Board of Directors in its board meeting
held on November 21, 1986 approved a salary adjustment for the complainant
increasing his monthly basic salary to P2,310.00 and an emergency allowance of
P510.00, a xerox copy of the salary adjustment is hereto attached and marked as
Annex E hereof;

That on August 25, 1987, because of his impressive performance on his assigned
job, another adjustment was approved by the President of the association increasing
his monthly basic salary to P2,880.00, a xerox copy of the salary adjustment is hereto
attached and marked as Annex F hereof;

That from January 4, 1988 up to June 1990, several salary adjustments were made
by the respondent on the monthly basic salary of the complainant including a letter of
appreciation for being as (sic) one of the outstanding performers during the first half
of 1988, the latest salary prior to the filing of the complaint was P3,720.00, a (sic)
xerox copies of all the documents relative to the salary adjustments are hereto
attached and marked as annexes G, H, I, J and K of this position paper;

That during his entire period of employment with respondent, the former was
required to perform overtime work without any additional compensation from the
latter. It was also at this point wherein the respondent refused to give the P25.00
increase on the minimum wage rates as provided for by law. On October 12, 1990,
complainant was suspended for the period of thirty seven (37) days for an offense
allegedly committed by the respondent sometime last August 1989.
On December 13, 1990, petitioner PESALA filed its position paper alleging among
[5]

other things:

On 01 March, 1986, complainant was appointed in a permanent status as the

company guard of respondent. In the Appointment Memorandum dated February 24,
1986 which has the conformity of complainant, it is expressly stipulated therein that
complainant is to receive a monthly salary of P1,900.00 plus P510.00 emergency
allowance for a twelve (12) hours work per day with one (1) day off. A copy of said
appointment memorandum is hereto attached as Annex A and made an integral part
hereof.
 On 01 December, 1986, the monthly salary of complainant was increased to
P2,310.00 plus P510.00 emergency allowance. Later, or on 01 January, 1988, the
monthly salary of complainant was again increased to P3,420.00. And still later, or on
01 February, 1989, complainants monthly salary was increased to P3,720.00. Copies
of the memoranda evidencing said increase are hereto attached as Annexes B, B-1 and
B-2 and are made integral parts hereof.

On 29 November, 1989, the manager of respondent in the person of Sulpicio

Jornales wrote to complainant informing the latter that the position of a guard will be
abolished effective November 30, 1989, and that complainant will be re-assigned to
the position of a ledger custodian effective December 1, 1989.

Pursuant to the above-mentioned letter-agreement of Mr. Jornales, complainant was

formally appointed by respondent as its ledger custodian on December 1, 1989. The
monthly salary of complainant as ledger custodian starting on December 1, 1989 was
P3,720.00 for forty (40) working hours a week or eight (8) working hours a day. A
copy of said Appointment memorandum is hereto attached as Annex C and made an
integral part hereof.

On 29 August, 1990, complainant was administratively charged with serious

misconduct or disobedience of the lawful orders of respondent or its officers, and
gross and habitual neglect of his duties, committed as follows:
1. Sometime in August, 1989, you (referring to complainant Esquejo) forwarded
the checks corresponding to the withdrawals of Mr. Jose Jimenez and Mr.
Anselmo dela Banda of Davao and Iloilo Station, respectively, without the
signature of the Treasurer and the President of PESALA, in violation of your
duty and function that you should see to it that the said checks should be
properly signed by the two PESALA officials before you send out said checks
of their addresses. As a result of which, there was a substantial delay in the
transmission of the checks to its owners resulting to an embarrassment on the
part of the PESALA officers and damage and injury to the receipients (sic) of
the checks since they needed the money badly.
2. Sometime in August, 1989, before you (complainant) went on your vacation,
you failed to leave or surrender the keys of the office, especially the keys to
the main and back doors which resulted to damage, injury and embarrassment
to PESALA. This is a gross violation of your assigned duties and you
disobeyed the instruction of your Superior.
xxx xxx xxx
 Herein complainant was informed of the aforequoted charges against him and was
given the opportunity to be heard and present evidence in his behalf as shown by the
Notice of Hearing (Annex D hereof) sent to him. Complainant did in fact appeared
(sic) at the hearing, assisted by his counsel, Atty. Mahinardo G. Mailig, and presented
his evidence in the form of a Counter-Affidavit. A copy of said Counter-Affidavit is
hereto attached as Annex E and made an integral part hereof.

On 12 October, 1990, after due deliberation on the merits of the administrative

charges filed against herein complainant, the Investigating Officer in the person of
Capt. Rogelio Enverga resolved the same imposing a penalty of suspension of herein
complainant, thus:
PENALTY: 1. For the first offense, you (referring to complainant Esquejo) are
suspended for a period of thirty (30) working days without pay
effective October 15, 1990.
2. For the second offense, your (sic) are suspended for a period of seven (7)
working days without pay effective from the date the first
suspension will expire.
On March 7, 1991, private respondent filed a detailed and itemized computation of
his money claims totaling P107,495.90, to which petitioner filed its comment on April
28, 1991. The computation filed on March 7, 1991 was later reduced to
P65,302.80. To such revised computation, the petitioner submitted its comment on
April 28, 1991.
Thereafter, labor arbiter Cornelio L. Linsangan rendered a decision dated November
11, 1991 granting overtime pay as follows:

WHEREFORE, judgment is hereby rendered:

1. Granting the claim for overtime pay covering the period October 10,
1987 to November 30, 1989 in the amount of P28,344.55.
2. The claim for non-payment of P25.00 salary increase pursuant to
Republic Act No. 6727 is dismissed for lack of merit.
Aggrieved by the aforesaid decision, petitioner appealed to public
respondent NLRC only to be rejected on April 23, 1992 via the herein assailed
Decision, the dispositive portion of which reads as follows:

WHEREFORE, premises considered, the award is reduced to an amount of

TWENTY EIGHT THOUSAND SIXTY-SIX PESOS AND 45/100 (P28,066.45). In
all other respects, the Decision under review is hereby AFFIRMED and the appeal
DISMISSED for lack of merit.
 No motion for reconsideration of the Decision was filed by the petitioner. [6]

What transpired afterwards is narrated by the Solicitor General in his

memorandum, which we presume to be correct since petitioner did not contradict the
[7]

same in its memorandum:

x x x Petitioner did not appeal the Decision of respondent NLRC. When it became
final, the parties were called to a conference on June 29, 1992 to determine the
possibility of the parties voluntary compliance with the Decision (Order of Labor
Arbiter Linsangan, dated July 23, 1992).

x x x In their second conference, held on July 15, 1992, petitioner proposed to

private respondent a package compromise agreement in settlement of all pending
claims. Private respondent for his part demanded P150,000.00 as settlement of his
complaint which was turned down by petitioner as too excessive. Unfortunately, no
positive results were achieved.

As a result, a pleading was filed by petitioner captioned: Motion to Defer Execution

and Motion to Re-Compute alleged overtime pay. Petitioner states that quite recently,
the Employee Payroll Sheets pertaining to the salaries, overtime pay, vacation and
sick leave of Angel Esquejo were located.

x x x Petitioners Motion to Defer Execution and Motion to Re-Compute

respondents overtime pay was denied in an Order dated July 23, 1992.

x x x Petitioner moved to reconsider the Denial Order on July 27, 1992. Private
respondent opposed.
In the meantime, petitioner filed the instant special civil action for certiorari before
this Court on July 10, 1992. Later, on July 17, 1992, citing as reason that x x x quite
recently, the Employee Payroll Sheets which contained the salaries and overtime pay
received by respondent Esquejo were located in the bodega of the petitioner and based
on said Payroll Sheets, it appears that substantial overtime pay have been paid to
respondent Esquejo in the amount of P24,283.22 for the period starting January 1987
up to November 1989, petitioner asked this Court for the issuance of a temporary
restraining order or writ of preliminary injunction. On the same date of July 17, 1992,
a Supplemental Petition Based On Newly Discovered Evidence was filed by petitioner
to which was attached photocopies of payroll sheets of the aforestated period.
On July 29, 1992, this Court issued a temporary restraining order enjoining the
respondents from enforcing the Decision dated April 23, 1992 issued in NLRC NCR
CA No. 002522-91, the case below subject of the instant petition.
 The Issues
For issues have been raised by the petitioner in its effort to obtain a reversal of the
assailed Decision, to wit:

THE RESPONDENT NLRC COMMITTED A GRAVE ABUSE OF DISCRETION

WHEN IT RULED THAT PRIVATE RESPONDENT IS ENTITLED TO
OVERTIME PAY WHEN THE SAME IS A GROSS CONTRAVENTION OF THE
CONTRACT OF EMPLOYMENT BETWEEN PETITIONER AND RESPONDENT
ESQUEJO AND A PATENT VIOLATION OF ARTICLES 1305, 1306 AND 1159
OF THE CIVIL CODE.

II

THE RESPONDENT NLRC COMMITTED A GRAVE ABUSE OF DISCRETION

IN AWARDING OVERTIME PAY OF P28,066.45 TO PRIVATE RESPONDENT
WHEN THE SAME IS A CLEAR VIOLATION OF ARTICLE 22 OF THE CIVIL
CODE ON UNJUST ENRICHMENT.

III

THE RESPONDENT NLRC COMMITTED A GRAVE ABUSED OF DISCRETION

WHEN IT RULED THAT PRIVATE RESPONDENT WAS NOT PAID THE
OVERTIME PAY BASED ON THE COMPUTATION OF LABOR ARBITER
CORNELIO LINSANGAN WHICH WAS AFFIRMED BY SAID RESPONDENT
NLRC WHEN THE SAME IS NOT SUPPORTED BY SUBSTANTIAL EVIDENCE
AND IT, THEREFORE, VIOLATED THE CARDINAL PRIMARY RIGHTS OF
PETITIONER AS PRESCRIBED IN ANG TIBAY VS. CIR 69 PHIL. 635.

IV

WHETHER OR NOT THE PETITIONERS SUPPLEMENTAL PETITION BASED

ON NEWLY DISCOVERED EVIDENCE MAY BE ADMITTED AS PART OF ITS
EVIDENCE IT BEING VERY VITAL TO THE JUDICIOUS DETERMINATION
OF THE CASE.(Rollo, p. 367)
In essence the above issues boil down to this query: Is an employee entitled to
overtime pay for work rendered in excess of the regular eight hour day given the fact
that he entered into a contract of labor specifying a work-day of twelve hours at a
fixed monthly rate above the legislative minimum wage?
 The Courts Ruling
At the outset, we would like to rectify the statement made by the Solicitor General
that the petitioner did not appeal from the Decision of (public) respondent NLRC. The
elevation of the said case by appeal is not possible. The only remedy available from
an order or decision of the NLRC is a petition for certiorari under Rule 65 of the
Rules of Court alleging lack or excess of jurisdiction or grave abuse of
discretion. The general rule now is that the special civil action of certiorari should be
[8]

instituted within a period of three months. Hence, when the petition was filed on July
[9]

10, 1992, three months had not yet elapsed from petitioners receipt of the assailed
Decision (should really be from receipt of the order denying the motion for
reconsideration).
However, aside from failing to show clearly grave abuse of discretion on the part of
respondent NLRC, which we shall discuss shortly, the petitioner also failed to comply
with the mandatory requirement of filing a motion for reconsideration from the
Decision of the Public respondent before resorting to the remedy of certiorari. We
have previously held that:

x x x. The implementing rules of respondent NLRC are unequivocal in requiring

that a motion for reconsideration of the order, resolution, or decision of respondent
commission should be seasonably filed as a precondition for pursuing any further or
subsequent remedy, otherwise the said order, resolution, or decision shall become
final and executory after ten calendar days from receipts thereof. Obviously, the
rationale therefor is that the law intends to afford the NLRC an opportunity to rectify
such errors or mistakes it may have lapsed into before resort to the courts of justice
can be had. This merely adopts the rule that the function of a motion for
reconsideration is to point to the court the error that it may have committed and to
give it a chance to correct itself.
[10]

Additionally, the allegations in the petition clearly show that petitioner failed to file
a motion for reconsideration of the assailed Resolution before filing the instant
petition. As correctly argued by private respondent Rolando Tan, such failure
constitutes a fatal infirmity x x x. The unquestioned rule in his jurisdiction is that
certiorari will lie only if there is no appeal or any other plain, speedy and adequate
remedy in the ordinary course of law against the acts of public respondent. In the
instant case, the plain and adequate remedy expressly provided by law was a motion
for reconsideration of the assailed decision, based on palpable or patent errors, to be
made under oath and filed within ten (10) calendar days from receipt of the questioned
decision. And for failure to avail of the correct remedy expressly provided by law,
petitioner has permitted the subject Resolution to become final and executory after the
lapse of the ten day period within which to file such motion for reconsideration. [11]
 In brief, the filing of the instant petition was premature and did not toll the running
of the 3 month period. Thus, the assailed Decision became final and executory. On
this ground alone, this petition must therefore be dismissed.
However, in view of the importance of the substantial query raised in the petition,
we have resolved to decide the case on the merits also.

The First Issue: Was Overtime Pay Included?

The main disagreement between the parties centers on how the contract of
employment of the private respondent should be interpreted.The terms and conditions
thereof read as follows:

Date: February 24, 1986

NAME : ESQUEJO, ANGEL
NATURE OF ACTION : APPOINTMENT
FROM :
POSITION TITLE : COMPANY GUARD
TO :
STATUS : PERMANENT
EFFECTIVE DATE : MARCH 1, 1986
FROM : P1,990.00 per month
plus P510.00 emergency
allowance
SALARY :
TO :
------------------------------
REMARKS : To confirm permanent
appointment as company
guard who will render 12
hours a day with one (1)
day off
------------------------------
RECOMMENDED BY: APPROVED BY:
(Signed) (Signed)
SULPICIO B. JORNALES CATALINO F. BANEZ
(Signed)
ANGEL V. ESQUEJO [12]

Petitioner faults the public respondent when it said that there was no meeting of
minds between the parties, since the employment contract explicitly states without any
equivocation that the overtime pay for work rendered for four (4) hours in excess of
the eight (8) hour regular working period is already included in the P1,990.00 basic
salary. This is very clear from the fact that the appointment states 12 hours a day
work. By its computations, petitioner tried to illustrate that private respondent was
[13] [14]

paid more than the legally required minimum salary then prevailing.
To prove its contention, petitioner argues that:

The legal minimum wage prescribed by our statutes, the legally computed overtime
pay and the monthly salaries being paid by petitioner to respondent Esquejo would
show that indeed, the overtime pay has always been absorbed and included in the said
agreed monthly salaries.

In 1986, the legal minimum salary of Esquejo is computed as follows (per

Appointment Memoranda dated February 4, 1986 and June 6, 1986 [Annex C and D
of Annex B of this Petition]):
54 x 314 days
12 months = P1,413.00 monthly salary
The hourly overtime pay is computed as follows:
54/8 hours = P6.75 x 4 hrs. = P27.00
P27.00 x 1.25 = P33.75 x 20 (should be 26) days = P887.50

(should be P877.50)
P1,413.00 - legal minimum wage
+ 887.50(877.50) - legal overtime pay
P2,290.50 - amount due to respondent
Esquejo under the law

P2,500.00 - gross salary of Esquejo per contract

-2,290.50
P 209.50 - Difference (Rollo, p. 371).
On the other hand, private respondent in his position paper claims that overtime pay
is not so incorporated and should be considered apart from the P1,990.00 basic
salary.[15]

We find for the private respondent and uphold the respondent NLRCs ruling that he
is entitled to overtime pay.
Based on petitioners own computations, it appears that the basic salary plus
emergency allowance given to private respondent did not actually include the
overtime pay claimed by private respondent. Following the computations it would
appear that by adding the legal minimum monthly salary which at the time was
P1,413.00 and the legal overtime pay P877.50, the total amount due the private
respondentas basic salary should have been P2,290.50. By adding the emergency cost
of living allowance (ECOLA) of P510.00 as provided by the employment contract, the
total basic salary plus emergency allowance should have amounted to P2,800.50.
However, petitioner admitted that it actually paid private respondent P1,990.00 as
basic salary plus P510.00 emergency allowance or a total of only
P2,500.00.Undoubtedly, private respondent was shortchanged in the amount of
P300.50. Petitioners own computations thus clearly establish that private respondents
claim for overtime pay is valid.

Side Issue: Meeting of the Minds?

The petitioner contends that the employment contract between itself and the private
respondent perfectly satisfies the requirements of Article 1305 of the Civil Code as to
the meeting of the minds such that there was a legal and valid contract entered into by
the parties. Thus, private respondent cannot be allowed to question the said salary
arrangements for the extra 4 hours overtime pay after the lapse of 4 years and claim
only now that the same is not included in the terms of the employment contract. [16]

We disagree. Public respondent correctly found no such agreement as to overtime

pay. In fact, the contract was definite only as to the number of hours of work to be
rendered but vague as to what is covered by the salary stipulated. Such ambiguity was
resolved by the public respondent, thus:

In resolving the issue of whether or not complainants overtime pay for the four (4)
hours of work rendered in excess of the normal eight hour work period is incorporated
in the computation of his monthly salary, respondent invokes its contract of
employment with the complainant. Said contract appears to be in the nature of a
document identifiable as an appointment memorandum which took effect on March 1,
1986 (Records, p. 56) by virtue of which complainant expressed conformity to his
appointment as company guard with a work period of twelve (12) hours a day with
one (1) day off. Attached to this post is a basic salary of P1,990.00 plus P510.00
emergency allowance. It is (a) cardinal rule in the interpretation of a contract that if
the terms thereof are clear and leave no doubt upon the intention of the contracting
parties, then the literal meaning of its stipulations shall control. (Art. 1370, Civil Code
of the Philippines). To this, respondent seeks refuge. Circumstances, however, do not
allow us to consider this rule in the light of complainants claim for overtime pay
which is an evident indication that as to this matter, it cannot be said that there was a
meeting of the minds between the parties, it appearing that respondent considered the
four (4) hours work in excess of the eight hours as overtime work and compensated by
way of complainants monthly salary while on the latters part, said work rendered is
likewise claimed as overtime work but yet unpaid in view of complainants being
given only his basic salary. Complainant claims that the basic salary could not
possibly include therein the overtime pay for his work rendered in excess of eight
hours. Hence, respondents Appointment Memorandum cannot be taken and accorded
credit as it is so worded in view of this ambiguity. We therefore proceed to determine
the issue in the light of existing law related thereto. While it is true that the
complainant received a salary rate which is higher that the minimum provided by law,
it does not however follow that any additional compensation due the complainant can
be offset by his salary in excess of the minimum, especially in the absence of an
express agreement to that effect. To consider otherwise would be in disregard of the
rule of nondiminution of benefits which are above the minimum being extended to the
employees. Furthermore, such arrangement is likewise in disregard of the manner
required by the law on how overtime compensation must be determined. There is
further the possibility that in view of subsequent increases in the minimum wage, the
existing salary for twelve (12) hours could no longer account for the increased wage
level together with the overtime rate for work rendered in excess of eight hours. This
fertile ground for a violation of a labor standards provision can be effectively thwarted
if there is a clear and definite delineation between an employees regular and overtime
compensation. It is, further noted that a reading of respondents Appointment
Memoranda issued to the complainant on different dates (Records, pp. 56-60) shows
that the salary being referred to by the respondent which allegedly included
complainants overtime pay, partakes of the nature of a basic salary and as such, does
not contemplate any other compensation above thereof including complainants
overtime pay. We therefore affirm complainants entitlement to the latter benefit. [17]

Petitioner also insists that private respondents delay in asserting his right/claim
demonstrates his agreement to the inclusion of overtime pay in his monthly salary
rate. This argument is specious. First of all, delay cannot be attributed to the private
respondent. He was hired on March 1, 1986. His twelve-hour work periods continued
until November 30, 1989. On October 10, 1990 (just before he was suspended) he
filed his money claims with the labor arbiter. Thus, the public respondent in
upholding the decision of the arbiter computed the money claims for the three year
period from the date the claims were filed, with the computation starting as of October
10, 1987 onwards.
In connection with the foregoing, we should add that even if there had been a
meeting of the minds in the instant case, the employment contract could not have
effectively shielded petitioner from the just and valid claims of private
respondent. Generally speaking, contracts are respected as the law between the
contracting parties, and they may establish such stipulations, clauses, terms and
conditions as they may see fit; and for as long as such agreements are not contrary to
law, morals, good customs, public policy or public order, they shall have the force of
law between them. However, x x x, while it is the inherent and inalienable right of
[18]
every man to have the utmost liberty of contracting, and agreements voluntarily and
fairly made will be held valid and enforced in the courts, the general right to contract
is subject to the limitation that the agreement must not be in violation of the
Constitution, the statute or some rule of law (12 Am. Jur. pp. 641-642). And under
[19]

the Civil Code, contracts of labor are explicitly subject to the police power of the State
because they are not ordinary contracts but are impressed with public
interest. Inasmuch as in this particular instance the contract is question would have
[20]

been deemed in violation of pertinent labor laws, the provisions of said laws would
prevail over the terms of the contract, and private respondent would still be entitled to
overtime pay.
Moreover, we cannot agree with petitioners assertion that by judging the intention
of the parties from their contemporaneous acts it would appear that the failure of
respondent Esquejo to claim such alleged overtime pay since 1986 clearly
demonstrate(s) that the agreement on his gross salary as contained in his appointment
paper is conclusive on the matter of the inclusion of overtime pay. (Rollo, pp. 13-15;
also, Rollo, pp. 378-380). This is simply not the case here. The interpretation of the
provision in question having been put in issue, the Court is constrained to determine
which interpretation is more in accord with the intent of the parties. To ascertain the
[21]

intent of the parties, the Court is bound to look at their contemporaneous and
subsequent acts. Private respondents silence and failure to claim his overtime pay
[22]

since 1986 cannot be considered as proving the understanding on his part that the rate
provided in his employment contract covers overtime pay. Precisely, that is the very
question raised by private respondent with the arbiter, because contrary to the claim of
petitioner, private respondent believed that he was not paid his overtime pay and that
such pay is not covered by the rate agreed upon and stated in his Appointment
Memorandum. The subsequent act of private respondent in filing money claims
negates the theory that there was clear agreement as to the inclusion of his overtime
pay in the contracted salary rate. When an employee fails to assert his right
immediately upon violation thereof, such failure cannot ipso facto be deemed as a
waiver of the oppression. We must recognize that the worker and his employer are not
equally situated. When a worker keeps silent inspite of flagrant violations of his
rights, it may be because he is seriously fearful of losing his job. And the dire
consequences thereof on his family and his dependents prevent him from
complaining. In short, his thoughts of sheer survival weigh heavily against launching
an attack upon his more powerful employer.
The petitioner contends that the agreed salary rate in the employment contract
should be deemed to cover overtime pay, otherwise serious distortions in wages
would result since a mere company guard will be receiving a salary much more that
the salaries of other employees who are much higher in rank and position than him in
the company. (Rollo, p. 16) We find this argument flimsy and undeserving of
consideration. How can paying an employee the overtime pay due him cause serious
distortions in salary rates or scales? And how can other employees be aggrieved when
they did not render any overtime service?
Petitioners allegation that private respondent is guilty of laches is likewise devoid of
merit. Laches is defined as failure or neglect for an unreasonable and unexplained
length of time to do that which, by exercising due diligence, could or should have
been done earlier. It is negligence or omission to assert a right within an unreasonable
time, warranting the presumption that the party entitled to assert it has either
abandoned or declined to assert it. The question of laches is addressed to the sound
[23]

discretion of the court, and since it is an equitable doctrine, its application is

controlled by equitable considerations. It cannot work to defeat justice or to perpetrate
fraud and injustice. Laches cannot be charged against any worker when he has not
[24]

incurred undue delay in the assertion of his rights. Private respondent filed his
complaint within the three-year reglementary period. He did not sleep on his rights for
an unreasonable length of time. [25]

Second Issue: Unjust Enrichment?

Petitioner contends that the award of overtime pay is plain and simple unjust and
illegal enrichment. Such award in effect sanctioned and approved the grant of
payment to respondent Esquejo which will result in double payment for the overtime
work rendered by paid employee. Also, per petitioner, (n)othing in the Labor Code
[26]

nor in the Rules and Regulations issued in the implementation thereof prohibits the
manner of paying the overtime pay (by) including the same in the salary. [27]

This is begging the issue. To reiterate, the main question raised before the labor
tribunals is whether the provision on wages in the contract of employment already
included the overtime pay for four (4) working hours rendered six days a week in
excess of the regular eight-hour work. And we hold that the tribunals below were
correct in ruling that the stipulated pay did not include overtime. Hence, there can be
no undue enrichment in claiming what legally belongs to private respondent.

Third Issue: Basis of NLRCs Decision?

Petitioner assails respondent NLRC for adopting that portion of the decision of the
labor arbiter, which reads as follows:

x x x Our conclusion is quite clear considering the fact that at the time of his
employment in March 1986, during which the minimum wage was P37.00 a day for 8
hours work, complainants total take-home-pay working 12 hours a day including
ECOLA, was only P2,500.00 a month. And immediately prior to his appointment as
Ledger Custodian effective December 1, 1989, with the working hours reduced to 8
hours or 40 hours a week, complainants monthly salary was P3,420.00 (instead of
P5,161.01 minimum monthly with 4 hours overtime work everyday, or a difference of
P1,741.01 a month).

Accordingly, the claim for overtime pay reckoned from October 10, 1987 up to
November 30, 1989 should be, as it is hereby, granted. (Rollo, p. 201).
[28]

Petitioner believes that by adopting the above-quoted portion of the arbiters

decision, respondent NLRC violated the cardinal rule that its decisions must be
supported by substantial evidence. In doing so, petitioner claims that
the NLRC violated its primary rights as enunciated in the case of Ang Tibay
vs. CIR. In other words, petitioner holds the view that the arbiters decision failed to
[29]

explain how the amount of P5,161.01 was arrived at. [30]

Petitioner is in error. The public respondent did not adopt in toto the aforequoted
portion of the arbiters decision. It made its own computations and arrived at a slightly
different amount, with a difference of P278.10 from the award granted by the labor
arbiter. To refute petitioners claim, public respondent attached (as Annexes 1, 1-A 1-
B and 1-C) to its Comment, the computations made by the labor arbiter in arriving at
the sum of P5,161.00. On the other hand, public respondent made its own
computation in its assailed Decision and arrived at a slightly different figure from that
computed by the labor arbiter:

Respondent claims that the award of P28,344.55 is bereft of any factual basis.
Records show that as per computation of the office of the Fiscal Examiner, (Records,
p. 116) the said amount was arrived at. The computation was however based on the
assumption that the complainant regularly reported for work. Records however show
that the complainant absented himself from work for one day in August
1989. (Records, p. 63) For this unworked day, no overtime pay must be due. As to the
rest of his period of employment subject to the three year limitation rule which dates
from October 10, 1987 up to his appointment as Ledger Custodian on December 1,
1989 after which is regular work period was already reduced to eight hours, there
being no showing that the complainant absented himself from work, and he being then
required to work for a period of twelve hours daily, We therefore rule on
complainants entitlement to overtime compensation for the duration of the aforesaid
period in excess of one working day. Consequently, complainants overtime pay shall
be computed as follows:

OVERTIME PAY: (4 HRS/DAY)

October 10, 1987 December 13, 1987 = 2.10 mos.
P54/8 hrs. = P6.75 x 4 hrs. = P27.00
P27 x 1.25 = P33.75 x 26 x 2.10 mos. = P1,842.75
 December 14, 1987 June 30, 1989 = 18.53 mos.
P64/8 hrs. = P8 x 4 hrs. = P32.00
P32 x 1.25 = P40 x 26 x 18.53 = P19,271.20

July 1, 1989 November 30, 1989 = 5 mos.

P89/8 hrs. = P11.12 x 4 hrs. = P44.50
P44.50 x 1.25 = P55.62 x 25 x 5 mos. = P6,952.50(P6,953.125)
TOTAL OVERTIME PAY

P28,066.45(P28,067.075) (Rollo, pp. 210-212).

Prescinding therefrom, it is evident that petitioner had no basis to argue that

respondent NLRC committed any grave abuse of discretion in quoting the questioned
portion of the labor arbiters holding.

Fourth Issue: Newly Discovered Evidence?

In its Supplemental Petition filed on July 17, 1996, petitioner alleges in part:

2. That only recently, the petitioner was able to locate the Employees Payroll Sheets
which contained the salaries, overtime pay, vacation and sick leaves of respondent
Esquejo which pertains to the period starting from January 1, 1987 up to November
1989. Therefore, said total amount of overtime pay paid to and received by respondent
Esquejo should be deducted from the computed amount of P28,066.45 based on the
questioned decision. (Rollo, p. 220).
Contrary to petitioners claim however, said documents consisting of payroll sheets,
cannot be considered as newly-discovered evidence since said papers were in its
custody and possession all along, petitioner being the employer of private respondent.
Furthermore, petitioner offers no satisfactory explanation why these documents
were unavailable at the time the case was being heard by the labor arbiter. In its
Memorandum, petitioner excused itself for its failure to present such evidence before
the labor arbiter and respondent NLRC by saying that petitioner(s office) appeared to
be in disorder or in a state of confusion since the then officers (of petitioner) were
disqualified by the Monetary Board on grounds of misappropriation of funds of the
association and other serious irregularities. There was no formal turn-over of the
documents from the disqualified set of officers to the new officers of petitioner. We[31]

find such excuse weak and unacceptable, the same not being substantiated by any
evidence on record. Moreover, payroll records are normally not in the direct custody
and possession of corporate officers but of their subordinates, i.e., payroll clerks and
the like. In the normal course of business, such payroll sheets are not the subject of
formal turnovers by outgoing officers to their successors in office. And if indeed it is
true that petitioner had been looking for such records or documents during the
pendency of the case with the labor arbiter and with public respondent, petitioner
never alleged such search before the said labor tribunals a quo. Hence, such bare
allegations of facts cannot now be fairly appreciated in this petition for certiorari,
which is concerned only with grave abuse of discretion or lack (or excess) of
jurisdiction.
The Solicitor General quotes with approval a portion of private respondents
Opposition to petitioners motion for reconsideration thus:

It is clear from the payroll, although the substantial pages thereof do not show that
the net amount indicated therein have been received or duly acknowledged to have
been received by the complainant, THAT OVERTIME PAYMENTS THAT WERE
MADE REFER TO WORK RENDERED DURING COMPLAINANTS OFF
DAYS. What has been rightfully claimed by the complainant and awarded by this
Honorable Office is the overtime works (sic) rendered by the complainant daily for
six (6) days a week computed at four (4) hours per day. This computation is based on
the evidence thus submitted by the parties. All appointments issued by the respondent
carries (sic) with it (sic) that the basic salary of the complainant is equivalent to 12
hours work everyday for six (6) days a week, hence, the four (4) hours overtime daily
was not considered and therefore not paid by the respondent. (Rollo, p. 327).
It has been consistently held that factual issues are not proper subjects of a petition
for certiorari, as the power of the Supreme Court to review labor cases is limited to
questions of jurisdiction and grave abuse of discretion. The introduction in this
[32]

petition of so-called newly discovered evidence is unwarranted. This Court is not a

trier of facts and it is not its function to examine and evaluate the evidence the
evidence presented (or which ought to have been presented) in the tribunals below. [33]

WHEREFORE, in view of the foregoing considerations, the Petition

is DISMISSED, the temporary restraining order issued on July 30, 1992 LIFTED, and
the assailed decision of the public respondent AFFIRMED. Costs against petitioner.
SO ORDERED.
 THIRD DIVISION

CIRTEK EMPLOYEES G.R. No. 190515

LABOR UNION-
FEDERATION OF FREE Present:
WORKERS
Petitioner, CARPIO MORALES, J., Chairperson,
LEONARDO-DE CASTRO,
BERSAMIN,
VILLARAMA, JR., and
- versus - SERENO, JJ.

Promulgated:
CIRTEK ELECTRONICS, June 6, 2011
INC.,
Respondent.

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

RESOLUTION

CARPIO MORALES, J.:

This resolves the motion for reconsideration and supplemental motion for
reconsideration filed by respondent, Cirtek Electronics, Inc., of the Courts
Decision dated November 15, 2010.

Respondent-movant avers that petitioner, in filing the petition for certiorari

under Rule 65, availed of the wrong remedy, hence, the Court should have
dismissed the petition outright. It goes on to aver that the Court erred in resolving a
factual issue whether the August 24, 2005 Memorandum of Agreement (MOA)
was validly entered into , which is not the office of a petition for certiorari.
 Respondent-movant further avers that the MOA[1] signed by the remaining
officers of petitioner Union and allegedly ratified by its members should have been
given credence by the Court.

Furthermore, respondent-movant maintains that the Secretary of Labor

cannot insist on a ruling beyond the compromise agreement entered into by the
parties; and that, as early as February 5, 2010, petitioner Union had already filed
with the Department of Labor and Employment (DOLE) a resolution of
disaffiliation from the Federation of Free Workers resulting in the latters lack of
personality to represent the workers in the present case.

The motion is bereft of merit.

Respondent indeed availed of the wrong remedy of certiorari under Rule

65. Due, however, to the nature of the case, one involving workers wages and
benefits, and the fact that whether the petition was filed under Rule 65 or appeal by
certiorari under Rule 45 it was filed within 15 days (the reglementary period under
Rule 45) from petitioners receipt of the resolution of the Court of Appeals
Resolution denying its motion for reconsideration, the Court resolved to give it due
course. As Almelor v. RTC of Las Pias, et al. [2] restates:

Generally, an appeal taken either to the Supreme Court or the

CA by the wrong or inappropriate mode shall be dismissed. This is
to prevent the party from benefiting from ones neglect and
mistakes. However, like most rules, it carries certain exceptions.
After all, the ultimate purpose of all rules of procedures is to achieve
substantial justice as expeditiously as possible. (emphasis and
underscoring supplied)
Respecting the attribution of error to the Court in ruling on a question of
fact, it bears recalling that a QUESTION OF FACT arises when the doubt or
difference arises as to the truth or falsehood of alleged facts,[3] while a QUESTION
OF LAW exists when the doubt or difference arises as to what the law is on a
certain set of facts.
 The present case presents the primordial issue of whether the Secretary of
Labor is empowered to give arbitral awards in the exercise of his authority to
assume jurisdiction over labor disputes.

Ineluctably, the issue involves a determination and application of existing

law, the provisions of the Labor Code, and prevailing jurisprudence. Intertwined
with the issue, however, is the question of validity of the MOA and its ratification
which, as movant correctly points out, is a question of fact and one which is not
appropriate for a petition for review on certiorari under Rule 45. The rule,
however, is not without exceptions, viz:

This rule provides that the parties may raise only questions of law,
because the Supreme Court is not a trier of facts. Generally, we are not
duty-bound to analyze again and weigh the evidence introduced in and
considered by the tribunals below. When supported by substantial
evidence, the findings of fact of the CA are conclusive and binding
on the parties and are not reviewable by this Court, unless the case
falls under any of the following recognized exceptions:

(1) When the conclusion is a finding grounded entirely on speculation,

surmises and conjectures;

(2) When the inference made is manifestly mistaken, absurd or

impossible;

(3) Where there is a grave abuse of discretion;

(4) When the judgment is based on a misapprehension of facts;

(5) When the findings of fact are conflicting;

(6) When the Court of Appeals, in making its findings, went beyond the
issues of the case and the same is 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 of fact 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 petitioners'
main and reply briefs are not disputed by the respondents; and
 (10) When the findings of fact of the Court of Appeals are premised on
the supposed absence of evidence and contradicted by the evidence on
record. (emphasis and underscoring supplied)

In the present case, the findings of the Secretary of Labor and the appellate court
on whether the MOA is valid and binding are conflicting, the former giving scant
consideration thereon, and the latter affording it more weight.

As found by the Secretary of Labor, the MOA came about as a result of the
constitution, at respondents behest, of the Labor-Management Council (LMC)
which, he reminded the parties, should not be used as an avenue for bargaining but
for the purpose of affording workers to participate in policy and decision-
making. Hence, the agreements embodied in the MOA were not the proper subject
of the LMC deliberation or procedure but of CBA negotiations and, therefore,
deserving little weight.

The appellate court, held, however, that the Secretary did not have the
authority to give an arbitral award higher than what was stated in the MOA. The
conflicting views drew the Court to re-evaluate the facts as borne by the records,
an exception to the rule that only questions of law may be dealt with in an appeal
by certiorari under Rule 45.

As discussed in the Decision under reconsideration, the then Acting

Secretary of Labor Manuel G. Imson acted well within his jurisdiction in ruling
that the wage increases to be given are P10 per day effective January 1, 2004
and P15 per day effective January 1, 2005, pursuant to his power to assume
jurisdiction under Art. 263 (g)[4] of the Labor Code.

While an arbitral award cannot per se be categorized as an agreement

voluntarily entered into by the parties because it requires the interference and
imposing power of the State thru the Secretary of Labor when he assumes
jurisdiction, the award can be considered as an approximation of a collective
bargaining agreement which would otherwise have been entered into by the
parties. Hence, it has the force and effect of a valid contract obligation between
the parties.[5]
 In determining arbitral awards then, aside from the MOA, courts considered
other factors and documents including, as in this case, the financial
documents[6] submitted by respondent as well as its previous bargaining history
and financial outlook and improvements as stated in its own website.[7]

The appellate courts ruling that giving credence to the Pahayag and the minutes of
the meeting which were not verified and notarized would violate the rule on parol
evidence is erroneous. The parol evidence rule, like other rules on evidence, should
not be strictly applied in labor cases. Interphil Laboratories Employees Union-
FFW v. Interphil Laboratories, Inc. [8] teaches:
[R]eliance on the parol evidence rule is misplaced. In labor
cases pending before the Commission or the Labor Arbiter, the rules of
evidence prevailing in courts of law or equity are not controlling.
Rules of procedure and evidence are not applied in a very rigid and
technical sense in labor cases. Hence, the Labor Arbiter is not precluded
from accepting and evaluating evidence other than, and even contrary
to, what is stated in the CBA. (emphasis and underscoring supplied)

On the contention that the MOA should have been given credence because it
was validly entered into by the parties, the Court notes that even those who signed
it expressed reservations thereto. A CBA (assuming in this case that the MOA can
be treated as one) is a contract imbued with public interest. It must thus be given a
liberal, practical and realistic, rather than a narrow and technical construction, with
due consideration to the context in which it is negotiated and the purpose for which
it is intended.[9]

As for the contention that the alleged disaffiliation of the Union from the
FFW during the pendency of the case resulted in the FFW losing its personality to
represent the Union, the same does not affect the Courts upholding of the authority
of the Secretary of Labor to impose arbitral awards higher than what was
supposedly agreed upon in the MOA. Contrary to respondents assertion, the
unavoidable issue of disaffiliation bears no significant legal repercussions to
warrant the reversal of the Courts Decision.

En passant, whether there was a valid disaffiliation is a factual

issue. Besides, the alleged disaffiliation of the Union from the FFW was by virtue
of a Resolution signed on February 23, 2010 and submitted to the DOLE Laguna
Field Office on March 5, 2010two months after the present petition was filed on
December 22, 2009, hence, it did not affect FFW and its Legal Centers standing to
file the petition nor this Courts jurisdiction to resolve the same.
At all events, the issue of disaffiliation is an intra-union dispute which must
be resolved in a different forum in an action at the instance of either or both the
FFW and the Union or a rival labor organization, not the employer.

An intra-union dispute refers to any conflict between and among

union members, including grievances arising from any violation of
the rights and conditions of membership, violation of or
disagreement over any provision of the unions constitution and by-
laws, or disputes arising from chartering or disaffiliation of the
union. Sections 1 and 2, Rule XI of Department Order No. 40-03, Series
of 2003 of the DOLE enumerate the following circumstances as
inter/intra-union disputes, viz:
RULE XI
INTER/INTRA-UNION DISPUTES AND
OTHER RELATED LABOR RELATIONS DISPUTES

SECTION 1. Coverage. - Inter/intra-union disputes shall include:

(a) cancellation of registration of a labor organization filed by its members
or by another labor organization;
(b) conduct of election of union and workers association
officers/nullification of election of union and workers association
officers;
(c) audit/accounts examination of union or workers association funds;
(d) deregistration of collective bargaining agreements;
(e) validity/invalidity of union affiliation or disaffiliation;
(f) validity/invalidity of acceptance/non-acceptance for union membership;
(g) validity/invalidity of impeachment/expulsion of union and workers
association officers and members;
(h) validity/invalidity of voluntary recognition;
(i) opposition to application for union and CBA registration;
(j) violations of or disagreements over any provision in a union or workers
association constitution and by-laws;
(k) disagreements over chartering or registration of labor organizations and
collective bargaining agreements;
 (l) violations of the rights and conditions of union or workers association
membership;
(m) violations of the rights of legitimate labor organizations, except
interpretation of collective bargaining agreements;
(n) such other disputes or conflicts involving the rights to self-organization,
union membership and collective bargaining
(1) between and among legitimate labor organizations;
(2) between and among members of a union or workers association.

SECTION 2. Coverage. Other related labor relations disputes shall include any
conflict between a labor union and the employer or any individual, entity or group that is
not a labor organization or workers association. This includes: (1) cancellation of
registration of unions and workers associations; and (2) a petition for
interpleader.[10] (emphasis supplied)

Indeed, as respondent-movant itself argues, a local union may disaffiliate

at any time from its mother federation, absent any showing that the same is
prohibited under its constitution or rule. Such, however, does not result in it
losing its legal personality altogether. Verily, Anglo-KMU v. Samahan Ng Mga
Manggagawang Nagkakaisa Sa Manila Bay Spinning Mills At J.P.
Coats[11] enlightens:

A local labor union is a separate and distinct unit primarily designed

to secure and maintain an equality of bargaining power between the
employer and their employee-members. A local union does not owe its
existence to the federation with which it is affiliated. It is a separate
and distinct voluntary association owing its creation to the will of its
members. The mere act of affiliation does not divest the local union
of its own personality, neither does it give the mother federation the
license to act independently of the local union. It only gives rise to a
contract of agency where the former acts in representation of the
latter. (emphasis and underscoring supplied)

Whether then, as respondent claims, FFW went against the will and wishes of its
principal (the member-employees) by pursuing the case despite the signing of the
MOA, is not for the Court, nor for respondent to determine, but for the Union and
FFW to resolve on their own pursuant to their principal-agent relationship.
 WHEREFORE, the motion for reconsideration of this Courts Decision of
November 15, 2010 is DENIED.

SO ORDERED.
Case Digest

Cirtek Employees Labor Union vs Cirtek Electronics

NOVEMBER 6, 2013 ~ VBDIAZ

Cirtek Employees Labor Union vs Cirtek Electronics

GR 190515
Facts:
This resolves the motion for reconsideration and supplemental motion for
reconsideration filed by respondent, Cirtek Electronics, Inc., of the Court’s Decision
dated November 15, 2010.

Respondent-movant maintains that the Secretary of Labor cannot insist on a ruling

beyond the compromise agreement entered into by the parties; and that, as early as
February 5, 2010, petitioner Union had already filed with the Department of Labor
and Employment (DOLE) a resolution of disaffiliation from the Federation of Free
Workers resulting in the latter’s lack of personality to represent the workers in the
present case.

Issue: WON petitioner lost its personality to represent the workers because of its
disaffiliation from the Federation of Free Workers.
Held:
The issue of disaffiliation is an intra-union dispute which must be resolved in a
different forum in an action at the instance of either or both the FFW and the Union or
a rival labor organization, not the employer.

Indeed, as respondent-movant itself argues, a local union may disaffiliate at any time
from its mother federation, absent any showing that the same is prohibited under its
constitution or rule. Such, however, does not result in it losing its legal personality
altogether. Verily, Anglo-KMU v. Samahan Ng Mga Manggagawang Nagkakaisa Sa
Manila Bay Spinning Mills At J.P. Coats enlightens:
A local labor union is a separate and distinct unit primarily designed to secure and
maintain an equality of bargaining power between the employer and their employee-
members. A local union does not owe its existence to the federation with which it is
affiliated. It is a separate and distinct voluntary association owing its creation to the
will of its members. The mere act of affiliation does not divest the local union of its
own personality, neither does it give the mother federation the license to act
independently of the local union. It only gives rise to a contract of agency where the
former acts in representation of the latter. (emphasis and underscoring supplied)

MR denied.
 Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

G.R. No. L-42724 April 9, 1985

GENERAL BANK & TRUST COMPANY, CLARENCIO S. YUJUICO, SALVADOR D. TENORIO,

IRINEO P. SAN LUIS and JOSE SANTOS, petitioners
vs.
THE COURT OF APPEALS (Ninth Division) and MANUEL E. BATUCAN, respondents

Mario E. Ongkiko for petitioners.

Manuel C. Maranga and Gaudioso O. Sosmena for respondents.

GUTIERREZ, JR., J.:

This is a petition for review on certiorari of the Court of Appeals' decision which affirmed the decision of the
Court of First Instance of Cebu ordering the petitioners to pay private respondent Manuel E. Batucan, jointly
and severally certain sums of money and attorney's fees.

The undisputed facts are as follows:

... this case starts with the employment of plantiff-appellee with the Cebu Branch of the First
National City Bank of New York for 18 years, where he rose to the position of Chief Clerk,
Accounting Department (Exhibit 0); that on January 11, 1965, plaintiff-appellee joined the
defendant bank in its Cebu branch as accountant with an annual compensation of P6,000.00
(Exhibit A); that on April 26, 1965, the Cebu Branch of defendant bank began operating and
doing business with the public; that on January 1, 1966, plaintiff received an increase of
P50.00 bringing his monthly salary to P550.00 (Exhibit D); that on April 11, 1967 defendant
bank appointed the plaintiff to the position of Acting Manager of its Cebu Branch, with the
corresponding increase of sale to P700.00 a month (Exhibit E); that effective September 1,
1967, defendant bank granted plantiff a monthly housing allowance of P200.00 in addition to
his monthly salary (Exhibit F); that on October 3, 1967 defendant bank appointed plaintiff as
the regular Manager of its Cebu Branch (Exhibit G) effective May 1, 1968; that defendant
bank increased plaintiff's salary to P1800.00 a month (Exhibit H); that on May 16, 1969 while
the plaintiff was on vacation leave, he happened to visit the bank and learned that three tellers
of defendant bank's branch in Cebu City, namely, Miss Crystal Enriquez, Miss Yolanda Chu,
and Miss Sonia Chiu, had been transferred to the head office in Manila by defendant Jose D.
Santos; that the plantiff went to Manila on May 18, 1969 to make personal representation
with the head office for the retention of the said tellers in Cebu; that on May 26, 1969 the
plaintiff reported back for duty with defendant bank's branch in Cebu and reinstated
immediately the three tellers to their respective positions in the Cebu branch of defendant
bank; that on May 28, 1969 defendant Jose D. Santos submitted a report to defendant
Salvador D. Tenorio alleging that there was excess personnel in the Cebu Branch; that on the
same date defendant Jose D. Santos submitted a supplementary report to defendant Salvador
D. Tenorio charging the plaintiff of over appraising the real estate offered by Domingo Chua
as collateral for his credit accommodation (Exhibit 34); that defendant Salvador D. Tenorio
 immediately dispatched a letter to the plaintiff dated May 30, 1969 requiring him to explain
within twenty-four hours why no disciplinary action should be taken against him for alleged
repeated violation of defendant bank's policies and directives regarding credit
accommodations and for over-appraisal of the real estate collateral for Domingo Chua's
account, among others (Exhibit 8); that on June 6, 1969, the plaintiff received the said letter
of defendant Salvador D. Tenorio but found it impossible to render the required explanation
in 24 hours; that on June 19, 1969 defendant Jose D. Santos went to Cebu City and served
plaintiff with the letter of defendant Salvador D. Tenorio, dated June 18, 1969, suspending the
plaintiff; and that on July 22, 1969 plantiff was served with the order of his termination
signed by defendant Clarencio S. Yujuico, dated July 18, 1969.

The Court of First Instance of Cebu, Branch X rendered a decision, the dispositive portion of which reads:

WHEREFORE, based on all the foregoing considerations, and after taking into account the
business, financial and social standing of both plantiff and defendants, judgment is hereby
rendered, finding the dismissal of plantiff as without just cause or otherwise illegal arbitrary,
oppressive and malicious, and ordering defendants to pay to the plaintiff, jointly and
severally, the following sums: (a) P1,000.00 a month, as consequential damages for the loss
of his salaries and allowances, from the date of his dismissal until the judgment shall have
become final and executory; (b) P2,500.00 as termination pay; (c) P106.63 representing
unpaid salaries from the 16th to 19th of June 1969; (d) P200,000.00 in concept of moral
damages; (e) P50,000.00 as exemplary or corrective damages; (f) P15,000.00 as attorney's
fees; and to pay the costs of the suit.

The Court of Appeals, affirmed the decision of the lower court but modified the judgment by reducing moral
damages to P150,000.00 and exemplary damages to P30,000.00.

The petitioners made the following assignments of errors against the Court of Appeals in their brief:

(FIRST ASSIGNMENT OF ERROR)

THE RESPONDENT COURT CLEARLY IGNORED UNDISPUTED DOCUMENTARY

EVIDENCE SHOWING THAT RESPONDENT BATUCAN WAS DISMISSED FOR JUST
CAUSE.

(SECOND ASSIGNMENT OF ERROR)

ASSUMING ARGUENDO THAT RESPONDENT BATUCAN'S DISMISSAL WAS

WITHOUT JUST CAUSE, THE RESPONDENT COURT ERRED AS A MATTER OF
LAW IN GRANTING EXCESSIVE DAMAGES IN THE FORM OF COMPENSATORY,
MORAL AND EXEMPLARY DAMAGES, PLUS ATTORNEY'S FEES—IN ADDITION
TO SEPARATION PAY.

(THIRD ASSIGNMENT OF ERROR)

THE INDIVIDUAL PETITIONERS, YUJUICO, TENORIO, SANTOS AND SAN LUIS,

DID NOT INCUR ANY PERSONAL LIABILITY IN CONNECTION WITH THE
DISMISSAL OF RESPONDENT BATUCAN BY PETITIONER BANK.
The main issue in this case is whether or not the dismissal of Manuel E. Batucan was justified on the ground
that he repeatedly failed to uphold the interests of the bank thus leading to his employer's loss of confidence on
him.

After a careful review of the case, we find no error in the finding of the Court of Appeals that Mr. Batucan was
indeed illegally dismissed.

The petitioners' claim that "undisputed documentary evidence show that prior to his dismissal, specifically
from March 1968 to January 1969, respondent Batucan had been repeatedly cited, warned and finally
threatened with dismissal by his superior, petitioner Tenorio, for his practice of granting credit
accommodations without authority during his tenure." They support such claim with six memoranda addressed
to Mr. Batucan, to wit: Exh. "22" dated April 17, 1968 by Tenorio; Exh. "23" dated March 12, 1968 by
Tenorio; Exh. "24" dated March 14, 1968 by Tenorio; Exh. "29" dated December 9, 1968 by Tenorio; Exh.
"30" dated December 27, 1968 by Tenorio; Exh. "34" dated January 28, 1969 by Tenorio.

Petitioners' argument is devoid of merit. We agree with the respondent that these communications are "nothing
more than routinary acts and/or privileged acts of top management officials which could not in any way affect
or erode petitioners' confidence in respondent Batucan."

After the first three aforecited exhibits were dispatched to Cebu on March 12, 1968, March 14, 1968, and April
17, 1968, petitioner San Luis cleared Mr. Batucan from an exceptions reported by the Central Bank examiners
in connection with their examination conducted in March, 1968. In his report to the President of the bank in
about the first week of March 1968, San Luis commended Mr. Batucan for the good image enjoyed by the
bank in the locality because clients, customers, and depositors spoke well and highly of Mr. Batucan for his
dedication, sincere and upright dealing with people. Because of such commendation, the president of the bank,
the late Senator Quintin Paredes gave Mr. Batucan an increase of P100.00 in his monthly salary effective May
1, 1968. Mr. Batucan was also asked to speak at the manager's meeting on October 19, 1968 on his
"Techniques in Effective solicitation of Deposits or New Accounts." Batucan was also given a free hand in the
prosecution of a defalcating head teller relying on his good judgment to protect the interests of the bank.

With the foregoing circumstances, we cannot reconcile the management's alleged loss of confidence in Mr.
Batucan with the latter's commendations for efficient performance, his having been given an increase in salary
and his being asked to speak to other colleagues on effective banking techniques shortly after the supposed loss
of confidence.

In an analogous case, Dosch v. NLRC (123 SCRA 296) this Court said:

xxx xxx xxx

Neither is the other ground alleged by Northwest in dismissing petitioner which is loss of
confidence, supported by evidence. On the contrary, the fact that Northwest wanted to
promote petitioner to Director of International Sales as the Company feels there is need for
an executive of (his) experience to fill the position of Director of International Sales' as well
as its Manifestation dated March 23, 1976 that Northwest 'offered to rehire petitioner as
Director of International Sales with office of Minneapolis, U.S.A. clearly indicate that
Northwest had full confidence in petitioner. ... (Emphasis supplied)

Loss of confidence in a managerial employee can not be deemed present where he was in fact being promoted.
In the case at bar, though Mr. Batucan may not in fact have been promoted in position, all the privileges,
commendations, and salary increases negate the allegation that the management had lost confidence in him
Moreover, there is no evidence that Mr. Batucan granted unauthorized credit accommodations because after
the last three exhibits were sent, an internal audit examination was conducted on February 11, 1969 by
petitioner Santos together with the Internal Auditor, Mr. Rosauro Macalagay. In this examination, no
unauthorized credit accommodations were found and brought to the attention of Mr. Batucan.

We agree with the Court of Appeals in its finding that:

The preponderance of the evidence, however, shows that the alleged unauthorized extension
of temporary over-draft or credit accommodations referred to credit accommodations which
were granted by and already existing during the term of the previous management. Thus,
defendant Tenorio himself admitted:

Q In other words, this past due obligations in which you requested Mr.
Batucan to have been settled, an these accounts mentioned in your
memorandum of April 27, memorandum of May 3rd, 1967, memorandum of
May 16, 1967, were an accounts existing during the time of the previous
management, is that correct?

A Yes, sir.

Q Could you recall whether this is an authorized accommodations

mentioned in your memorandum marked Exhibits 'i 1', 'l 2', 'l 3' and 'I 4'
existing since the opening of the bank in 1965 up to the time Mr. Campillan
was replaced by Mr. Batucan?

A In these accounts as far as I recall came from the books of the branch of
Cebu during that period from the beginning up to the time of the transfer of
Mr. Campilan.' (t.s.n., July 13,1971, pp. 16-17.)

Moreover, it was established by the testimony of defendant Tenorio himself that the plaintiff-
appellee was able to regularize the previous unauthorized accounts and to effect collection of
outstanding obligations. The pertinent portion of the testimony of defendant Tenorio reads as
follows:

xxx xxx xxx

Q And the account of Atty. Deen during the time of Mr. Campilan when he
left was unauthorized then subsequently regularized?

A Correct.

Q Could you say that it was Mr. Batucan who regularized the account of
Atty. Deen?

A I think he was able to regularize.

Q How about the account of Mr. Uy, is it unauthorized until now?

A I think it was regularized.

Q And it was Mr. Batucan who regularized his account?

A Yes, sir.
 Q The same is true with Mrs. Agustine's?

A She is a head office client. In fact Mrs. Augustines have paid the
outstanding obligation in Cebu but her outstanding in the head office is still
unpaid.

Q This outstanding obligation of Mrs. Augustines, it was Mr. Batucan who

collected that account?

A Correct.

Q And also the account of Alvarez, it was unauthorized account of the past
management, that was also collected?

A Yes, sir.

Q And it was also Mr. Batucan who effected the collection of that account?

A Yes, sir.

Q And the same is true with the account of Green Year Textiles, this was
unauthorized accommodation but Mr. Batucan collected full payment
thereof?

A Eventually, yes.

Not only did the Court of Appeals establish that there were no improper credit accommodations granted during
Mr. Batucan's term as manager but his competence at being able to regularize these accounts and his
contributions to the improvement of the bank were clearly ascertained.

There is no question that managerial employees should enjoy the confidence of top management. This is
especially true in banks where officials handle big sums of money and engage in confidential or fiduciary
transactions. However, loss of confidence should not be simulated. It should not be used as a subterfuge for
causes which are improper, illegal, or unjustified. Loss of confidence may not be arbitrarily asserted in the face
of overwhelming evidence to the contrary. It must be genuine, not a mere afterthought to justify earlier action
taken in bad faith.

We now come to the issue of damages. Petitioners question the propriety of awarding moral and exemplary
damages to the respondent. Under Article 2217 of the Civil Code:

Moral damages include physical suffering, mental anguish, fright, serious anxiety,
besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury.
Though incapable of pecuniary computation, moral damages may be recovered if they are the
proximate result of the defendant's wrongful act or commission.

Mr. Batucan left a stable job with a reputable bank to join the petitioner bank. He had been an employee of the
First National City Bank of New York for eighteen (18) years. Undoubtedly, before he accepted petitioner
Tenorio's invitation, he must have thought the matter over several times. And from the time he joined the
petitioner bank, the records show that Mr. Batucan has indeed worked his way up from accountant to
permanent branch manager of the bank. During his term as manager, he was able to increase the income and
resources of the bank. He raised the image of petitioner bank in the business and banking community and
placed its operations on a good and competitive basis. His peremptory dismissal from the bank was certainly a
shock to him and damaged his moral feelings and personal pride after all the loyalty and hard work he had
dedicated to the bank. We agree with the respondent court when it said:

xxx xxx xxx

We did not encounter any difficulty in finding that had the defendants not invited the
plaintiff-appellant to join defendant bank, then he would have continued working with the
first National City Bank of New York branch iii Cebu City or found some other desirable and
new employment. Undoubtedly, the plaintiff would now be occupying a high responsible
position in the Cebu branch of the First National City Bank of New York.

The only reason for his dismissal found in the records is his failure to follow top-management orders with
regards to the transfer of the three tellers. Petitioners alleged it to be insubordination. Nevertheless,
insubordination must be proven to justify dismissal (St. Luke's Hospital v. Ministry of Labor and Employment,
116 SCRA 240). And we do not think that his earnest efforts in making representations to retain the three
tellers warrant his dimissal. A manager or supervisor must stand up for his subordinates unless the latter are
guilty of wrongdoing or some conduct prejudicial to the employer. Only after as representations was Mr.
Batucan questioned on the several "unauthorized credit accommodations." His failure to explain within 24
hours which, in the light of the circumstances, was too short, caused his suspension and later, his dismissal
retroactive to the date of suspension.

There was no valid reason for his dismissal, much less for all the charges and accusations made against him.
The dismissal followed by the efforts to justify it was tainted by bad faith or malice on the part of the
petitioners who wanted Mr. Batucan removed from his post.

The petitioners cite the case of Gutierrez v. Bachrach Motor Co., (105 Phil. 10) where this Court stated:

xxx xxx xxx

... [I]n the absence of a contract of employment for a specific period, just as an employee in a
commercial or industrial establishment may quit at any time, singly or collectively, with or
without cause, so the employer can dismiss any employee at any time and without cause. This
right of the employer is commonly referred to as his right to hire and fire his employee in the
same way that the employee can stop working by himself or go on strike with his fellow
employees. ...

However, in the case of Phil. Refining Co., Inc. v. Garcia (18 SCRA 107), this Court through Justice J.B.L.
Reyes made a distinction:

The employer's right to dismiss his employee, however, differs from, and should not be
confused with the manner in which the right is exercised. The manner in which the company
exercised its right to dismiss in the case at bar was abusive; hence, it is liable for moral
damages, as previously discussed.

Moreover, the Court made a statement which is applicable to the circumstances of this case:

xxx xxx xxx

 ... The company's conduct violated Article 1701, which prohibits acts of oppression by either
capital or labor against the other, and Article 21 on human relations, the sanction of which by
way of moral damages, is provided for in Article 2219, No. 10, all of the Civil Code.

Moral damages may be recovered in the following and analogous cases:

xxx xxx xxx

(10) Acts and actions referred to in articles 21, 26 x x x x x x

ART. 21. Any person who wilfully causes loss or injury to another in a manner that is
contrary to morals, good customs or public policy shall compensate the latter for the damage.

In view of the foregoing, we find that moral damages may be justly awarded. Moral damages being justified,
exemplary damages may also be awarded. (Bert Osmena & Associates v. Court of Appeals, 120 SCRA 395).

In the case of Nadura v. Benguet Consolidated, Inc. (5 SCRA 879), the Court stated:

We also believe that Nadura is entitled to exemplary or corrective damages which, as well
known, are imposed by way of example or correction for the public good. These damages are
required by public policy, because wanton acts must be suppressed and discouraged. From
what we have said heretofore, the conclusion is inevitable that Benguet had no plausible
reason to resist Nadura's claim for severance pay. While it had the right to discharge him
because his employment was without a definite period, it was in duty bound to give him
either one month's notice in advance or pay the corresponding severance pay. Instead of
complying with its obligation in this respect, it resisted Nadura's claim and forced him to
litigate these many years. We are, therefore, of the opinion, and so hold, that Benguet must
pay exemplary damages.

A review of the records, however, indicates that the moral and exemplary damages awarded may be somewhat
excessive. Hence, in the exercise of our discretion and after considering all factors, we have decided to reduce
to P20,000.00 the award for moral and exemplary damages and to P5,000.00 the award for attorney's fees.

The award of P1,000.00 a month from the time Mr. Batucan's employment was terminated up to the date this
case becomes final and executory is likewise excessive. A period of 16 years would be involved. Because of
the passage of time and the strained relations with top management, Mr. Batucan does not or should not seek
reinstatement to his managerial position in the bank. An award of P12,000.00 as consequential damages is fair
under the circumstances.

At the same time, pursuant to Republic Act 1052 as amended by Republic Act 1787, which provides that in
case of employment without a definite period, an employer may terminate an employee's services without just
cause by serving to the employee a written notice at least one month in advance or by granting him pay
equivalent to one-half month salary for every year of service, whichever is longer. (Sterling Products
International, Inc. v. Sol, 7 SCRA 447). The respondent is entitled to separation pay. Since Mr. Batucan has
been serving the bank for 4-½ years, then he is entitled to the separation pay of 2-½ months salary or
P2,500.00 which was justly awarded to him.

As held in the case of Jaguar Transportation Co., Inc. et at. v. Juan Cornista, et al (83 SCRA 77):

Granting, arguendo, that Juan Cornista was dismissed without notice and without just cause,
he cannot demand reinstatement. Cornista was not dismissal as a result of a violation of the
 Eight-Hour Labor Law or unfair labor practice. His dismissal is covered by the Termination
Pay Law under which he is not entitled to reinstatement but only to a certain compensation.

Considering the facts and equities of this case, however, we have decided to limit compensatory damages to
only P12,000.00, as explained above.

Lastly, petitioners raise the issue that "individual petitioners, having acted in their official capacities as bank
officers, did not incur any personal liability in favor of Batucan.

We quote with favor the finding of the respondent Court, to wit:

The evidence shows that the individual defendants acted jointly in causing the illegal and
unjustifiable dimissal of the plaintiff-appellee. Hence, the trial court is correct in holding the
individual defendants jointly and severally liable to the plaintiff-appellee. "

Clearly, the petitioners acted beyond their authority and against what the law provides. Article 1701 of the
Civil Code and the related Articles 19, 20 and 21 provide:

ART. 1701. Neither capital nor labor shall act oppressively against the other, or impair the
interest or convenience of the public.

ART. 19. Every person must, in the exercise of his rights and in the performance of his duties,
act with justice, give everyone his due, and observe honesty and good faith.

ART. 20. Every person who, contrary to law, wilfully or negligently causes damage to
another, shall indemnify the latter for the same.

ART. 21. Any person who wilfully causes loss or injury to another in a manner that is
contrary to morals, good customs or public policy shall compensate the latter for the damage.

WHEREFORE, the decision appealed from is MODIFIED to read as follows:

The petitioners are hereby ordered to pay to the private respondent, jointly and severally, the following sums-
TWO THOUSAND FIVE HUNDRED PESOS (P2,500.00) termination pay; ONE HUNDRED SIX PESOS
AND SIXTY THREE CENTAVOS (P106. 63) unpaid salaries; TWELVE THOUSAND PESOS (P12,000.00)
in compensatory damages; TWENTY THOUSAND PESOS (P20,000.00) in moral and exemplary damages;
and FIVE THOUSAND PESOS (P5,000.00) attorney's fees.

SO ORDERED.

Plana, Relova, De la Fuente and Alampay, JJ., concur.

Separate Opinions
TEEHANKEE, (Chairman), J., concurring:

I concurs except for the reference to the Dosch case wherein he dissented and which has no similarity of facts
with this case. He dissents from the imposition of joint and several liability on the individual petitioners who
had merely acted in their official capacities as bank officers and should not be held personally and solidarily
answerable for the corporation-bank's sole liability to respondent employee.

Melencio-Herrera, J., concurring

I concur, except for the reference to Dosch vs. NLRC (123 SCRA 296) where I dissented.

Separate Opinions

TEEHANKEE, (Chairman), J., concurring:

I concurs except for the reference to the Dosch case wherein he dissented and which has no similarity of facts
with this case. He dissents from the imposition of joint and several liability on the individual petitioners who
had merely acted in their official capacities as bank officers and should not be held personally and solidarily
answerable for the corporation-bank's sole liability to respondent employee.

Melencio-Herrera, J., concurring:

I concur, except for the reference to Dosch vs. NLRC (123 SCRA 296) where I dissented.
G.R. No. 70479 February 27, 1987

FIRESTONE TIRE AND RUBBER COMPANY OF THE PHILIPPINES, petitioner,

vs.
CARLOS LARIOSA and NATIONAL LABOR RELATIONS COMMISSION, respondents.

FERNAN, J:

In this petition for certiorari, petitioner Firestone Tire and Rubber Company of the Philippines [Firestone for
brevity] assails the decision of public respondent National Labor Relations Commission which ordered the
reinstatement without backwages of Carlos Lariosa, a dismissed tire builder of petitioner, as having been
rendered with grave abuse of discretion amounting to lack of jurisdiction.

The facts are as follows:

Carlos Lariosa started working with Firestone on January 3, 1972 as a factory worker. At the time of his
dismissal, he was a tire builder.

At around 2:00 o'clock in the afternoon of July 27, 1983, as he was about to leave the company premises
Lariosa submitted himself to a routine check by the security guards at the west gate. He was frisked by
Security Guard Ambrosio Liso [Lizo] while his personal bag was inspected by Security Guard Virgilio Olvez.
In the course of the inspection, sixteen [16] wool flannel swabs, all belonging to the company, were found
inside his bag, tucked underneath his soiled clothes.

As a result of the incident, Firestone terminated Lariosa's services on August 2, 1983, citing as grounds
therefor: "stealing company property and loss of trust." 1 Firestone also filed a criminal complaint against him
with the Rizal provincial fiscal for attempted theft [IS No. 83-436-M]. 2

Lariosa, on the other hand, sued Firestone before the Ministry of Labor and Employment for illegal dismissal,
violation of Batas Pambansa Blg. 130 and its related rules and regulations, and damages. The Labor Arbiter, in
his decision dated May 8, 1984, found Lariosa's dismissal justified. 3 However, on appeal, the National Labor
Relations Commission on December 28, 1984 reversed the decision of the Labor Arbiter [with one
commissioner voting for affirmance] and held that the dismissal of Lariosa was too severe a penalty. It
therefore ordered Lariosa's reinstatement but without backwages, the period when he was out of work to be
considered a suspension. 4

Petitioner Firestone, in this special civil action for certiorari, contends that the NLRC erred in not dismissing
Lariosa's appeal for being late, in finding that Lariosa was not accorded due process and in reversing the Labor
Arbiter.

We shall deal first with the timeliness of the appeal. It is admitted that Lariosa filed his appeal on June 7, 1984
or after the lapse of fourteen days from notice of the decision of the Labor Arbiter. Article 223 of the Labor
Code clearly provides for a reglementary period of ten days within which to appeal decision of the Labor
Arbiter to the NLRC. The ten-day period has been interpreted by this Court in the case of Vir-jen Shipping and
Marine Services, Inc. vs. NLRC, G.R. No. 58011-12, July 20, 1982, 115 SCRA 347, 361, to mean ten
"calendar" days and not ten "working" days. However, the "Notice of Decision" which Lariosa's lawyer
received together with a copy of the arbiter's decision advised them that an appeal could be taken to the NLRC
within ten "working" days from receipt of the said decision. 5
Mindful of the fact that Lariosa's counsel must have been misled by the implementing rules of the labor
commission and considering that the shortened period for appeal is principally intended more for the
employees' benefit, rather than that of the employer, We are inclined to overlook this particular procedural
lapse and to proceed with the resolution of the instant case.

A review of the record shows that Lariosa was indubitably involved in the attempted theft of the flannel swabs.
During the investigation called by the company's industrial relations manager Ms. Villavicencio on July 28,
1983, or one day after the incident, Security Guards Liso and Olvez contradicted Lariosa's bare claim that he
had no intention to bring home the swabs and that he had simply overlooked that he had earlier placed them
inside his bag after they were given to him by his shift supervisor while he was busy at work. Guard Olvez
stated that when he confronted Lariosa with the swabs, the latter replied that they were for "home use." And
when he requested Lariosa to stay behind while he reported the matter to the authorities, Lariosa refused and
hurriedly left the premises and boarded a passing jeepney. 6

From the records, it is likewise clear that Firestone did not act arbitrarily in terminating Lariosa's services. On
the contrary, there are transcripts to prove that an investigation of the incident was promptly conducted in the
presence of the employee concerned, the union president and the security guards who witnessed the attempted
asportation. Records also belie the allegation that Lariosa was shown his walking papers on the very day of the
incident. The letter of Ms. Villavicencio to Lariosa dated August 1, 1983 informing the latter of his dismissal
effective August 2, 1983 conclusively shows that he was discharged only on August 2, 1983, after an
investigation was held to ventilate the truth about the July 27 incident. 7 Thus, we cannot agree with the
NLRC's conclusion that even if Firestone had found substantial proof of Lariosa's misconduct, it did not
observe the statutory requirements of due process.

There is no gainsaying that theft committed by an employee constitutes a valid reason for his dismissal by the
employer. 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. 8

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. 9

As a tire builder, Lariosa was entrusted with certain materials for use in his job. On the day in question, he was
given two bundles of wool flannel swabs [ten pieces per bundle] for cleaning disks. He used four swabs from
one pack and kept the rest [sixteen pieces] in his "blue travelling bag." 10 Why he placed the swabs in his
personal bag, which is not the usual receptacle for company property, has not been satisfactorily explained.

If Lariosa, by his own wrong-doing, could no longer be trusted, it would be an act of oppression to compel the
company to retain him, fully aware that such an employee could, in the long run, endanger its very viability.

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. 11

In view of the foregoing, We rule that Firestone had valid grounds to dispense with the services of Lariosa and
that the NLRC acted with grave abuse of discretion in ordering his reinstatement. However, considering that
Lariosa had worked with the company for eleven years with no known previous bad record, the ends of social
and compassionate justice would be served if he is paid full separation pay but not reinstatement without
backages as decreed by the NLRC. 12

WHEREFORE, the petition is granted. The decision of the National Labor Relations Commission dated
December 28, 1984 is reversed and set aside. Petitioner Firestone Tire and Rubber Company of the Philippines
is directed to pay its dismissed worker Carlos Lariosa the separation pay to which he may be entitled under the
law, or any collective bargaining agreement or company rules or practice, whichever is higher.

SO ORDERED.
general_firestoneCA1972
References: [1972] RPC 457, (1971) 1A IPR 121
Coram: Sachs, Buckley and Orr LJJ
Ratio: The court set out the test for novelty required to be established before a patent could properly be
granted: ‘To determine whether a patentee’s claim has been anticipated by an earlier publication it is necessary
to compare the earlier publication with the patentee’s claim. The earlier publication must, for this purpose, be
interpreted as at the date of its publication, having regard to the relevant surrounding circumstances which then
existed, and without regard to subsequent events. The patentee’s invention must similarly be construed as at its
own date of publication having regard to the relevant surrounding circumstances then existing. If the earlier
publication, so construed, discloses the same device as the device which the patentee by his claim, so
construed, asserts that he has invented, the patentee’s claim has been anticipated, but not otherwise. In such
circumstances the patentee is not the true and first inventor of the device and his claimed invention is not new .
.
The earlier publication and the patentee’s claim must each be construed as they would be at the respective
relevant dates by a reader skilled in the art to which they relate having regard to the state of knowledge in such
art at the relevant date. The construction of these documents is a function of the court, being a matter of law,
but, since documents of this nature are almost certain to contain technical material, the court must, by
evidence, be put in the position of a person of the kind to whom the document is addressed, that is to say, a
person skilled in the relevant art at the relevant date. If the art is one having a highly developed technology, the
notional skilled reader to whom the document is addressed may not be a single person but a team, whose
combined skills would normally be employed in that art in interpreting and carrying into effect instructions
such as those which are contained in the document to be construed. We have already described the composite
entity deemed to constitute the notional skilled addressee.
When the prior inventor’s publication and the patentee’s claim have respectively been construed by the court
in the light of all properly admissible evidence as to technical matters, the meaning of words and expressions
used in the art and so forth, the question whether the patentee’s claim is new for the purposes of section
32(1)(e) falls to be decided as a question of fact. If the prior inventor’s publication contains a clear description
of, or clear instructions to do or make, something that would infringe the patentee’s claim if carried out after
the grant of the patentee’s patent, the patentee’s claim will have been shown to lack the necessary novelty, that
is to say, it will have been anticipated. The prior inventor, however, and the patentee may have approached the
same device from different starting points and may for this reason, or it may be for other reasons, have so
described their devices that it cannot be immediately discerned from a reading of the language which they have
respectively used that they have discovered in truth the same device; but if carrying out the directions
contained in the prior inventor’s publication will inevitably result in something being made or done which, if
the patentee’s patent were valid, would constitute an infringement of the patentee’s claim, this circumstance
demonstrates that the patentee’s claim has in fact been anticipated.
If on the other hand, the prior publication contains a direction which is capable of being carried out in a
manner which would infringe the patentee’s claim, but would be at least as likely to be carried out in a way
which would not do so, the patentee’s claim will not have been anticipated, although it may fail on the ground
of obviousness. To anticipate the patentee’s claim the prior publication must contain clear and unmistakeable
directions to do what the patentee claims to have invented . . A signpost, however clear, upon the road to the
patentee’s invention will not suffice. The prior inventor must be clearly shown to have planted his flag at the
precise destination before the patentee.’
The court stated the test of anticipation of an idea, or its lack of novelty for patents law purposes: ‘To
determine whether a patentee’s claim has been anticipated by an earlier publication it is necessary to compare
the earlier publication with the patentee’s claim. The earlier publication must, for this purpose, be interpreted
as at the date of its publication, having regard to the relevant surrounding circumstances which then existed,
and without regard to subsequent events. The patentee’s invention must similarly be construed as at its own
date of publication having regard to the relevant surrounding circumstances then existing. If the earlier
publication, so construed, discloses the same device as the device which the patentee by his claim, so
construed, asserts that he has invented, the patentee’s claim has been anticipated, but not otherwise. In such
circumstances the patentee is not the true and first inventor of the device and his claimed invention is not new .
.
the question whether the patentee’s claim is new . . falls to be decided as a question of fact. If the prior
inventor’s publication contains a clear description of . . something that would infringe the patentee’s claim if
carried out after the grant of the patentee’s patent, the patentee’s claim will have been shown to lack the
necessary novelty, that it to say, it will have been anticipated. . .
The prior inventor, however, and the patentee may have approached the same device from different starting
points and may for this reason, or it may be for other reasons, have so described their devices that it cannot be
immediately discerned from a reading of the language which they have respectively used that they have
discovered in truth the same device; but if carrying out the directions contained in the prior inventor’s
publication will inevitably result in something being made or done which, if the patentee’s patent were valid,
would constitute an infringement of the patentee’s claim, this circumstance demonstrates that the patentee’s
claim has in fact been anticipated.
If, on the other hand, the prior publication contains a direction which is capable of being carried out in a
manner which would infringe the patentee’s claim, but would be at least as likely to be carried out in a way
which would not do so, the patentee’s claims will not have been anticipated, although it may fail on the ground
of obviousness. To anticipate the patentee’s claim the prior publication must contain clear and unmistakeable
directions to do what the patentee claims to have invented: . . A signpost, however clear, upon the road to the
patentee’s invention will not suffice. The prior inventor must be clearly shown to have planted his flag at the
precise destination before the patentee.’
This case cites:

 Cited – Flour Oxidizing Co Ltd v Carr and Co Ltd ([1908] 25 RPC 428)
Application was made for a patent for using an apparatus previously disclosed as suitable for a
different use.
Held: Parker J said: ‘But where the question is solely a question of prior publication, it is not, in my
opinion, enough to prove . .
 Cited – BTH Co Ltd v Metropolitan Vickers Electrical Co Ltd([1928] 45 RPC 1)
Lord Dunedin construed the claim in question and proceeded to consider the Tesla Patent, the alleged
anticipation of the patent claim: ‘Now that being my view of the Claim, I turn to Tesla, and what I
have to ask myself is this – Would a man who was . .

(This list may be incomplete)

This case is cited by:

 Appeal from – General Tire v Firestone Tyre and Rubber Company Limited HL ([1976] RPC 197,
[1975] 1 WLR 819, [1975] 2 All ER 173, [1975] FSR 273)
The object of damages is to compensate for loss or injury. The general rule for ‘economic’ torts is that
the measure is that sum of money which will put the injured party in the same position as he would
have been in if he had not sustained the . .
 Cited – Rocky Mountain Traders Limited and Hewlett Packard Gmbh; Westcoast Limited and
Fellowes Manufacturing (UK) Limited CA (Bailii, [2000] EWCA Civ 347)
The claimant appealed an order finding its patents for mechanisms for labelling CDs invalid for
obviousness.
Held: the judge had applied the correct tests for obviousness, and the view taken by the judge of the
expert evidence was not open to . .
 Cited – Synthon Bv v Smithkline Beecham Plc HL (Bailii, [2005] UKHL 59, House of Lords, [2006]
RPC 10, [2006] 1 All ER 685)
Synthon filed an international application for a patent. Before it was published, SB filed a similar
application in the UK patents registry. Synthon had applied for the UK patent granted to SB to be
revoked. Jacob J had found that the reader of the . .
 Cited – W L Gore and Associates Gmbh v Geox Spa PatC (Bailii, [2008] EWHC 2311 (Pat))
The claimants sought a declaration of non-infringement of four patents relating to waterproof fabrics
for shoes.
Held: The patents could not be set as invalid for obviousness.
 Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 75271-73 June 27, 1988

CATALINO N. SARMIENTO and 71 other striking workers of ASIAN TRANSMISSION

CORPORATION, petitioners,
vs.
THE HON. JUDGE ORLANDO R. TUICO of the Municipal Trial Court of Calamba, Laguna,
ROBERTO PIMENTEL, NELSON C. TEJADA, and the COMMANDING OFFICER, 224th PC
Company at Los Baños Laguna, respondents.

No. L-77567 June 27, 1988

ASIAN TRANSMISSION, CORPORATION (ATC), petitioner,

vs.
THE NATIONAL LABOR RELATIONS COMMISSION (NLRC), respondent.

Jose C. Espinas for petitioners in G.R. Nos. 75271-73.

Augusto Gatmaytan for petitioner ATC.

Emilio C. Capulong, Jr. for private respondents in G.R. Nos. 75271-73.

CRUZ, J.:

Two basic questions are presented in these cases, to wit:

1. Whether or not a return-to-work order may be validly issued by the National Labor Relations Commission
pending determination of the legality of the strike; and

2. Whether or not, pending such determination, the criminal prosecution of certain persons involved in the said
strike may be validly restrained.

The first issue was submitted to the Court in G.R. No. 77567, to which we gave due course on July 1,
1987. 1 The case arose when on May 7, 1986, petitioner Asian Transmission Corporation terminated the
services of Catalino Sarmiento, vice-president of the Bisig ng Asian Transmission Labor Union (BATU), for
allegedly carrying a deadly weapon in the company premises. 2 As a result, the BATU filed a notice of strike
on May 26, 1986, claiming that the ATC had committed an unfair labor practice. 3 The conciliatory conference
held on June 5, 1986, failed to settle the dispute. The ATC then filed a petition asking the Ministry of Labor
and Employment to assume jurisdiction over the matter or certify the same to the NLRC for compulsory
arbitration. 4 Noting that the impending strike would prejudice the national interest as well as the welfare of
some 350 workers and their families, the MOLE issued an order on June 3, 1986, certifying the labor dispute
to the NLRC. 5 At the same time, it enjoined the management from locking out its employees and the union
from declaring a strike or similar concerted action. This order was reiterated on June 13, 1986, upon the
representation of the ATC that some 40 workers had declared a strike and were picketing the company
premises. 6 Proceedings could not continue in the NLRC, however, because of the acceptance by President
Aquino of the resignations of eight of its members, leaving only the vice-chairman in office.7 For this reason,
the MOLE, on September 9, 1986, set aside the orders of June 9 and 13, 1986, and directly assumed
jurisdiction of the dispute, at the same time enjoining the company to accept all returning workers. 8 This order
was itself set aside on November 24,1986, upon motion of both the BATU and the ATC in view of the
appointment of new commissioners in the NLRC. The MOLE then returned the case to the respondent NLRC
and directed it to expeditiously resolve all issues relating to the dispute, "adding that the union and the striking
workers are ordered to return to work immediately." 9 Conformably, the NLRC issued on January 13, 1987 the
following resolution, which it affirmed in its resolution of February 12, 1987, denying the motion for
reconsideration:

CERTIFIED CASE No. NCR-NS-5-214-86, entitled Asian Transmission Corporation,

Petitioner versus Bisig ng Asian Transmission Labor Union (BATU), et al., Respondents.-
Considering that the petitioner, despite the order dated 24 November 1986 of the Acting
Minister, "to accept all the returning workers" continues to defy the directive insofar as 44 of
the workers are concerned, the Commission, sitting en banc, resolved to order the petitioner
to accept the said workers, or, to reinstate them on payroll immediately upon receipt of the
resolution.

It is these orders of January 13 and February 12, 1987, that are challenged by the ATC in this petition for
certiorari and are the subject of the temporary restraining order issued by this Court on March 23, 1987.10

The second issue was raised in G.R. Nos. 75271-73, which we have consolidated with the first- mentioned
petition because of the Identity of their factual antecedents. This issue was provoked by three criminal
complaints filed against the petitioning workers in the municipal trial court of Calamba, Laguna, two by the
personnel administrative officer of the ATC and the third by the Philippine Constabulary. The first two
complaints, filed on July 11 and July 15, 1986, were for "Violation of Article 265, par. 1, in relation to Article
273 of the Labor Code of the Philippines." 11 The third, filed on July 17, 1986, was for coercion. 12 In all three
complaints, the defendants were charged with staging an illegal strike, barricading the gates of the ATC plant
and preventing the workers through intimidation, harassment and force from reporting for work. Acting on
Criminal Case No. 15984, Judge Orlando Tuico issued a warrant of arrest against the petitioners and
committed 72 of them to jail although he later ordered the release of 61 of them to the custody of the municipal
mayor of Calamba, Laguna. 13 The petitioners had earlier moved for the lifting of the warrant of arrest and the
referral of the coercion charge to the NLRC and, later, for the dismissal of Criminal Cases Nos. 15973 and
15981 on the ground that they came under the primary jurisdiction of the NLRC. 14 As the judge had not ruled
on these motions, the petitioners came to this Court in this petition for certiorari and prohibition. On August
12, 1986, we issued a temporary restraining order to prevent Judge Tuico from enforcing the warrant of arrest
and further proceeding with the case. 15 This order was reiterated on September 21, 1987, "to relieve tensions
that might prevent an amicable settlement of the dispute between the parties in the compulsory arbitration
proceedings now going on in the Department of Labor," and made to apply to Judge Paterno Lustre, who had
succeeded Judge Tuico. 16

That is the background. Now to the merits.

It is contended by the ATC that the NLRC had no jurisdiction in issuing the return-to-work order and that in
any case the same should be annulled for being oppressive and violative of due process.

The question of competence is easily resolved. The authority for the order is found in Article 264(g) of the
Labor Code, as amended by B.P. Blg. 227, which provides as follows:

When in his opinion there exists a labor dispute causing or likely to cause strikes or lockouts
adversely affecting the national interest, such as may occur in but not limited to public
 utilities, companies engaged in the generation or distribution of energy, banks, hospitals, and
export- oriented industries, including those within export processing zones, the Minister of
Labor and Employment shall assume jurisdiction over the dispute and decide it or certify the
same to the Commission for compulsory arbitration. Such assumption or certification shall
have the effect of automatically enjoining the intended or impending strike or lockout as
specified in the assumption order. If one has already taken place at the time of assumption or
certification, all striking or locked out employees shall immediately return to work and the
employer shall immediately resume operations and readmit all workers under the same terms
and conditions prevailing before the strike or lockout. The Minister may seek the assistance
of law-enforcement agencies to ensure compliance with this provision as well as such orders
as he may issue to enforce the same.

The justification of the MOLE for such order was embodied therein, thus:

Asian Transmission Corporation is an export-oriented enterprise and its annual export

amounts to 90% of its sales generating more than twelve (12) million dollars per year. The
corporation employs three hundred fifty (350) workers with a total monthly take home pay or
approximately P1,300,000.00 a month.

Any disruption of company operations will cause the delay of shipments of export finished
products which have been previously committed to customers abroad, thereby seriously
hampering the economic recovery program which is being pursued by the government. It wig
also affect gravely the livelihood of three hundred fifty (350) families who will be deprived of
their incomes.

This Office is therefore of the opinion that a strike or any disruption in the normal operation
of the company will adversely affect the national interest. It is in the interest of both labor and
management that the dispute be certified for compulsory arbitration to National Labor
Relations Commission.

WHEREFORE, this Office hereby certifies the labor dispute to the National Labor Relations
Commission in accordance with Article 264(g) of the Labor Code, as amended. In line with
this Certification, the management is enjoined from locking out its employees and the union
from declaring a strike, or any concerted action which will disrupt the harmonious labor-
management relations at the company. 17

There can be no question that the MOLE acted correctly in certifying the labor dispute to the NLRC, given the
predictable prejudice the strike might cause not only to the parties but more especially to the national interest.
Affirming this fact, we conclude that the return-to-work order was equally valid as a statutory part and parcel
of the certification order issued by the MOLE on November 24, 1986. The law itself provides that "such
assumption or certification shall have the effect of automatically enjoining the intended or impending strike. If
one has already taken place at the time of assumption or certification, all striking or locked out employees shall
immediately return to work and the employer shall immediately resume operations and readmit all workers
under the same terms and conditions prevailing before the strike or lockout." The challenged order of the
NLRC was actually only an implementation of the above provision of the Labor Code and a reiteration of the
directive earlier issued by the MOLE in its own assumption order of September 9, 1986.

It must be stressed that while one purpose of the return-to-work order is to protect the workers who might
otherwise be locked out by the employer for threatening or waging the strike, the more important reason is to
prevent impairment of the national interest in case the operations of the company are disrupted by a refusal of
the strikers to return to work as directed. In the instant case, stoppage of work in the firm will be hurtful not
only to both the employer and the employees. More particularly, it is the national economy that will suffer
because of the resultant reduction in our export earnings and our dollar reserves, not to mention possible
cancellation of the contracts of the company with foreign importers. It was particularly for the purpose of
avoiding such a development that the labor dispute was certified to the NLRC, with the return-to-work order
following as a matter of course under the law.

It is also important to emphasize that the return-to-work order not so much confers a right as it imposes a duty;
and while as a right it may be waived, it must be discharged as a duty even against the worker's will. Returning
to work in this situation is not a matter of option or voluntariness but of obligation. The worker must return to
his job together with his co-workers so the operations of the company can be resumed and it can continue
serving the public and promoting its interest. That is the real reason such return can be compelled. So
imperative is the order in fact that it is not even considered violative of the right against involuntary servitude,
as this Court held in Kaisahan ng Mga Manggagawa sa Kahoy v. Gotamco Sawmills. 18 The worker can of
course give up his work, thus severing his ties with the company, if he does not want to obey the order; but the
order must be obeyed if he wants to retain his work even if his inclination is to strike.

If the worker refuses to obey the return-to-work order, can it be said that he is just suspending the enjoyment of
a right and he is entitled to assert it later as and when he sees fit? In the meantime is the management required
to keep his position open, unable to employ replacement to perform the work the reluctant striker is unwilling
to resume because he is still manning the picket lines?

While the ATC has manifested its willingness to accept most of the workers, and has in fact already done so, it
has balked at the demand of the remaining workers to be also allowed to return to work. 19 Its reason is that
these persons, instead of complying with the return-to-work order, as most of the workers have done, insisted
on staging the restrained strike and defiantly picketed the company premises to prevent the resumption of
operations. By so doing, the ATC submits, these strikers have forfeited their right to be readmitted, having
abandoned their positions, and so could be validly replaced.

The Court agrees.

The records show that the return-to-work order was first issued on June 3, 1986, and was reiterated on June 13,
1986. The strike was declared thereafter, if we go by the criminal complaints in G.R. Nos. 75271-73, where the
alleged acts are claimed to have been done on June 9,1986, and July 15,1986.

These dates are not denied. In fact, the petitioners argue in their pleadings that they were engaged only in
peaceful picketing, 20 which would signify that they had not on those dates returned to work as required and
had decided instead to ignore the said order. By their own acts, they are deemed to have abandoned their
employment and cannot now demand the right to return thereto by virtue of the very order they have defied.

One other point that must be underscored is that the return-to-work order is issued pending the determination
of the legality or illegality of the strike. It is not correct to say that it may be enforced only if the strike is legal
and may be disregarded if the strike is illegal, for the purpose precisely is to maintain the status quo while the
determination is being made. Otherwise, the workers who contend that their strike is legal can refuse to return
to their work and cause a standstill in the company operations while retaining the positions they refuse to
discharge or allow the management to fill. Worse, they win also claim payment for work not done, on the
ground that they are still legally employed although actually engaged in activities inimical to their employer's
interest.

This is like eating one's cake and having it too, and at the expense of the management. Such an unfair situation
surely was not contemplated by our labor laws and cannot be justified under the social justice policy, which is
a policy of fairness to both labor and management. Neither can this unseemly arrangement be sustained under
the due process clause as the order, if thus interpreted, would be plainly oppressive and arbitrary.
Accordingly, the Court holds that the return-to-work order should benefit only those workers who complied
therewith and, regardless of the outcome of the compulsory arbitration proceedings, are entitled to be paid for
work they have actually performed. Conversely, those workers who refused to obey the said order and instead
waged the restrained strike are not entitled to be paid for work not done or to reinstatement to the positions
they have abandoned by their refusal to return thereto as ordered.

Turning now to the second issue, we hold that while as a general rule the prosecution of criminal offenses is
not subject to injunction, the exception must apply in the case at bar. The suspension of proceedings in the
criminal complaints filed before the municipal court of Calamba, Laguna, is justified on the ground of
prematurity as there is no question that the acts complained of are connected with the compulsory arbitration
proceedings still pending in the NLRC. The first two complaints, as expressly captioned, are for "violation of
Art. 265, par. 2, in relation to Art. 273, of the Labor Code of the Philippines," and the third complaint relates to
the alleged acts of coercion committed by the defendants in blocking access to the premises of the ATC. Two
of the criminal complaints were filed by the personnel administrative officer of the ATC although he
vigorously if not convincingly insists that he was acting in his personal capacity.

In view of this, the three criminal cases should be suspended until the completion of the compulsory arbitration
proceedings in the NLRC, conformably to the policy embodied in Circular No. 15, series of 1982, and Circular
No. 9, series of 1986, issued by the Ministry of Justice in connection with the implementation of B.P. Blg.
227. 21 These circulars, briefly stated, require fiscals and other government prosecutors to first secure the
clearance of the Ministry of Labor and/or the Office of the President "before taking cognizance of complaints
for preliminary investigation and the filing in court of the corresponding informations of cases arising out of or
related to a labor dispute," including "allegations of violence, coercion, physical injuries, assault upon a person
in authority and other similar acts of intimidation obstructing the free ingress to and egress from a factory or
place of operation of the machines of such factory, or the employer's premises." It does not appear from the
record that such clearance was obtained, conformably to the procedure laid down "to attain the industrial peace
which is the primordial objectives of this law," before the three criminal cases were filed.

The Court makes no findings on the merits of the labor dispute and the criminal cases against the workers as
these are not in issue in the petitions before it. What it can only express at this point is the prayerful hope that
these disagreements will be eventually resolved with justice to all parties and in that spirit of mutual
accommodation that should always characterize the relations between the workers and their employer. Labor
and management are indispensable partners in the common endeavor for individual dignity and national
prosperity. There is no reason why they cannot pursue these goals with open hands rather than clenched fists,
striving with rather than against each other, that they may together speed the dawning of a richer day for all in
this amiable land of ours.

WHEREFORE, judgment is hereby rendered as follows:

1. In G.R. No. 77567, the petition is DENIED and the challenged Orders of the NLRC dated January 13, 1986,
and February 12, 1986, are AFFIRMED as above interpreted. The temporary restraining order dated March 23,
1987, is LIFTED.

2. In G.R. Nos. 75271-73, the temporary restraining order of August 12,1986, and September 21, 1986, are
CONTINUED IN FORCE until completion of the compulsory arbitration proceedings in the NLRC.

No costs. It is so ordered.

Narvasa, Gancayco, Griño-Aquino and Medialdea, JJ., concur