FIRST DIVISION LBC DOMESTIC FRANCHISE CO., Petitioner, G.R. No. 162577 Present: - versus PUNO, C.J.

, Chairperson, SANDOVAL-GUTIERREZ, CORONA, AZCUNA, and GARCIA, JJ. Promulgated:

RUSSEL E. FLORIDO, Respondent.

August 17, 2007 X ------------------------------------------------------------------------------------------- X DECISION AZCUNA, J.: This is a petition for review[1] seeking the nullification of the Decision and Resolution rendered by the Court of Appeals (CA) on November 20, 2003 and March 5, 2004, respectively, in CA-G.R. SP No. 79079 entitled LBC Domestic Franchise Company v. National Labor Relations Commission (Second Division) and Russel E. Florido. The facts are as follows:[2] Respondent Russel E. Florido was employed by petitioner LBC Domestic Franchise Company on September 5, 1989. From being an Account Executive, he was promoted through the year s until he became the companys VicePresident for Operations receiving a monthly salary of P25,000. In November of 1999, a committee was formed for the purpose of preparing petitioners Christmas giveaways to its employees. Before Yvonnie Platon, President of petitioner company, left for the United States, a committee meeting was held and it was decided that each employee would receive a ham that will cost P300. Respondent volunteered to find a supplier of the hams, thus saying: Ako ay may kilala, ako na lang.[3] Platon agreed and entrusted the task to respondent. She likewise designated respondent as the companys Officer -in-Charge. Platon returned to the Philippines in time for the company Christmas party. At the party, the hams were distributed to the employees. An additional twenty (20) hams were likewise ordered by the company and delivered by respondent. Meanwhile, the company employees were grouped by teams, and each team was allotted representation expense. From their petty cash, Arnel Fajardo and the QCT Katipunan Team advanced the respective amounts of P3,960 andP4,752. The corresponding receipts supporting the claim for the reimbursement of the cash advances made by the latter indicated: FLORIDO TRADING, meat dealer. On February 11, 2000, while respondent was in the middle of a Team Leaders/Branch Managers meeting, he was served with a memorandum from petitioners Board Chairman, Mr. Carlos R. Araneta. He was being directed to go on vacation leave and consume all his remaining leave credits, and in the meantime, he shall turn over all his accountabilities to Mr. Gene Santos, an officer of the company. Respondent reluctantly complied with the order. Platon, upon the other hand, was summoned by Mr. Araneta to explain the receipts prepared and signed by respondent for the liquidation of cash advances in connection with the purchase of the hams, as well as the receipts for the Fundador Brandy giveaways. On March 6, 2000, Platon issued a memorandum requiring respondent to submit a written explanation, as follows:

It was brought to my attention by our Chief Accountant that the official receipts you used in liquidating the amount of P92,700 and P6,000 representing the purchase of 320 pieces of Purefoods Fiesta Ham as Christmas giveaways to our employees were that of TOBS Meat Supply. It was further noted that the handwritings in the said receipts were yours and you yourself signed the said official receipts as the authorized personnel to issue the same. We would like to be clarified why instead of Purefoods receipts, the above-mentioned receipts were the ones used in liquidating the said expenses and why is it that you were the one who issued and signed the same In addition to the foregoing, the Chief Accountant likewise brought to my attention the two other receipts allegedly issued by a FLORIDO TRADING in the amount of P3,960 and P4,752. The receipt for P3,960 was used by Mr. Arnel Fajardo in liquidating the purchase of ten (10) bottles of Fundador Brandy while the other receipt for P4,752 was used by QCT Katipunan in liquidating their purchase of twelve (12) bottles of the same kind of liquor as giveaways. Since the two receipts were without Tax Identification Numbers, hence, not registered with the BIR, Mr. Fajardo and Katipunan Team were asked on the receipts source and were informed that it was you who issued the same. We would like to be clarified why you issued the said receipt and why it was not registered with the BIR Kindly submit your reply within forty eight (48) hours from receipt of this memo. On March 8, 2000, respondent replied, as follows: 1. I proposed the supply of the product under my name. The company, after careful evaluation of the proposal, approved it exclusively because the price is low compared to prevailing market price. The approval does not carry any requirement as to receipt to be used or company who should supply both product and receipt. Pursuant to the approved offer, I delivered the Purefoods Fiesta hams products and the company received the products without any complaint whatsoever, a clear admission of strict compliance of both offer and acceptance. I got fully paid for the delivered products by Ms. Pearlie Tobias, LBC-DFC Finance Officer, who had cash advanced the payment for these hams. The receipt was in the name of Tobs Meat Supply because I was authorized by the same to act for and in his behalf. Relative to the Fundador issue, I have not offered [and] neither the company ordered from me the Fundador brandies. I supplied these liquors through individual orders by the representatives of the concerned teams which by itself is strictly personal and private among employees and myself. I have no contract with LBC-FDC for this purpose. Payments for these liquors represent cash advances by these employees. These orders were ordered by them because my price was way below the prevailing market price of the liquor. The personnel who ordered the Fundador brandies knew fully well beforehand that I cannot issue receipts because I ordered these Fundador brandies in [the] black market which is the reason why the price was very low. Hence, I issued Florido Trading receipts for this purpose.

2.

3. 4. 5.

6. 7.

8.

With this explanation, I hope that the company will be clarified and extend to me the rights rightfully belonging to me under the law by lifting the suspension and allowing me to resume my employment immediately with backwages.

Respondent reported to work on March 10, 2000 but he was prohibited from entering the General Aviation Compound of the Manila International Airport. The security guard on duty showed him a communication from petitioner dated February 11, 2000 advising the Manila International Airport Authority (MIAA) that respondent will no longer be reporting to the company so that his pending application for the renewal of his MIAA ID/Pass should be cancelled. On March 15, 2000, a meeting with respondent in the nature of a formal investigation of the matter was arranged by Platon at Seaside Restaurant. Platon allegedly informed respondent that he could bring a legal counsel to the meeting but respondent came to the meeting by himself. At the meeting, respondent reminded Platon that he had informed her of his offer to look for a supplier of ham, and that his proposal/quotation was approved by the management, the same having been e-mailed earlier to Ms. Liza Berenguer, Vice-President for Finance. Respondent added that it was not uncommon for the employees of petitioner to undertake similar transactions with the latter. On March 16, 2000, respondent was dismissed by petitioner for breach of trust and confidence. Consequently, respondent filed a complaint for illegal dismissal with the Regional Arbitration Branch of the National Labor Relations Commission (NLRC) in Quezon City.[4] On February 19, 2002, declaring that petitioner overreacted to the report made by its Chief Accountant regarding the receipts submitted by respondent for liquidation purposes, the Labor Arbiter rendered a Decision finding petitioner guilty of illegal dismissal: WHEREFORE, premises considered, judgment is hereby rendered, declaring the dismissal of the complainant as illegal and ordering the respondent as follows: 1. 2. To reinstate complainant to his former position or substantially equivalent position without loss of seniority rights, benefits and other privileges; To pay complainant the sum of Six Hundred Fifty Seven Thousand Five Hundred Sixty Four and 19/100 (P657,564.19) pesos, representing his backwages from the time of his dismissal up to the date of this decision; To pay complainant the amount of Five Hundred Thousand (P500,000.00) Pesos by way of moral damages; To pay complainant the amount of Three Hundred Thousand (P300,000.00) Pesos by way of exemplary damages; To pay complainant attorneys fees equivalent to ten (10%) percent of the total monetary award; Should reinstatement be no longer possible, to pay complainant separation pay of one (1) month salary for every year of service. SO ORDERED.[5]

3. 4. 5. 6.

Petitioner appealed to the NLRC and on April 28, 2003, the Second Division promulgated a Decision affirming in toto the Labor Arbiters Decision. The pertinent portions of the Decision read: As we have discussed above, there must be evidence to sustain the basis for the alleged breach of the trust and confidence in an employee. Without which, such ground would be used indiscriminately in trampling the rights of workers to their security of tenure. ... We now proceed to the issue of questionable receipts being raised by the respondents. We find and so hold that this matter was satisfactorily explained by the complainant that he was authorized by the proprietor of Tobs Meat Supply, Mr. Edmund Jumuad. Furthermore, the affidavit executed by the latter gives the reason for the use of his receipts We find nothing unusual [or] irregular with the transaction. After all, Mr. Jumuad had a hand in the delivery of the hams. In the absence of any controverting evidence which is obtaining in the instant case, We would even find that the transaction benefited the respondent company for getting the maximum worth of its money.

With respect to the receipts issued for the liquor (Fundador Brandy), We agree with the complainant that he never had any transaction with the respondent company. If any, the transaction was made personally with co-workers who wanted to procure the said liquor at a low price. We, therefore, find no evidence to support such a conclusion of loss of trust and confidence on the part of the complainant as claimed by the respondent. On the matter of the award of damages [a] careful evaluation of the records showed that at the time the complainant was suddenly issued a written order to consume all his vacation leave credits he was conducting a meeting or conference with the companys branch managers. The said order did not mention any reason why he was being directed to take his leave and consume all leaves available at that time. It, however, stated, among others, that he should surrender all his accountabilities to another officer of the company. It needs no stretching of the imagination that such situation had created mixed thoughts and/or speculations in the minds of the said branch managers and other employees as well. These thoughts are either of sympathy or ridicule. Either way, it necessarily caused worries and anxieties in the mind of complainant being in the dark as to why he was suddenly asked to surrender all his accountabilities and take a leave. This is made even worse when on the following day, February 11, 2000, respondent communicated to the Manila International Airport Authority (MIAA) and requested that the application of complainant for his renewal of his gate pass [be denied as] the complainant will no longer be reporting to the said office. To Our mind, this has effectively sealed the complainants fate with respondents without even the benefit of due process. We, therefore, find and so hold that there is sufficient basis to sustain the award of damages to complainant. ... WHEREFORE, the instant appeal is DISMISSED for lack of merit and the decision appealed from is AFFIRMED en toto. SO ORDERED.[6] Petitioners motion for reconsideration having been denied, the case was elevated to the CA. On November 20, 2003, the CA rendered a Decision modifying the Decisions of the Labor Arbiter and the NLRC but only with respect to the award of damages, thus: We now proceed to the issue of damages awarded to private respondent. The NLRC sustained the award of moral and exemplary damages, as well as attorneys fees, in view of the attendant circumstances which it held showed bad faith on the part of petitioners officers who unceremoniously served a memo on private respondent ordering him to consume his remaining vacation leave credits while he was in the middle of a seminar/conference for branch managers. The sudden and unexplained cancellation of his access to the MIAA General Aviation Compound and renewal application of ID/Control Pass, which effectively prevented him from performing his usual duties, amounted to virtual termination and the subsequent memo requiring him to submit his written explanation to the charges against him followed by a summary meeting/hearing and culminating in his dismissal within a span of only a few days clearly demonstrated bad faith and oppressive exercise of management prerogative towards private respondent who is a ranking managerial employee. The Labor Arbiter thus noted that such knee-jerk reaction on the part of petitioners officers resulted in the unjustified dismissal of private respondent for an unfounded charge which caused extreme anxiety and embarrassment to private respondent. We do not agree. Exemplary and moral damages are proper when the dismissal of an employee is attended by bad faith or fraud, or constitutes an act oppressive to labor in a manner contrary to morals, good customs, or public policy. It is basic that for moral damages to be awarded, the claimant must satisfactorily prove its factual basis and causal connection with the respondents acts. [7] In this case, however, We fail to conclude that the officers of petitioner company acted in a malevolent or oppressive manner in the course of investigating the questionable receipts submitted by private respondent to liquidate the cash advance used for payment of the hams purchased by him. Admittedly, he signed those receipts but made it appear as the true signature of the owner. Since upon initial inquiry made by the Chief Accountant, it was discovered that the Tobs Meat Supply did not officially issue the two (2) receipts in the regular course of business while the receipts for the

Fundador Brandy did not bear a Tax Identification Number (TIN) and hence also unofficial, there [was] reasonable basis for the petitioner to investigate further and act to protect its interest. Private respondent was given the opportunity to explain his side, which though belatedly done by petitioners officers, due process was accorded said employee. And even if private respondent was subsequently disallowed access to the MIAA and his Control ID/Pass renewal application revoked, this was made at the time the matter was being investigated and does not by itself constitute harassment. Clearly, the award of moral and exemplary damages [is] not proper in this case. Likewise, it has been held that attorneys fees are not recoverable where there is no sufficient showing of bad faith on the part of petitioner-employer.[8] WHEREFORE, premises considered, the present petition is hereby PARTLY GIVEN DUE COURSE. The challenged Decision dated April 28, 2003 and Resolution dated July 31, 2003 of the NLRC are hereby AFFIRMED with MODIFICATION in that the award of moral and exemplary damages, as well as attorneys fees, is hereby DELETED. No pronouncement as to costs. Petitioner contends that:[10] 1. 2. 3. The Court of Appeals erred in ruling that the dismissal for loss of trust and confidence did not have reasonable factual basis; The Court of Appeals erred in ruling that the imposition of the penalty of dismissal on respondent for falsifying the receipts is too harsh; and The Court of Appeals erred in sustaining the award of reinstatement and full backwages in respondents favor. SO ORDERED.[9]

Petitioner argues, as follows: Firstly, respondent was dishonest, thus, his termination was with just cause. He profited out of the clandestine transactions in question. He attempted to hide his identity as the real supplier of the hams by submitting to the company, which he is supposed to protect, falsified receipts; Secondly, respondent effectively transacted business with the company of which he is the Vice-President through his subordinates when he sold Fundador Brandy to them. He is claiming that such transactions were purely private between him and the company employees. This contention is untenable because the payments therefor were to be eventually shouldered by the company. That is precisely the reason why the receipts which he issued for the payments of the bottles of brandy were submitted to the company for the corresponding liquidation process. Respondent, therefore, transacted business with the company through his subordinates over whom, wittingly or unwittingly, he undeniably exercised moral ascendancy in doing so. This was evidently unethical, a serious misconduct that justifies the termination of his employment. His submission of the receipts for the brandy without a Tax Identification Number (TIN), in violation of the company requirement which he knew very well, added to the gravity of his undesirable actions; Thirdly, based on jurisprudence, the employer is allowed a wide latitude in terminating the employment of a managerial employee for loss of trust and confidence, then it follows that petitioner be given a wider latitude in dismissing respondent who was not a mere managerial employee but somebody holding the second highest position in the company as Vice-President; Fourthly, the penalty of termination is not harsh considering respondents position in the company; Finally, since respondent was dismissed with just cause and with due process, the order of reinstatement and backwages is oppressive to petitioner. In termination cases, the burden of proof rests upon the employer to show that the dismissal is for a valid and just cause. Failure to do so would necessarily mean that the dismissal was not justified, and, therefore, was illegal. [11] It is sufficient to show by substantial evidence that the employee is guilty of misconduct which makes the latter unworthy of the trust and confidence demanded by his position.[12]

Both the NLRC and the CA found that petitioner failed to establish that the dismissal of respondent from his position was justifiable. Absent any showing of arbitrariness and evidence to the contrary, the Court will not disturb the conclusion shared by the NLRC and the CA. The Court agrees that the penalty of dismissal imposed upon respondent is disproportionate to the alleged infraction committed by the latter. As aptly explained by the CA: [13] In this case, We find no such reasonable basis to conclude that private respondent has breached the trust reposed in him by petitioner whose claim that he had purposely or knowingly concealed his identity as the real supplier of the hams was not supported by substantial evidence. Evidence submitted by private respondent clearly showed [that] it was really TOBS Meat Supply owned by Jumuad who supplied the Purefoods Fiesta hams since if not for the latters contact as a meat dealer, private respondent could not have procured those hams at the price fixed by the management committee who agreed to his suggestion/proposal to make the purchase in behalf of the company. Hence, We cannot give credence to petitioners contention at this stage that the dismissal of private respondent was justified since petitioner-employer had reasonable basis for the loss of trust and confidence in said managerial employee. Besides, for the allegedly suspicious act of affixing a false signature on the questioned receipts covering an otherwise regular and fair sales transaction on behalf of the company, the extreme penalty of dismissal from service is rather too harsh. It has been held that where a penalty less punitive would suffice, whatever missteps that may have been committed by the worker ought not to be visited with a consequence so severe such as a dismissal from employment.[14] As shown by the records, respondent had been a competent and loyal employee of the company which is the reason why he was promoted several times until he became the Operations Manager. Also, taking into account respondents length of service to the company, the penalty of dismissal is not commensurate with his alleged misconduct.[15] Moreover, the mere fact that respondent was a managerial employee did not give unbridled discretion for petitioner to remove him from his job on the ground of loss of confidence. In Maglutac v. NLRC,[16] this Court declared that while an employer has its own interests to protect, and pursuant thereto, it may terminate a managerial employee for a just cause, such prerogative to dismiss or lay off an employee must be exercised without abuse of discretion. Its implementation should be tempered with compassion and understanding. The employer should bear in mind that in the execution of said prerogative, what is at stake is not only the employees position but his livelihood. The fact that one is a managerial employee does not by itself exclude him from the protection of the constitutional guaranty of security of tenure. Respondent did not appeal from the CA decision. In any case, with regard to the award of moral and exemplary damages and attorneys fees, the Court agrees with the CA that the same are not recoverable under the circumstances. Respondent failed to show that petitioners action to terminate his employment was done in bad faith. The finding that the employee had been wrongfully dismissed does not automatically warrant an award of moral and other damages. An award of moral damages cannot be justified solely upon the premise that the employer fired his employee without just cause or due process. Additional facts must be pleaded and proven for the grant of moral damages under the Civil Code. There must be a showing that the dismissal was attended by bad faith or fraud, or was oppressive to labor, or done in a manner contrary to morals, good customs, or public policy, and that social humiliation, wounded feelings, grave anxiety and mental anguish resulted therefrom. [17] Likewise, exemplary damages may be awarded only if the dismissal was shown to have been effected in a wanton, oppressive or malevolent manner.[18] In the same vein, attorneys fees are not recoverable absent any sufficient evidence of bad faith on the part of the employer.[19] WHEREFORE, the petition is DENIED. The Decision and Resolution of the Court of Appeals on November 20, 2003 and March 5, 2004, respectively, in CA-G.R. SP No. 79079 are hereby AFFIRMED. No costs. SO ORDERED.

THIRD DIVISION PHILIPPINE LONG DISTANCE TELEPHONE COMPANY, Petitioner, - versus G.R. No. 143688 Present: Ynares-Santiago, J. (Chairperson), Austria-Martinez, Chico-Nazario, Nachura, and Reyes, JJ. Promulgated:

BELINDA D. BUNA, Respondent.

August 17, 2007 x ---------------------------------------------------------------------------------------- x DECISION YNARES-SANTIAGO, J.: This is a petition for review on certiorari under Rule 45 assailing the Decision [1] of the Court of Appeals dated February 28, 2000 which annulled and set aside the Decision[2] and Order[3] of the National Labor Relations Commission (NLRC) dated May 25, 1998 and October 12, 1998, respectively, as well as its Resolution[4] dated June 5, 2000 denying the motion for reconsideration. The facts of the case are as follows. Respondent Belinda D. Buna was an employee of petitioner Philippine Long Distance Telephone Company (PLDT). She last held the position of Service Representative in the PLDT Business Office in Pasay City from 1993 to 1996, handling applications for service subscriptions involving telephone lines with prefix numbers 831, 832, 833 and 834. Sometime in 1995, a certain Engr. Danilo Castillano complained about unauthorized overseas calls amounting to P40,000.00 involving his telephone line with number 847-5330. Upon investigation by the PLDT Quality Control and Inspection Division (QCID), it was established that Castillanos phone line was originally denominated as 833-2661 under the name of Olivia L. Eduarte. It was supposed to be inactive since its disconnection on January 26, 1984. But Eduarte purportedly wrote PLDT in June 1993 and requested that the line be transferred to Castillano. Respondent processed the request and recommended its approval. Thus, telephone number 833-2661 was subsequently changed to 847-5330 and a telephone unit was installed in Castillanos home address. When asked about the alleged letter request, Eduarte denied having written the same and maintained that the signature therein is not hers.[5] For his part, Castillano admitted that he purchased the rights over the subject phone subscription for P40,000.00 from a certain Chito, an employee of PLDT.[6] He subsequently identified Chito as Ramoncito Buna, respondents husband and a former employee of PLDT. On January 17, 1996, PLDT Management sent an Inter-Office Memo[7] to respondent asking her to explain why she should not be dismissed from service for her complicity in the anomalous transaction. In her explanation,[8] respondent admitted that she processed the request and recommended the approval of the transfer of the subscription to Castillano on the basis of Eduartes alleged letter request dated June 21, 1993. She also submitted an affidavit[9]purportedly executed by Castillano dated December 11, 1995, where the latter reiterated his complaint for the unauthorized charges; absolved Ramoncito Buna of complicity in the irregular transfer; and admitted knowing Ramoncito.[10] However, Castillano subsequently submitted a certification[11] dated February 26, 1996 denying execution of the affidavit presented by respondent. He claimed that the signature in said affidavit was not his as well as the residence certificate therein. In view of this, PLDT sent a Notice[12] of termination of respondents services effective March 15, 1996.

Respondent filed a complaint for illegal dismissal with claims for back wages, benefits, damages and attorneys fees against PLDT. After due proceedings, Labor Arbiter Ricardo C. Nora rendered a Decision [13] finding respondents dismissal legal and justified, thus, her complaint was dismissed for lack of merit. Buna appealed to the NLRC which affirmed the dismissal in a Decision[14] dated May 25, 1998. Respondents motion for reconsideration was denied; hence, she filed a petition for certiorari under Rule 65 of the Rules of Court before the Court of Appeals. The petition was initially denied due course[15] on grounds that the motion for reconsideration was filed before the NLRC only on July 22, 1998 or 10 days late, and the petition for certiorari before the Court of Appeals was likewise filed out of time. It was filed on February 3, 1999 while the last day for filing the petition was on January 12, 1999. However, upon motion for reconsideration, the petition for certiorari was given due course. On February 28, 2000, the Court of Appeals rendered a decision in favor of respondent Buna, the dispositive portion of which reads: WHEREFORE, in view of the foregoing, the instant petition is hereby GIVEN DUE COURSE, and the writ prayed for GRANTED. Consequently, the assailed Decision of the National Labor Relations Commission dated May 25, 1998 and its Order dated October 12, 1998 in NLRC-NCR CA No. 01347097 are hereby ANNULLED and SET ASIDE. Respondent Philippine Long Distance and Telephone Co. is hereby ordered to reinstate petitioner Belinda D. Buna to her former position without loss of seniority rights and to pay her full back wages, inclusive of allowances, other benefits and privileges or their monetary equivalent computed from the time her compensation was withheld from her up to the time of actual reinstatement. No pronouncement as to costs. SO ORDERED.[16]

PLDTs motion for reconsideration was denied. Hence, the instant petition raising the following issue: WHETHER OR NOT THE COURT OF APPEALS COMMITTED GRAVE ERROR IN GRANTING BUNAS PETITION FOR CERTIORARI AND IN SETTING ASIDE THE DECISION OF THE NATIONAL LABOR RELATIONS COMMISSION WHICH HAD ALREADY ATTAINED FINALITY WHEN RESPONDENT FAILED TO COMPLY WITH THE MANDATORY PERIODS NOT ONLY ONCE BUT TWICE.[17] PLDT claims that the Court of Appeals no longer had jurisdiction to entertain respondent Bunas petition since the latter failed to seasonably file the motion for reconsideration of the NLRC Decision within the 10-day reglementary period. PLDT asserts that even assuming that the remedy of filing a special civil action of certiorari was available to respondent, it will not prosper because it was also filed beyond the 60-day reglementary period. PLDT avers that the Decision rendered by the Court of Appeals is null and void for having been rendered without jurisdiction. Respondent maintains that she had no participation in the irregular transfer of Eduardos subscription to Castillano. She contends that the charge against her is merely a ruse and an attempt by PLDT to evade the payment of the benefits due her in the form of redundancy pay. The petition is impressed with merit. Section 1, Rule 65 of the Rules of Court clearly states that in order to avail of the special civil action of certiorari, one must be left with no appeal, nor any plain, speedy, and adequate remedy in the ordinary course of law, to wit: SECTION 1. Petition for Certiorari. When any tribunal, board or officer exercising judicial or quasi-judicial functions has acted without or in excess of its or his jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction, and there is no appeal, nor any plain, speedy, and adequate remedy in the ordinary course of law, a person aggrieved thereby may file a verified petition in the proper court, alleging the facts with certainty and praying that judgment be rendered annulling or modifying the proceedings of such tribunal, board or officer, and granting such incidental reliefs as law and justice may require. x x x x. (Emphasis supplied)

A motion for reconsideration of an assailed decision is deemed a plain and adequate remedy expressly available under the law.[18] The general rule is that a motion for reconsideration is indispensable before resort to the special civil action of certiorari to afford the court or tribunal the opportunity to correct its error, if any. [19] Failure to file a motion for reconsideration with the NLRC before availing of the special civil action of certiorari is a fatal infirmity.[20] This rule is subject to certain recognized exceptions, to wit: a) where the order is a patent nullity, as where the court a quo has no jurisdiction; b) where the questions raised in the certiorari proceedings have been duly raised and passed upon by the lower court, or are the same as those raised and passed upon in the lower court; c) where there is an urgent necessity for the resolution of the question and any further delay would prejudice the interests of the Government or of the petitioner or the subject matter of the petition is perishable; d) where, under the circumstances, a motion for reconsideration would be useless; e) where petitioner was deprived of due process and there is extreme urgency for relief; f) where, in a criminal case, relief from an order of arrest is urgent and the granting of such relief by the trial court is improbable; g) where the proceedings in the lower court are a nullity for lack of due process; h) where the proceeding was ex parte or in which the petitioner had no opportunity to object; and, i) where the issue raised is one purely of law or where public interest is involved. [21] None of these exceptions are present in the instant case. As such, respondents failure to timely file a motion for reconsideration of the decision of the NLRC rendered such decision final and executory. Consequently, recourse to the Court of Appeals was no longer feasible or available. Respondent received the NLRC Decision on July 2, 1998, hence she had 10 days or until July 12, 1998 within which to move for its reconsideration. However, the motion for reconsideration was filed only on July 22, 1998. A motion for reconsideration filed out of time is a pro forma motion which does not toll the running of the reglementary period.[22] Moreover, in the absence of a motion for reconsideration filed within the reglementary period, the assailed order, resolution, or decision of the NLRC becomes final and executory. At any rate, even on the merits, respondents cause must fail. In finding that respondent was illegally dismissed, the Court of Appeals ruled that although PLDT may have proven that there was an irregularity in the transfer of the subject phone line, it failed to establish that respondent had something to do with it. We do not agree. Respondent was dismissed from employment on the ground of loss of trust and confidence. Loss of trust and confidence, as a valid ground for dismissal, must be substantiated by evidence. Respondent is not a mere rank-andfile employee but a confidential employee. In fact, her position as a Service Representative is classified as High Priority. She does not only screen and process telephone applications but also recommend them for approval. She likewise handles the transfer of subscriptions from existing clients to new applicants. Her job entails the observance of proper company procedures relating to the evaluation and subsequent recommendation of prospective clients to PLDT. Her assessment of the fitness of such applicants is relied upon by PLDT in giving its approval to the subscription applications which in turn results in a client-provider relationship between PLDT and its subscribers. Thus, her job involves a high degree of responsibility requiring a substantial amount of trust and confidence on the part of PLDT. Jurisprudence has distinguished the treatment of managerial employees or employees occupying positions of trust and confidence from that of rank-and-file personnel, insofar as the application of the doctrine of trust and confidence is concerned. InCruz, Jr. v. Court of Appeals,[23] the Court had occasion to explain as follows: Thus, with respect to rank-and file personnel, loss of trust and confidence as ground for valid dismissal requires proof of involvement in the alleged events in question, and that mere uncorroborated assertions and accusations by the employer will not be sufficient. But as regards a managerial employee, the mere existence of a basis for believing that such employee has breached the trust of his employer would suffice for his dismissal. Hence, in the case of managerial employees, proof beyond reasonable doubt is not required, it being sufficient that there is some basis for such loss of confidence, such as when the employer has reasonable ground to believe that the employee concerned is responsible for the purported misconduct, and the nature of his participation therein renders him unworthy of the trust and confidence demanded by his position. (Emphasis supplied)

There is substantial evidence showing that there was valid cause for PLDT to dismiss respondents employment for loss of trust and confidence. By her own admission, she processed the irregular transfer of phone subscription to Castillano on the basis of a letter request from Eduarte, which proved to be a forgery. In the sworn statement dated December 4, 1995, Castillano admitted that he bought the subject telephone line from a certain Chito whom he later identified in a line-up presented before him as Ramoncito Buna, respondents husband. Although there were three other affidavits allegedly executed by Castillano absolving the spouses from any participation in the anomalous transaction, none of these documents refuted the certification Castillano issued on February 26, 1996 where he denied authorship of the affidavit dated December 11, 1995 which was attached by respondent to her explanation. Moreover, Castillano knew respondents husband and was in fact identified by the latter as the one who sold to him the phone line for P40,000.00. The transfer was facilitated and completed through respondent since the phone number was under her scope of authority. As correctly pointed out by the Labor Arbiter and subsequently upheld by the NLRC: Under the circumstances, we are convinced that complainant was involved in effecting the unauthorized transfer x x x. We take particular note of the fact that the spurious letter request was in favor of someone known to her husband. To us, it is more than pure coincidence that the beneficiary of complainants act of processing for approval the fake letter request, would be someone known to her husband.Said Mr. Castillano, on the other hand, has never denied having purchased the telephone line for P40,000, a highly irregular transaction. And in the investigation at the QCID on December 4, 1995, Mr. Castillano, in a face to face confrontation with Mr. Buna, pointed to the latter as the PLDT employee who sold to him the line of Ms. Eduarte for P40,000. and in order that the same could be transferred to the former, the fake letter request of Ms. Eduarte was processed and recommended for approval by the complainant. Clearly, the confluence of events point to the complainant as a necessary and indispensable participant in a chain of irregularities intended to illegally transfer a telephone from the original owner to Mr. Ca stillano, a friend of complainants husband x x x.[24] (Emphasis supplied) Based on the foregoing, we find that loss of trust and confidence, as a ground for termination, has been clearly established. InAzul v. Banco Filipino Savings and Mortgage Bank ,[25] we upheld the employees dismissal despite lack of proof of actual participation in the anomalous activities because his actuations had sown in his employer the seed of mistrust and loss of confidence, thus: While, indeed, it was not proved that he was the one who made the irregular entries on the tickets, the fact that he did not lift a finger at all to determine who it was is a sad reflection of his job. In fact, even if the petitioner had no actual and direct participation in the alleged anomalies, his failure to detect any anomaly in the passage tickets amounts to gross negligence and incompetence, which are, likewise, justifiable grounds for his dismissal. Be that as it may, to our mind, it is no longer necessary to prove the petitioners direct participation in the irregularity, for what is mat erial is that his actuations were more than sufficient to sow in his employer the seed of mistrust and loss of confidence. The aforesaid ruling likewise applies to respondent because of her questionable involvement in the manipulation of company records to facilitate the transfer of a telephone line which was obtained through highly irregular means. Her participation was essential to the consummation of the anomalous transaction. WHEREFORE, the petition is GRANTED. The February 28, 2000 Decision of the Court of Appeals declaring respondents dismissal as unlawful and the June 5, 2000 Resolution denying the motion for reconsideration, are REVERSED and SET ASIDE. The May 25, 1998 Decision of the National Labor Relations Commission affirming the Labor Arbiters Decision dated April 21, 1997 dismissing the complaint for lack of merit, and the October 12, 1998 Order denying the motion for reconsideration, are REINSTATED and AFFIRMED. SO ORDERED.

Manila THIRD DIVISION AKLAN COLLEGE, INCORPORATED and MSGR. ADOLFO P. DEPRA, Petitioners, Present: G.R. No. 152949

YNARES-SANTIAGO, J., Chairperson, - versus AUSTRIA-MARTINEZ, CHICO-NAZARIO, NACHURA, and REYES, JJ.

RODOLFO P. GUARINO, Respondent. x------------------------------------------------x DECISION AUSTRIA-MARTINEZ, J.:

Promulgated: August 14, 2007

Before the Court is a petition for Review on Certiorari under Rule 45 of the Rules of Court filed by Aklan College, Incorporated (ACI) and Msgr. Adolfo P. Depra (Msgr. Depra) assailing the Decision[1] of the Court of Appeals (CA) dated March 9, 2001, and its Resolution[2] of April 5, 2002 in CA-G.R. SP No. 54035. The undisputed facts, as summarized by the CA, are as follows: Private respondent Guarino was first hired in 1972 as an instructor by petitioner College. In 1974, private respondent was appointed as Acting Dean of the Commerce and Secretarial Department. On November 26, 1990, he was again appointed by the petitioner as Acting Personnel Director, in addition to his duties as acting dean. His appointment as Acting Personnel Director was in a temporary basis and until it is revoked by the President or Rector of the College. (Annex A, Rollo, 32) A year after, private respondent went on leave for one year from November 4, 1991 up to November 4, 1992. On October 20, 1992, private respondent wrote the petitioner through its Rector informing the latter of his intention of reassuming his positions with the petitioner college. However, in petitioners response, it informed private respondent that he cannot anymore reassume his former position as Acting Dean of the Commerce and Secretarial Department because he is not qualified for the position.

Then, on November 10, 1992, petitioner formally informed private respondent that the Board of Trustees of the petitioner college has decided not to allow him to reassume his position as Acting Dean for the reason that he has not qualified to continue holding the position and that the position of Acting Personnel director has already been filled up by a regular incumbent. Hence, on November 11, 1992, private respondent filed the instant case for illegal dismissal against petitioner with the office of the Department of Labor in Kalibo, Aklan.[3] On May 24, 1994, the Labor Arbiter (LA) handling the case rendered judgment dismissing the complaint for lack of merit. Rodolfo P. Guarino (respondent) filed an appeal with the National Labor Relations Commission (NLRC). On March 9, 1995, the NLRC rendered a Decision reversing the LA, with the following dispositive portion: WHEREFORE, the respondents are hereby ordered to pay the complainant separation pay for his discharge from the position of Dean of Commerce and Secretarial Science, equivalent to one month pay for every year of service, a fraction of six months being considered one year. The respondents are further ordered to reinstate the complainant in his position as personnel director with full backwages from the time his salaries were withheld from him until his actual reinstatement, and as instructor without backwages. The respondents are furthermore ordered to pay the complainant 10% of the monetary awards as attorneys fees. Other claims are hereby DISMISSED for lack of sufficient evidence. Complainant's monetary awards up to March 10, 1995 are (sic) P149,955.85 computed as follows:

I Separation Pay as Dean P4,395.50 x 17 years -----P74,723.50

II Backwages as Personnel Director (Nov. 10, 1992-March 10, 1995) P2,200 x 28 months Sub-total -----P61,600.00 P136, 323.50

III 10% ATTORNEYS FEES

------

P13,632.35

Grand total

------

P149,955.85

SO ORDERED.[4] Aggrieved by the Decision of the NLRC, petitioners filed a special civil action for certiorari with the CA. On March 9, 2001, the CA rendered judgment denying the petition and affirming the assailed decision of the NLRC.[5] Petitioners Motion for Reconsideration was subsequently denied by the CA in its Re solution dated April 5, 2002.[6]

Hence, herein petition with a sole Assignment of Error, to wit: THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION IN DISREGARDING THE WELL-SETTLED DOCTRINE LAID DOWN IN LA SALETTE OF SANTIAGO, INC. v. NLRC, 195 SCRA 80 [1991] THAT NO EMPLOYEE ATTAINS A SECOND SECURITY OF TENURE TO AN ADMINISTRATIVE POSITION.[7] Petitioners contend that it is not a disputed fact that, during his employment with petitioner ACI, respondent held three concurrent positions: those of an instructor, Acting Dean of the Commerce Department and Acting Personnel Director; what petitioners refused to give back to respondent when he was sent a letter dated November 10, 1992 were his positions as Acting Dean and Acting Personnel Director; respondent was never stripped of his position as an instructor. Citing the case of La Salette of Santiago, Inc. v. National Labor Relations Commission,[8] petitioners assert that while an employee attains security of tenure as a member of the teaching staff of a private educational institution from which he could only be removed for cause, he cannot always aspire for a second tenure in an administrative position and can, therefore, be stripped of this position by the appointing power without the latter being held responsible for illegal dismissal. Petitioners argue that when private respondent was not allowed to re-assume his former administrative positions as Acting Dean and Acting Personnel Director but was still considered as an instructor and was even prodded to resume his teaching responsibilities, he could not be considered as having been illegally dismissed. Petitioners further argue that there was no law or agreement which gave respondent additional tenure as dean; that his appointment as dean in a regular capacity was made dependent on his graduation with a degree of Master in Business Administration (MBA), as this is a requirement imposed by DECS Order No. 5, Series of 1990 as well as the Manual of Regulations for Private Schools; that petitioner was not able to finish his MBA which compelled petitioner ACI to withhold the position from him. Petitioners also aver that respondents appointment as Dean and Personnel Directo r was only in an acting but never in a regular capacity. Citing various rulings of this Court, petitioners contend that a bona fide appointment in an acting capacity is essentially temporary and revocable in character and the holder of such an appointment may be removed anytime even without hearing or cause. On the other hand, respondent argues that petitioners reliance on La Salette is misplaced, as the factual circumstances obtaining therein are materially different from those in the present case. Respondent contends that in La Salette, the complainant therein was appointed to various administrative positions for a definite or fixed term, while in the present case respondent was appointed as dean not for a fixed duration but for an indefinite period. In addition, respondent claims that by continuously serving as Dean of ACIs Commerce and Secretarial Department for more than 17 years, his assumption of the said office could not be considered as temporary. He claims that while he was not formally appointed as dean, he has acquired security of tenure as such pursuant to the provisions of Article 280 of the Labor Code. [9] The Court finds the petition meritorious. Respondents termination as Acting Personnel Director is valid. The factual milieu in La Salette is similar to the present case insofar as respondents position as Personnel Director is concerned. In La Salette, the respondent therein occupied different administrative positions in various capacities every so often and for a period not exceeding three years. For three years, she was the principal of La Salette Jones High School. For the next three years she worked as teacher and Subject Area Coordinator of a sister school, La Salette of Santiago. Thereafter, for seven years, she was employed as a fulltime instructor in still another sister corporation, La Salette College; and for two years of that period, she served as the Head of the Department of Education and Liberal Arts. After which, for three years, she was assigned as Assistant Principal of the High School Department of La Salette of Santiago, concurrently with her work as part-time instructor in La SaletteCollege. For the last two years of her connection with the La Salette School System, she was designated as High School Principal of La Salette of Santiago. On this matter, the Court held as follows: What is immediately apparent from this second look at the material facts is that while Clarita Javiers work as teacher in the La Salette School System was more or less continuous, or was evidently intended to be on a permanent basis, her assignment in one administrative office or another-i.e., as high school principal, subject area coordinator, head of a college department, assistant principal- was not. In these administrative posts, she served in a non-permanent capacity, either at the pleasure of the school or for a fixed term. She could not but have become aware of the pattern in her employment relationship with her employer, of the duality

in the nature of her employment, particularly of the non-permanent character of her stints in the administrative positions to which she was designated. There was therefore no cause for her to believe that security of tenure could be obtained by her in any of the administrative positions she held at one time or another. On the contrary, the temporariness of her occupancy of those administrative offices must have become quite apparent to her, in light of the facts. x x x[10] In the present case, it is not disputed that respondent was appointed as Acting Personnel Director on November 26, 1990. He went on leave for one year from November 4, 1991 until November 4, 1992, after which he was no longer allowed to re-assume his administrative posts. Having assumed the position of Personnel Director in an acting capacity, respondent could not reasonably have expected that he had acquired security of tenure. Moreover, in La Salette, the respondents appointment to the various administrative positions she held were not even in an acting capacity. Yet this Court held that she never attained security of tenure with respect to these positions. In the present case,with all the more reason should respondent not expect that he has gained security of tenure, considering that his appointment was only in an acting capacity. This Court has held that an acting appointment is merely temporary, or one which is good until another appointment is made to take its place.[11] And if another person is appointed, the temporary appointee should step out and cannot even dispute the validity of his successors appointment. [12] The undisturbed unanimity of cases is that one who holds a temporary appointment has no fixed tenure of office; his employment can be terminated anytime at the pleasure of the appointing power without need to show that it is for cause.[13] Insofar as the principles governing permanent and temporary appointments are concerned, this Court finds the ruling in the more recent case of Achacoso v. Macaraig[14] relevant and instructive. While Achacoso served as the jurisprudential basis in cases involving the issue of security of tenure in career executive service positions in the government, this Court finds the rules on permanent and temporary appointments enunciated therein applicable to the present case. This Court held in Achacoso that a permanent appointment can be issued only to a person who meets all the requirements for the position to which he is being appointed; a person who does not have the requisite qualifications for the position cannot be appointed to it in the first place or, only as an exception to the rule, may be appointed to it merely in an acting capacity in the absence of persons who are qualified; the purpose of an acting or temporary appointment is to prevent a hiatus in the discharge of official functions by authorizing a person to discharge the same pending the selection of a permanent or another appointee; the person named in an acting capacity accepts the position under the condition that he shall surrender the office once he is called upon to do so by the appointing authority.[15] Consistent with the rulings in La Salette, Achacoso and the other cases cited above, respondent could not have attained security of tenure with respect to his position as Personnel Director of ACI. His termination as such is valid. On the other hand, the factual circumstances are different with respect to respondents appointmen t as Acting Dean of ACIsCommerce Department. In the present case, respondent was allowed to occupy the position of Acting Dean for a continuous period of 17 years, more or less, beginning in 1974 until he went on leave on November 4, 1991. Unlike the private respondent in LaSalette, herein respondents term as acting dean remained uninterrupted. In fact, there was not even any showing that he was handed any reappointment paper or made to sign a renewal contract regarding the said position. Nonetheless, the Court finds respondents termination as Acting Dean also valid for the following reasons: Petitioners assert that under DECS Order No. 5, Series of 1990, as well as Section 41 of the Manual of Regulations for Private Schools, the acquisition of a Masters degree has been made a requirement before a person can be appointed as Dean of an undergraduate program. Article IV (1) (1.2) of DECS Order No. 5, Series of 1990, provides for the following minimum qualifications for the position of chairman, dean or director of a schools accounting program, to wit: a. Holder of a CPA certificate issued by the Professional Regulation Commission;

b. Holder of at least a masters degree in business, accountancy, or business educat ion; c. Teaching experience of at least three (3) years; d. The ability to lead and gain the confidence and respect of the faculty. However, the Court finds that petitioners erred in relying upon the above-quoted provisions of DECS Order No. 5, Series of 1990, as its basis in dismissing respondent as the Acting Dean of its Commerce Department, because the said Order specifically applies only to the position of chairman, dean or director of a schools Accounting Department. Moreover, petitioners failed to refute respondents contention in his Position Paper that the Department of Commerce to which he was assigned consists of many fields of study other than accounting. The Court also notes that the Manual being referred to by petitioners is the 1992 Manual of Regulations for Private Schools (8th Edition). The 1992 Manual took effect at the beginning of the summer session of 1993.[16] Prior to its effectivity, what was in force was the 1970 Manual of Regulations (7 th Edition). The alleged illegal dismissal of respondent took place on November 10, 1992. At the time of the dismissal, what was in effect was the 1970 Manual. Hence, it should have been the 1970 Manual, and not the 1992 Manual, that petitioners cited as their basis in dismissing respondent from his position as Acting Dean. In any case, it must be pointed out that like the 1992 Manual, the 1970 Manual requires that a Dean of an undergraduate program must have acquired an appropriate graduate degree. Paragraph 69 of the 1970 Manual provides: 69. Administrative and supervisory officials should have the following minimum qualifications, duly supported by credentials on file with the school. a. For principal of primary and/or intermediate schools, a holder of a Bachelor's degree in Elementary Education or equivalent with three years of successful teaching experience in the elementary grades. b. For principal of secondary schools, a holder of a Bachelor of Science in Education degree or equivalent with three years of successful teaching experience in the high school. c. College dean, a holder of an appropriate graduate degree with at least three years of successful college teaching experience. d. Dean of the Graduate School, a holder of an appropriately earned doctorate degree with at least three years of successful graduate school teaching experience. (emphasis supplied) Both the 1970 and 1992 Manuals were promulgated by the Department of Education, Culture and Sports (now, Department of Education) in the exercise of its rule-making power as provided for under Section 70[17] of Batas Pambansa Blg. 232, otherwise known as the Education Act of 1982. As such, these Manuals have the force and effect of law.[18] Since the 1970 Manual imposes minimum requirements that must be complied with before a person can be appointed as a college dean, petitioner ACI is duty-bound to comply with these requirements. Otherwise, it runs the risk of incurring administrative sanctions from DECS. [19] In the present case, the fact that respondent was retained as an acting dean for 17 years did not give him a vested right to occupy in a permanent capacity the position to which he was appointed. Neither do his long years of service confer upon him the requisite qualifications which he does not possess. Not being a masters degree holder, he was never and could never have been appointed in a permanent capacity, as he is not qualified under the law. Thus, pursuant to the 1970 Manual, respondents dismissal as acting dean of ACIs Commerce Department is valid. Respondents appointment as dean of petitioners Commerce Department was also in an acting capacity. Hence, the Court finds the rulings in La Salette and Achacoso, which were earlier discussed, applicable. The Court is not persuaded by respondents contention that petitioner ACI is estopped from assailing respondents qualification since it allowed the latter to continue occupying the position of acting dean for more than 17 years despite the said requirement being imposed by the DECS. In the present case, the employment of respondent as Acting Dean is contrary to the express provisions of the 1970 Manual. It is settled that estoppel cannot give validity to an act that is prohibited by law, or one

that is against public policy.[20] Neither can the defense of illegality be waived.[21] Hence, respondents appointment as Acting Dean can never be deemed validated byestoppel. Moreover, respondent cannot deny that he is aware of the fact tha t a masters degree in business administration is required of a person who is appointed to the position of ACIs Dean of Commerce. He never disputed petitioners' contention in their Answer/Position Paper [22] filed with the Labor Arbiter that he was indeed aware of this requirement. In fact, it was in his Memorandum-Proposal addressed to the Rector of ACI dated May 26, 1972[23] that respondent suggested that ACI grant him financial assistance so that he can go to graduate school and take up MBA. ACI acted favorably on his suggestion and awarded him a scholarship grant less than a month after the said Memorandum-Proposal was submitted. In addition, one of the conditions imposed by petitioners upon respondent in their Scholarship and Employment contract was for him to serve as Dean of its Commerce Department after he finished his MBA. Despite the opportunity given him, respondent still failed to obtain an MBA. Nonetheless, respondent was still allowed to retain his position as Acting Dean. Under the foregoing circumstances, especially in light of the requirements imposed by law, petitioners extension of respondents appointment can be considered simply as an act of grace on the part of the former and may not be interpreted as a change of status from temporary to permanent. If the intention of the petitioners was to make respondents appointment permanent, they would have done so by executing a different appointment paper considering the fact that the original appointment was of a temporary nature. Moreover, the provisions of Article 280 of the Labor Code are not applicable to the present case especially with respect to the issue of respondent's acquisition of security of tenure. It is settled that questions respecting a private school teachers entitlement to security of tenure are governed by the Manual of Regulations for Private Schools and not the Labor Code. Paragraph 75[24] of the 1970 Manual (now Section 93[25] of the 1992 Manual) lays down the requisites before a teacher can be considered as having attained a permanent status and therefore entitled to security of tenure. In La Salette, the Court was clear in ruling that, unlike teachers (assistant instructors, instructors, assistant professors, associate professors, full professors) who aspire for and expect to acquire permanency, or security of tenure, in their employment as faculty members, teachers who are appointed as department heads or administrative officials (e.g., college or department secretaries, principals, directors, assistant deans, deans) do not normally, and should not expect to, acquire a second status of permanency or an additional or second security of tenure as such officer. In the instant case, it is not disputed that respondent was never removed from his position as instructor. He was only dismissed from his capacity as Acting Dean and Acting Personnel Director. As to respondents right to procedural due process, this Court has held that there is no need of a notice to the acting appointee or any form of hearing.[26] Such procedural requirements apply where the officer is removable only for cause.[27] This Court reiterates the rule that a bona fide appointment in an acting capacity is essentially temporary and revocable in character and the holder of such appointment may be removed anytime even without hearing or cause.[28] As to respondents entitlement to separation pay, the settled rule is that separation pay is the amount that an employee receives at the time of his severance from the service and is designed to provide the employee with the wherewithal during the period that he is seeking another employment. [29] In the present case, while respondent was no longer allowed to return to his positions as Acting Dean and Acting Personnel Director he was, nonetheless, retained as an instructor. Hence, he could not be deemed as separated from the service because his employment as instructor remains. On the other hand, if respondent chose to seek another employment as there is no showing in the present case that he returned to his position as instructor, petitioners should not be faulted and made to suffer the consequence of respondent's decision. In such a case he is deemed to have voluntarily resigned. Settled is the rule that an employee who voluntarily resigns from employment is not entitled to separation pay unless, however, there is a stipulation for payment of such in the employment contract or Collective Bargaining Agreement, or payment of the amount is sanctioned by established employer practice or policy. [30] There is no proof to show that the present case falls under any of the above-enumerated exceptions. Hence, the Court finds no cogent reason to award him separation pay. WHEREFORE, the instant petition is GRANTED. The Decision of the Court of Appeals dated March 9, 2001 in CA-G.R. SP No. 54035, which affirmed the Decision of the National Labor Relations Commission, Fourth Division, Cebu City in NLRC Case No. V-0261-94 is REVERSED and SET ASIDE. The Labor Arbiter's Decision dated May 24, 1994 in RAB Case No. 0210-AKLAN-92 (06-11-700045-92), dismissing respondents complaint for lack of merit, is REINSTATED. No costs. SO ORDERED.

SECOND DIVISION G.R. No. 165598 LAGONOY BUS CO., INC./ NYMPHA O. BUENCAMINO, Petitioners,

Present:

QUISUMBING, J., Chairperson, - versus CARPIO, CARPIO MORALES, TINGA, and VELASCO, JR., JJ. COURT OF APPEALS (former Fourth Division), JOSE B. CARIO, LORENZO FERMANO, ELEUTERIO P. PADIN, JR., MELVIN F. MORALEDA, LEYNARD O. ALVAREZ, BENJAMIN RINGANATE, JR., LORETO B. CONCINA, REY B. OLIVER, JR., and RUPERTO O. REBUYA, JR., Respondents. August 14, 2007 x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x DECISION QUISUMBING, J.:

Promulgated:

Assailed by petition for review on certiorari are both the Decision[1] dated April 28, 2004 and the Resolution[2] datedSeptember 27, 2004, of the Court of Appeals in CA-G.R. SP No. 71240. The Court of Appeals had reinstated the decision[3] of the Labor Arbiter who declared respondents dismissal illegal and ordered petitioners to pay respondents their full backwages and separation pay. Petitioner Lagonoy Bus Co., Inc. (LBCI) is a transportation company which commenced operations in September 1991. It was headed by Reynaldo D. Buencamino as President and General Manager (old LBCI). Reynaldo is the husband of petitioner Nympha O. Buencamino. On various dates, LBCI hired respondents Jose B. Cario, Lorenzo Fermano, Eleuterio P. Padin, Jr., Melvin F. Moraleda, Leynard O. Alvarez, Benjamin Ringanate, Jr., Loreto B. Concina, Rey B. Oliver, Jr., and Ruperto O. Rebuya, Jr., in different capacities as bus driver, alternate driver, bus conductor, and bus inspector, respectively. Meanwhile, LBCI obtained a loan from the Rural Bank of Nabua, Inc., with Alfredo F. Odiamar, Nymphas father, as co-maker/borrower. When LBCI defaulted, the bank filed a case for a sum of money with damages.

On June 4, 1997, LBCI temporarily ceased operations following the attachment of its rolling stocks. Consequently, it terminated respondents services without notice and separation pay. To settle the case, Alfredo paid the loan as evidenced by a compromise agreement. On July 4, 1997, the bus company (hereafter, the new LBCI) resumed operations under the management of Nympha. It also rehired respondents on probationary basis. Sometime in December 1997 and January 1998, respondents were dismissed for failing to meet the company standards.[4] Respondents filed separate complaints for illegal dismissal with claims for separation pay, backwages and damages. For their part, petitioners specified dishonesty and loss of confidence as additional grounds to dismiss respondents.[5] On January 15, 2001, the Labor Arbiter rendered a decision in favor of respondents, declaring their dismissal illegal. The decision decreed as follows: WHEREFORE, premises considered, judgment is hereby rendered in favor of complainants, and against respondents, in the manner following: 1. Declaring the dismissal of the complainants by respondents Lagonoy Bus Co., Inc./[Nympha] O. Buencamino, illegal; 2. Ordering respondents to pay complainants their full backwages, computed as of the date of this decision, as follows: 1) Jose B. Cario (P2,240 x 38 mos.) 2) Lorenzo Fermano (P200 x 26 x 38) 3) Eleuterio P. Padin, Jr. (P173 x 26 x 35) 4) Melvin F. Moraleda (P200 x 26 x 35) 5) Leynard O. Alvarez (P173 x 26 x 35) 6) Benjamin Ringanate, Jr. (P200 x 26 x 35) 7) Loreto B. Concina (P200 x 26 x 35) 8) Rey B. Oliver, Jr. (P200 x 26 x 35) 9) Ruperto O. Rebuya, Jr. (P200 x 26 x 35) Php 85,120.00 197,600.00 157,430.00 182,000.00 157,430.00 182,000.00 182,000.00 182,000.00 182,000.00 Php 1,507,580.00 3. Ordering respondents to pay complainants their respective separation pay in lieu of reinstatement, computed as follows: 1) Jose B. Cario (P2,240 x 5 yrs) 2) Lorenzo Fermano (P200 x 26 x 2) 3) Eleuterio P. Padin, Jr. ([P]173 x 26 x 6) 4) Melvin F. Moraleda (P200 x 26 x 3) 5) Leynard O. Alvarez ([P]173 x 26 x 6) 6) Benjamin Ringanate, Jr. (P200 x 26 x 7) 7) Loreto B. Concina (P200 x 26 x 7) Php 11,200.00 10,400.00 26,988.00 15,600.00 26,988.00 36,400.00 36,400.00

8) Rey B. Oliver, Jr. (P200 x 26 x 4) 9) Ruperto O. Rebuya, Jr. (P200 x 26 x 4)

20,800.00 20,800.00 Php 205,576.00

All other claims and charges are DISMISSED for lack of merit. SO ORDERED.[6]

On January 28, 2002, the National Labor Relations Commission (NLRC) reversed the decision of the Labor Arbiter and dismissed the complaints.[7] Respondents moved for reconsideration but were denied on March 22, 2002.[8] On April 25, 2002, the NLRC issued an Entry of Judgment certifying that on April 19, 2002, the NLRC resolution dated March 22, 2002 became final and executory.[9] Respondents sought relief from the Court of Appeals on April 29, 2002 through a petition for certiorari under Rule 65 of the Rules of Court.[10] On April 28, 2004, the appellate court reversed the NLRC decision in this wise: WHEREFORE, premises considered, the instant Petition for Certiorari is GRANTED. Accordingly, the January 28, 2002 and March 22, 2002 Resolutions of the NLRC, Third Division, are ANNULLED and SET ASIDE and the DECISION of the labor arbiter dated January 15, 2001 is hereby REINSTATED. SO ORDERED.[11]

The Court of Appeals ruled that the old LBCI and the new LBCI were one and the same because the new LBCI (1) engaged in the same line of business and carried the same corporate name; (2) utilized the same rolling stocks, passenger buses, and facilities; (3) plied the same route; and (4) had the same personnel. Thus, the new LBCI should be treated as respondents employer in resolving their complaints for illegal dismissal. The appellate court also noted that respondents have worked for LBCI for at least two years and performed services tha t were desirable and necessary to LBCIs business; thus, they had attained regular status despite the contrary stipulations in their contracts with the new LBCI. They could not be dismissed without just cause and due process as done by petitioners.

Petitioners now allege in the instant petition that the Court of Appeals erred in: I. GRANTING THE PETITION FOR CERTIORARI UNDER RULE 65 OF THE 1997 RULES OF CIVIL PROCEDURE AS IT IS NOT THE PROPER REMEDY TO REVIEW A DECISION THAT HAS ALREADY BECOME FINAL AND EXECUTORY. II. HOLDING THAT LAGONOY BUS COMPANY, INC. (LBCI) UNDER THE OLD MANAGEMENT OF REYNALDO BUENCAMINO AND LAGONOY BUS COMPANY, INC. (LBCI) UNDER THE NEW MANAGEMENT OF [NYMPHA] BUENCAMINO ARE ONE AND THE SAME COMPANY AND TOTALLY IGNORED THE SUBROGATION PURSUANT TO ARTICLE 1303 OF THE CIVIL CODE OF ALFREDO F. ODIAMAR & HERMOGENA S. ODIAMAR OVER THE RIGHTS AND INTERESTS OF THE RURAL BANK OF NABUA, INC. IN CIVIL CASE NO. IR-2891 AND THEIR EVENTUAL ENTRY AS THE NEW OWNERS OF LBCI. III. HOLDING THAT COMPLAINANTS WERE ILLEGALLY DISMISSED FROM EMPLOYMENT [DESPITE THEIR] PROBATIONARY STATUS AND ON THE GROUND OF LOSS OF CONFIDENCE IN COMPLETE DISREGARD OF THE EXPRESS MANDATE OF ARTICLES 281 AND 282 OF THE LABOR CODE.[12]

Simply put, petitioners raise the following issues: (1) Is a petition for certiorari under Rule 65 of the Rules of Court the proper remedy against a decision of the NLRC that has become final and executory? (2) Are the old LBCI and the new LBCI distinct companies or are they one and the same? (3) Were respondents illegally dismissed? On the first issue, petitioners contend that an appeal from the final disposition of the NLRC should be by a petition for review under Rule 45 of the Rules of Court. Respondents counter that although the decision of the NLRC was declared final and executory, they were not precluded from filing a petition for certiorari under Rule 65 within the reglementary period provided in the Rules of Court. In St. Martin Funeral Home v. NLRC,[13] we held that the special civil action of certiorari is the mode of judicial review of the decisions of the NLRC either by this Court or the Court of Appeals, but the latter court is the more appropriate forum in view of the doctrine on the hierarchy of courts and that, in the exercise of this power, the Court of Appeals can review the factual findings or the legal conclusions of the NLRC.[14] In this case, when respondents received the March 22, 2002 resolution of the NLRC on April 3, 2002, they had sixty days within which to elevate the case on certiorari to the Court of Appeals. Hence, the petition they filed on April 29, 2002 was within the reglementary period. Moreover, considering that the petition for certiorari before the Court of Appeals was timely filed, then it can also be said that there was no error on the part of the appellate court when it entertained the said petition for certiorari. On the second issue, petitioners argue that after the old LBCI ceased operations on June 4, 1997, it underwent a change of ownership and management. When Alfredo paid the loan of the LBCI, he was subrogated to the banks rights against LBCI. Hence, he became LBCIs majority stockholder and as purchaser, he had no legal obligation to continue employing respondents. Respondents insist that the old LBCI and the new LBCI are one and the same since the cessation of operations by the old LBCI was merely temporary. In fact, it resumed operations only a month thereafter. Under Article 286[15] of the Labor Code, an employer may bona fide suspend the operation of its business for a period not exceeding six months. In such a case, there is no termination of the employment of the employees, but only a temporary displacement. When the suspension of the business operations exceeds six months, then the employment of the employees could be deemed terminated. Worth stressing, if the operation of the business is resumed within six months, it shall be the duty of the employer to reinstate his employees to their former positions without loss of seniority rights, if the latter would indicate their desire to resume work within one month from such resumption of operations.[16] In compliance, therefore, with said Article 286 and the applicable jurisprudence, it was the duty of the new LBCI to reinstate respondents to their former positions without loss of seniority rights when it resumed operations on July 4, 1997, a month after it temporarily ceased operations. Respondents in fact indicated their desire to resume their work when they re-applied with the new LBCI. Considering the circumstances in this case, we find no merit in petitioners argument that Alfredo became LBCIs majority stockholder after he paid LBCIs loan and, as purchaser of its stocks, he had no legal obligation to continue employing respondents. That argument lacks factual as well as legal foundation. First, even if Alfredo was subrogated to the banks rights against LBCI, he became at most a creditor. Being a creditor differs from being a purchaser or majority stockholder. We note likewise that petitioners did not substantiate their claim of a sale, nor even the date thereof. Even LBCIs change of name to ANH Transport Services, Inc. on August 21, 1998, with Alfredo as majority stockholder is of no moment since the change occurred after respondents dismissal. At the time respondents were dismissed, they were still employed by the old LBCI. Second, granting that a sale took place, the old LBCI should have given respondents the required notice and separation pay prior to their dismissal. While we recognize that an employer has a right to sell or dispose of all or substantially all of its assets and properties, which could bring about the dismissal of its employees in the process, such right should not be interpreted in such a manner as to insulate the employer

or the divesting corporation (the old LBCI) from its obligation to its employees, particularly the payment of separation pay. Such interpretation could not be tolerated in labor law. It strikes at the very concept of social justice.[17] Third, as astutely observed by the Court of Appeals, the old LBCI and the new LBCI are one and the same because the new LBCI (1) engaged in the same line of business and carried the same corporate name; (2) utilized the same rolling stocks, passenger buses, and facilities; (3) plied the same route; and (4) had the same personnel. On the third issue, petitioners contend that respondents were hired by the new LBCI under probationary status and were bound by the rules on probationary employment. Thus, petitioners had just cause to dismiss them when they failed to meet the company standards and committed acts tantamount to dishonesty and loss of confidence. Respondents respond that having worked for LBCI for at least two years and performed services that were desirable and necessary to LBCIs business, they had attained regular status. Hence, they could not be dismissed without just cause and due process. Having ruled out a sale of LBCI during its temporary suspension of operations, we hold that respondents remained regular employees of LBCI regardless of the change of management. They could likewise not be dismissed without just cause and due process. On this point, we find no reason to depart from the findings of both the Labor Arbiter and the Court of Appeals. They are positively instructive and well considered.

On the matter of dishonesty and loss of confidence, respondents termination letters cited only failure to meet the company standards as ground for their dismissal.[18] This only shows that at the time respondents were dismissed, the particular and specific charges of dishonesty and loss of confidence had not yet surfaced. In fact, petitioners even admitted that they received information on non-collection or undercollection of fares only on January 5, 1998.[19] At that time, respondents had already been dismissed. Clearly, these additional grounds were mere afterthoughts to justify respondents dismissal by the petitioners. We find the bare mention of the original and the additional grounds cited insufficient to justify said dismissal. WHEREFORE, the instant petition is DENIED. The Decision dated April 28, 2004, as well as the Resolution datedSeptember 27, 2004, of the Court of Appeals in CA-G.R. SP No. 71240 is hereby AFFIRMED. Let this case be remanded to the Labor Arbiter for re-computation and payment of the backwages and separation pay due respondents as expeditiously as possible. Costs against the petitioners. SO ORDERED.

THIRD DIVISION JOEL B. DE JESUS, Petitioner, G.R. No. 151158 Present: - versus YNARES-SANTIAGO, J., Chairperson, AUSTRIA-MARTINEZ, CHICO-NAZARIO, NACHURA, and REYES, JJ. Promulgated: August 17, 2007 x------------------------------------------------------------------------------------x DECISION NACHURA, J.: Petitioner Joel B. De Jesus appeals by certiorari under Rule 45 of the Rules of Court the September 28, 2001 Decision[1] of the Court of Appeals (CA) in CA-G.R. SP. No. 58241, and the December 12, 2001 Resolution[2] denying its reconsideration. On November 20, 1996, De Jesus applied for shipboard employment with respondent Pacific Ocean Manning, Inc. (POMI), a domestic corporation duly licensed by the Philippine Overseas Employment Administration (POEA) to operate as a manning agency. As a standard operating procedure, POMI directed De Jesus to undergo the pre-employment medical examination at the Our Lady of Fatima Medical Clinic, its accredited clinic. On the query pertaining to his medical history, specifically as to whether he was suffering from or had been told that he had any disease or ailment, including stomach pain or ulcer, De Jesus answered in the negative. After the examination, he was reported fit for work.[3] De Jesus was then hired as 4th Engineer by POMI, for and in behalf of its principal Celtic Pacific Ship Management Ltd. (Celtic), on board the ocean-going vessel M/V Author on March 26, 1997. The employment contract[4] stipulated that he would work for a period of nine (9) months with a monthly salary of US$824.00 and a fixed overtime rate of US$459.00. De Jesus also signed the Standard Employment Contract Addendum,[5] barring alcohol, drugs, and any medication on board without written permission from the master of the vessel. The use of drugs not prescribed by a medical doctor on board or ashore was prohibited and considered a fundamental breach of the contract of employment. It was also provided that any prescribed drug should be kept at the vessels hospital, and used only with the approval and supervision of the captain. Any seafarer taking any medication prescribed by a medical doctor was further required to inform the company master manning agent or drug and alcohol test collector of this fact. De Jesus departed from the Philippines on March 28, 1997 and embarked on M/V Author the following day. Early in his stint on board M/V Author, De Jesus experienced stomach pains, which became unbearable during the second month of his stay, especially when his captain required him to work even during meal hours. His condition worsened and he severely lost weight. Thus, when the ship docked in Hamburg, Germany, De Jesus requested for medical treatment. The ship captain referred him to Dr. JanGerd H. Hagelstein. De Jesus was diagnosed to be suffering from relapse of gastric ulcer and was advised to sign off for thorough diagnostic examination and treatment. He was declared fit for repatriation.[6] De Jesus was repatriated to the Philippines on June 19, 1997. Upon his arrival, he went to POMI and requested financial assistance and medical treatment for his illness. POMI, however, refused. De Jesus was constrained to seek medical treatment from Bataan Doctors Hospital at his own expense. He sought reimbursement from POMI, but again it was refused because De Jesus allegedly concealed his previous history of ulcer. POMI, likewise, disallowed De Jesus claim for unpaid salary, on the ground that the amount

NATIONAL LABOR RELATIONS COMMISSION and PACIFIC OCEAN MANNING, INC., Respondents.

had already been applied to the cost of his repatriation.[7] Thus, De Jesus filed a complaint[8] for the recovery of unpaid wages, sickwage allowance and medical expenses. POMI, on the other hand, had a different story. According to POMI, De Jesus committed misrepresentation when he concealed in his medical history that he suffered from ulcer two (2) years ago; that he breached his employment contract when he brought on board his medicines fo r ulcer without the ship captains permission; and that De Jesus admitted having deliberately brought pieces of Cimetidine for fear that his ulcer might recur on board. POMI posited that De Jesus was validly discharged, and ultimately prayed for the denial of the claims. [9] By Decision[10] of August 28, 1998, the Labor Arbiter declared that De Jesus misrepresentation cannot be made basis for the denial of his claims. According to the Labor Arbiter, De Jesus underwent a thorough medical examination before his deployment and was reported fit to work by POMIs accredited clinic. POMI cannot now be heard to claim otherwise. Besides, POMI was aware that De Jesus had been discharged on November 29, 1994 due to illness while on board M/V Oriental Venus. It was, thus, expected that POMI would conduct, as it, in fact, conducted a thorough medical examination in determining De Jesus state of health before his deployment. He concluded that De Jesus illness was work-related or at least workaggravated. He also ruled that POMI failed to convincingly establish that De Jesus violated his employment contract. The Labor Arbiter, thus, disposed: WHEREFORE, premises considered, judgment is hereby entered in favor of complainant and against the [respondent] ordering the latter, jointly and severally, to pay the sum of US$2,735.15 as unpaid salaries and medical allowance for 59 days or its present peso equivalent in the sum of P118,705.51 plus another sum of P5,000.00 as medical benefits or reimbursement of medical expenses of complainant. SO ORDERED.[11] POMI appealed to the National Labor Relations Commission (NLRC), claiming that there was prima facie abuse of discretion on the part of the Labor Arbiter in granting the claims of De Jesus. The NLRC granted the appeal. It found De Jesus guilty of unauthorized possession of medicines on board M/V Author, justifying his discharge. Likewise, it denied the claim for medical and sickness allowance, stating that a relapse of ulcer was not work- related, as the illness already existed when De Jesus applied with POMI, but the former intentionally concealed it so he could be hired. Such misrepresentation disqualified De Jesus from claiming employment benefits under the contract. Finally, the NLRC sustained POMI in applying De Jesus unpaid salaries to the cost of his repatriation.[12] Hence, it reversed the decision of the Labor Arbiter, viz.: WHEREFORE, premises considered, the appeal is hereby GRANTED. Accordingly, the Decision appealed from is totally REVERSED and SET ASIDE and a new one [is] entered DISMISSING the instant case for lack of merit. SO ORDERED.[13] De Jesus motion for reconsideration having been denied by the Resolution [14] of July 30, 2001, he elevated the case to the Court of Appeals on petition for certiorari. In its Decision[15] of September 28, 2001, the Court of Appeals affirmed the NLRC. It agreed with the NLRC that De Jesus misrepresentation disqualified him from employment, be nefits and claims. The appellate court added that De Jesus did not categorically deny the charge of unauthorized possession of Cimetidine, in violation of the Standard Employment Contract Addendum. The CA concluded that POMI was justified in discharging him from M/V Author, and the NLRC, thus, acted well within its discretion in reversing the findings of the Labor Arbiter. De Jesus filed a Motion for Reconsideration,[16] but the Court of Appeals denied it on December 12, 2001.[17]

Aggrieved by the Resolutions of the Court of Appeals, De Jesus comes to this Court positing these issues: I WHETHER OR NOT PETITIONER SHALL (sic) BE AWARDED HIS UNPAID SALARIES, MEDICAL ALLOWANCE AND REIMBURSEMENT OF HIS MEDICAL EXPENSES. II WHETHER PETITIONER SHALL (sic) BEAR THE COST OF HIS REPATRIATION. [18] It is a settled rule that under Rule 45 of the Rules of Court, only questions of law may be raised before this Court. Judicial review by this Court does not extend to a re-evaluation of the sufficiency of the evidence upon which the proper labor tribunal has based its determination. Firm is the doctrine that this Court is not a trier of facts, and this applies with greater force in labor cases.[19] However, factual issues may be considered and resolved when the findings of facts and conclusions of law of the Labor Arbiter are inconsistent with those of the NLRC and the Court of Appeals,[20] as in this case. De Jesus insists on reimbursement for his medical expenses and entitlement to sickness allowance and his unpaid salaries. POMI, on the other hand, counters that De Jesus committed misrepresentation and breach of contract. The Labor Arbiter lent credence to De Jesus posture and granted his claims, but the NLRC and Court of Appeals reversed the Arbiters findings. T hus, a review of the records of the case, with an assessment of the facts, is necessary. The evidence shows that De Jesus previously suffered from ulcer but he ticked NO in his medical history. De Jesus, therefore, committed misrepresentation. Nonetheless, he passed the pre-employment medical examination, was reported fit to work, and was suffered to work on board M/V Author for more than two (2) months, until his repatriation on June 19, 1997. The rule is that an ailment contracted even prior to his employment, does not detract from the compensability of the disease. It is not required that the employment be the sole factor in the growth, development or acceleration of the illness to entitle the claimant to the benefits incident thereto. It is enough that the employment had contributed, even in a small measure, to the development of the disease. [21] In this case, POMI failed to rebut De Jesus claim that he was required to work even during mealtime and that the meals served on board did not fit the dietary preference of the Filipinos. Such plight took a toll on De Jesus health and surely contributed, even in a slight degree, to the relapse of his illness. In OSM Shipping Philippines, Inc. v. Dela Cruz,[22] this Court, in granting similar claims, held: Labor contracts are impressed with public interest and the provisions of the POEA Standard Employment Contract must be construed fairly, reasonably and liberally in favor of Filipino seamen in the pursuit of their employment on board ocean-going vessels. Despite his misrepresentation, Arbit underwent and passed the required pre-medical examination, was declared fit to work, and was suffered to work by petitioner. Upon repatriation, he complied with the required post-employment medical examination. Under the beneficent provisions of the Contract, it is enough that the work has contributed, even in a small degree, to the development of the disease and in bringing about his death. Strict proof of causation is not required.[23] De Jesus misrepresentation cannot, therefore, be made basis by POMI for the denial of his claims under the contract. Apparently realizing the folly of the denial grounded solely on the employees misrepresen tation, POMI then asserted that De Jesus breached his employment contract. It alleged that De Jesus was caught in possession of several pieces of Cimetidine, without the ship captains permission, and that therefore, he was discharged for a just cause.

Indeed, possession of medicines on board without the ship captains permission was a violation of the Standard Employment Contract Addendum and would entitle POMI to dismiss the erring crew member but only after compliance with the procedure provided in the contract.[24] Section 17 of the Revised Standard Employment Terms and Conditions Governing the Employment of Filipino Seafarers on Board Ocean-Going Vessels supplies the disciplinary procedure against an erring seafarer: SECTION 17. DISCIPLINARY PROCEDURES: The Master shall furnish the seafarer with the following disciplinary procedure against an erring seafarer: A. The master shall furnish the seafarer with a written notice containing the following: 1. Grounds for the charges as listed in Section 31 of this Contract. 2. Date, time and place for a formal investigation of the charges against the seafarer concerned. B. The Master or his authorized representative shall conduct the investigation or hearing, giving the seafarer the opportunity to explain or defend himself against the charges. An entry on the investigation shall be entered into the ships logbook. C. If after the investigation or hearing, the Master is convinced that imposition of a penalty is justified, the Master shall issue a written notice of penalty and the reasons for it to the seafarer, which copies shall be furnished to the Philippine Agent. D. Dismissal for just cause may be effected by the master without furnishing the seafarer with notice of dismissal if doing so will prejudice the safety of the crew or the vessel. This information shall be entered in the ships logbook. The Master shall send a complete report to the manning agency substantiated by the witnesses, testimonies and any other documents in support thereof. In this case, there was no showing that Celtic complied with the foregoing procedure, thus, casting a serious doubt on the validity of De Jesus discharge. Likewise, neither the ships logbook nor the report sent to POMI as Celtics manning agent was presented in the proceedings a quo to establish the breach committed by De Jesus. The pieces of evidence submitted before the Labor Arbiter in support of De Jesus discharge zeroed in on the alleged misrepresentation, which, as mentioned, cannot be a valid basis for the denial of De Jesus claims. Settled is the rule that in termination cases, the burden of proof rests upon the employer to show that the dismissal is for a just and valid cause. The case of the employer must stand or fall on its own merits and not on the weakness of the employee's defense.[25] In this case, no convincing proof was offered to prove POMIs allegation. All that we have is its self-serving assertion that De Jesus violated his employment contract. There is no proof that the prescribed disciplinary procedure was followed. We, therefore, agree with the Labor Arbiters finding that POMI utterly failed to establish its claim of valid dismissal. Accordingly, the NLRC and Court of Appeals erred in reversing the said finding. It is clear from the records that De Jesus disembarked for a medical reason. Hence, the cost of De Jesus repatriation should be borne by Celtic and POMI, pursuant to the provisions of Section 20(B)(4) of the Standard Employment Contract: 4. Upon sign-off of the seafarer from the vessel for medical treatment. The employer shall bear the full cost of repatriation in the event the seafarer is declared (1) fit for repatriation; or (2) fit to work but the employer is unable to find employment for the seafarer on board his former vessel or another vessel of the employer despite earnest efforts.

The cost of repatriation should not be deducted from De Jesus unpaid salaries of US$911.00.

Likewise, records show that De Jesus immediately reported to POMI for post-employment medical examination and treatment, but the latter adamantly refused to extend him medical assistance. He was constrained to seek medical attention from Bataan Doctors Hospital at his own expense. Celtic and POMI should, therefore, reimburse De Jesus for his medical expenses. Finally, De Jesus is entitled to his sickness allowance for fifty-nine (59) days from June 19, 1998 until August 16, 1998, when he was declared fit to work. Section 20(B)(3) of the Contract governs the contractual liability of an employer to pay sickness allowance to a seafarer who suffered illness or injury during the term of his contract viz.: SECTION 20. COMPENSATION AND BENEFITS xxxx B. 3. COMPENSATION AND BENEFITS FOR INJURY OR ILLNESS xxxx Upon sign-off from the vessel for medical treatment, the seafarer is entitled to sickness allowance equivalent to his basic wage until he is declared fit to work or the degree of permanent disability has been assessed by the company-designated physician but in no case shall this period exceed one hundred twenty (120) days.

For this purpose, the seafarer shall submit himself to a post-employment medical examination by a company-designated physician within three working days upon his return except when he is physically incapacitated to do so, in which case a written notice to the agency within the same period is deemed as compliance. Failure of the seafarer to comply with the mandatory reporting requirement shall result in the forfeiture of his right to claim the above benefits x x x. In fine, we affirm the Labor Arbiters Decision granting De Jesus claims for unpaid salary of US$911.00, sickness allowance for fifty-nine (59) days, and reimbursement of his medical expenses. WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals in CA-G.R. SP. No. 58241, and its Resolution dated December 21, 2001, are REVERSED and SET ASIDE. The Decision dated August 28, 1998 of the Labor Arbiter is REINSTATED. SO ORDERED.

SECOND DIVISION

SAN MIGUEL CORPORATION, Petitioner, - versus -

G.R. No. 147566 Present: PUNO, J., Chairperson, SANDOVAL-GUTIERREZ,

*CORONA,

NATIONAL LABOR RELATIONS COMMISSION and RAFAEL MALIKSI, Respondents.

AZCUNA, and GARCIA, JJ. Promulgated: December 6, 2006

x------------------------------------------------------------------------------------x DECISION GARCIA, J.: In this petition for review under Rule 45 of the Rules of Court, petitioner San Miguel Corporation (SMC) seeks the reversal and setting aside of the Decision[1] dated September 30, 1999 of the Court of Appeals (CA) in CA-G.R. SP No. 50321, as reiterated in its Resolution[2] of March 20, 2001, affirming in toto an earlier decision of the National Labor Relations Commission (NLRC) in NLRC NCR CA No. 005478-93, entitled Rafael C. Maliksi v. San Miguel Corporation and/or Philippine Software Services & Education Center. The affirmed NLRC decision overturned that of the Labor Arbiter and declared the herein private respondent Rafael Maliksi (Maliksi) a regular employee of the petitioner and ordered the latter to reinstate him with benefits. As found by the NLRC and subsequently adopted by the CA, the facts are as follows: On 16 October 1990, Rafael M. Maliksi filed a complaint against the San Miguel CorporationMagnolia Division, herein referred to as SMC and Philippine Software Services and Education Center herein referred to as PHILSSEC to compel the said respondents to recognize him as a regular employee. He amended the complaint on 12 November 1990 to include the charge of illegal dismissal because his services were terminated on 31 October 1990. The complainants employment record indicates that he rendered service with Lipercon Services from 1 April 1981 to February 1982 as budget head assigned to SMC-Beer Division, then from July 1983 to April 1985 with Skillpower, Inc., as accounting clerk assigned to SMC-Magnolia Division, then from October 1988 to 1989 also with Skillpower, Inc. as acting clerk assigned to SMC-Magnolia Finance, and from October 1989 to 31 October 1990 with PHILSSEC assigned to Magnolia Finance as accounting clerk. The complainant considered himself as an employee of SMC-Magnolia. Lipercon Services, Skillpower, Inc. and PHILSSEC are labor-only contractors and any one of which had never been his employer. His dismissal, according to him, was in retaliation for his filing of the complaint for regularization in service. His dismissal was illegal there being no just cause for the action. He was not accorded due process neither was his dismissal reported to the Department of Labor and Employment. PHILSSEC disclaimed liability. As an entity catering (sic) computer systems and program for business enterprises, it has contracted with SMC-Magnolia to computerize the latters manual accounting reporting systems of its provincial sales. PHILSSEC then conducted a three phase analysis of SMC Magnolia set up: first the computer needs of the firm was (sic) determined; then, the development of computer systems or program suitable; and, finally, set up the systems and train the employees to operate the same. In all these phases, PHILSSEC uses its computer system and technology and provided the necessary manpower to

compliment the transfer of the technology to SMC-Magnolia. Complainant Maliksi was one of those employed by PHILSSEC whose principal function was the manual control of data needed during the computerization. Like all assigned to the project, the complainants work was controlled by PHILSSEC supervisors, his salary paid by the agency and he reported directly to PHILSSEC. The computerization project was completed on 31 October 1990, and so, the complainant was terminated on the said date. SMC, on the other hand, submitted its position. In the contract SMC entered with PHILSSEC, the latter undertook to set up the computerization of the provincial sales reporting system of Magnolia Division. To carry out the task, PHILSSEC utilized 3 computer programmers and the rest were data encoders. The complainant being one of the compliments (sic) performed the following functions: xxx xxx xxx SMC likewise contends that PHILSSEC exercised exclusive managerial prerogative over the complainant as to hiring, payment of salary, dismissal and most importantly, the control over his work. SMC was interested only in the result of the work specified in the contract but not as to the means and methods of accomplishing the same. Moreover, PHILSSEC has substantial capital of its own. It has an IBM system, 3 computers, 17 IBM or IBM-compatible computers; it has a building where the computer training center and main office are located. What it markets to clients are computer programs and training systems on computer technology and not the usual labor or manpower supply to establishment concerns. Moreover, what PHILSSEC set up employing the complainant, among others, has no relation to the principal business of SMC, which is food and beverage. It was a single relationship between the people utilized by PHILSSEC and SMC [3] The Labor Arbiter declared Maliksi a regular employee of PHILSSEC and absolved SMC from liability. Dispositively, the Labor Arbiters decision reads: WHEREFORE, the complainant, Rafael Maliksi, is recognized as a regular employee of Philippine Software Services and Education Centerwhich respondent is ordered to reinstate him to a job of the same level as his previous position in any of the projects where there is a vacancy and without loss of seniority rights. A five months backwages is awarded because the prolonged suspension from his work was brought about by his refusal to take any job offered by PHILSSEC earlier in the proceedings of this case. The respondent, SMC-Magnolia Division, is exempted from any liability as the complaint against the said corporation is dismissed for lack of merit. SO ORDERED.[4] Maliksi appealed to the NLRC. In turn, in a decision dated January 26, 1998, the NLRC reversed that of the Labor Arbiter by declaring Maliksi a regular employee of the petitioner and ordering the latter to reinstate him without loss of seniority rights and with full benefits, to wit: WHEREFORE, as recommended, the decision below is hereby SET ASIDE. Accordingly, judgment is hereby rendered directing respondent SMC-Magnolia Division to reinstate complainant as a regular employee without loss of seniority rights and other privileges and to pay complainant full backwages, inclusive of allowances and other benefits or their monetary equivalent, computed from the time his compensation was withheld from him up to time of his actual reinstatement, plus 10% of the total money award for and attorneys fees. SO ORDERED.[5] From the aforementioned decision of the NLRC, SMC went on certiorari to the CA in CA-G.R. SP No. 50321. As stated at the outset, the CA, in the herein assailed Decision[6] dated September 30, 1999, affirmed in toto that of the NLRC. In so doing, the CA found SMC to have utilized PHILSSEC, Lipercon Services, Inc. (Lipercon) and Skillpower, Inc. (Skillpower) as conduits to circumvent Article 280 of the Labor Code, employing Maliksi as contractual or project employee through these entities, thereby undermining his right to gain regular employment status under the law. The appellate court echoed the NLRCs assessment that Maliksis work was necessary or desirable in the business of SMC in its Magnolia Division, for more than the required one-year period. It affirmed the NLRCs finding that the three (3) conduit entities adverted to, Lipercon and Skillpower, are labor-only contractors such that Maliksis previous employment contracts with SMC, through these two entities, are deemed to have been entered into in violation of labor laws. Consequently, Maliksis employment with SMC became permanent and regular after the statutory period of one year of service through these entities. The CA concluded that on account of his past employment contracts with SMC under Lipercon and Skillpower, Maliksi was already a regular employee of SMC when he entered into SMCs computerization project as part of the PHILSSEC project complement.

With its motion for reconsideration having been denied by the CA in its Resolution of March 20, 2001, SMC is now with this Court via the present recourse on the following assigned errors: I The Court of Appeals gravely erred in declaring private respondent a regular employee of petitioner SMC despite its findings that PHILSSEC, the contractor that employed private respondent, is an independent job contractor. Corollarily, the declaration of the Honorable Court of Appeals that private respondent is a regular employee of petitioner SMC proceeds from the erroneous premise that private respondent was already a regular employee of SMC when he was hired by the independent contractor PHILSSEC. Having been placed in petitioner SMC by a supposed labor-only contractor, for just five months and for a different job, three years after his last assignment therein, private respondent had not thereby become a regular employee of petitioner SMC. II The Court of Appeals gravely erred in ultimately resolving the case upon the principle that all doubts must be resolved in favor of labor; certainly, protection to labor does not imply sanctioning a plain injustice to the employer, particularly where private respondent was shown to have stated falsehoods and committed malicious intercalations and misrepresentations. III The Court of Appeals gravely erred in declaring that private respondent was not part of the of the personnel group in the computerization program of petitioner SMC under PHILSSEC. We DENY. SMC concedes that Maliksi, before his employment with PHILSSEC, worked in SMC from November 1988 to April 1990, but as employee of Skillpower[7] and that he was previously assigned to SMC between 1981 up to February 1985, for periods spread apart.[8] The Labor Arbiter found, as earlier stated, that Maliksi rendered service with Lipercon from 1 April 1981 to February 1982 as budget head assigned to SMC-Beer Division; from July 1983 to April 1985 with Skillpower as accounting clerk assigned to SMC-Magnolia Division, then from October 1988 to 1989[9] also with Skillpower as acting clerk assigned to SMC-Magnolia Finance, and from October 1989 to 31 October 1990 with PHILSSEC assigned to Magnolia Finance as accounting clerk. In all, it appears that, while under the employ of either Lipercon or Skillpower, Maliksi has undisputedly rendered service with SMC for at least three years and seven months.[10] The Court takes judicial notice of the fact that Lipercon and Skillpower were declared to be labor-only contractors,[11]providing as they do manpower services to the public for a fee. The existence of an employeremployee relationship is factual and we give due deference to the factual findings of both the NLRC and the CA that an employer-employee relationship existed between SMC (or its subsidiaries) and Maliksi. Indeed, having served SMC for an aggregate period of more than three (3) years through employment contracts with these two labor contractors, Maliksi should be considered as SMCs regular employee. The hard fact is that he was hired and re -hired by SMC to perform administrative and clerical work that was necessary to SMCs business on a daily basis. In Bustamante v. National Labor Relations Commission, [12] we ruled: In the case at bar, petitioners were employed at various periods from 1985 to 1989 for the same kind of work they were hired to perform in September 1989. Both the labor arbiter and the respondent NLRC agree that petitioners were employees engaged to perform activities necessary in the usual business of the employer. As laborers, harvesters or sprayers in an agricultural establishment which produces high grade bananas, petitioners tasks are indispensable to the year -round operations of respondent company. This belies the theory of respondent company that the employment of petitioners was terminated due to the expiration of their probationary period in June 1990. If at all significant, the contract for probationary employment was utilized by respondent company as a chicanery to deny petitioners their status as regular employees and to evade paying them the benefits attached to such status. Some of the petitioners were hired as far back as 1985, although the hiring was not continuous. They were hired and re-hired in a span of from two to four years to do the same type of work which conclusively shows the nec essity of petitioners service to the respondent companys business. Petitioners have, therefore, become regular employees after performing activities which are necessary in the usual business of their employer. But, even assuming that the activities of petitioners in respondent companys plantation were not necessary or desirable

to its business, we affirm the public respondents finding that all of the complainants (petitioners) have rendered non-continuous or broken service for more than one (1) year and are consequently considered regular employees. We do not sustain public respondents theory that private respondent should not be made to compensate petitioners for backwages because its termination of their employment was not made in bad faith. The act of hiring and re-hiring the petitioners over a period of time without considering them as regular employees evidences bad faith on the part of private respondent . The public respondent made a finding to this effect when it stated that the subsequent re-hiring of petitioners on a probationary status clearly appears to be a convenient subterfuge on the part of management to prevent complainants (petitioners) from becoming regular employees. (Emphasis supplied) It is worth noting that, except for the computerization project of PHILSSEC, petitioner did not make any insinuation at all that the services of Maliksi with SMC was project-related such that an employment contract with Lipercon and Skillpower was necessary. In Madriaga v. Court of Appeals,[13] the Court, confronted with the same issue now being addressed, declared that regularization of employment in SMC should extend to those whose situation is similar to the complainants in said case. We wrote: This is the third time that the parties have invoked the power of this Court to decide the labor dispute involved in this case. The generative facts of the case are as follows: On 04 March 1988, the NOWM and a number of workers-complainants filed with the Arbitration Branch of the NCR, NLRC, Manila, against San Miguel Corporation, Philippine Dairy Products Corporation, Magnolia Dairy Products, Skillpower Corporation and Lipercon Services, Inc. for illegal dismissal. xxx xxx xxx The Voluntary Arbitrator rendered a decision on 29 July 1988, the dispositive of which states: WHEREFORE, it is hereby declared that complainants are regular employees of SMC and PDPC. Accordingly, SMC and PDPC are hereby ordered to reinstate the dismissed 85 complainants to their former positions as their regular employees effective from the date of the filing of their complaints with full backwages less the daily financial assistance of P30.00 per day each, extended to them by Lipercon and Skillpower. Aggrieved by the said decision of the Voluntary Arbitrator, SMC and PDPC filed a petition for certiorari before the Supreme Court. It was upon the filing of the said petition for certiorari that the Court had the first opportunity to pass upon the controversies involved in this case. In a Resolution dated 30 August 1989, the Court dismissed G.R. No. 85577 entitled, Philippine Dairy Products Corporation and San Miguel Corporation Magnolia Dairy Products Division v. Voluntary Arbitrator Tito F. Genilo of the Department of Labor and Employment (DOLE) and the National Organization of Workingmen (NOWM) for lack of merit. The Court held in full: Individual private respondents are xxx [SMC, et al.] laborers supplied to petitioners by Skillpower Corporation andLipercon Services, Inc., on the basis of contracts of services. Upon expiration of the said contracts, individual private respondents were denied entry to petitioners' premises. Individual private respondents and respondent union thus filed separate complaints for illegal dismissal against petitioners San Miguel Corp., Skillpower Corporation and Lipercon Services, Inc., in the [NLRC, NCR] After consolidation and voluntary arbitration, respondent Labor Arbiter Tito F. Genilo rendered a decision xxx declaring individual private respondents regular employees of petitioners and ordering the latter to reinstate the former and to pay them backwages. On motion for execution filed by private respondents, Labor Arbiter Genilo issued on October 20, 1988 an order directing, among others, the regularization of all the complainants which include those still working and those already terminated. Hence, this petition for certiorari with injunction. Petitioners contend that prior to reinstatement, individual private respondents should first comply with certain requirements, like submission of NBI and police clearances and submission to physical and medical examinations, since petitioners are deemed to be direct

employers and have the right to ascertain the physical fitness and moral uprightness of its employees by requiring the latter to undergo periodic examinations, and that petitioners may not be ordered to employ on regular basis the other workers rendering services to petitioners by virtue of a similar contract of services between petitioners and Skillpower Corporation and Lipercon Services, Inc. because such other workers were not parties to or were not impleaded in the voluntary arbitration case. Considering that the clearances and examinations sought by petitioners from private respondents are not 'periodic' in nature but are made preconditions for reinstatement, as in fact the petition filed alleged that reinstatement shall be effective upon compliance with such requirements, (pp. 5-6 thereof) which should not be the case because this is not a case of initial hiring, the workers concerned having rendered years of service to petitioners who are considered direct employers, and that regularization is a labor benefit that should apply to all qualified employees similarly situated and may not be denied merely because some employees were allegedly not parties to or were not impleaded in the voluntary arbitration case, even as the finding of Labor Arbiter Genilo is to the contrary, this Court finds no grave abuse of discretion committed by Labor Arbiter Genilo in issuing the questioned order of October 20, 1988. ACCORDINGLY, the Court Resolved to Dismiss the petition for lack of merit. In fine, the Court affirmed the ruling of the Voluntary Arbitrator and declared that therein complainants are regular employees of San Miguel Corporation (SMC) and PDPC. It must be noted that in the abovequoted Resolution, the Court extended the benefit of regularization not only to the original complainants but also to those workers who are similarly situated to therein complainants. Herein petitioners are among those who are similarly situated. [14] (Emphasis supplied) We find respondent Maliksi to be similarly situated with those of the complainants in Madriaga. Indeed, Lipercon and Skillpower have figured in not just a few of our decisions,[15] so much so that we are inclined to believe that these two were involved in labor-only contracting with respect to Maliksi. We hold that the finding of the NLRC and the CA as to SMCs resorting to labor-only contracting is entitled to consideration in its full weight. With respect to PHILSSEC, there was no need for Maliksi to be employed under the formers computerization program to be considered a regular employee of SMC at the time. Moreover, SMC itself admits that Maliksis work under the computerization program did not require the operation of a computer system, such as the software program being developed by PHILSSEC.[16]Given this admission, we are simply at a loss to understand why Maliksi should be included in the computerization project as a project employee. Not being a computer expert, Maliksis inclusion in the project was uncalled for. To our mind, his placement in the project was for the purpose of circumventing labor laws. The evidence shows that immediately before he entered the PHILSSEC project in October 1989, Maliksi was fresh out of his employment with SMC (through Skillpower) as acting clerk assigned to SMCMagnolia Finance (from October 1988 to 1989). Maliksis work under the PHILSSEC project was mainly administrative in nature and necessary to the development of SMCs business. These were: a. posting manually the daily account balances in the workset; b. fitting the daily totals into the monthly totals; c. comparing the manual totals with the computer generated totals; d. locating the differences between the totals; and, e. adjusting and correcting errors. Simply put, the data gathered by SMC on a daily basis through Maliksis work would be submitted for analysis and evaluation, thereby allowing SMC to make the necessary business decisions that would enable it to market its products better, or monitor its sales and collection with efficiency. Without the data gatherer or encoder, no analysis could occur. SMC would then, for the most part, be kept in the dark. As to the petitioners second assigned error, we hold that there is no need to resolve the present case under the principle that all doubts should be resolved in favor of the workingman. The perceived doubt does not obtain in the first place. We understand Maliksis desperation in making his point clear to SMC, which unduly refuses to acknowledge his status as a regular employee. Instead, he was juggled from one employment contract to another in a continuous bid to circumvent labor laws. The act of hiring and re-hiring workers over a period of time without considering them as regular employees evidences bad faith on the part of the employer.[17] Where, from the circumstances, it is apparent that periods have been imposed to preclude the acquisition of tenurial security by the employee, the policy,

agreement or practice should be struck down as contrary to public policy, morals, good customs or public order.[18] In point of law, any person who willfully causes loss or injury to another in a manner that is contrary to morals, good customs or public policy shall be liable for the damage. [19] Ways and means contrived by employers to countermand labor laws granting regular employment status to their workers are numerous and long. For instance, they toss the poor workers from one job contractor to another, make them go through endless applications, lining up, paperwork, documentation, and physical examinations; make them sign five- or ten-month-only job contracts, yet re-hire them after brief rest periods, but not after requiring them to go through the whole application and selection process once again; prepare and have them sign waivers, quitclaims, and the like; refuse to issue them identification cards, receipts or any other concrete proof of employment or documentary proof of payment of their salaries; fail to enroll them for entitlement to social security and other benefits; give them positions, titles or designations that connote short-term employment. Others are more creative: they set up distributors or dealers which are, in reality, shell or dummy companies. In this manner, the mother company avoids the employer-employee relations, and is thus shielded from liability from employee claims in case of illegal dismissal, closure, unfair labor practices and the like. In those instances, the poor employees, finding the shell or dummy company to be without assets, often end up confused and without recourse as to whom to run after. They sue the mother company which conveniently sets up the defense of absence of employer-employee relations. In San Miguel Corporation v. MAERC Integrated Services, Inc.,[20] we took note of the practice of hiring employees through labor contractors that catered exclusively to the employment needs of SMC or its divisions or other specific business interests, such that after the specific SMC business or division ceases to do business, the labor contractor likewise ceases its operations. The contrivances may be many and the schemes ingenious and imaginative. But this Court will not hesitate to put pen to a line and defend the workers right to be secure in his (or her) proprietary right to regular employment and his right to a secure employment, viz, one that is free from fear and doubt, that anytime he could be removed, retrenched, his contract not renewed or he might not be re-hired. The ramifications may seem trivial, but we cannot allow the ordinary Filipino workers right to tenurial security to be put in jeopardy by recurrent but abhorrent pr actices that threaten the very lives of those that depend on him. Considering, however, the supervening event that SMCs Magnolia Division has been acquired by another entity, it appears that private respondents reinstatement is no longer feasible. Inst ead, he should be awarded separation pay as an alternative.[21]Likewise, owing to petitioners bad faith, it should be held liable to pay damages for causing undue injury and inconvenience to the private respondent in its contractual hiring-firing-rehiring scheme. WHEREFORE, the instant petition is DENIED and the assailed CA decision dated September 30, 1999 is AFFIRMED, with the MODIFICATION that if the reinstatement of private respondent is no longer practicable or feasible, then petitioner SMC is ordered to pay him, in addition to the other monetary awards, separation pay for the period from October 31, 1990 when he was dismissed until he shall have been actually paid at the rate of one (1) month salary for every year of his employment, with a fraction of at least six (6) months being considered as one (1) year, or the rate of separation pay awarded by petitioner to its other regular employees as provided by written agreement, policy or practice, whichever is higher or most beneficial to private respondent. In addition, petitioner is hereby suffered to indemnify private respondent the amount of P50,000.00 as nominal damages for its bad faith in juggling the latter from one labor contractor to another and causing him unnecessary injury and inconvenience, and for denying him his proprietary right to regular employment. Let this case be REMANDED to the Labor Arbiter for the computation of private respondents backwages, proportionate 13th month pay, separation pay, attorneys fees and other monetary awards; and for immediate execution. Costs against the petitioner. SO ORDERED.

FIRST DIVISION

DOLE PHILIPPINES, INC., Petitioner, - versus -

G.R. No. 161115

Present: MEDEL ESTEVA, et al Respondents. PANGANIBAN, C.J. Chairperson, YNARES-SANTIAGO, AUSTRIA-MARTINEZ, CALLEJO, SR., and CHICO-NAZARIO, JJ.

Promulgated: November 30, 2006

x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x DECISION CHICO-NAZARIO, J.: Before this Court is a Petition for Review on Certiorari under Rule 45 of the revised Rules of Civil Procedure seeking the reversal of the Decision,[1] dated 20 May 2002, and the Amended Decision,[2] dated 27 November 2003, both rendered by the Court of Appeals in CA-G.R. SP No. 63405, which declared herein petitioner Dole Philippines, Inc. as the employer of herein respondents, Medel Esteva and 86 others; found petitioner guilty of illegal dismissal; and ordered petitioner to reinstate respondents to their former positions and to pay the latter backwages. The antecedent facts of the case are recounted as follows: Petitioner is a corporation duly organized and existing in accordance with Philippine laws, engaged principally in the production and processing of pineapple for the export market. [3] Its plantation is located in Polomolok, South Cotabato.[4]

Respondents are members of the Cannery Multi-Purpose Cooperative (CAMPCO). CAMPCO was organized in accordance with Republic Act No. 6938, otherwise known as the Cooperative Code of the Philippines, and duly-registered with the Cooperative Development Authority (CDA) on 6 January 1993.[5] Members of CAMPCO live in communities surrounding petitioners plantation and are relatives of petitioners employees. On 17 August 1993, petitioner and CAMPCO entered into a Service Contract.[6] The Service Contract referred to petitioner as the Company, while CAMPCO was the Contractor. Relevant portions thereof read as follows 1. That the amount of this contract shall be or shall not exceed TWO HUNDRED TWENTY THOUSAND ONLY (P220,000.00) PESOS, terms and conditions of payment shall be on a per job basis as specified in the attached schedule of rates; the CONTRACTOR shall perform the following services for the COMPANY; 1.1 1.2 Assist the COMPANY in its daily operations; Perform odd jobs as may be assigned.

2. That both parties shall observe the following terms and conditions as stipulated, to wit: 2.1 CONTRACTOR must carry on an independent legitimate business, and must comply with all the pertinent laws of the government both local and national; CONTRACTOR must provide all hand tools and equipment necessary in the performance of their work. However, the COMPANY may allow the use of its fixed equipment as a casual facility in the performance of the contract; 2.3 2.4 CONTRACTOR must comply with the attached scope of work, specifications, and GMP and safety practices of the company; CONTRACTOR must undertake the contract work under the following manner: a. b. c. on his own account; under his own responsibility; according to his manner and method, free from the control and direction of the company in all matters connected with the performance of the work except as to the result thereof;

2.2

3. CONTRACTOR must pay the prescribed minimum wage, remit SSS/MEDICARE premiums to proper government agencies, and submit copies of payroll and proof of SSS/MEDICARE remittances to the COMPANY; 4. This contract shall be for a specific period of Six (6) months from July 1 to December 31, 1993; x xx. Pursuant to the foregoing Service Contract, CAMPCO members rendered services to petitioner. The number of CAMPCO members that report for work and the type of service they performed depended on the needs of petitioner at any given time. Although the Service Contract specifically stated that it shall only be for a period of six months, i.e., from 1 July to 31 December 1993, the parties had apparently extended or renewed the same for the succeeding years without executing another written contract. It was under these circumstances that respondents came to work for petitioner. Investigation by DOLE Concomitantly, the Sangguniang Bayan of Polomolok, South Cotabato, passed Resolution No. 64, on 5 May 1993, addressed to then Secretary Ma. Nieves R. Confessor of the Department of Labor and Employment (DOLE), calling her attention to the worsening working conditions of the petitioners workers and the organization of contractual workers into several cooperatives to replace the individual labor-only contractors that used to supply workers to the petitioner. Acting on the said Resolution, the DOLE Regional Office No. XI in Davao City organized a Task Force that conducted an investigation into the alleged laboronly contracting activities of the cooperatives in Polomolok.[7]

On 24 May 1993, the Senior Legal Officer of petitioner wrote a letter addressed to Director Henry M. Parel of DOLE Regional Office No. XI, supposedly to correct the misinformation that petitioner was involved in labor-only contracting, whether with a cooperative or any private contractor. He further stated in the letter that petitioner was not hiring cooperative members to replace the regular workers who were separated from service due to redundancy; that the cooperatives were formed by the immediate dependents and relatives of the permanent workers of petitioner; that these cooperatives were registered with the CDA; and that these cooperatives were authorized by their respective constitutions and by-laws to engage in the job contracting business.[8] The Task Force submitted a report on 3 June 1993 identifying six cooperatives that were engaged in labor-only contracting, one of which was CAMPCO. The DOLE Regional Office No. XI held a conference on 18 August 1993 wherein the representatives of the cooperatives named by the Task Force were given the opportunity to explain the nature of their activities in relation to petitioner. Subsequently, the cooperatives were required to submit their position papers and other supporting documents, which they did on 30 August 1993. Petitioner likewise submitted its position paper on 15 September 1993.[9] On 19 October 1993, Director Parel of DOLE Regional Office No. XI issued an Order [10] in which he made the following findings Records submitted to this Office show that the six (6) aforementioned cooperatives are all duly registered with the Cooperative Development Authority (CDA). These cooperatives were also found engaging in different activities with DOLE PHILIPPINES, INC. a company engaged in the production of pineapple and export of pineapple products. Incidentally, some of these cooperatives were also found engaging in activities which are directly related to the principal business or operations of the company. This is true in the case of the THREE (3) Cooperatives, namely; Adventurers Multi Purpose Cooperative, Human Resource Multi Purpose Cooperative and Cannery Multi Purpose Cooperative. From the foregoing findings and evaluation of the activities of Adventurers Multi Purpose Cooperative, Human Resource Multi Purpose Cooperative and Cannery Multi Purpose Cooperative, this Office finds and so holds that they are engaging in Labor Only Contracting Activities as defined under Section 9, Rule VIII, Book III of the rules implementing the Labor Code of the Philippines, as amended which we quote: Section 9 Labor Only Contracting a) Any person who undertakes to supply workers to an employer shall be deemed to be engaged in labor-only contracting where such person: 1) Does not have substantial capital or investment in the form of tools, equipment, machineries, work premises and other materials; and 2) The workers recruited and placed by such person are performing activities which are directly related to the principal business or operation of the employer to which workers are habitually employed.

b) Labor-only contracting as defined herein is hereby prohibited and the person acting as contractor shall be considered merely as an agent or intermediary of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him.

WHEREFORE, premises considered, ADVENTURERS MULTI PURPOSE COOPERATIVE, HUMAN RESOURCE MULTI PURPOSE COOPERATIVE and CANNERY MULTI PURPOSE COOPERATIVE are hereby declared to be engaged in labor only contracting which is a prohibited activity. The same cooperatives are therefore ordered to cease and desist from further engaging in such activities.

The three (3) other cooperatives, namely Polomolok Skilled Workers Multi Purpose Cooperative, Unified Engineering and Manpower Service Multi Purpose Cooperative and Tibud sa

Katibawasan Multi Purpose Cooperative whose activities may not be directly related to the principal business of DOLE Philippines, Inc. are also advised not to engage in labor only contracting with the company. All the six cooperatives involved appealed the afore-quoted Order to the Office of the DOLE Secretary, raising the sole issue that DOLE Regional Director Director Parel committed serious error of law in directing the cooperatives to cease and desist from engaging in labor-only contracting. On 15 September 1994, DOLE Undersecretary Cresencio B. Trajano, by the authority of the DOLE Secretary, issued an Order[11] dismissing the appeal on the basis of the following ratiocination The appeal is devoid of merit. The Regional Director has jurisdiction to issue a cease and desist order as provided by Art. 106 of the Labor Code, as amended, to wit: Art. 106. Contractor or subcontractor. x x x xxxx The Secretary of Labor may, by appropriate regulations, restrict or prohibit the contracting out of labor to protect the rights of workers established under this Code. In so prohibiting or restricting, he may make appropriate distinctions between labor only contracting and job contracting as well as differentiations within these types of contracting and determine who among the parties involved shall be considered the employer for purposes of this Code, to prevent any violation or circumvention of any provision of this Code (Emphasis supplied) There is labor-only contracting where the person supplying workers to an employer does not have substantial capital or investment in the forms of tools, equipment, machineries, work premises, among others, and the workers recruited and placed by such person are performing activities which are directly related to the principal business of the employer. In such cases, the person or the intermediary shall be considered merely as an agent of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him. in relation to Article 128(b) of the Labor Code, as amended by Republic Act No. 7730, which reads: Art. 128. Visitorial and Enforcement Power. b) Notwithstanding the provisions of Articles 129 and 217 of this Code to the contrary, and in cases where the relationship of employer-employee still exists, the Secretary of Labor and Employment or his duly authorized representatives shall have the power to issue compliance orders to give effect to the labor standards provisions of this Code and other labor legislation based on the findings of labor employment and enforcement officers or industrial safety engineers made in the course of inspection. The Secretary or his duly authorized representatives shall issue writs of execution to the appropriate authority for the enforcement of their orders, except in cases where the employer contests the findings of the labor employment and enforcement officer and raises issues supported by documentary proof which were not considered in the course of inspection. An order issued by the duly authorized representative of the Secretary of Labor and Employment under this article may be appealed to the latter. In case said order involves a monetary award, an appeal by the employer may be perfected only upon the posting of a cash bond issued by a reputable bonding company duly accredited by the Secretary of Labor and Employment in the amount equivalent to the monetary award in the order appealed from. The records reveal that in the course of the inspection of the premises of Dolefil, it was found out that the activities of the members of the [cooperatives] are necessary and desirable in the principal business of the former; and that they do not have the necessary investment in the form of tools and equipments. It is worthy to note that the cooperatives did not deny that they do not have enough capital in the form of tools and equipment. Under the circumstances, it could not be denied

that the [cooperatives] are considered as labor-only contractors in relation to the business operation of DOLEFIL, INC. Thus, Section 9, Rule VIII, Book III of the Omnibus Rules Implementing the Labor Code, provides that: Sec. 9. Labor-only contracting. (a) Any person who undertakes to supply workers to an employer shall be deemed to be engaged in labor-only contracting where such person: (1) Does not have substantial capital or investment in the form of tools, equipment, machineries, work premises and other materials; and (2) The workers recruited and placed by such person are performing activities which are directly related to the principal business or operations of the employer in which workers are habitually employed. (b) Labor-only contracting as defined herein is hereby prohibited and the person acting as a contractor shall be considered merely as an agent or intermediary of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him. x x x x Violation of the afore-quoted provision is considered a labor standards violation and thus, within the visitorial and enforcement powers of the Secretary of Labor and Employment (Art. 128). The Regional Directors authority to issue a cease and desist order emanates from Rule I, Section 3 of the Rules on Disposition of Labor Standard Cases in the Regional Offices, to wit: Section 3. Authorized representative of the Secretary of Labor and Employment. The Regional Directors shall be the duly authorized representatives of the Secretary of Labor and Employment in the administration and enforcement of the labor standards within their respective territorial jurisdiction. The power granted under Article 106 of the Labor Code to the Secretary of Labor and Employment to restrict or prohibit the contracting out of labor to protect the rights of workers established under the Code is delegated to the Regional Directors by virtue of the above-quoted provision. The reason why labor-only contracting is prohibited under the Labor Code is that it encourages circumvention of the provisions of the Labor Code on the workers right to security of tenure and to self-organization. HEREFORE, the respondents Appeal is hereby DISMISSED for lack of merit. The Order of the Regional Director, Regional Office No. XI, Davao City, is AFFIRMED.

After the motion for reconsideration of the foregoing Order was denied, no further motion was filed by the parties, and the Order, dated 15 September 1994, of DOLE Undersecretary Trajano became final and executory. A Writ of Execution[12] was issued by DOLE Regional Office No. XI only on 27 July 1999, years after the issuance of the order subject of the writ. The DOLE Regional Office No. XI was informed that CAMPCO and two other cooperatives continued to operate at DOLE Philippines, Inc. despite the cease and desist Order it had issued. It therefore commanded the Sheriff to proceed to the premises of CAMPCO and the two other cooperatives and implement its Order dated 19 October 1993. Respondents Complaint before the NLRC Respondents started working for petitioner at various times in the years 1993 and 1994, by virtue of the Service Contract executed between CAMPCO and petitioner. All of the respondents had already rendered more than one year of service to petitioner. While some of the respondents were still working for petitioner,

others were put on stay home status on varying dates in the years 1994, 1995, and 1 996 and were no longer furnished with work thereafter. Together, respondents filed a Complaint,[13]on 19 December 1996, with the National Labor Relations Commission (NLRC), for illegal dismissal, regularization, wage differentials, damages and attorneys fees. In their Position Paper,[14] respondents reiterated and expounded on the allegations they previously made in their Complaint Sometime in 1993 and 1994, [herein petitioner] Dolefil engaged the services of the [herein respondents] through Cannery Multi-purpose Cooperative. A cooperative which was organized through the initiative of Dolefil in order to fill in the vacuum created as a result of the dismissal of the regular employees of Dolefil sometime in 1990 to 1993. The [respondents] were assigned at the Industrial Department of respondent Dolefil. All tools, implements and machineries used in performing their task such as: can processing attendant, feeder of canned pineapple at pineapple processing, nata de coco processing attendant, fruit cocktail processing attendant, and etc. were provided by Dolefil. The cooperative does not have substantial capital and does not provide the [respondents] with the necessary tools to effectively perform their assigned task as the same are being provided by Dolefil. The training and instructions received by the [respondents] were provided by Dolefil. Before any of the [respondents] will be allowed to work, he has to undergo and pass the training prescribed by Dolefil. As a matter of fact, the trainers are employees of Dolefil. The [respondents] perform their assigned task inside the premises of Dolefil. At the job site, they were given specific task and assignment by Dolefils supervisors assigned to supervise the works and efficiency of the complainants. Just like the regular employees of Dolefil, [respondents] were subjected to the same rules and regulations observe [sic] inside company premises and to some extent the rules applied to the [respondents] by the company through its officers are even stricter. The functions performed by the [respondents] are the same functions discharged by the regular employees of Dolefil. In fact, at the job site, the [respondents] were mixed with the regular workers of Dolefil. There is no difference in so far as the job performed by the regular workers of Dolefil and that of the [respondents]. Some of the [respondents] were deprived of their employment under the scheme of stay home status where they were advised to literally stay home and wait for further instruction to report anew for work. However, they remained in this condition for more than six months. Hence, they were constructively or illegally dismissed. Respondents thus argued that they should be considered regular employees of petitioner given that: (1) they were performing jobs that were usually necessary and desirable in the usual business of petitioner; (2) petitioner exercised control over respondents, not only as to the results, but also as to the manner by which they performed their assigned tasks; and (3) CAMPCO, a labor-only contractor, was merely a conduit of petitioner. As regular employees of petitioner, respondents asserted that they were entitled to security of tenure and those placed on stay home status for more than six months had been constructively and illegally dismissed. Respondents further claimed entitlement to wage differential, moral damages, and attorneys fees. In their Supplemental Position Paper,[15] respondents presented, in support of their Complaint, the Orders of DOLE Regional Director Parel, dated 19 October 1993, and DOLE Undersecretary Trajano, dated 15 September 1994, finding that CAMPCO was a labor-only contractor and directing CAMPCO to cease and desist from any further labor-only contracting activities. Petitioner, in its Position Paper[16] filed before the NLRC, denied that respondents were its employees. Petitioner explained that it found the need to engage external services to augment its regular workforce, which was affected by peaks in operation, work backlogs, absenteeism, and excessive leaves. It used to engage the services of individual workers for definite periods specified in their employment contracts and never exceeding one year. However, such an arrangement became the subject of a labor case, [17] in which petitioner was accused of preventing the regularization of such workers. The Labor Arbiter who heard the case, rendered his Decision[18] on 24 June 1994 declaring that these workers fell squarely within the

concept of seasonal workers as envisaged by Article 280 of the Labor Code, as amended, who were hired by petitioner in good faith and in consonance with sound business practice; and consequently, dismissing the complaint against petitioner. The NLRC, in its Resolution,[19] dated 14 March 1995, affirmed in toto the Labor Arbiters Decision and further found that the workers were validly and legally engaged by petitioner for term employment, wherein the parties agreed to a fixed period of employment, knowingly and voluntarily, without any force, duress or improper pressure being brought to bear upon the employees and absent any other circumstance vitiating their consent. The said NLRC Resolution became final and executory on 18 June 1996. Despite the favorable ruling of both the Labor Arbiter and the NLRC, petitioner decided to discontinue such employment arrangement. Yet, the problem of petitioner as to shortage of workforce due to the peaks in operation, work backlogs, absenteeism, and excessive leaves, persisted. Petitioner then found a solution in the engagement of cooperatives such as CAMPCO to provide the necessary additional services. Petitioner contended that respondents were owners-members of CAMPCO; that CAMPCO was a duly-organized and registered cooperative which had already grown into a multi-million enterprise; that CAMPCO was engaged in legitimate job-contracting with its own owners-members rendering the contract work; that under the express terms and conditions of the Service Contract executed between petitioner (the principal) and CAMPCO (the contractor), the latter shall undertake the contract work on its own account, under its own responsibility, and according to its own manner and method free from the control and direction of the petitioner in all matters connected with the performance of the work, except as to the result thereof; and since CAMPCO held itself out to petitioner as a legitimate job contractor, respondents, as ownersmembers of CAMPCO, were estopped from denying or refuting the same. Petitioner further averred that Department Order No. 10, amending the rules implementing Books III and VI of the Labor Code, as amended, promulgated by the DOLE on 30 May 1997, explicitly recognized the arrangement between petitioner and CAMPCO as permissible contracting and subcontracting, to wit Section 6. Permissible contracting and subcontracting. Subject to the conditions set forth in Section 3(d) and (e) and Section 5 hereof, the principal may engage the services of a contractor or subcontractor for the performance of any of the following; (a) Works or services temporarily or occasionally needed to meet abnormal increase in the demand of products or services, provided that the normal production capacity or regular workforce of the principal cannot reasonably cope with such demands; (b) Works or services temporarily or occasionally needed by the principal for undertakings requiring expert or highly technical personnel to improve the management or operations of an enterprise; (c) Services temporarily needed for the introduction or promotion of new products, only for the duration of the introductory or promotional period; (d) Works or services not directly related or not integral to the main business or operation of the principal, including casual work, janitorial, security, landscaping, and messengerial services, and work not related to manufacturing processes in manufacturing establishments; (e) Services involving the public display of manufacturers products which does not involve the act of selling or issuance of receipts or invoices; (f) Specialized works involving the use of some particular, unusual, or peculiar skills, expertise, tools or equipment the performance of which is beyond the competence of the regular workforce or production capacity of the principal; and (g) Unless a reliever system is in place among the regular workforce, substitute services for absent regular employees, provided that the period of service shall be coextensive with the period of absence and the same is made clear to the substitute employee at the time of engagement. The phrase absent regular employees includes those who are serving suspensions or other disciplinary measures not amounting to termination of employment meted out by the principal, but excludes those on strike where all the formal requisites for the legality of the strike have been prima facie complied with based on the records filed with the National Conciliation and Mediation Board. According to petitioner, the services rendered by CAMPCO constituted permissible job contracting under the afore-quoted paragraphs (a), (c), and (g), Section 6 of DOLE Department Order No. 10, series of 1997.

After the parties had submitted their respective Position Papers, the Labor Arbiter promulgated its Decision[20] on 11 June 1999, ruling entirely in favor of petitioner, ratiocinating thus After judicious review of the facts, narrated and supporting documents adduced by both parties, the undersigned finds [and] holds that CAMPCO is not engaged in labor-only contracting. Had it not been for the issuance of Department Order No. 10 that took effect on June 22, 1997 which in the contemplation of Law is much later compared to the Order promulgated by the Undersecretary Cresencio Trajano of Department of [L]abor and Employment, the undersigned could safely declared [sic] otherwise. However, owing to the principle observed and followed in legal practice that the later law or jurisprudence controls, the reliance to Secretary Trajanos order is overturned. Labor-only contracting as amended by Department [O]rder No. 10 is defined in this wise: Labor-only contracting is prohibited under this Rule is an arrangement where the contractor or subcontractor merely recruits, supplied [sic] or places workers to perform a job, work or service for a principal, and the following elements are present: i) The contractor or sub-contractor does not have substantial capital or investment to actually perform the job, work, or service under its own account & responsibility, and ii) The employees recruited, supplied or placed by such contractor or subcontractor are performing activities which are directly related to the main business of the principal. Verification of the records reveals that per Annexes J and K of [herein petitioner DolePhils] position paper, which are the yearly audited Financial Statement and Balance Sheet of CAMPCO shows [sic] that it has more than substantial capital or investment in order to qualify as a legitimate job contractor. We likewise recognize the validity of the contract entered into and between CAMPCO and [petitioner] for the former to assists [sic] the latter in its operations and in the performance of odd jobs such as the augmentation of regular manning particularly during peaks in operation, work back logs, absenteeism and excessive leave availment of respondents regular employees. The rule is wellsettled that labor laws discourage interference with an employers judgment in the conduct of his business. Even as the law is solicitors [sic] of the welfare of the employees, it must also protect the right of an employer to exercise what are clearly management prerogatives. The free will of management to conduct its own business affairs to achieve its purpose cannot be denied ( Yuco Chemical Industries vs. Ministry of [L]abor, GR No. 75656, May 28, 1990). CAMPCO being engaged in legitimate contracting, cannot therefore declared [sic] as guilty of labor-only contracting which [herein respondents] want us to believe. The second issue is likewise answered in the negative. The reason is plain and simple[,] section 12 of Department [O]rder No. 10 states: Section 12. Employee-employer relationship. Except in cases provided for in Section 13, 14, 15 & 17, the contractor or subcontractor shall be considered the employer of the contractual employee for purposes of enforcing the provisions of the Code. The Resolution of NLRC 5th division, promulgated on March 14, 1 1995 [sic] categorically declares: Judging from the very nature of the terms and conditions of their hiring, the Commission finds the complainants to have beenengaged to perform work, although necessary or desirable to the business of respondent company, for a definite period or what is community called TERM EMPLOYMENT. It is clear from the evidence and record that the nature of the business and operation of respondent company has its peaks and valleys and therefore, it is not difficult to discern, inclement weather, or high availment

by regular workers of earned leave credits, additional workers categorized as casuals, or temporary, are needed to meet the exigencies. (Underlining in the original) The validity of fixed-period employment has been consistently upheld by the Supreme [C]ourt in a long line of cases, the leading case of which is Brent School, Inc. vs. Zamora & Alegre, GR No. 48494, February 5, 1990. Thus at the end of the contract the employer-employee relationship is terminated. It behooves upon us to rule that herein complainants cannot be declared regular rank and file employees of the [petitioner] company. Anent the third issue, [respondents] dismally failed to provide us the exact figures needed for the computation of their wage differentials. To simply alleged [sic] that one is underpaid of his wages is not enough. No bill of particulars was submitted. Moreover, the Order of RTWPB Region XI, Davao City dated February 21, 1996 exempts [petitioner] company from complying Wage Order No. 04 [ sic] in so far as such exemption applies only to workers who are not covered by the Collective Bargaining Agreement, for the period January 1 to December 31, 1995,. [sic] In so far as [respondents] were not privies to the CBA, they were the workers referred to by RTWPBs Order. [H]ence, [respondents] claims for wage differentials are hereby dismissed for lack of factual basis. We find no further necessity in delving into the issues raised by [respondents] regarding moral damages and attorneys fees for being moot and academic because of the findings that CAMPCO does not engaged [sic] in labor-only contracting and that [respondents] cannot be declared as regular employees of [petitioner]. WHEREFORE, premises considered, judgment is hereby rendered in the above-entitled case, dismissing the complaint for lack of merit. Respondents appealed the Labor Arbiters Decision to the NLRC, reiterating their position that they should be recognized as regular employees of the petitioner since CAMPCO was a mere labor-only contractor, as already declared in the previous Orders of DOLE Regional Director Parel, dated 19 October 1993, and DOLE Undersecretary Trajano, dated 15 September 1994, which already became final and executory. The NLRC, in its Resolution,[21] dated 29 February 2000, dismissed the appeal and affirmed the Labor Arbiters Decision, reasoning as follows We find no merit in the appeal. The concept of conclusiveness of judgment under the principle of res judicata means that where between the first case wherein judgment is rendered and the second case wherein such judgment is invoked, there is identity of parties, but there is no identity of cause of action, the judgment is conclusive in the second case, only as to those matters actually and directly controverted and determined and not as to matters merely involved therein ( Viray, etc. vs. Marinas, et al., 49 SCRA 44). There is no denying that the order of the Department of Labor and Employment, Regional Office No. XI in case No. RI100-9310-RI-355, which the complainants perceive to have sealed the status of CAMPCO as labor-only contractor, proceeded from the visitorial and enforcement power of the Department Secretary under Article 128 of the Labor Code. Acting on reports that the cooperatives, including CAMPCO, that operated and offered services at [herein petitioner] company were engaging in labor-only contracting activities, that Office conducted a routinary inspection over the records of said cooperatives and consequently, found the latter to be engaging in labor-only contracting activities. This being so, [petitioner] company was not a real party-in-interest in said case, but the cooperatives concerned. Therefore, there is no identity of parties between said case and the present case which means that the afore-said ruling of the DOLE is not binding and conclusive upon [petitioner] company. It is not correct, however, to say, as the Labor Arbiter did, that the afore-said ruling of the Department of Labor and Employment has been overturned by Department Order No. 10. It is a basic principle that once a judgment becomes final it cannot be disturbed, except for clerical errors or when supervening events render its execution impossible or unjust (Sampaguita Garmens [sic] Corp. vs. NLRC, G. R. No. 102406, June 7, 1994). Verily, the subsequent issuance of Department Order No. 10 cannot be construed as supervening event that would render the execution of said judgment impossible or unjust. Department Order No. 10 refers to the ramification of some provisions of the Rules Implementing Articles 106 and 109 of the Labor Code, without substantially changing the definition of labor-only or job contracting.

Well-settled is the rule that to qualify as an independent job contractor, one has either substantial capital or investment in the form of tools, equipment and machineries necessary to carry out his business (see Virginia Neri, et al. vs. NLRC, et al., G.R. Nos. 97008-89, July 23, 1993). CAMPCO has admittedly a paid-up capital of P4,562,470.25 and this is more than enough to qualify it as an independent job contractor, as aptly held by the Labor Arbiter. WHEREFORE, the appeal is DISMISSED for lack of merit and the appealed decision is AFFIRMED. Petition for Certiorari with the Court of Appeals Refusing to concede defeat, respondents filed with the Court of Appeals a Petition for Certiorari under Rule 65 of the revised Rules of Civil Procedure, asserting that the NLRC acted without or in excess of its jurisdiction and with grave abuse of discretion amounting to lack of jurisdiction when, in its Resolution, dated 29 February 2000, it (1) ruled that CAMPCO was a bona fide independent job contractor with substantial capital, notwithstanding the fact that at the time of its organization and registration with CDA, it only had a paid-up capital of P6,600.00; and (2) refused to apply the doctrine of res judicata against petitioner. The Court of Appeals, in its Decision,[22] dated 20 May 2002, granted due course to respondents Petition, and set aside the assailed NLRC Decision. Pertinent portions of the Court of Appeals Decision are reproduced below In the case at bench, it was established during the proceedings before the [NLRC] that CAMPCO has a substantial capital. However, having a substantial capital does not per se qualify CAMPCO as a job contractor. In order to be considered an independent contractor it is not enough to show substantial capitalization or investment in the form of tools, equipment, machinery and work premises. The conjunction and, in defining what a job contractor is, means that aside from having a substantial capital or investment in the form of tools, equipment, machineries, work premise, and other materials which are necessary in the conduct of his business, the contractor must be able to prove that it also carries on an independent business and undertakes the contract work on his own account under his own responsibility according to his own manner and method, free from the control and direction of his employer or principal in all matters connected with the performance of the work except as to the results thereof. [Herein petitioner DolePhil] has failed to prove, except for the substantial capital requirement, that CAMPCO has met the other requirements. It was not established that CAMPCO is engaged or carries on an independent business. In the performance of the respective tasks of workers deployed by CAMPCO with [petitioner], it was not established that CAMPCO undertook the contract of work it entered with [petitioner] under its own account and its own responsibility. It is [petitioner] who provides the procedures to be followed by the workers in the performance of their assigned work. The workers deployed by CAMPCO to [petitioner] performed activities which are directly related to the principal business or operations of the employer in which workers are habitually employed since [petitioner] admitted that these workers were engaged to perform the job of other regular employees who cannot report for work. Moreover, [NLRC] likewise gravely erred in not giving weight to the Order dated 19 October 1993 issued by the Office of the Secretary of the Department of Labor and Employment, through Undersecretary Cresencio Trajano, which affirmed the findings of the Department of Labor and Employment Regional Office, Region XI, Davao City that Cannery Multi-Purpose Cooperative is one of the cooperatives engaged in labor-only contracting activities.

In the exercise of the visitorial and enforcement power of the Department of Labor and Employment, an investigation was conducted among the cooperatives organized and existing in Polomolok, South Cotabato, relative to labor-only contracting activities. One of the cooperatives investigated was Cannery Multi-Purpose Cooperative. After the investigation, the Department of Labor and Employment, Regional Office No. XI,Davao City, through its Regional Director, issued the Order dated 19 October 1993, stating: WHEREFORE, premises considered, ADVENTURERS MULTI PURPOSE COOPERATIVE, HUMAN RESOURCE MULTI PURPOSE SKILLED COOPERATIVE and CANNERY MULTI PURPOSE COOPERATIVE are hereby declared to be engaged in labor only contracting which is a prohibited activity. The same cooperatives are therefore ordered to cease and desist from further engaging in such activities. xxxx SO ORDERED.

Cannery Multi Purpose Cooperative, together with the other cooperatives declared as engaged in labor-only contracting activity, appeal the above-findings to the Secretary of the Department of Labor and Employment. Their appeal was dismissed for lack of merit as follows:: [sic] xxxx [NLRC] held that CAMPCO, being not a real party-in interest in the above-case, the said ruling is not binding and conclusive upon [petitioner]. This Court, however, finds the contrary. CAMPCO was one of the cooperatives investigated by the Department of Labor and Employment, Regional Office No. XI, Davao City, pursuant to Article 128 of the Labor Code. It was one of the appellants before the Secretary of the Department of Labor questioning the decision of the Regional Director of DOLE, Regional Office No. XI, Davao City. This Court noted that in the proceedings therein, and as mentioned in the decision rendered by Undersecretary Cresencio B. Trajano of the Department of Labor and Employment, Manila, regarding the cooperatives appeal thereto, the parties therein, including Cannery Multi-Purpose Cooperative, submitted to the said office their position papers and Articles of Cooperatives and Certification of Registrations [ sic] on 30 August 1993. This is a clear indicia that CAMPCO participated in the proceedings therein. [NLRC], therefore, committed grave abuse of discretion amounting to lack or excess of jurisdiction when it held that CAMPCO was never a party to the said case. [Petitioner] invokes Section 6 of Department Order No. 10, series of 1997, issued by the Department of Labor and Employment which took effect on 22 June 1997. The said section identified the circumstances which are permissible job contracting, to wit: xxxx [Petitioners] main contention is based on the decisions rendered by the labor arbiter and [NLRC] which are both anchored on Department Order No. 10 issued by the Department of Labor and Employment. The said department order provided for several flexible working relations between a principal, a contractor or subcontractor and the workers recruited by the latter and deployed to the former. In the case at bench, [petitioner] posits that the engagement of [petitioner] of the workers deployed by CAMPCO was pursuant to D.O. No. 10, Series of 1997. However, on 8 May 2001, the Department of Labor and Employment issued Department Order No. 3, series of 2001, revoking Department Order No. 10, series of 1997. The said department order took effect on 29 May 2001. xxxx Under Department Order No. 3, series of 2001, some contracting and outsourcing arrangements are no longer legitimate modes of employment relation. Having revoked Department Order No. 10, series of 1997, [petitioner] can no longer support its argument by relying on the revoked department order. Considering that [CAMPCO] is not a job contractor, but one engaged in labor-only contracting, CAMPCO serves only as an agent of [petitioner] pursuant to par. (b) of Sec. 9, Rule VIII, Book III of the Implementing Rules and Regulations of the Labor Code, stating, xxxx However, the Court cannot declare that [herein respondents] are regular employees of [petitioner]. x x x xxxx In the case at bench, although [respondents] were engaged to perform activities which are usually necessary or desirable in the usual business or trade of private respondent, it is apparent, however, that their services were engaged by [petitioner] only for a definite period. [Petitioners] nature of business and operation has its peaks. In order to meet the demands during peak seasons they necessarily have to engage the services of workers to work only for a particular season. In the case of [respondents], when they were deployed by CAMPCO with [petitioner] and were assigned by the latter at its cannery department, they were aware that they will be working only for a certain duration, and this was made known to them at the time they were employed, and they agreed to the same.

xxxx The non-rehiring of some of the petitioners who were allegedly put on a floating status is an indication that their services were no longer needed. They attained their floating status only after they have finished their contract of employment, or after the duration of the season that they were employed. The decision of [petitioner] in not rehiring them means that their services were no longer needed due to the end of the season for which they were hired. And this Court reiterates that at the time they were deployed to [petitioners] cannery division, they knew that the services they have to render or the work they will perform are seasonal in nature and consequently their employment is only for the duration of the season. ACCORDINGLY, in view of the foregoing, the instant petition for certiorari is hereby GRANTED DUE COURSE. The decision dated 29 February 2000 and Resolution dated 19 December 2000 rendered by [NLRC] are hereby SET ASIDE. In place thereof, it is hereby rendered that: 1. Cannery Multi-Purpose Cooperative is a labor-only contractor as defined under the Labor Code of the Philippines and its implementing rules and regulations; and that DOLE Philippines Incorporated is merely an agent or intermediary of Cannery MultiPurpose Cooperative.

2.

All other claims of [respondents] are hereby DENIED for lack of basis. Both petitioner and respondents filed their respective Motions for Reconsideration of the foregoing Decision, dated 20 May 2002, prompting the Court of Appeals to promulgate an Amended Decision on 27 November 2003, in which it ruled in this wise: This court examined again the documentary evidence submitted by the [herein petitioner] and we rule not to disturb our findings in our Decision dated May 20, 2002. It is our opinion that there was no competent evidence submitted that would show that CAMPCO is engaged to perform a specific and special job or service which is one of the strong indicators that an entity is an independent contractor. The articles of cooperation and by-laws of CAMPCO do not show that it is engaged in performing a specific and special job or service. What is clear is that it is a multi-purpose cooperative organized under RA No. 6938, nothing more, nothing less. As can be gleaned from the contract that CAMPCO entered into with the [petitioner], the undertaking of CAMPCO is to provide [petitioner] with workforce by assisting the company in its daily operations and perform odd jobs as may be assigned. It is our opinion that CAMPCO merely acted as recruitment agency for [petitioner]. CAMPCO by supplying manpower only, clearly conducted itself as labor-only contractor. As can be gleaned from the service contract, the work performed by the [herein respondents] are directly related to the main business of the [petitioner]. Clearly, the requisites of labor-only contracting are present in the case at bench. In view of the above ruling, we find it unnecessary to discuss whether the Order of Undersecretary Trajano finding that CAMPCO is a labor -only contractor is a determining factor or constitutes res judicata in the case at bench. Our findings that CAMPCO is a labor-only contractor is based on the evidence presented vis--vis the rulings of the Supreme Court on the matter. Since, the argument that the [petitioner] is the real employer of the [respondents], the next question that must be answered is what is the nature of the employment of the petitioners? xxxx The afore-quoted [Article 280 of the Labor Code, as amended] provides for two kinds of employment, namely: (1) regular (2) casual. In our Decision, we ruled that the [respondents] while performing work necessary and desirable to the business of the [petitioner] are seasonal employees as their services were engaged by the [petitioner] for a definite period or only during peak season. In the most recent case of Hacienda Fatima v. National Federation of Sugarcane Workers Food and General Trade, the Supreme Court ruled that for employees to be excluded from those classified as regular employees, it is not enough that they perform work or services that are seasonal in nature. They must have also been employed only for the duration of one season. It is undisputed that the [respondents] services were engaged by the [petitioner] since 1993 and 1994. The instant

complaint was filed in 1996 when the [respondents] were placed on floating status. Evidently, [petitioner] employed the [respondents] for more than one season. Therefore, the general rule on regular employment is applicable. The herein petitioners who performed their jobs in the workplace of the [petitioner] every s eason for several years, are considered the latters regular employees for having performed works necessary and desirable to the business of the [petitioner]. The [petitioners] eventual refusal to use their serviceseven if they were ready, able and willing to perform their usual duties whenever these were availableand hiring other workers to perform the tasks originally assigned to [respondents] amounted to illegal dismissal of the latter. We thus, correct our earlier ruling that the herein petitioners are seasonal workers. They are regular employees within the contemplation of Article 280 of the Labor Code and thus cannot be dismissed except for just or authorized cause. The Labor Code provides that when there is a finding of illegal dismissal, the effect is that the employee dismissed shall be reinstated to his former position without loss of seniority rights with backwages from the date of his dismissal up to his actual reinstatement. This court however, finds no basis for the award of damages and attorneys fees in favor of the petitioners. WHEREFORE, the Decision dated May 20, 2002 rendered by this Court is hereby AMENDED as follows: 1) [Petitioner] DOLE PHILIPPINES is hereby declared the employer of the [respondents]. 2) [Petitioner] DOLE PHILIPPINES is hereby declared guilty of illegal dismissal and ordered to immediately reinstate the [respondents] to their former position without loss of seniority rights and other benefits, and to pay each of the [respondents] backwages from the date of the filing of illegal dismissal on December 19, 1996 up to actual reinstatement, the same to be computed by the labor arbiter. 3) The claims for damages and attorneys fees are hereby denied for lack of merit. The Petition at Bar Aggrieved by the Decision, dated 20 May 2002, and the Amended Decision, dated 27 November 2003, of the Court of Appeals, petitioner filed the instant Petition for Review on Certiorari under Rule 45 of the revised Rules of Civil Procedure, in which it made the following assignment of errors I. THE COURT OF APPEALS HAS DEPARTED FROM THE USUAL COURSE OF JUDCIAL PROCEEDINGS WHEN IT MADE ITS OWN FACTUAL FINDINGS AND DISREGARDED THE UNIFORM AND CONSISTENT FACTUAL FINDINGS OF THE LABOR ARBITER AND THE NLRC, WHICH MUST BE ACCORDED GREAT WEIGHT, RESPECT AND EVEN FINALITY. IN SO DOING, THE COURT OF APPEALS EXCEEDED ITS AUTHORITY ON CERTIORARI UNDER RULE 65 OF THE RULES OF COURT. II. THE COURT OF APPEALS HAS DECIDED A QUESTION OF SUBSTANCE IN A WAY NOT IN ACCORD WITH THE CONSTITUTION, LAW, APPLICABLE RULES AND REGULATIONS AND DECISIONS OF THE SUPREME COURT IN NOTHOLDING THAT DEPARTMENT ORDER NO. 10, SERIES OF 1997 IS THE APPLICABLE REGULATION IN THIS CASE. IN GIVING RETROACTIVE APPLICATION TO DEPARTMENT ORDER NO. 3, SERIES OF 2001, THE COURT OF APPEALS VIOLATED THE CONSTITUTIONAL PROVISION AGAINST IMPAIRMENT OF CONTRACTS AND DEPRIVED PETITIONER OF THE DUE PROCESS OF THE LAW. III. THE COURT OF APPEALS HAS DETERMINED A QUESTION OF SUBSTANCE NOT IN ACCORD WITH LAW AND JURISPRUDENCE IN GIVING WEIGHT TO THE ORDER DATED 19 OCTOBER 1993 ISSUED BY THE OFFICE OF SECRETARY OF LABOR, WHICH AFFIRMED THE FINDINGS OF THE DOLE REGIONAL OFFICE (REGION XI, DAVAO CITY) THAT CAMPCO IS ONE OF THE COOPERATIVES ENGAGED IN LABOR-ONLY CONTRACTING ACTIVITIES. IV. THE COURT OF APPEALS HAS DETERMINED A QUESTION OF SUBSTANCE NOT IN ACCORD WITH LAW AND JURISPRUDENCE IN NOT RULING THAT RESPONDENTS, BY ACTIVELY REPRESENTING THEMSELVES AND WARRANTING THAT THEY ARE ENGAGED IN LEGITIMATE JOB CONTRACTING, ARE BARRED BY THE No costs.[23]

EQUITABLE PRINCIPLE OFESTOPPEL FROM ASSERTING THAT THEY ARE REGULAR EMPLOYEES OF PETITIONER. V. THE COURT OF APPEALS HAS DETERMINED A QUESTION OF SUBSTANCE NOT IN ACCORD WITH LAW AND JURISPRUDENCE IN RULING THAT CAMPCO IS ENGAGED IN THE PROHIBITED ACT OF LABOR-ONLY CONTRACTINGDESPITE THERE BEING SUBSTANTIAL EVIDENCE TO THE CONTRARY. VI. THE COURT OF APPEALS HAS DETERMINED A QUESTION OF SUBSTANCE NOT IN ACCORD WITH LAW AND JURISPRUDENCE IN RULING THAT PETITIONER IS THE EMPLOYER OF RESPONDENTS AND THAT PETITIONER IS GUILTY OF ILLEGAL DISMISSAL.[24] This Courts Ruling I Anent the first assignment of error, petitioner argues that judicial review under Rule 65 of the revised Rules of Civil Procedure is limited only to issues concerning want or excess or jurisdiction or grave abuse of discretion. The special civil action for certiorariis a remedy designed to correct errors of jurisdiction and not mere errors of judgment. It is the contention of petitioner that the NLRC properly assumed jurisdiction over the parties and subject matter of the instant case. The errors assigned by the respondents in their Petition for Certiorari before the Court of Appeals do not pertain to the jurisdiction of the NLRC; they are rather errors of judgment supposedly committed by the the NLRC, in its Resolution, dated 29 February 2000, and are thus not the proper subject of a petition for certiorari. Petitioner also posits that the Petition for Certiorari filed by respondents with the Court of Appeals raised questions of fact that would necessitate a review by the appellate court of the evidence presented by the parties before the Labor Arbiter and the NLRC, and that questions of fact are not a fit subject for a special civil action for certiorari. It has long been settled in the landmark case of St. Martin Funeral Home v. NLRC,[25] that the mode for judicial review over decisions of the NLRC is by a petition for certiorari under Rule 65 of the revised Rules of Civil Procedure. The different modes of appeal, namely, writ of error (Rule 41), petition for review (Rules 42 and 43), and petition for review on certiorari (Rule 45), cannot be availed of because there is no provision on appellate review of NLRC decisions in the Labor Code, as amended.[26] Although the same case recognizes that both the Court of Appeals and the Supreme Court have original jurisdiction over such petitions, it has chosen to impose the strict observance of the hierarchy of courts. Hence, a petition for certiorari of a decision or resolution of the NLRC should first be filed with the Court of Appeals; direct resort to the Supreme Court shall not be allowed unless the redress desired cannot be obtained in the appropriate courts or where exceptional and compelling circumstances justify an availment of a remedy within and calling for the exercise by the Supreme Court of its primary jurisdiction. The extent of judicial review by certiorari of decisions or resolutions of the NLRC, as exercised previously by the Supreme Court and, now, by the Court of Appeals, is described in Zarate v. Olegario,[27] thus The rule is settled that the original and exclusive jurisdiction of this Court to review a decision of respondent NLRC (or Executive Labor Arbiter as in this case) in a petition for certiorari under Rule 65 does not normally include an inquiry into the correctness of its evaluation of the evidence. Errors of judgment, as distinguished from errors of jurisdiction, are not within the province of a special civil action for certiorari, which is merely confined to issues of jurisdiction or grave abuse of discretion. It is thus incumbent upon petitioner to satisfactorily establish that respondent Commission or executive labor arbiter acted capriciously and whimsically in total disregard of evidence material to or even decisive of the controversy, in order that the extraordinary writ of certiorari will lie. 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 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. The Court of Appeals, therefore, can grant the Petition for Certiorari if it finds that the NLRC, in its assailed decision or resolution, committed grave abuse of discretion by capriciously, whimsically, or arbitrarily disregarding evidence which is material or decisive of the controversy; and the Court of Appeals can not make this determination without looking into the evidence presented by the parties. Necessarily, the appellate court can only evaluate the materiality or significance of the evidence, which is alleged to have been capriciously, whimsically, or arbitrarily disregarded by the NLRC, in relation to all other evidence on record.

As this Court elucidated in Garcia v. National Labor Relations Commission[28]--

[I]n Ong v. People, we ruled that certiorari can be properly resorted to where the factual findings complained of are not supported by the evidence on record. Earlier, in Gutib v. Court of Appeals, we emphasized thus: [I]t has been said that a wide breadth of discretion is granted a court of justice in certiorari proceedings. The cases in which certiorari will issue cannot be defined, because to do so would be to destroy its comprehensiveness and usefulness. So wide is the discretion of the court that authority is not wanting to show that certiorari is more discretionary than either prohibition or mandamus. In the exercise of our superintending control over inferior courts, we are to be guided by all the circumstances of each particular case as the ends of justice may require. So it is that the writ will be granted where necessary to prevent a substantial wrong or to do substantial justice. And in another case of recent vintage, we further held: In the review of an NLRC decision through a special civil action for certiorari, resolution is confined only to issues of jurisdiction and grave abuse of discretion on the part of the labor tribunal. Hence, the Court refrains from reviewing factual assessments of lower courts and agencies exercising adjudicative functions, such as the NLRC. Occasionally, however, the Court is constrained to delve into factual matters where, as in the instant case, the findings of the NLRC contradict those of the Labor Arbiter. In this instance, the Court in the exercise of its equity jurisdiction may look into the records of the case and re-examine the questioned findings. As a corollary, this Court is clothed with ample authority to review matters, even if they are not assigned as errors in their appeal, if it finds that their consideration is necessary to arrive at a just decision of the case. The same principles are now necessarily adhered to and are applied by the Court of Appeals in its expanded jurisdiction over labor cases elevated through a petition for certiorari; thus, we see no error on its part when it made anew a factual determination of the matters and on that basis reversed the ruling of the NLRC. II The second assignment of error delves into the significance and application to the case at bar of the two department orders issued by DOLE. Department Order No. 10, series of 1997, amended the implementing rules of Books III and VI of the Labor Code, as amended. Under this particular DOLE department order, the arrangement between petitioner and CAMPCO would qualify as permissible contracting. Department Order No. 3, series of 2001, revoked Department Order No. 10, series of 1997, and reiterated the prohibition on labor-only contracting. Attention is called to the fact that the acts complained of by the respondents occurred well before the issuance of the two DOLE department orders in 1997 and 2001. The Service Contract between DOLE and CAMPCO was executed on 17 August 1993. Respondents started working for petitioner sometime in 1993 and 1994. While some of them continued to work for petitioner, at least until the filing of the Complaint, others were put on stay home status at various times in 1994, 1995, and 1996. Respondents filed their Complaint with the NLRC on 19 December 1996. A basic rule observed in this jurisdiction is that no statute, decree, ordinance, rule or regulation shall be given retrospective effect unless explicitly stated. [29] Since there is no provision at all in the DOLE department orders that expressly allowed their retroactive application, then the general rule should be followed, and the said orders should be applied only prospectively. Which now brings this Court to the question as to what was the prevailing rule on labor-only contracting from 1993 to 1996, the period when the occurrences subject of the Complaint before the NLRC took place. Article 106 of the Labor Code, as amended, permits legitimate job contracting, but prohibits labor-only contracting. The said provision reads ART. 106. Contractor or subcontractor. Whenever an employer enters into a contract with another person for the performance of the formers work, the employees of the contractor and of the latters subcontractor, if any, shall be paid in accordance with the prov isions of this Code.

In the event that the contractor or subcontractor fails to pay the wages of his employees in accordance with this Code, the employer shall be jointly and severally liable with his contractor or subcontractor to such employees to the extent of the work performed under the contract, in the same manner and extent that he is liable to employees directly employed by him. The Secretary of Labor may, by appropriate regulations, restrict or prohibit the contracting out of labor to protect the rights of workers established under this Code. In so prohibiting or restricting, he may make appropriate distinctions between labor-only contracting and job contracting as well as differentiations within these types of contracting and determine who among the parties involved shall be considered the employer for purposes of this Code, to prevent any violation or circumvention of any provision of this Code. There is labor-only contracting where the person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others, and the workers recruited and placed by such persons are performing activities which are directly related to the principal business of such employer. In such cases, the person or intermediary shall be considered merely as an agent of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him. To implement the foregoing provision of the Labor Code, as amended, Sections 8 and 9, Rule VIII, Book III of the implementing rules, in force since 1976 and prior to their amendment by DOLE Department Order No. 10, series of 1997, provided as follows Sec. 8. Job contracting. There is job contracting permissible under the Code if the following conditions are met; (1) The contractor carries on an independent business and undertakes the contract work on his own account under his own responsibility according to his own manner and method, free from the control and direction of his employer or principal in all matters connected with the performance of the work except as to the results thereof; and (2) The contractor has substantial capital or investment in the form of tools, equipment, machineries, work premises, and other materials which are necessary in the conduct of his business. Sec. 9. Labor-only contracting. (a) Any person who undertakes to supply workers to an employer shall be deemed to be engaged in labor-only contracting where such person: (1) Does not have substantial capital or investment in the form of tools, equipment, machineries, work premises and other materials; and (2) The workers recruited and placed by such persons are performing activities which are directly related to the principal business or operations of the employer in which workers are habitually employed. (b) Labor-only contracting as defined herein is hereby prohibited and the person acting as contractor shall be considered merely as an agent or intermediary of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him. (c) For cases not falling under this Article, the Secretary of Labor shall determine through appropriate orders whether or not the contracting out of labor is permissible in the light of the circumstances of each case and after considering the operating needs of the employer and the rights of the workers involved. In such case, he may prescribe conditions and restrictions to insure the protection and welfare of the workers. Since these statutory and regulatory provisions were the ones in force during the years in question, then it was in consideration of the same that DOLE Regional Director Parel and DOLE Undesrsecretary Trajano issued their Orders on 19 September 1993 and15 September 1994, respectively, both finding that CAMPCO was engaged in labor-only contracting. Petitioner, in its third assignment of error, questions the weight that the Court of Appeals gave these orders in its Decision, dated 20 May 2002, and Amended Decision, dated 27 November 2003. III

The Orders of DOLE Regional Director Parel, dated 19 September 1993, and of DOLE Undersecretary Trajano, dated 15 September 1994, were issued pursuant to the visitorial and enforcement power conferred by the Labor Code, as amended, on the DOLE Secretary and his duly authorized representatives, to wit ART. 128. Visitorial and enforcement power. (a) The Secretary of Labor or his duly authorized representatives, including labor regulation officers, shall have access to employers records and premises at any time of the day or night whenever work is being undertaken therein, and the right to copy therefrom, to question any employee and investigate any fact, condition or matter which may be necessary to determine violations or which may aid in the enforcement of this Code and of any labor law, wage order or rules and regulations pursuant thereto. (b) Notwithstanding the provisions of Articles 129 and 217 of this Code to the contrary, and in cases where the relationship of employer-employee still exists, the Secretary of Labor and Employment or his duly authorized representatives shall have the power to issue compliance orders to give effect to the labor standards provisions of this Code and other labor legislation based on the findings of labor employment and enforcement officers or industrial safety engineers made in the course of inspection. The Secretary or his duly authorized representatives shallissue writs of execution to the appropriate authority for the enforcement of their orders, except in cases where the employer contests the findings of the labor employment and enforcement officer and raises issues supported by documentary proofs which were not considered in the course of inspection. An order issued by the duly authorized representative of the Secretary of Labor and Employment under this article may be appealed to the latter. In case said order involves a monetary award, an appeal by the employer may be perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the Secretary of Labor and Employment in the amount equivalent to the monetary award in the order appealed from. (Emphasis supplied.) Before Regional Director Parel issued his Order, dated 19 September 1993, a Task Force investigated the operations of cooperatives in Polomolok, South Cotabato, and submitted a report identifying six cooperatives that were engaged in labor-only contracting, one of which was CAMPCO. In a conference before the DOLE Regional Office, the cooperatives named by the Task Force were given the opportunity to explain the nature of their activities in relation to petitioner; and, the cooperatives, as well as petitioner, submitted to the DOLE Regional Office their position papers and other supporting documents to refute the findings of the Task Force. It was only after these procedural steps did Regional Director Parel issued his Order finding that three cooperatives, including CAMPCO, were indeed engaged in labor-only contracting and were directed to cease and desist from further engaging in such activities. On appeal, DOLE Undersecretary Trajano, by authority of the DOLE Secretary, affirmed Regional Director Parels Order. Upon denial of the Motion for Reconsideration filed by the cooperatives, and no further appeal taken therefrom, the Order of DOLE Undersecretary Trajano, dated 15 September 1994, became final and executory. Petitioner avers that the foregoing Orders of the authorized representatives of the DOLE Secretary do not constitute res judicata in the case filed before the NLRC. This Court, however, believes otherwise and finds that the final and executory Orders of the DOLE Secretary or his authorized representatives should bind the NLRC. It is obvious that the visitorial and enforcement power granted to the DOLE Secretary is in the nature of a quasi-judicial power. Quasi-judicial power has been described by this Court in the following manner Quasi-judicial or administrative adjudicatory power on the other hand is the power of the administrative agency to adjudicate the rights of persons before it. It is the power to hear and determine questions of fact to which the legislative policy is to apply and to decide in accordance with the standards laid down by the law itself in enforcing and administering the same law. The administrative body exercises its quasi-judicial power when it performs in a judicial manner an act which is essentially of an executive or administrative nature, where the power to act in such manner is incidental to or reasonably necessary for the performance of the executive or administrative duty entrusted to it. In carrying out their quasi-judicial functions the administrative officers or bodies are required to investigate facts or ascertain the existence of facts, hold hearings, weigh evidence, and draw conclusions from them as basis for their official action and exercise of discretion in a judicial nature. Since rights of specific persons are affected it is elementary that in the proper exercise of quasi-judicial power due process must be observed in the conduct of the proceedings.[30] (Emphasis supplied.)

The DOLE Secretary, under Article 106 of the Labor Code, as amended, exercise quasi-judicial power, at least, to the extent necessary to determine violations of labor standards provisions of the Code and other labor legislation. He can issue compliance orders and writs of execution for the enforcement of his orders. As evidence of the importance and binding effect of the compliance orders of the DOLE Secretary, Article 128 of the Labor Code, as amended, further provides ART. 128. Visitorial and enforcement power. xxxx (d) It shall be unlawful for any person or entity to obstruct, impede, delay or otherwise render ineffective the orders of the Secretary of Labor or his duly authorized representatives issued pursuant to the authority granted under this article, and no inferior court or entity shall issue temporary or permanent injunction or restraining order or otherwise assume jurisdiction over any case involving the enforcement orders issued in accordance with this article. The Orders of DOLE Regional Director Parel, dated 19 September 1993, and of DOLE Undersecretary Trajano, dated 15 September 1994, consistently found that CAMPCO was engaging in labor-only contracting. Such finding constitutes res judicata in the case filed by the respondents with the NLRC. It is well-established in this jurisdiction that the decisions and orders of administrative agencies, rendered pursuant to their quasi-judicial authority, have upon their finality, the force and binding effect of a final judgment within the purview of the doctrine of res judicata. The rule of res judicata, which forbids the reopening of a matter once judicially determined by competent authority, applies as well to the judicial and quasi-judicial acts of public, executive or administrative officers and boards acting within their jurisdiction as to the judgments of courts having general judicial powers. The orderly administration of justice requires that the judgments or resolutions of a court or quasi-judicial body must reach a point of finality set by the law, rules and regulations, so as to write finis to disputes once and for all. This is a fundamental principle in the Philippine justice system, without which there would be no end to litigations.[31] Res judicata has dual aspects, bar by prior judgment and conclusiveness of judgment. This Court has previously clarified the difference between the two Section 49, Rule 39 of the Revised Rules of Court lays down the dual aspects of res judicata in actions in personam. to wit: "Effect of judgment. - The effect of a judgment or final order rendered by a court or judge of the Philippines, having jurisdiction to pronounce the judgment or order, may be as follows: xxxx (b) In other cases the judgment or order is, with respect to the matter directly adjudged or as to any other matter that could have been raised in relation thereto, conclusive between the parties and their successors in interest by title subsequent to the commencement of the action or special proceeding, litigating for the same thing and under the same title and in the same capacity; (c) In any other litigation between the same parties or their successors in interest, that only is deemed to have been adjudged in a former judgment which appears upon its face to have been so adjudged, or which was actually and necessarily included therein or necessary thereto." Section 49(b) enunciates the first concept of res judicata known as "bar by prior judgment," whereas, Section 49(c) is referred to as "conclusiveness of judgment." There is "bar by former judgment" when, between the first case where the judgment was rendered, and the second case where such judgment is invoked, there is identity of parties, subject matter and cause of action. When the three identities are present, the judgment on the merits rendered in the first constitutes an absolute bar to the subsequent action. But where between the first case wherein Judgment is rendered and the second case wherein such judgment is invoked, there is only identity of parties but there is no identity of cause of action, the judgment is conclusive in the second case, only as to those matters actually and directly controverted and determined, and not as to matters merely involved therein. This is what is termed "conclusiveness of judgment."

The second concept of res judicata, conclusiveness of judgment, is the one applicable to the case at bar. The same parties who participated in the proceedings before the DOLE Regional Office are the same parties involved in the case filed before the NLRC. CAMPCO, on behalf of its members, attended the conference before the DOLE Regional Office; submitted its position paper; filed an appeal with the DOLE Secretary of the Order of DOLE Regional Director Parel; and moved for reconsideration of the subsequent Order of DOLE Undersecretary Trajano. Petitioner, although not expressly named as a respondent in the DOLE investigation, was a necessary party thereto, considering that CAMPCO was rendering services to petitioner solely. Moreover, petitioner participated in the proceedings before the DOLE Regional Office, intervening in the matter through a letter sent by its Senior Legal Officer, dated 24 May 1993, and submitting its own position paper. While the causes of action in the proceedings before the DOLE and the NLRC differ, they are, in fact, very closely related. The DOLE Regional Office conducted an investigation to determine whether CAMPCO was violating labor laws, particularly, those on labor-only contracting. Subsequently, it ruled that CAMPCO was indeed engaging in labor-only contracting activities, and thereafter ordered to cease and desist from doing so. Respondents came before the NLRC alleging illegal dismissal by the petitioner of those respondents who were put on stay home status, and seeking regularization of respondents who were still working for petitioner. The basis of their claims against petitioner rests on the argument that CAMPCO was a labor-only contractor and, thus, merely an agent or intermediary of petitioner, who should be considered as respondents real employer. The matter of whether CAMPCO was a labor-only contractor was already settled and determined in the DOLE proceedings, which should be conclusive and binding upon the NLRC. What were left for the determination of the NLRC were the issues on whether there was illegal dismissal and whether respondents should be regularized. This Court also notes that CAMPCO and DOLE still continued with their Service Contract despite the explicit cease and desist orders rendered by authorized DOLE officials. There is no other way to look at it except that CAMPCO and DOLE acted in complete defiance and disregard of the visitorial and enforcement power of the DOLE Secretary and his authorized representatives under Article 128 of the Labor Code, as amended. For the NLRC to ignore the findings of DOLE Regional Director Parel and DOLE Undersecretary Trajano is an unmistakable and serious undermining of the DOLE officials authority. IV In petitioners fourth assignment of error, it points out that the Court of Appeals erred in not holding respondents estopped from asserting that they were regular employees of petitioner since respondents, as ownersmembers of CAMPCO, actively represented themselves and warranted that they were engaged in legitimate job contracting. This Court cannot sustain petitioners argument. It is true that CAMPCO is a cooperative composed of its members, including respondents. Nonetheless, it cannot be denied that a cooperative, as soon as it is registered with the CDA, attains a juridical personality of its own,[32] separate and distinct from its members; much in the same way that a corporation has a juridical personality separate and distinct from its stockholders, known as the doctrine of corporate fiction. The protection afforded by this doctrine is not absolute, but the exception thereto which necessitates the piercing of the corporate veil can only be made under specified circumstances. In Traders Royal Bank v. Court of Appeals,[33] this Court ruled that Petitioner cannot put up the excuse of piercing the veil of corporate entity, as this is merely an equitable remedy, and maybe awarded only in cases when the corporate fiction is used to defeat public convenience, justify wrong, protect fraud or defend crime or where a corporation is a mere alter ego or business conduit of a person. Piercing the veil of corporate entity requires the court to see through the protective shroud which exempts its stockholders from liabilities that ordinarily, they could be subject to, or distinguishes one corporation from a seemingly separate one, were it not for the existing corporate fiction. But to do this, the court must be sure that the corporate fiction was misused, to such an extent that injustice, fraud, or crime was committed upon another, disregarding, thus, his, her, or its rights. It is the corporate entity which the law aims to protect by this doctrine. Using the above-mentioned guidelines, is petitioner entitled to a piercing of the cooperative identity of CAMPCO? This Court thinks not.

It bears to emphasize that the piercing of the corporate veil is an equitable remedy, and among the maxims of equity are: (1) he who seeks equity must do equity, and (2) he who comes into equity must come with clean hands. Hence, a litigant may be denied relief by a court of equity on the ground that his conduct has been inequitable, unfair, dishonest, fraudulent, or deceitful as to the controversy in issue. [34] Petitioner does not come before this Court with clean hands. It is not an innocent party in this controversy. Petitioner itself admitted that it encouraged and even helped the establishment of CAMPCO and the other cooperatives in Polomolok, South Cotabato. These cooperatives were established precisely to render services to petitioner. It is highly implausible that the petitioner was lured into entering into the Service Contract with CAMPCO in 1993 on the latters misrepresentation and false warranty that it was an independent job contractor. Even if it is conceded that petitioner was indeed defrauded into believing that CAMPCO was an independent contractor, then the DOLE proceedings should have placed it on guard. Remember that petitioner participated in the proceedings before the DOLE Regional Office, it cannot now claim ignorance thereof. Furthermore, even after the issuance of the cease and desist order on CAMPCO, petitioner still continued with its prohibited service arrangement with the said cooperative. If petitioner was truly defrauded by CAMPCO and its members into believing that the cooperative was an independent job contractor, the more logical recourse of petitioner was to have the Service Contract voided in the light of the explicit findings of the DOLE officials that CAMPCO was engaging in labor-only contracting. Instead, petitioner still carried on its Service Contract with CAMPCO for several more years thereafter. V As previously discussed, the finding of the duly authorized representatives of the DOLE Secretary that CAMPCO was a labor-only contractor is already conclusive. This Court cannot deviate from said finding. This Court, though, still notes that even an independent review of the evidence on record, in consideration of the proper labor statutes and regulations, would result in the same conclusion: that CAMPCO was engaged in prohibited activities of labor-only contracting. The existence of an independent and permissible contractor relationship is generally established by the following criteria: whether or not the contractor is carrying on an independent business; the nature and extent of the work; the skill required; the term and duration of the relationship; the right to assign the performance of a specified piece of work; the control and supervision of the work to another; the employer's power with respect to the hiring, firing and payment of the contractor's workers; the control of the premises; the duty to supply the premises tools, appliances, materials and labor; and the mode, manner and terms of payment.[35] While there is present in the relationship of petitioner and CAMPCO some factors suggestive of an independent contractor relationship (i.e., CAMPCO chose who among its members should be sent to work for petitioner; petitioner paid CAMPCO the wages of the members, plus a percentage thereof as administrative charge; CAMPCO paid the wages of the members who rendered service to petitioner), many other factors are present which would indicate a labor-only contracting arrangement between petitioner and CAMPCO. [36] First, although petitioner touts the multi-million pesos assets of CAMPCO, it does well to remember that such were amassed in the years following its establishment. In 1993, when CAMPCO was established and the Service Contract between petitioner and CAMPCO was entered into, CAMPCO only had P6,600.00 paid-up capital, which could hardly be considered substantial.[37] It only managed to increase its capitalization and assets in the succeeding years by continually and defiantly engaging in what had been declared by authorized DOLE officials as labor-only contracting. Second, CAMPCO did not carry out an independent business from petitioner. It was precisely established to render services to petitioner to augment its workforce during peak seasons. Petitioner was its only client. Even as CAMPCO had its own office and office equipment, these were mainly used for administrative purposes; the tools, machineries, and equipment actually used by CAMPCO members when rendering services to the petitioner belonged to the latter. Third, petitioner exercised control over the CAMPCO members, including respondents. Petitioner attempts to refute control by alleging the presence of a CAMPCO supervisor in the work premises. Yet, the mere presence within the premises of a supervisor from the cooperative did not necessarily mean that CAMPCO had control over its members. Section 8(1), Rule VIII, Book III of the implementing rules of the Labor Code, as amended, required for permissible job contracting that the contractor undertakes the contract work on his account, under his own responsibility, according to his own manner and method, free from the control and direction of his employer or principal in all matters connected with the performance of the work except as to the results thereof. As alleged by

the respondents, and unrebutted by petitioner, CAMPCO members, before working for the petitioner, had to undergo instructions and pass the training provided by petitioners personnel. It was petitioner who determined and prepared the work assignments of the CAMPCO members. CAMPCO members worked within petitioners plantation and processing plants alongside regular employees performing identical jobs, a circumstance recognized as an indicium of a labor-only contractorship.[38] Fourth, CAMPCO was not engaged to perform a specific and special job or service. In the Service Contract of 1993, CAMPCO agreed to assist petitioner in its daily operations, and perform odd jobs as may be assigned. CAMPCO complied with this venture by assigning members to petitioner. Apart from that, no other particular job, work or service was required from CAMPCO, and it is apparent, with such an arrangement, that CAMPCO merely acted as a recruitment agency for petitioner. Since the undertaking of CAMPCO did not involve the performance of a specific job, but rather the supply of manpower only, CAMPCO clearly conducted itself as a labor-only contractor.[39] Lastly, CAMPCO members, including respondents, performed activities directly related to the principal business of petitioner. They worked as can processing attendant, feeder of canned pineapple and pineapple processing, nata de coco processing attendant, fruit cocktail processing attendant, and etc., functions which were, not only directly related, but were very vital to petitioners business of production and processing of pineapple products for export. The findings enumerated in the preceding paragraphs only support what DOLE Regional Director Parel and DOLE Undersecretary Trajano had long before conclusively established, that CAMPCO was a mere labor-only contractor. VI The declaration that CAMPCO is indeed engaged in the prohibited activities of labor-only contracting, then consequently, an employer-employee relationship is deemed to exist between petitioner and respondents, since CAMPCO shall be considered as a mere agent or intermediary of petitioner. Since respondents are now recognized as employees of petitioner, this Court is tasked to determine the nature of their employment. In consideration of all the attendant circumstances in this case, this Court concludes that respondents are regular employees of petitioner. Article 280 of the Labor Code, as amended, reads ART. 280. Regular and Casual Employment. The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary and desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season. An employment shall be deemed to be casual if its is not covered by the preceding paragraph: Provided, That, any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such activity exists. This Court expounded on the afore-quoted provision, thus The primary standard, therefore, of determining a regular employment is the reasonable connection between the particular activity performed by the employee in relation to the usual business or trade of the employer. The test is whether the former is usually necessary or desirable in the usual business or trade of the employer. The connection can be determined by considering the nature of the work performed and its relation to the scheme of the particular business or trade in its entirety. Also, if the employee has been performing the job for at least one year, even if her performance is not continuous or merely intermittent, the law deems the repeated and continuing need for its performance as sufficient evidence of the necessity if not indispensability of the activity to the business. Hence, the employment is also considered regular, but only with respect to such activity and while such activity exists.[40]

In the instant Petition, petitioner is engaged in the manufacture and production of pineapple products for export. Respondents rendered services as processing attendant, feeder of canned pineapple and pineapple processing, nata de coco processing attendant, fruit cocktail processing attendant, and etc., functions they performed alongside regular employees of the petitioner. There is no doubt that the activities performed by respondents are necessary or desirable to the usual business of petitioner. Petitioner likewise want this Court to believe that respondents employment was dependent on the peaks in operation, work backlogs, absenteeism, and excessive leaves. However, bearing in mind that respondents all claimed to have worked for petitioner for over a year, a claim which petitioner failed to rebut, the n respondents continued employment clearly demonstrates the continuing necessity and indispensability of respondents employment to the business of petitioner. Neither can this Court apply herein the ruling of the NLRC in the previous case involving petitioner and the individual workers they used to hire before the advent of the cooperatives, to the effect that the employment of these individual workers were not regular, but rather, were valid term employments, wherein the employer and employee knowingly and voluntarily agreed to employment for only a limited or specified period of time. The difference between that case and the one presently before this Court is that the members of CAMPCO, including respondents, were not informed, at the time of their engagement, that their employment shall only be for a limited or specified period of time. There is absence of proof that the respondents were aware and had knowingly and voluntarily agreed to such term employment. Petitioner did not enter into individual contracts with the CAMPCO members, but executed a Service Contract with CAMPCO alone. Although the Service Contract of 1993 stated that it shall be for a specific period, from 1 July to 31 December 1993, petitioner and CAMPCO continued the service arrangement beyond 1993. Since there was no written renewal of the Service Contract, [41] there was no further indication that the engagement by petitioner of the services of CAMPCO members was for another definite or specified period only. Respondents, as regular employees of petitioner, are entitled to security of tenure. They could only be removed based on just and authorized causes as provided for in the Labor Code, as amended, and after they are accorded procedural due process. Therefore, petitioners acts of placing some of the respondents on stay home status and not giving them work assignments for more than six months were already tantamount to co nstructive and illegal dismissal.[42] In summary, this Court finds that CAMPCO was a labor-only contractor and, thus, petitioner is the real employer of the respondents, with CAMPCO acting only as the agent or intermediary of petitioner. Due to the nature of their work and length of their service, respondents should be considered as regular employees of petitioner. Petitioner constructively dismissed a number of the respondents by placing them on stay home status for over six months, and was therefore guilty of illegal dismissal. Petitioner must accord respondents the status of regular employees, and reinstate the respondents who it constructively and illegally dismissed, to their previous positions, without loss of seniority rights and other benefits, and pay these respondents backwages from the date of filing of the Complaint with the NLRC on 19 December 1996 up to actual reinstatement. WHEREFORE, in view of the foregoing, the instant Petition is DENIED and the Amended Decision, dated 27 November 2003, rendered by the Court of Appeals in CA-G.R. SP No. 63405 is AFFIRMED. Costs against the petitioner. SO ORDERED.

SECOND DIVISION CRISLYNDON T. SADAGNOT, Petitioner, G.R. No. 152636 Present: QUISUMBING, J., Chairperson, CARPIO, CARPIO MORALES, TINGA, and VELASCO, JR., JJ.

- versus -

REINIER PACIFIC INTERNATIONAL SHIPPING, INC. and NEPTUNE SHIPMANAGEMENT SERVICES, PTE., LTD. of SINGAPORE, Respondents.

Promulgated: August 8, 2007

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x DECISION CARPIO, J.: The Case Before the Court is a petition for review[1] assailing the 15 March 2002 Decision[2] of the Court of Appeals in CAG.R. SP No. 52310. The Court of Appeals affirmed the 14 September 1998 Decision and 10 February 1999 Resolution of the National Labor Relations Commission (NLRC). The Antecedent Facts Reinier Pacific International Shipping, Inc. and its foreign principal Neptune Shipmanagement Services Pte., Ltd. of Singapore (respondents) hired Crislyndon T. Sadagnot (petitioner) as Third Officer of the vessel MV Baotrans. Petitioners contract was for ten months with basic monthly salary of US$650. Petitioner boarded MV Baotrans on 19 August 1995. Petitioner alleged that while on board MV Baotrans, the vessels Master ordered him to perform hatch stripping, a deck work. Petitioner refused the order on the ground that it was not related to his duties as Third Officer. Petitioner alleged that when the order was issued, he was on watch standing duty and was doing nautical publications as required by standard maritime practice. Petitioner alleged that because of his refusal to obey the order, the Master made several negative reports against him. On 2 March 1996, respondents repatriated petitioner to the Philippines. Upon his arrival, petitioner executed a release document in favor of respondents stating that he had received all the amounts due him and he has no cause of action against respondents. On 9 May 1996, petitioner filed an action for illegal dismissal, non-payment of allotment, termination pay, damages, and attorneys fees against respondents. Petitioner alleged that he was prematurely repatriated without being given the opportunity to avail of the companys grievance procedure. Respondents alleged that petitioner was repatriated because of his willful disregard of and failure to obey the Masters lawful orders. Respondents alleged that petitioners refusal to obey the order constituted insubordination and was a direct affront to the authority of the Master. The Rulings of the Labor Arbiter and the NLRC In a Decision[3] dated 28 April 1998, the Labor Arbiter ruled in favor of petitioner, thus:

WHEREFORE, premises considered, respondents, REINIER PACIFIC INTERNATIONAL SHIPPING, INC., Neptune ShipmanagementServices Pte., Ltd./Singapore, are jointly and solidarily liable to pay complainant, CRISLYNDON T. SADAGNOT, the following: a) US$1,950.00 in its peso equivalent at the time of payment, representing three (3) months of unexpired term (US$650 x 3) in accordance with Sec. 10 of RA 8042. b) P5,000.00 by way of penalty for non-observance of due process, and c) 10% attorneys fees on top of the total award. SO ORDERED.[4] Respondents filed an appeal before the NLRC. On 14 September 1998, the NLRC set aside the Labor Arbiters Decision. The dispositive portion of the NLRC Decision[5]reads: WHEREFORE, the decision appealed from is SET ASIDE. Respondents Reinier Pacific International Shipping, Inc. and NeptuneShipmanagement Services Pte., Singapore are hereby ordered to jointly and severally liable to pay (sic) complainant Crislyndon T. Sadagnat (sic) the sum of TEN THOUSAND PESOS (P10,000.00) as indemnity for non-observance of due process in effecting his dismissal for cause. SO ORDERED.[6] Petitioner filed a motion for reconsideration. motion. In its 10 February 1999 Resolution,[7] the NLRC denied petitioners

Petitioner filed a petition for certiorari with the Court of Appeals. The Ruling of the Court of Appeals In its 15 March 2002 Decision, the Court of Appeals affirmed the NLRC Decision. The Court of Appeals ruled that petitioners act of not following the Masters order is a serious misconduct or willful disobedience under Article 282 of the Labor Code. The Court of Appeals noted that petitioners repatriation was based on a report in the logbook du ly signed by the Master and the Chief Officer. The dispositive portion of the Decision of the Court of Appeals reads: WHEREFORE, premises considered, the instant petition is DENIED DUE COURSE and accordingly DISMISSED for lack of merit. The assailed decision dated September 14, 1998 and the Resolution dated February 10, 1999 of the National Labor Relations Commission in NLRC NCR OCW CN 00-051856-96 (CA NO. 015582-98) are hereby AFFIRMED in toto. SO ORDERED.[8] Petitioner filed a petition for review before this Court. The Issues Petitioner raises the following issues before the Court: 1. Whether the Court of Appeals erred in adopting the logbook entry as evidence of petitioners misconduct; 2. Whether petitioner was validly dismissed from employment; and 3. Whether there is legal basis for the award of P10,000 indemnity to petitioner. The Ruling of this Court The petition is partly meritorious. Petitioner alleges that the Court of Appeals erred in adopting the Masters logbook entry as evidence of his supposed misconduct. Petitioner also alleges that the Court of Appeals erred in interpreting his actions as serious

misconduct or willful disobedience under Article 282 of the Labor Code. Petitioner further alleges that the indemnity awarded to him for respondents non-observance of due process has no legal basis and is not commensurate to the damage caused by respondents. On Petitioners Signature on Verification of the Petition Respondents allege that petitioners signature on the verification of the petition is a poor facsimile of the signature of petitioner, as appearing in the records of Reinier Pacific.[9] Respondents submitted to the Court an undated contract signed by petitioner. Hence, respondents allege that the petition should be dismissed outright unless petitioner could prove that he really signed the verification. Even if we assume that the undated contract submitted by respondents was the contract signed by petitioner in August 1995, respondents allegation must fail. The petition was filed on 6 May 2002. There was a lapse of almost seven years between the signing of the two documents. There is no sufficient proof that petitioners signature on the verification was forged just because it was not exactly the same as petitioners signature on the contract . Hence, the Court finds no reason to dismiss the petition on this ground. Evidentiary Value of the Entry in the Logbook On 10 February 1996, the Master entered the following in the vessels logbook: Mr. Crislyndon T. Sadagn[o]t, Third Officer[,] was instructed by the Master to hand over watch to Master and go on deck to assist Chief Officer in trying out hatch stripping actions as vessel received instructions from NOL-CD to keep every equipment ready for next voyage in tanker mode. Against the Master[s] instructions he argued that he had lots of corrections to do in the list of lights and sailing directions. He was told to give priority to deck work in order to prepare the vessel for tanker mode prior to loading at Richards bay on 22 February 1996 x x x.[10] Petitioner alleges that the Court of Appeals erred in giving credence to the logbook entry instead of the Joint Statement[11] by his crew mates attesting, among other things, to the fact that there were 12 deck crews on deck at the time who would be able to handle the hatch stripping if they were ordered to do so. The ships logbook is the official record of a ships voyage which its captain is obligated by law to keep. [12] It is where the captain records the decisions he has adopted, a summary of the performance of the vessel, and other daily events.[13] The entries made in the ships logbook by a person performing a duty required by law are prima facie evidence of the facts stated in the logbook.[14] Petitioner failed to prove that the entry was fabricated by the Master. While petitioner claimed that the Master entered untruthful reports in the logbook, he also admitted that he did not obey the Masters order and even suggested that it would be better if the hatch stripping shall be performed, as it should, by an able-bodied seaman.[15] Hence, we sustain the Court of Appeals in giving weight to the logbook entry. Willful Disobedience as Ground for Dismissal from the Service Petitioner alleges that his act does not constitute serious misconduct or willful disobedience that warrants his dismissal. Petitioner alleges that the Master wanted him to perform work that was not related to his contracted services as a Third Officer. He alleges that hatch stripping is the duty of an able seaman, and at the time that the Master ordered him to perform hatch stripping, there were able-bodied seamen on the deck who could do the job. Petitioner emphasizes that he was on watch duty when the Master commanded him to a job that was not included in his duties as a Third Officer. Petitioners duties as a Third Officer are as follows: 2.2.4 INSTRUCTIONS TO THE THIRD OFFICER (3/0) The Third Officer reports to the Master on navigational matters and the Chief Officer on cargo, maintenance and operational matters.

2.2.4.1 The Third Officer shall be directly responsible to the Chief Officer who will assign him to duties both at sea and in port. 2.2.4.2 His duties and responsibilities will include the efficient maintenance and upkeep of: a) b) c) d) All Life Saving appliances (LSA) and lifeboats. Fire Fighting Appliances (FFA). Manual fog and emergency signaling equipment. Visual communication gear and equipment and the keeping of complete records on the above.

2.2.4.3 The Third Officer shall be responsible for ensuring that the courtesy ensigns for the countries that the vessel will call at, are on board well before reaching those countries and that the vessel is dressed overall on Singapores National Day or any other occasion when notified by the local Port authority. 2.2.4.4 The Third Officer shall be directly responsible to the Chief Officer for the efficient management of cargo operations and the ships safety during the working periods assigned to his charge. While on cargo watch or deck duty he shall ensure that all equipment and working gears are correctly rigged and being worked in a safe manner that are conducive to the safe working limits, state, and age of that equipment. Comply with duties of 0.0.W. in port and anchor defined in OPM. 2.2.4.5 The Third Officer with superior certificate shall spend some time correcting charts and maintaining bridge equipment and publications and be familiar with the duties and responsibilities of the 2/0. Satisfactory performance of this training shall be recorded in the TPRB.

2.2.4.6 The Third Officer shall carry out duties assigned by the Master other than those mentioned herewith. 2.2.4.7 The Third Officer shall prepare a handing/taking over report containing his general duties and other special requirements that are special to the vessel prior to being relieved. This report shall be given to the relieving officer and acknowledged by the Master.[16] (Emphasis supplied) Petitioners duties clearly indicate that he shall carry out duties assigned by the Master. Petitioner cannot claim that the order to assist in hatch stripping was beyond his duties as a Third Officer because it is covered under duties assigned by the Master. The Court of Appeals, citing the NLRC, also ruled that petitioners work as desk officer necessarily entails responsibility over the deck crew and includes supervision of their work and maintenance of deck equipment.[17] Petitioner insists that there was no urgent need to perform deck work at the time the Master issued the order since loading was still 12 days from the time he was ordered to do hatch stripping. He also alleges that the fact that the vessel was not ready for the next cargo loading should not be attributed to him and only the Master was to blame for any delay. The urgency of the work to be done is within the sound discretion of the Master and is not for petitioner to decide. Petitioners attitude only emphasized his disposition to disobey the Master. Article 282 of the Labor Code provides: ART. 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; xxxx

Willful disobedience requires the concurrence of two requisites: (a) the employees assailed conduct must have been willful, that is, characterized by a wrongful and perverse attitude; and (b) the order violated must have been reasonable, lawful, made known to the employee, and must pertain to the duties which he had been engaged to discharge.[18] Again, petitioner does not deny that he refused to obey the Masters order. The Masters order was not unreasonable or unlawful as he received instructions to prepare the vessel for the next voyage in tanker mode. Petitioners allegation that there were able-bodied seamen willing to do the work was not substantiated. Petitioner submitted a Joint Statement executed by some officers of the vessel but not one of the seamen he referred to executed any affidavit to prove the allegation. As regards petitioners objection that he was on duty, the Master instructed petitioner to hand over the watch to him. Finally, since petitioners duties include duties assigned by the Master, we cannot sustain petitioners allegation that the order is not part of his duties as a Third Officer. Since petitioner was dismissed from employment for a valid cause, he in not entitled to any salary for the unexpired portion of his employment contract.[19] Observance of Due Process Petitioner alleges that he was not afforded his right to due process. He further alleges that the indemnity awarded to him by the NLRC and the Court of Appeals is not commensurate to the damage caused by respondents. Respondents failed to observe the necessary procedural safeguards. In termination cases, the employer must furnish the employee with two written notices before termination of employment can be legally effected: (a) a notice which apprises the employee of the particular acts or omissions for which his dismissal is sought, and (b) the subsequent notice which informs the employee of the employers decision to dismiss him. [20] There is nothing in the records showing that respondents complied with the two-notice requirement. In Agabon v. NLRC,[21] we ruled that if the dismissal is for a just cause, the lack of statutory due process should not nullify the dismissal, or render it illegal or ineffectual. The violation of petitioners right to due process only warrants the payment of indemnity in the form of nominal damages, the amount of which is addressed to the sound discretion of the Court, taking into consideration the relevant circumstances.[22] However, we agree with petitioner that the amount of indemnity awarded to him is insufficient. Considering the circumstances in this case and in line with prevailing jurisprudence, we deem it proper to increase the amount of nominal damages from P10,000 to P30,000.[23] WHEREFORE, we AFFIRM the 15 March 2002 Decision of the Court of Appeals in CA-G.R. SP No. 52310 with MODIFICATION by increasing the amount of nominal damages awarded to petitioner Crislyndon T. Sadagnot to P30,000. SO ORDERED.

SECOND DIVISION LANDTEX INDUSTRIES and WILLIAM GO, Petitioners, G.R. No. 150278 Present: QUISUMBING, J., Chairperson, CARPIO, CARPIO MORALES, TINGA, and VELASCO, JR., JJ.

- versus -

COURT OF APPEALS, SALVADOR M. AYSON, and LANDTEX INDUSTRIES WORKERS UNION FEDERATION OF FREE WORKERS (FFW), Respondents.

Promulgated: August 9, 2007

x-------------------------------------------------- x DECISION CARPIO, J.: The Case This is a petition for review on certiorari [1] of the Decision[2] dated 13 February 2001 and of the Resolution[3] dated 16 October 2001 of the Court of Appeals (appellate court) in CA-G.R. SP No. 50060. The Decision ordered petitioners Landtex Industries (Landtex) and William Go to award respondent Salvador M. Ayson (Ayson) separation pay in lieu of reinstatement, backwages, 13 th month pay, service incentive leave pay, and attorneys fees. The Facts Landtex, a sole proprietorship owned by Alex Go and managed by William Go, is a business enterprise engaged in the manufacture of garments. Ayson worked in Landtex as a knitting operator from 19 May 1979 to 6 July 1996. Ayson was an officer[4] of Landtex Industries Workers Union Federation of Free Workers (union) which had an existing collective bargaining agreement (CBA) with Landtex. Ayson received a letter[5] from Landtex dated 16 March 1996 which stated that Ayson committed acts contrary to company policies on 2 and 7 March 1996. The letter required Ayson to explain in writing within 24 hours from receipt why no disciplinary action should be taken against him for spreading damaging rumors about the personal life of an unspecified person, and for having an altercation with one of the companys owners when he was asked to submit an ID picture. Ayson replied in writing[6] that he could not defend himself from the charge of spreading damaging rumors because Landtexs letter failed to state what rumors he was supposed to have spread. Ayson further explained that he merely replied in a loud voice to the company owners request because he was carrying textiles. Ayson then apologized for his actions. Landtex sent Ayson another letter dated 2 April 1996 informing him of its receipt of his explanation. Landtex informed Ayson that the omission of the details about the damaging rumors was intentional because other employees might be able to read the letter. Furthermore, Landtex decided to conduct an investigation on 26 April 1996 in view of Aysons denials. The first meeting between Ayson and Landtexs counsel took place on 26 April 1996. The minutes of the 26 April 1996meeting state that Ayson was informed that there were witnesses who could testify that he spread rumors about the personal life of William Go and his family. Ayson denied that he spread rumors and requested for another

meeting so that he could hear the alleged witnesses and defend himself. Ayson further requested that the next investigation be held at Landtexs Mauban office because he and the union officers accompanying him suffer salary deductions for their attendance of investigations during office hours. [7] Another meeting was scheduled for 5 May 1996, but Ayson was unable to attend it and went home early because he allegedly needed to look after his child. The second meeting between Ayson and Landtexs counsel took place on 5 June 1996. The minutes of the 5 June 1996meeting state that Ayson and a union officer accompanying him appeared but refused to sign the attendance sheet or to participate. Landtexs counsel, Atty. Generosa Jacinto, made a note in the minutes which reads, Pls. advise mgt. They can take any action they want.[8] In a letter dated 19 June 1996, Landtex terminated Aysons services effective 30 June 1996 because of Aysons lack of cooperation during the investigations. Despite this notice, Ayson still reported for work until 6 July 1996. In a letter dated 8 July 1996, the union president requested Landtex for a formal dialogue regarding Aysons case. Landtexreaffirmed its decision to terminate Ayson in meetings with the union held on 10 and 16 July 1996. Landtex and the union agreed to refer the matter to a third party in accordance with the provisions of law and of the CBA. Landtex expected Ayson to refer the issue to the National Conciliation and Mediation Board (NCMB) for the selection of a voluntary arbitrator. Ayson and the union, however, filed a complaint before the labor arbiter.[9] The labor arbiter conducted mandatory conferences for amicable settlement with the participation of all parties. The parties agreed to the idea of payment of separation pay in lieu of reinstatement but differed as to the amount. Ayson wanted to receive one month basic salary for every year of service while Landtex wanted to pay only one-half month basic salary for every year of service from date of hiring to termination of employment.[10] The parties were not able to settle; hence, the labor arbiter ordered them to submit their position papers. In his position paper, Ayson asked whether his dismissal from employment has any just cause. Ayson also asked whetherLandtex complied with procedural due process when it terminated his employment. On the other hand, Landtex and William Go revealed in their position paper that Ayson was seen having a drinking session with other Landtex employees near the company premises. A Landtex security guard, who was a part of the drinking session but whose identity was not revealed, stated that Ayson maliciously narrated spiteful stories about the personal life of William Go. Landtex also questioned the jurisdiction of the labor arbiter over Aysons case. Landtex insisted that the labor arbiter should dismissAysons case and refer it to the NCMB for the selection of a voluntary arbitrator. The Ruling of the Labor Arbiter On 30 September 1997, the labor arbiter promulgated his decision[11] which ruled in favor of Ayson. The labor arbiter declared that despite the unions manifestation of its desire to refer Aysons case to a third party in accordance with provisions of law and CBA, [12] this manifestation did not affect Landtexs termination of Aysons employment. Aysons termination thus properly falls under the jurisdiction of the labor arbiter. Moreover, the labor arbiter did not find any evidence supporting Landtexsallegations that Ayson spread malicious rumors about William Go or shouted at William Gos wife. The pertinent portions of the labor arbiters decision read: Dismissal of a worker is no trifling matter; more so, of herein [Ayson] who had been employed with [Landtex] for seventeen years, more or less. The dismissal must be for a just cause, let alone with due process, and must be based on substantial evidence. Mere allegations will not suffice. WHEREFORE, premises considered, judgment is hereby rendered ordering [Landtex Industries and William Go] to reinstate [Ayson] to his former position without loss of seniority rights with full backwages from the date his salary has been withheld until the actual date of reinstatement. [Landtex Industries and William Go] are further ordered to pay ten (10%) percent of [Aysons] total monetary award as attorneys fees. Backwages 6/30/96 8/31/97 = 14.0 mos. P165.00 x 30 x 14.00 mos. =

P 69,300.00

13th Month Pay SILP 5.833 days x P165.00

5,775.00

962.50 P 76,037.50

Attorneys Fees TOTAL

7,603.75 P 83,641.25

All other claims of [Ayson] are dismissed for lack of merit. SO ORDERED.[13] Landtex and William Go appealed the labor arbiters decision to the National Labor Relations Commission (NLRC). Landtex and William Go posted a bond in the amount of the total award in the labor arbiters decision to perfect their appeal and to enjoin the execution of the decision. Landtex and William Go insisted that the labor arbiter had no jurisdiction over the parties and over the subject matter in the present case. The Ruling of the NLRC On 20 July 1998, the NLRC promulgated its decision[14] which agreed with Landtex and William Gos argument that Aysonscase falls within the original and exclusive jurisdiction of the voluntary arbitrators, as provided in Article 261 of the Labor Code. Landtex merely imposed a disciplinary measure when it terminated Aysons employment. Furthermore, the NLRC ruled that Aysonwaived his right to have his case heard before any other forum when he did not undergo the grievance process mandated by his unions CBA with Landtex. The NLRC declared that the disciplinary action meted out by Landtex to Ayson and the waiver ofAysons right to have his case heard were matters which require the interpretation of the CBA, and thus were within the original and exclusive jurisdiction of the voluntary arbitrators. The dispositive portion of the NLRCs decision reads: WHEREFORE, the decision appealed from is hereby SET ASIDE on the ground of lack of jurisdiction over the subject matter. The instant case is hereby referred to Voluntary Arbitration in accordance with the Collective Bargaining Agreement. SO ORDERED.[15] The NLRC dismissed Ayson and the unions motion for reconsideration on 11 September 1998. Ayson and the union then filed a petition for certiorari before the appellate court. The Ruling of the Appellate Court In a decision promulgated on 13 February 2001, the appellate court sustained the jurisdiction of the labor arbiter and modified the award in favor of Ayson. The appellate court further stated that the records are bereft of any showing that a grievance mediation had been undertaken so as to thresh out any disciplinary measure against [Ayson].[16] The appellate court took Landtex and William Go to task because they took the avenue of least resistance and discussed the possibility of an amicable settlement instead of filing a motion to dismiss before the labor arbiter. Moreover, the appellate court found that Ayson was illegally dismissed because his termination was characterized by bad faith, [and] wanton and reckless exercise of management prerogative.[17] Landtexsallegations against Ayson failed to show that Aysons dismissal was for a just cause. The appellate court awarded Ayson fullbackwages, separation pay (equivalent to one months pay for every year of service, a fraction of at least six months being considered as one whole year) in lieu of reinstatement, 13 th month pay, service incentive leave pay, and attorneys fees. Thedispositive portion of the decision of the appellate court reads: WHEREFORE, premises considered, the petition is GRANTED and the decision (promulgated on July 20, 1998) and the resolution (promulgated on September 11, 1998) of the public respondent (National Labor Relations Commission) in NLRC NCR Case No. 00-07-04492-92 is hereby REVERSED and SET ASIDE. The decision of the labor arbiter, which was rendered on September 30, 1997 is hereby

REINSTATEDsubject, however, to the MODIFICATION that separation pay shall be awarded to [Ayson] in lieu of reinstatement. No pronouncement as to costs. SO ORDERED.[18] Landtex and William Go filed a motion for reconsideration of the appellate courts deci sion. Ayson and the union also contested the appellate courts award of separation pay in lieu of reinstatement. The appellate court dismissed both motions in a resolution promulgated on 16 October 2001. Landtex and William Go then filed a petition for review before this Court on 11 December 2001. Ayson and the union also filed a petition for review, docketed as G.R. No. 150392, but this petition was withdrawn as Ayson no longer desired to question the resolution of the appellate court. [19] Emilia P. Ayson, respondent Aysons wife, later made a manifestation that she would like to represent Ayson in the present case since her husband died on 28 August 2002. She attached Aysons death certificate and their marriage certificate to prove her allegations. When Landtex and William Go filed their memorandum in the present case, they stated that Landtex started to suffer serious business reverses in the first quarter of 2001. Landtexs cutting and knitting departments temporarily closed in December 2002, andLandtex permanently ceased its operations in February 2003. Landtex and William Go attached Landtexs notice of closure to the union dated 9 January 2003, Landtexs balance sheets for the years 2000 to 2002, Landtexs profit and loss statements for the years 2000 to 2002, notice of extra-judicial sale of the property of spouses Alex and Nancy Go, demand letters addressed to Alex Go, and unpaid utility bills in the name of Alex Go to prove their allegations. The Issues Landtex and William Go raise the following issues before this Court: A. Whether the NLRC correctly ruled that jurisdiction over the subject matter of the instant case pertains exclusively to the voluntary arbitrator considering that 1. The existing CBA provides that a grievance is one that arises from the interpretation or implementation of this agreement, includingdisciplinary action imposed on any covered employee; and 2. The parties have undergone the grievance machinery of the collective bargaining agreement. Whether the instant case concerns enforcement and implementation of company personnel policy and that the issue therein was timely raised. Whether there is a valid ground for termination of the employment of [Ayson]. Whether [Ayson] is entitled to backwages and separation pay. Whether [the appellate court] committed grave and patent abuse of discretion and errors of law in setting aside the decision of the NLRC.[20] The Ruling of the Court The petition has no merit. The Labor Arbiters Jurisdiction Landtex and William Go insist that the matter subject of the present petition is covered by the CBAs provision on voluntary arbitration and thus is excluded from the labor arbiters jurisdiction. They allege that Aysons termination merely enforcedLandtexs personnel policy against misconduct. They further claim that the unions request for a formal dialogue signified the initiation of the grievance procedure outlined in the CBA. Landtex and William Go even assert that because of Aysons failure to submit his claim before the NCMB, he is barred from seeking relief from a forum other than that provided in the CBA. Section 1 of Article XV, Grievance Procedure, of the unions CBA with Landtex reads:

B. C. D. E.

Grievance Machinery. For purposes of this Agreement, a grievance is one that arises from the interpretation or implementation of this Agreement, including disciplinary action imposed on any covered employee. Any grievance, dispute, or complaint which a covered employee or UNION may have against the COMPANY: (a) relative to the meaning, interpretation and application of the terms of this agreement; or (b) arising out of the employment relationship, shall be submitted to the grievance machinery in accordance with the following procedure: Step I The employee shall present his grievance, dispute, or complaint in writing to the COMPANYs Section Head/In Charge and to the UNIONs authorized representative, and thereupon the said Section Head and UNION representative shall endeavor to work out a settlement within four (4) working days from presentation.

Step II

If, under Step I, no settlement is reached within four (4) working days from presentation, the grievance shall be taken up by the UNION representative with the General Manager. If, under Step II, no settlement is reached within four (4) working days, the grievance shall be referred by the parties to the Management-Employee Committee. If under Step III, no settlement is reached within eight (8) working days, the grievance shall be referred by both parties to the National Conciliation and Mediation Board (NCMB) for submission to voluntary arbitration in accordance with NCMBsrules within ten (10) days from the date of the last meeting of the Management-Employee Committee.

Step III

Step IV

Where the grievance or complaint involves the UNION directly, Steps I and II of the foregoing procedure shall be dispensed with and only Steps III and IV shall be followed.[21]

Articles 217, 261, and 262 of the Labor Code tackle the jurisdiction of labor arbiters and voluntary arbitration as follows: Art. 217. Jurisdiction of the Labor Arbiters and the Commission. - (a) Except as otherwise provided under this Code, the Labor Arbiters shall have original and exclusive jurisdiction to hear and decide, within thirty (30) calendar days after the submission of the case by the parties for decision without extension, even in the absence of stenographic notes, the following cases involving all workers, whether agricultural or non-agricultural: 1. Unfair labor practice cases; 2. Termination disputes; 3. If accompanied with a claim for reinstatement, those cases that workers may file involving wages, rates of pay, hours of work and other terms and conditions of employment; 4. Claims for actual, moral, exemplary and other forms of damages arising from the employeremployee relations; 5. Cases arising from any violation of Article 264 of this Code, including questions involving the legality of strikes and lockouts; and 6. Except claims for Employees Compensation, Social Security, Medicare and maternity benefits, all other claims arising from employer-employee relations, including those of persons in domestic or household service, involving an amount exceeding five thousand pesos (P5,000.00) regardless of whether accompanied with a claim for reinstatement. (b) The Commission shall have exclusive appellate jurisdiction over all cases decided by Labor Arbiters.

(c) Cases arising from the interpretation or implementation of collective bargaining agreements and those arising from the interpretation or enforcement of company personnel policies shall be disposed of by the Labor Arbiter by referring the same to the grievance machinery and voluntary arbitration as may be provided in said agreements. Art. 261. Jurisdiction of Voluntary Arbitrators or panel of Voluntary Arbitrators. - The Voluntary Arbitrator or panel of Voluntary Arbitrators shall have original and exclusive jurisdiction to hear and decide all unresolved grievances arising from the interpretation or implementation of the Collective Bargaining Agreement and those arising from the interpretation or enforcement of company personnel policies referred to in the immediately preceding article. Accordingly, violations of a Collective Bargaining Agreement, except those which are gross in character, shall no longer be treated as unfair labor practice and shall be resolved as grievances under the Collective Bargaining Agreement. For purposes of this article, gross violations of Collective Bargaining Agreement shall mean flagrant and/or malicious refusal to comply with the economic provisions of such agreement. The Commission, its Regional Offices and the Regional Directors of the Department of Labor and Employment shall not entertain disputes, grievances or matters under the exclusive and original jurisdiction of the Voluntary Arbitrator or panel of Voluntary Arbitrators and shall immediately dispose and refer the same to the Grievance Machinery or Voluntary Arbitration provided in the Collective Bargaining Agreement. ART. 262. Jurisdiction over other labor disputes. - The Voluntary Arbitrator or panel of Voluntary Arbitrators, upon agreement of the parties, shall also hear and decide all other labor disputes including unfair labor practices and bargaining deadlocks.

The labor arbiter, the appellate court, and the NLRC differed in their rulings on the matter of jurisdiction. The labor arbiter and the appellate court agreed with Ayson and the unions position. The labor arbiter assumed jurisdiction and emphasized that when the union met with Landtex on 8 July 1996, Ayson was no longer an employee because Landtex terminated him effective 30 June 1996. The manifestation of the unions desire to refer the matter to a third party in accordance with law and the CB A does not deviate from the fact that Ayson was already dismissed. On the other hand, the NLRC sustained Landtex and William Gosposition. The NLRC asserted that the determination of whether Aysons dismissal constitutes a disciplinary action within the scope of the CBA calls for an interpretation of the CBA. When the union called for a meeting with Landtex, the union effectively initiated the grievance procedure. Thus, Aysons case should have been subjected to voluntary arbitration. We agree with Ayson and the union and affirm the rulings of the labor arbiter and the appellate court. Article 261 of the Labor Code provides that voluntary arbitrators shall have original and exclusive jurisdiction to hear and decide all unresolved grievances arising from the interpretation or implementation of the Collective Bargaining Agreement and those arising from the interpretation or enforcement of company personnel policies. On the other hand, a reading of Article 217 in conjunction with Article 262 shows that termination disputes fall under the jurisdiction of the labor arbiter unless the union and the company agree that termination disputes should be submitted to voluntary arbitration. Such agreement should be clear and unequivocal. Existing law is an intrinsic part of a valid contract without need for the parties to expressly refer to it. Thus, the original and exclusive jurisdiction of the labor arbiter over unfair labor practices, termination disputes, and claims for damages cannot be arrogated into the powers of voluntary arbitrators in the absence of an express agreement between the union and the company.[22] In the present case, the CBA between Landtex and the union does not clearly state that termination disputes, as opposed to mere disciplinary actions, are covered by the CBA. The CBA defined a grievance as one that arises from the interpretation or implementation of this Agreement, including disciplinary action imposed on any covered employee. The CBA did not explicitly state that termination disputes should be submitted to the grievance machinery. In ruling that the present case should have been submitted to voluntary arbitration, the NLRC relied on the unions act of meeting with Landtex. The unions letter to Landtex, dated 8 July 1996, reads: We received your letter dated 19 June 1996 re: TERMINATION LETTER of MR. SALVADOR AYSON who happened to be [a] union officer of LANDTEX INDUSTRIES EMPLOYEES UNION.

In connection to [sic] this, we would like to request for a formal dialogue regarding the above matter at a [sic] soonest possible time. We are hoping that the management is with us in resolving this termination of our officer. May we have a continuous harmonious relationship. Thank you.[23] The CBAs provisions on grievance directly involving the union state that the grievance shall be referred by the parties to the Management-Employee Committee. The Management-Employee Committee shall be composed of three representatives each from the union and Landtex. According to the minutes of the meeting prepared by Landtexs counsel, when the union met with Landtexon 10 July 1996, there were seven union members and two Landtex representatives in attendance. The minutes of the meeting read: The mgt.s position is that it will no longer reconsider the termination of Mr. Ayson. The union on the other hand opened discussion of other possibilities in lieu of reinstatement. The union requested for time to study possibilities. The mgt. will do likewise. Reset 16 July 96[,] 5 pm at factory.[24] The next meeting proceeded with the same number of representatives from both parties. The minutes of the meeting state that therewas [n]o settlement. Union will refer matter to third party in accordance with provision of law and CBA.[25] We find nothing in the records which shows that the meetings between the union and Landtex already constitute the grievance machinery as mandated by the CBA. The meetings happened only after the effectivity of Aysons termination. The meetings did not comply with the requisite number of participants. The CBA mandated that there should be three representatives each from the union and Landtex but there were seven union members and two Landtex representatives who attended the meetings. More importantly, there was nothing in the minutes that shows that the attendees constituted a Management-Employee Committee. Finally, the appellate court is correct in stating that if Landtex really believed that the labor arbiter did not have jurisdiction over the present case, then Landtex should have filed a motion to dismiss in accordance with Section 15, Rule V of The New Rules of Procedure of the NLRC.[26] Instead of filing a motion to dismiss, Landtex participated in the proceedings before the labor arbiter. Had Landtex immediately filed a motion to dismiss, the labor arbiter would have determined the issue outright before proceeding with hearing the case. In the present case, Landtex raised the issue of jurisdiction only after the labor arbiter required the parties to submit their position papers.

Validity of Aysons Dismissal The requisites for a valid dismissal are (1) the dismissal must be for any of the causes expressed in Article 282 of the Labor Code, and (2) the opportunity to be heard and to defend oneself.[27] Landtex and William Go assert that Aysons termination was for a just cause as defined in Article 282[28] of the Labor Code; hence, the two-notice rule[29] should be followed. The contents of Landtexs first memorandum to Ayson, signed by Landtexs counsel, read: Ipinagbigay-alam sa amin ng pamahalaang Landtex Industries [sic] tungkol sa nangyaring insidente nuong ika-2 at 7 Marso 1996. and

Ayon sa isang saksi, ikaw ay nagkakalat ng mga balitang nakakasira sa aming personal na buhay. B ukod pa dito nuong ika-7 ng Marso ng ikaw ayhingan ng iyong ID pictures bilang isa sa mga regulasyon ng kompanya, ikaw ay sumungaw sa harap pa mismo ng nag mamay-ari ng kompanya nanaging dahilan upang magkasagutan kayo.

Iyong nalalaman na ang ganitong gawain ay taliwas sa umiiral na patakaran ng kompanya. Bunga nito[,] ikaw ay hinihingan ng nakasulat na paliwanag24 oras mula sa pagkakatanggap ng liham na it o. Ang hindi mo pagsunod ay nangangahulugan na maaari ng gumawa ng susunod na aksyong pa ng-disiplina and [sic] kompanya laban sa iyo.[30]

Aysons handwritten response reads: Ayon sa salaysay ng inyong saksi ako ay nagkakalat ng balitang nakakasira sa inyong persona l na buhay. Ipagpaumanhin po ninyo ang hindi ko pagtugon sa inyong sulat na nakasaad na ako ay nag kakalat ng balitang nakakasira ng inyong personalna buhay sa dahilan na wala naman pong nakas aad sa sulat kung anong balita na ipinagkakalat ko na nakakasira sa personal na buhay ninyo. Noon po ika-7 ng Marso ako po ay hiningan ng ID picture bilang isa sa mga regulasyon ng kompanya at nakasaad po sa sulat na ako po ay sumungaw o sumigaw sa harap mismo ng may-ari ng kompanya. Hindi po ako sumigaw[,] ako po ay sumagot lamang sa tanong nila. Kung ang pagkasagot ko man ay medyo napakalakas ito po ay sa dahilan na nang mga oras na iyon ay may buhat-buhat akong tela na aming inaakyat. Kung ito po ay minamasama ninyo, ay ihinihingi ko na lamang ng paumanhin.[31]

Landtex then summoned Ayson on 26 April 1996 to a 1996 incidents. The minutes of the 26 April 1996 meeting read:

meeting

to

investigate

the

and 7

March

Mr. Ayson was apprised of the incident that happened on March 2 & 7 wherein it was alleged that he is spreading some rumors involving [the] personal life of Mr. Go and his family. He was informed that there were witnesses who can testify on this. Mr. Ayson however requested that another investigaton be conducted wherein the alleged witnesses be presented since he cannot answer whether what was reported was true or not. He further denies allegations that he is spreading said rumors. Mr. Ayson together with union officers requested that investigation be conducted instead at Mauban, Quezon City since they are being deducted everytime they attend investigations like this during office hours. Mr. Ayson & union to be notified when another investigation [will] be scheduled.[32]

The next meeting was held on 5 June 1996. The minutes of the meeting read: Mr. Ferdinand Samson, union Sgt. at Arms [and] Mr. Salvador Ayson appeared but refused to sign attendance or participate in [the] investigation. Accord. to them, they will consult FFW.[33]

Landtex informed Ayson of its decision to terminate his services in a letter dated 19 June 1996. The letter, signed byLandtexs counsel, reads: Ito ay hinggil sa insidenteng nangyari na kinasangkutan mo noong ika-2 at 7 ng Marso 1996. Hindi lingid sa iyong kaalaman na ikaw ay binigyan ng pamunuan ng Landtex ng la hat ng pagkakataon upang marinig ang iyong panig at maipagtanggol ang iyong sarili sa paraang naaayon sa batas ngunit,ikaw ay hindi nakiisa o nakipagtulungan. Sa katunayan, noong nakaraang 16 Marso 1996 ikaw [ay] pinadalhan ng memo kung saan nakasaad ang nasabing insidente at kasama ang paghinging iyong nakasulat na paliwan ag. Noong nakaraang 02 Abril 1996 isang sulat ang pinadala sa iyo kung saan ikaw ay inatasang du malo sa isangpagsisiyasat. Sa nasabing imbestigasyon, iminungkahi mo at ng iyong mga kasama (mga opisyales ng unyon) na magsagawa ulit ng isa pangimbestigasyon at

nais ninyong ito ay isagawa sa inyong pagawaan. Kayat ito ay muling inskedyul noon 06 Mayo 1996 ngunit ikaw ay tumawag ngaraw din yaon at sinabing kailangan mong umuwi ng maaga dahil walang magbabantay sa iyong anak. Muli na naman nagtakda ng isa pang pagsisiyasat noong ika05 Hunyo 1996 ngunit, sa nasabing imbestigasyon ikaw ay tumangging maimbestigahanat tumanggi ring pumirma sa attendance. Ilang pagkakataon na iyong pinalampas kung saan sana ay naipadini g mo ang iyong panig at naipagtanggolmo ang iyong sarili. Kaugnay nito, ikinalulungkot na ipinababatid sa iyo ng pamunuan na batay sa akusasyon sa iyo, sa p agpatunay ng testigo laban sa iyo ikaw aytinatanggal sa trabaho. Ang iyong paglilingkod sa Landte x Industries ay hanggang sa ika-30 ng Hunyo 1996 na lamang.[34]

Landtex and William Go, in their appeal before the NLRC, stated that paragraphs (a) and (d) of Article 282[35] were applicable to Ayson. They added that the employer, exercising management prerogative, has the right to protect its interest by imposing the appropriate penalties on erring employees. However, upon reading the records of the case, we cannot deduce any proof of Landtex and William Gos accusations against Ayson. Moreover, the NLRC did not make any pronouncement as to whether Ayson was dismissed for a just cause. The appellate court and the labor arbiter were one in ruling that there was no just cause in Aysons dismissal. We quote the labor arbiters factual findings with approval: We have painstakingly read the records of this case and, sadly, this Office finds no shred of evidence to show that indeed [Ayson] had been spreading news and gossips or that he ever shouted at Mr. Go and engaged Mr. Go in a heated argument. No affidavit of either the security guard who claimed to be one of the drinking group who heard the alleged malicious news or gossips or that of Mr. and Mrs. Go who had been the subject of [Aysons] alleged shouting has been presented if only to substantiate [Landtex and William Gos] selfserving claims.[36]

Procedural due process in the dismissal of employees requires notice and hearing. The employer must furnish the employee two written notices before termination may be effected. The first notice apprises the employee of the particular acts or omissions for which his dismissal is sought, while the second notice informs the employee of the employers decision to dismiss him.[37] In the present case, Landtex more than complied with the two-notice rule. The requirement of a hearing, on the other hand, is complied with as long as there was an opportunity to be heard, and not necessarily that an actual hearing was conducted.[38] In the present case, Landtex scheduled three meetings before terminatingAyson. However, Landtex failed to understand the laws purpose in requiring the opportunity to be heard. Landtex scheduled meetings with Ayson but these meetings were not free from arbitrariness. Ayson could not adequately defend himself fromLandtexs and William Gos accusations. No witness was ever presented against Ayson, hence Ayson could not test the veracity of their claims. Unsubstantiated suspicions, accusations, and conclusions of the employer are not sufficient to justify an employees dismissal. The employer must prove by substantial evidence the facts and incidents upon which the accusations are made.[39] InPhilippine Associated Smelting and Refining Corporation (PASAR) v. NLRC ,[40] we ruled that the mere conduct of an investigation and the statements of the companys security guard are not en ough to establish the validity of the charge of wrongdoing against the dismissed employees. It is not enough for an employer who wishes to dismiss an employee to charge him with wrongdoing. The validity of the charge must be established in a manner consistent with due process. A suspicion or belief no matter how sincerely felt cannot substitute for factual findings carefully established through an orderly procedure. Landtex and William Go failed to observe due process in terminating Ayson. They likewise failed to establish that Aysonstermination was for a just cause. Thus, we rule that Landtex and William Go illegally dismissed Ayson. WHEREFORE, we DENY the petition. We AFFIRM the Decision dated 13 February 2001 and the Resolution dated 16 October 2001 of the Court of Appeals in CA-G.R. SP No. 50060. Emilia P. Ayson, in representation of Salvador M. Ayson, is entitled to receive the amounts due Salvador M. Ayson. Costs against the petitioners. SO ORDERED.

FIRST DIVISION GLOBE TELECOM and MA. CARIDAD D. GONZALES, Petitioners, -versusJENETTE MARIE B. CRISOLOGO, Respondent. Promulgated: August 10, 2007 x--------------------------------------------------x DECISION CORONA, J.: This petition for review on certiorari[1] seeks to set aside the decision of the Court of Appeals (CA) in CA-G.R. SP No. 85679[2] and its resolution denying reconsideration.[3] The CA nullified and set aside the resolution of the National Labor Relations Commission (NLRC) in NLRC-NCR-CA No. 037102-03[4] which in turn affirmed the decision of the labor arbiter in NLRC-NCR-Case No. 07-04818-2002.[5] Respondent Jenette Marie B. Crisologo, a lawyer, joined Globe Telecom (Globe) on November 3, 1998 as a manager in its corporate legal services department.[6] Her tasks included negotiating, drafting and reviewing the companys supply contracts.[7] On April 5, 2002, respondent (who was then pregnant) was rushed to the Makati Medical Center due to profuse bleeding. It was later diagnosed as a possible miscarriage.[8] After a week-long absence, respondent reported back to work on April 12, 2002. [9] On the same day, she tendered her resignation letter explaining that she was advised by her doctor to rest for the duration of her pregnancy.[10] She also requested permission to exhaust her unused leaves until the effective date of her resignation on May 30, 2002.[11] Globe accepted her resignation. On April 30, 2002, respondent called on her immediate supervisor, petitioner Ma. Caridad Gonzales.[12] In the course of their conversation, petitioner Gonzales casually informed respondent of an email circulating within the company[13] to the effect that she (respondent) allegedly solicited money from one of the companys suppliers.[14] Because the e-mail was not forwarded to her (being its subject), respondent requested a copy and an opportunity to confront the person(s) responsible. Petitioner Gonzales declined as there was no longer any reason to pursue the matter.[15] On May 2, 2002, respondent sent petitioner Gonzales a letter complaining of her ill -treatment by the company after she submitted her resignation letter.[16] She also confided that she resigned only because the e-mail damaged her name and reputation.[17] For that reason, she requested petitioner Gonzales to issue a certification clearing her of any wrongdoing, misconduct or transgression. [18] Petitioner Gonzales reminded respondent that, as a former executive, she should have been familiar with the company's standard operating procedure with regard to former employees. All employees basically undergo the same procedure upon separation from the company. [19] Gonzales also requested respondent to settle her debts and accountabilities to the company.[20] Meanwhile, Globe issued a certification attesting to respondents employment in the company from November 3, 1998 to May 30, 2002.[21] On May 2, 2002, respondent sent petitioners another letter. She insinuated that petitioners forced her to resign and reiterated her demand that Globe clear her name.[22] Petitioner Gonzales informed respondent that she had to settle her obligations to Globe first before it could issue the requested clearance.[23] Believing that Globe would not comply with her demands, respondent filed a complaint for illegal dismissal against petitioners on July 3, 2002.[24] According to respondent, petitioners fired her on the basis of a G.R. No. 174644 Present: PUNO, C.J., Chairperson, SANDOVAL-GUTIERREZ, CORONA, AZCUNA and GARCIA, JJ.

rumor whose veracity was never proven.[25]She was neither furnished a copy of the e-mail nor allowed to confront the person(s) who circulated it. Petitioner Gonzales immediately closed the matter with finality without conducting any inquiry.[26] Furthermore, petitioners failed not only to adduce clear and substantial proof of loss of confidence but also to observe due process [27] as petitioner Gonzales summarily forced her to resign.[28] Petitioners, on the other hand, contended that respondents clear and unequivocal resignation letter showed her unconditional desire to resign.[29] The labor arbiter dismissed the complaint. He found respondents claim contrary to logic and human experience because an experienced lawyer like her could not possibly be coerced into signing her rights away.[30] The NLRC, on appeal,[31] affirmed the decision of the labor arbiter. It did not believe that a mere rumor could force a lawyer to resign from her high-paying job.[32] Moreover, respondent could not have been forced to resign by Gonzales on April 30, 2002 because she had already submitted her resignation on April 12, 2002.[33] Aggrieved, respondent filed a petition for certiorari in the CA. The appellate court granted the petition and nullified the resolution of the NLRC in the absence of sufficient proof that respondent voluntarily resigned.[34] According to the CA: Petitioner was already receiving a hefty paycheck as director of Globes legal department. On top of this, she was receiving other corporate perks and had outstanding obligations with Globe. Petitioner would certainly not risk unemployment, especially at a time when she was having health problems brought about by her pregnancy. Indeed a resignation at that stage of her career runs counter to human conduct and experience.[35] It concluded that respondent resigned only because petitioner Gonzales forced her to.[36] Petitioners moved for reconsideration but the motion was denied. Thus, this petition. [37] According to petitioners, the decision of the CA was based on speculative suppositions [38] that were contrary to human experience and logic.[39] It was not impossible for an employee to resign despite a high salary. Moreover, the CA erred in finding that respondent was forced to resign. [40] The evidence on record, particularly respondents letter, sufficiently established her v oluntary resignation from Globe.[41] Respondent, however, contends that her circumstances at the time of her resignation forced her to resign.[42] Poor health and financial distress reduced her to the level of an average and ordinary employee at the mercy of her employer.[43] We agree with the labor arbiter and NLRC.

CIRCUMSTANCES WARRANT A REVIEW OF THE FACTUAL FINDINGS OF THE CA This Court ordinarily reviews only questions of law in a Rule 45 petition. In labor cases, the factual findings of the labor arbiter and NLRC are generally respected and, if supported by substantial evidence, accorded finality.[44] This rule, however, is not absolute. When the factual findings of the CA conflict with those of the labor arbiter and the NLRC, this Court is constrained to review the evidence on record. [45] In this case, the factual findings of the labor arbiter and NLRC differ from those of the CA. The labor arbiter and the NLRC found that respondent voluntarily resigned. The CA, on the other hand, concluded that she did not resign voluntarily but was terminated illegally. RESPONDENTS RESIGNATION LETTER PROVES SHE VOLUNTARILY RESIGNED To support their contention that respondent voluntarily resigned, petitioners presented her resignation letter dated April 12, 2002[46]:

This is to inform you that as per my doctors advice, I have to take a long rest due to a very difficult pregnancy and other health reasons.I am therefore tendering my resignation effective 30 May 2002 and would like to request that I be allowed to exhaust all leaves due to me until such date. Furthermore, I hereby undertake to turn over all my pending work to other lawyers until said effective date of my termination. Thank you very much.[47] (emphasis supplied) Respondent personally drafted her resignation letter in a clear, concise and categorical language. Its content, as quoted above, confirmed her unequivocal intent to resign. An employee of respondents accomplished educational background and professional standing will not easily relinquish her legal rights unless she intends to.[48] Respondents resignation letter without doubt proved petitioners assertion that she voluntarily resigned from her job. Moreover, the resignation letter was submitted by respondent and was accepted by Globe on April 12, 2002. This fact alone completely negated her claim that petitioners coerced her to resign on April 30, 2002. Indeed, how could she have been forced to resign on that date when she had already tendered her resignation more than two weeks earlier? HUMAN EXPERIENCE CONFIRMS RESPONDENTS VOLUNTARY RESIGNATION Resignation is the voluntary act of an employee who finds herself in a situation where she believes that personal reasons cannot be sacrificed in favor of the exigency of the service and that she has no other choice but to disassociate herself from employment.[49] Employees resign for various reasons. A big salary is certainly no hindrance to a voluntary cessation of employment. Human resource studies reveal that various factors (in and out of the workplace) affect an employees employment decision.[50] In this instance, respondent would have suffered a miscarriage had she continued to work. She obviously resigned for the sake of her child's well-being, motherhood clearly taking precedence over her job. RESPONDENT COULD NOT HAVE BEEN COERCED OR INTIMIDATED Coercion exists when there is a reasonable or well-grounded fear of an imminent evil upon a person or his property or upon the person or property of his spouse, descendants or ascendants. [51] No such situation existed in this case. As a matter of fact, respondents resignation letter [52] and May 2, 2002 letter[53] both contained expressions of gratitude. In her May 2, 2002 letter, she told petitioner Gonzales: I wish to express my appreciation for the training you readily gave me while I was under your supervision.[54] In St. Michael Academy v. NLRC,[55] we held that expressions of gratitude cannot possibly come from an employee who is just forced to resign as they belie allegations of coercion. [56] Moreover, the May 2, 2002 letter was sent after respondents April 30, 2002 conversati on with petitioner Gonzales. Indeed, if something untoward really took place in the course of that conversation, experience dictates that respondent would not have bothered to thank petitioner Gonzales. Therefore, respondents assertion that she was forced to resign was simply not true. WHEREFORE, the petition is hereby GRANTED. The September 14, 2005 decision and September 13, 2006 resolution of the Court of Appeals in CA-G.R. SP No. 85679 are REVERSED and SET ASIDE. The March 31, 2004 resolution of the National Labor Relations Commission in NLRC-NCR-CA No. 037102-03 affirming the July 31, 2003 decision of the labor arbiter in NLRC-NCR-Case No. 07-04818-2002 is REINSTATED. SO ORDERED.

FIRST DIVISION PHILIPPINE DAILY INQUIRER, INC., Petitioner, G.R. No. 164532 Present: - versus PUNO, C.J., Chairperson, SANDOVAL-GUTIERREZ, CORONA, AZCUNA, and GARCIA, JJ. Promulgated: July 24, 2007 x----------------------------------------------------x

LEON M. MAGTIBAY, JR. and PHILIPPINE DAILY INQUIRER EMPLOYEES UNION (PDIEU), Respondents.

DECISION GARCIA, J.: By this petition for review on certiorari under Rule 45 of the Rules of Court, petitioner Philippine Daily Inquirer, Inc. (PDI) seeks the reversal and setting aside of the decision[1] dated May 25, 2004 of the Court of Appeals (CA) in CA G.R. SP No. 78963, affirming the resolution dated September 23, 2002 of the National Labor Relations Commission (NLRC) in NLRC Case No. 00-03-01945-96. The affirmed NLRC resolution reversed an earlier decision dated July 29, 1996 of the Labor Arbiter in NLRC Case No. 011800-96, which dismissed the complaint for illegal dismissal filed by the herein respondent Leon Magtibay, Jr. against the petitioner. The factual antecedents are undisputed: On February 7, 1995, PDI hired Magtibay, on contractual basis, to assist, for a period of five months from February 17, 1995, the regular phone operator. Before the expiration of Magtibays contractual employment, he and PDI agreed to a fifteen-day contract extension, or from July 17, 1995 up to July 31, 1995, under the same conditions as the existing contract. After the expiration of Magtibays contractual employment, as extended, PDI announced the creation and availability of a new position for a second telephone operator who would undergo probationary employment. Apparently, it was PDIs policy to accord regular employees preference for new vacancies in the company. Thus, Ms. Regina M. Layague, a PDI employee and member of respondent PDI Employees Union (PDIEU), filed her application for the new position. However, she later withdrew her application, paving the way for outsiders or non-PDI employees, like Magtibay in this case, to apply. After the usual interview for the second telephone operator slot, PDI chose to hire Magtibay on a probationary basis for a period of six (6) months. The signing of a written contract of employment followed. On March 13, 1996, or a week before the end the agreed 6-month probationary period, PDI officer Benita del Rosario handed Magtibay his termination paper, grounded on his alleged failure to meet company standards. Aggrieved, Magtibay immediately filed a complaint for illegal dismissal and damages before the Labor Arbiter. PDIEU later joined the fray by filing a supplemental complaint for unfair labor practice. Magtibay anchored his case principally on the postulate that he had become a regular employee by operation of law, considering that he had been employed by and had worked for PDI for a total period of ten months, i.e., four months more than the maximum six-month period provided for by law on probationary employment. He also claimed that he was not apprised at the beginning of his employment of the

performance standards of the company, hence, there was no basis for his dismissal. Finally, he described his dismissal as tainted with bad faith and effected without due process. PDI, for its part, denied all the factual allegations of Magtibay, adding that his previous contractual employment was validly terminated upon the expiration of the period stated therein. Pressing the point, PDI alleged that the period covered by the contractual employment cannot be counted with or tacked to the period for probation, inasmuch as there is no basis to consider Magtibay a regular employee. PDI additionally claimed that Magtibay was dismissed for violation of company rules and policies, such as allowing his lover to enter and linger inside the telephone operators booth and for failure to meet prescribed company standards which were allegedly made known to him at the start through an orientation seminar conducted by the company. After due proceedings, the Labor Arbiter found for PDI and accordingly dismissed Magtibays complaint for illegal dismissal. The Labor Arbiter premised his holding on the validity of the previous contractual employment of Magtibay as an independent contract. He also declared as binding the stipulation in the contract specifying a fixed period of employment. According to the Labor Arbiter, upon termination of the period stated therein, the contractual employment was also effectively terminated, implying that Magtibay was merely on a probationary status when his services were terminated inasmuch as the reckoning period for probation should be from September 21, 1995 up to March 31, 1996 as expressly provided in their probationary employment contract. In fine, it was the Labor Arbiters position that Magtibays previous contractual employment, as later extended by 15 days, cannot be considered as part of his subsequent probationary employment. Apart from the foregoing consideration, the Labor Arbiter further ruled that Magtibays dismissal from his probationary employment was for a valid reason. Albeit the basis for termination was couched in the abstract, i.e., you did not meet the standards of the company, there were three specific reasons for Magtibays termination, to wit: (1) he repeatedly violated the company rule prohibiting unauthorized persons from entering the telephone operators room; (2) he intentionally omitted to indicate in his application form his having a dependent child; and (3) he exhibited lack of sense of responsibility by locking the door of the telephone operators room on March 10, 1996 without switching the proper lines to the company guards so that incoming calls may be answered by them. The Labor Arbiter likewise dismissed allegations of denial of due process and the commission by PDI of unfair labor practice. PDIEU and Magtibay appealed the decision of the Labor Arbiter to the NLRC. As stated earlier, the NLRC reversed and set aside said decision, effectively ruling that Magtibay was illegally dismissed. According to the NLRC, Magtibays probationary employment had ripened into a regular one. With the NLRCs denial of its motion for reconsideration, PDI went to the CA on a petition for certiorari. Eventually, the CA denied due course to PDIs petition on the strength of the following observations: We agree with the findings of respondent NLRC. Petitioner PDI failed to prove that such rules and regulations were included in or form part of the standards that were supposed to be made known to respondent Magtibay at the time of his engagement as telephone operator. Particularly, as regards the first stated infraction xxx petitioner PDI, contrary to its assertion, stated in its position paper, motion for reconsideration and in this petition that respondent Magtibay failed to abide by the rules and regulations of the company issued by Ms. Benita del Rosario regarding the entry of persons in the operators booth when respondent was already working for petitioner PDI. Further, nowhere can it be found in the list of Basic Responsibility and Specific Duties and Responsibilities (Annex D of the petition) of respondent Magtibay that he has to abide by the duties, rules and regulations that he has allegedly violated. The infractions considered by petitioner PDI as grounds for the dismissal of respondent Magtibay may at most be classified as just causes for the termination of the latters employment. x x x. xxx xxx xxx

Finally, the three questionable grounds also relied upon by petitioner PDI in dismissing respondent Magtibay may be considered as just causes. However, petitioner PDI did not raise the same as an issue in the present petition because the procedure it adopted in dismissing respondent Magtibay fell short of the minimum requirements provided by law.

PDI filed a motion for reconsideration but to no avail. Hence, this recourse by PDI on the following submissions: I. THE COURT OF APPEALS COMMITTED GRAVE ERROR IN FINDING THAT A PROBATIONAR Y EMPLOYEES FAILURE TO FOLLOW AN EMPLOYERS RULES AND REGULATIONS CANNOT BE DEEMED FAILURE BY SAID EMPLOYEE TO MEET THE STANDARDS OF HIS EMPLOYER THUS EMASCULATING PETITIONERS RIGHT TO CHOOSE ITS EMPLOYEES. II. THE COURT OF APPEALS COMMITTED A GRAVE ERROR IN REFUSING TO FIND THAT PROCEDURAL DUE PROCESS AS LAID DOWN IN SECTION 2, RULE XXIII OF THE IMPLEMENTING RULES OF THE LABOR CODE HAD BEEN OBSERVED BY THE PETITIONER. We GRANT the petition. This Court, to be sure, has for a reason, consistently tended to be partial in favor of workers or employees in labor cases whenever social legislations are involved. However, in its quest to strike a balance between the employers prerogative to choose his employees and the employees right to security of ten ure, the Court remains guided by the gem of a holding in an old but still applicable case of Pampanga Bus, Co. v. Pambusco Employees Union, Inc.[2] In it, the Court said: The right of a laborer to sell his labor to such persons as he may choose is, in its essence, the same as the right of an employer to purchase labor from any person whom it chooses. The employer and the employee have thus an equality of right guaranteed by the Constitution. If the employer can compel the employee to work against the latters will, this is servitude. If the employee can compel the employer to give him work against the employers will, this is oppression. Management and labor, or the employer and the employee are more often not situated on the same level playing field, so to speak. Recognizing this reality, the State has seen fit to adopt measures envisaged to give those who have less in life more in law. Article 279 of the Labor Code which gives employees the security of tenure is one playing field leveling measure: Art. 279. Security of Tenure. In cases of regular employment, the employer shall not terminate the services of an employee except for a just cause or when authorized by this Title. x x x. But hand in hand with the restraining effect of Section 279, the same Labor Code also gives the employer a period within which to determine whether a particular employee is fit to work for him or not. This employers prerogative is spelled out in the following provision: Art. 281. Probationary employment. Probationary employment shall not exceed six (6) months from the date the employee started working, unless it is covered by an apprenticeship agreement stipulating a longer period. The services of an employee who has been engaged on a probationary basis may be terminated for a just cause or when he fails to qualify as a regular employee in accordance with reasonable standards made known by the employer to the employee at the time of his engagement. An employee who is allowed to work after a probationary period shall be considered a regular employee. In International Catholic Migration Commission v. NLRC, [3] we have elucidated what probationary employment entails: x x x. A probationary employee, as understood under Article 282 (now Article 281) of the Labor Code, is one who is on trial by an employer during which the employer determines whether or not he is qualified for permanent employment. A probationary appointment is made to afford the employer an opportunity to observe the fitness of a probationer while at work, and to ascertain whether he will become a proper and efficient employee. The word probationary, as used to describe the period of employment, implies the purpose of the term or period but not its length.

Being in the nature of a trial period the essence of a probationary period of employment fundamentally lies in the purpose or objective sought to be attained by both the employer and the employee during said period. The length of time is immaterial in determining the correlative rights of both in dealing with each other during said period. While the employer, as stated earlier, observes the fitness, propriety and efficiency of a probationer to ascertain whether he is qualified for permanent employment, the probationer, on the other, seeks to prove to the employer, that he has the qualifications to meet the reasonable standards for permanent employment. It is well settled that the employer has the right or is at liberty to choose who will be hired and who will be denied employment. In that sense, it is within the exercise of the right to select his employees that the employer may set or fix a probationary period within which the latter may test and observe the conduct of the former before hiring him permanently. x x x. Within the limited legal six-month probationary period, probationary employees are still entitled to security of tenure. It is expressly provided in the afore-quoted Article 281 that a probationary employee may be terminated only on two grounds: (a) for just cause, or (b) when he fails to qualify as a regular employee in accordance with reasonable standards made known by the employer to the employee at the time of his engagement.[4] PDI invokes the second ground under the premises. In claiming that it had adequately apprised Magtibay of the reasonable standards against which his performance will be gauged for purposes of permanent employment, PDI cited the one-on-one seminar between Magtibay and its Personnel Assistant, Ms. Rachel Isip-Cuzio. PDI also pointed to Magtibays direct superior, Benita del Rosario, who diligently briefed him about his responsibilities in PDI. These factual assertions were never denied nor controverted by Magtibay. Neither did he belie the existence of a specific rule prohibiting unauthorized persons from entering the telephone operators booth and that he violated that prohibition. This notwithstanding, the NLRC and the CA proceeded nonetheless to rule that the records of the case are bereft of any evidence showing that these rules and regulations form part of the so-called company standards. We do not agree with the appellate court when it cleared the NLRC of commission of grave abuse of discretion despite the latters disregard of clear and convincing evidence tha t there were reasonable standards made known by PDI to Magtibay during his probationary employment. It is on record that Magtibay committed obstinate infractions of company rules and regulations, which in turn constitute sufficient manifestations of his inadequacy to meet reasonable employment norms. The suggestion that Magtibay ought to have been made to understand during his briefing and orientation that he is expected to obey and comply with company rules and regulations strains credulity for acceptance . The CAs observation that nowhere can it be found in the list of Basic Responsibility and Specific Duties and Responsibilities of respondent Magtibay that he has to abide by the duties, rules and regulations that he has allegedly violated is a strained rationalization of an unacceptable conduct of an employee. Common industry practice and ordinary human experience do not support the CAs posture. All employees, be they regular or probationary, are expected to comply with company-imposed rules and regulations, else why establish them in the first place. Probationary employees unwilling to abide by such rules have no right to expect, much less demand, permanent employment. We, therefore find sufficient factual and legal basis, duly established by substantial evidence, for PDI to legally terminate Magtibays probationary employment effective upon the end of the 6 month probationary period. It is undisputed that PDI apprised Magtibay of the ground of his termination, i.e., he failed to qualify as a regular employee in accordance with reasonable standards made known to him at the time of engagement, only a week before the expiration of the six-month probationary period. Given this perspective, does this make his termination unlawful for being violative of his right to due process of law? It does not. Unlike under the first ground for the valid termination of probationary employment which is for just cause, the second ground does not require notice and hearing. Due process of law for this second ground consists of making the reasonable standards expected of the employee during his probationary period known to him at the time of his probationary employment. By the very nature of a probationary employment, the employee knows from the very start that he will be under close observation and his performance of his assigned duties and functions would be under continuous scrutiny by his superiors. It is in apprising him of the standards against which his performance shall be continuously assessed where due process regarding the second ground lies, and not in notice and hearing as in the case of the first ground.

Even if perhaps he wanted to, Magtibay cannot deny as he has not denied PDIs assertion that he was duly apprised of the employment standards expected of him at the time of his probationary employment when he underwent a one-on-one orientation with PDIs personnel assistant, Ms. Rachel IsipCuzio. Neither has he denied nor rebutted PDIs further claim that his direct superior, Benita del Rosario, briefed him regarding his responsibilities in PDI. Lest it be overlooked, Magtibay had previously worked for PDI as telephone operator from February 7, 1995 to July 31, 1995as a contractual employee. Thus, the Court entertains no doubt that when PDI took him in on September 21, 1995, Magtibay was already very much aware of the level of competency and professionalism PDI wanted out of him for the entire duration of his probationary employment. PDI was only exercising its statutory hiring prerogative when it refused to hire Magtibay on a permanent basis upon the expiration of the six-month probationary period. This was established during the proceedings before the labor arbiter and borne out by the records and the pleadings before the Court. When the NLRC disregarded the substantial evidence establishing the legal termination of Magtibays probationary employment and rendered judgment grossly and directly contradicting such clear evidence, the NLRC commits grave abuse of discretion amounting to lack or excess of jurisdiction. It was, therefore, reversible error on the part of the appellate court not to annul and set aside such void judgment of the NLRC. WHEREFORE, the assailed decision dated May 25, 2004 of the CA in CA G.R. SP No. 78963 is hereby REVERSED andSET ASIDE, and the earlier resolution dated September 23, 2002 of the NLRC in NLRC Case No. 00-03-01945-96 is declaredNULL and VOID. The earlier decision dated July 29, 1996 of the Labor Arbiter in NLRC Case No. 011800-96, dismissing respondent Leon Magtibay, Jr.s complaint for alleged illegal dismissal, is REINSTATED. No pronouncement as to costs. SO ORDERED.

FIRST DIVISION

RODELIA S. FUNGO, Petitioner,

G.R. No. 152531 Present:

-versus-

PUNO, C.J., Chairperson, SANDOVAL-GUTIERREZ, CORONA, AZCUNA, and GARCIA, JJ. Promulgated: July 27, 2007

LOURDES SCHOOL OF MANDALUYONG and FR. SERVILLANO B. BUSTAMANTE, OFM, CAP., Respondents.

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

DECISION SANDOVAL-GUTIERREZ, J.: Challenged in this Petition for Review on Certiorari under Rule 45 of the 1997 Rules of Civil Procedure, as amended, are the Decision[1] dated July 25, 2001 and Resolution dated January 18, 2002 of the Court of Appeals in CA-G.R. SP No. 59424. Rodelia S. Fungo, petitioner, alleged in her petition that on June 1, 1981, she was employed as secretary of respondent Fr. Servillano B. Bustamante, rector of Lourdes School of Mandaluyong. Respondent Fr. Bustamante authorized her to file and keep confidential documents in his office. He entrusted to her the duplicate keys of the filing cabinet and she was allowed to take any document therefrom whenever she had to bring some matters to his attention.

In January 1996, petitioners husband, Nicolas Fungo, an elementary school teacher in the same school, was dismissed from the service because of his low performance rating. According to petitioner, her husbands services were terminated because of his sta tement during a faculty meeting that the Mission and Vision Statement of the school is not being practiced. He was also one of those who signed a letter asking the Provincial Minister of the Capuchins in the Philippines to appoint Fr. Miguel Peralta either as rector or vice rector of the school. Fr. Peralta is a close rival of respondent Fr. Bustamante since their seminary days. Petitioner then wrote respondent Fr. Bustamante questioning the performance rating given to her husband. She attached to her letter documents containing the summary of efficiency ratings of all the teachers. She retrieved these documents from the filing cabinet. On March 8, 1996 petitioner received a letter from respondent Fr. Bustamante requiring her to explain in writing why she should not be dismissed from employment for willful breach of trust reposed on her. On March 11, 1996, petitioner filed her written explanation. Petitioner further alleged in her petition that in the morning of April 1, 1996, Fr. Manuel Remirez, the school treasurer, summoned her to his office. Thereupon, he compelled her to tender her resignation within 30 minutes, otherwise, she will not receive her separation pay. Petitioner pleaded for one day deferment so she could consult her aunt, Milagros Tadeo, former assistant principal on academics for the elementary

department of the same school. However, Fr. Remirez denied her plea. Considering that her husband was jobless and that her family was in financial predicament, petitioner submitted her resignation letter [2] on the very same day. Subsequently, she received her separation pay. On January 28, 1997, petitioner filed with the Labor Arbiter a complaint for illegal dismissal with prayer for reinstatement and payment of backwages and other benefits, as well as for an award of moral and exemplary damages and attorneys fees. Petitioner alleged therein that she was forced to resign and to accept her separation pay; and that Fr. Remirez took advantage of her economic plight, compelling her to submit her resignation letter within 30 minutes. Respondents, in their answer, denied the allegations in the complaint, contending that petitioner voluntarily submitted her resignation letter on April 1, 1996. She even filed with the school an application for benefits under the Retirement Plan of the Catholic Educational Association of the Philippines (CEAP) which was granted. Then she executed a waiver of her claims for benefits from the school and the CEAP board of trustees. Respondents thus prayed that the complaint be dismissed for being malicious and baseless. On September 23, 1998, the Labor Arbiter promulgated a Decision[3] finding that petitioner was constructively dismissed from employment. The dispositive portion reads: WHEREFORE, premises considered, judgment is hereby entered in favor of complainant and against respondents, ordering the latter, jointly and severally, as follows: 1. To pay the sum of P316,187.00 as backwages of complainant from April 1, 1996 up to September 1, 1998, lessP58,292.60 which was paid to her in advance; 2. To pay another sum of P21,806.00 as mandatory 13th month pay of the complainant for two years, 1996 and 1997; and 3. To immediately reinstate complainant to her former or equivalent position under the same terms and conditions prevailing prior to her dismissal or separation, or, at the option of the employer, to reinstate her name in the payroll, also under the same terms and conditions prevailing prior to her dismissal or separation. Provided; however, that should reinstatement be no longer feasible due to any intervening event, respondents are further ordered to pay the separation pay of complainant equivalent to her one (1) month salary per year of service, a fraction of six (6) months considered as one (1) year without qualification or deduction in addition to her backwages. All other issues or claims are hereby ordered DISMISSED for lack of merit. SO ORDERED.[4] On appeal, the National Labor Relations Commission (NLRC), in its Decision dated November 22, 1999, reversed the Labor Arbiters judgment, holding that based on the documentary evidence presented by respondents, petitioner voluntarily resigned. Her resignation letter and application for benefits under the CEAP Retirement Plan negate her claim that she was illegally dismissed. Petitioner filed a motion for reconsideration but the NLRC denied the same in its Resolution[5] dated April 17, 2000. Petitioner seasonably filed with the Court of Appeals a petition for certiorari under Rule 65 of the 1997 Rules of Civil Procedure, as amended, contending that the NLRC committed grave abuse of discretion in ruling that she resigned voluntarily. OnJuly 25, 2001, the appellate court rendered its Decision dismissing the petition. Its ratiocination is partly reproduced as follows: A painstaking examination of the records leads this Court to conclude that petitioner cannot that easily be intimidated into tendering her resignation for a simple reason that she was facing a financial trauma out of the dismissal of her husband. If she was of honest heart and belief that she has every right to hold and maintain her position and employment as secretary, she could have fought off the imposing threats she alleges to have been given by Fr. Remirez and simply turned down the latters offer. In fact, she would even have a better standing in court if she was terminated by her employers rather than executing a resignation letter and later on

claim that such was only resorted to because of undue intimidation of her superior. Indubitably, it is the petitioners word now against the word of Fr. Remirez that she was pressured into resigning by the latter. Petitioner filed a motion for reconsideration. However, it was denied by the appellate court in its Resolution dated January 18, 2002. Hence, this petition. The primordial issue for our resolution is whether the petitioner was constructively dismissed from the service.

The petition is impressed with merit. It is a well-established rule that the jurisdiction of this Court in cases brought before it from the Court of Appeals via Rule 45 of the same Rules is limited to reviewing errors of law.[6] This Court is not a trier of facts. In the exercise of its power of review, the findings of facts of the Court of Appeals are conclusive and binding. Thus, it is not the function of this Court to analyze and weigh the evidence all over again.[7] In the instant case, however, we have to determine the appellate courts findings of facts since they contradict those of the Labor Arbiter. After a careful scrutiny of the records, we agree with the Labor Arbiter that petitioner was constructively dismissed from employment. Respondents argue that petitioners act of retrieving the document from the files inside the rectors office was improper and constituted a willful breach of the trust reposed upon her by Fr. Bustamante. Such breach of trust is a just cause for terminating her services. To be a valid ground for dismissal, loss of trust and confidence must be based on a willful breach of trust and founded on clearly established facts. A breach is willful if it is done intentionally, knowingly and purposely, without justifiable excuse, as distinguished from an act done carelessly, thoughtlessly, heedlessly or inadvertently. It must rest on substantial grounds and not on the employers arbitrariness, whims, caprices or suspicion. Otherwise, the employee would eternally remain at the mercy of the employer. [8] Loss of confidence must not be indiscriminately used as a shield by the employer against a claim that the dismissal of an employee was arbitrary. And, in order to constitute a just cause for dismissal, the act complained of must be work-related and shows that the employee concerned is unfit to continue working for the employer. [9] In Nokom v. National Labor Relations Commission,[10] we set the guidelines for the application of loss of confidence as a just cause for dismissing an employee from the service, thus: a. loss of confidence should not be simulated;

b. it should not be used as a subterfuge for causes which are improper, illegal or unjustified; c. d. it may not be arbitrarily asserted in the face of overwhelming evidence to the contrary; and it must be genuine, not a mere afterthought to justify earlier action taken in bad faith.

In the instant case, Fr. Bustamante entrusted to petitioner various documents in his office. She could take any document from the filing cabinet inside his office. While she retrieved documents pertaining to the efficiency ratings of all teachers in the school for the year 1990-1991, such act did not constitute a breach of trust and confidence since she did not show those documents to any other person except to Fr. Bustamante himself. Significantly, he did not dispute the fact that petitioner had access to the records.

When petitioner asked Fr. Bustamante why her husbands performance rating was low, Fr. Remirez summoned her to his office and urged her to tender her resignation within 30 minutes. He threatened her that if she would not resign, her separation pay would be forfeited. These circumstances glaringly show that respondents wanted to terminate her employment, but they made it appear that she voluntarily resigned.

Resignation is the voluntary act of employees who are compelled by personal reasons to disassociate themselves from their employment. It must be done with the intention of relinquishing an office, accompanied by the act of abandonment.[11] It would have been illogical therefore for the petitioner to resign and then file a complaint for illegal dismissal. Resignation is inconsistent with the filing of the complaint.[12]

An examination of the records of this case convinced us that petitioner was indeed made to resign against her will with threat that she will not be given her separation pay should she fail to do so. Clearly, her consent was vitiated. Indeed, it is very unlikely that petitioner, who worked in the school for almost fifteen (15) years, would simply resign voluntarily. Her receipt of the benefits could be considered as an act of self preservation, taking into consideration the financial predicament she and her family were then facing.

Thus, we rule that petitioner was constructively dismissed from her employment. There is constructive dismissal if an act of clear discrimination, insensibility, or disdain by an employer becomes so unbearable on the part of the employee that it would foreclose any choice by him except to forego her continued employment.[13] It exists where there is cessation of work because continued employment is rendered impossible, unreasonable or unlikely, as an offer involving a demotion in rank and a diminution in pay.[14] Respondent Fr. Bustamante claimed that he had lost trust and confidence in petitioner. Under this circumstance, coupled with Fr. Remirezs threat that she would not be given her separation pay, petitioner was compelled to resign.

Petitioners intention to leave the school, as well as her act of relinquishment, is not present in the instant case. On the contrary, she vigorously pursued her complaint against respondents. It is a clear manifestation that she had no intention of relinquishing her employment. That Fr. Remirez convinced her to resign or else she will not receive her separation pay obviously shows that respondents wanted to get rid of her under the guise of voluntary resignation.

Under Article 279 of the Labor Code, an employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement . Considering, however, that the nature of petitioners work requires constant interaction with Fr. Bustamante, their working relationship has been strained. Thus, the payment of separation pay and other benefits in lieu of reinstatement is in order. A more equitable disposition would be an award of separation pay equivalent to at least one month pay, or one month pay for every year of service, whichever is higher, with a fraction of at least six (6) months being considered as one (1) whole year.[15]

In fine, we hold that the Court of Appeals erred when it ruled that petitioner voluntarily resigned from employment.

WHEREFORE, we GRANT the petition. The assailed Decision and Resolution of the Court of Appeals in CAG.R. SP. No. 59424 are REVERSED. The Decision of the Labor Arbiter is hereby REINSTATED with MODIFICATION in the sense that respondents are ordered to pay petitioner separation pay equivalent to one (1) month salary for every year of service rendered, plus full backwages and other privileges and benefits, or their monetary equivalent, computed from her dismissal until the finality of this Decision. From these amounts shall be deducted the separation pay she already received in advance. SO ORDERED.

THIRD DIVISION ACEBEDO OPTICAL AND MIGUEL ACEBEDO III, Petitioners, G. R. No. 150171 Present: - versus YNARES-SANTIAGO, J. Chairperson, AUSTRIA-MARTINEZ, CHICO-NAZARIO, and NACHURA, JJ. Promulgated: July 17, 2007

NATIONAL LABOR RELATIONS COMMISSION AND MELENCIA ASEGURADO, Respondents.

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

DECISION CHICO-NAZARIO, J.: The Case For Review on Certiorari,[1] under Rule 45 of the Rules of Court, as amended, is the Decision,[2] dated 16 May 2001, of the Court of Appeals in CA-G.R. SP No. 59471, and its Resolution dated 19 September 2001, denying the Motion for Reconsideration of said decision. The Court of Appeals dismissed the petition for certiorari, filed by herein petitioners Acebedo Optical (Corporation) and Miguel Acebedo III (Acebedo) and affirmed in toto the Resolution,[3] dated 17 November 1999, of the National Labor Relations Commission (NLRC)-First Division in NLRC NCR Case No. 00-01-00651-97, which, in turn, sustained the Decision dated 22 May 1998, of Labor Arbiter Emerson C. Tumanon directing herein petitioners to reinstate private respondent Melencia B. Asegurado to her former or equivalent position without loss of seniority rights, for illegally terminating the latters employment from petitioner corporation; and ordering them to pay her full backwages, service incentive leaves and attorneys fees. This case stemmed from a complaint for illegal dismissal with prayer for reinstatement and payment of full backwages and other benefits. Said grievance was filed by herein private respondent against herein petitioners on 22 January 1997 before the National Labor Relations Commission. The facts of the case as synthesized from the records are as follows: On 16 August 1991, petitioners engaged the services of private respondent as a packaging clerk responsible for the following tasks: 1. 2. 3. 4. 5. 6. Receives (sic) product from supplier and sort them out; Record incoming and outgoing deliveries to stock ledger and stock card; Received (sic) requisition from branch retail outlets; Select products from storage and place them inside the box, label the boxes and prepare the corresponding delivery receipts; Make physical count at regular intervals and reconciles physical count with book records; Other assignments as and when required by supervisor from time to time.[4]

Initially, the private respondents employment status was probationary. Six months later, or on 1 March 1992, however, she wasregularized. But before her employment status was made permanent, private respondent was given a Memorandum[5] by petitioner Miguel Acebedo III, Operations Manager of petitioner corporation, reading as follows:

TO FROM SUBJECT DATE

: : : :

MELENCIA BUTIL THE OPERATIONS DEPARTMENT WRITTEN WARNING on . . . . . . . September 7, 1991

--------------------------------------------------As per report of the Personnel Department on the Absences and Tardiness for the month of August, you were found to have 1 hr. & 34 mins. late (sic). Be informed that habitual absences/tardiness is a grave violation of company policy. This serves as your written warning. [Signed] MIGUEL R. ACEBEDO III Operations Manager The memorandum was to apprise her of her accumulated tardiness of one hour and a half for the month of August 1991; likewise, it served as a warning to her that habitual tardiness/absenteeism is considered a violation of company policy. On 15 October 1992, private respondent received another memorandum[6] essentially warning her that habitual tardiness was considered a grave violation of Company Policy; [7] but without actually notifying her of the actual period of her alleged tardiness. According to said memorandum, it was to serve as private respondents first written warning as well. A copy of the communication reads: TO FROM SUBJECT DATE : : : : MELENCIA BUTIL THE PERSONNEL DEPARTMENT AS STATED October 15, 1992

--------------------------------------------------Be reminded that habitual tardiness is considered a grave violation of Company Policy and is subject to strict disciplinary action. This will serve as your first written warning. [Signed] THE PERSONNEL DEPARTMENT On 22 April 1994, a three-day suspension from work was imposed on private respondent on the ground of her being tardy twenty-six times within the period of January to March 1994. The suspension notice was served on her via a Memorandum[8] dated the same day. It was averred that private respondent incurred twenty-six counts of tardiness within the above-specified months which number far exceeded the maximum allowable limit per month of only four times.[9] The third Memorandum states: TO FROM SUBJECT DATE : : : : MELENCIA ASEGURADO THE PERSONNEL DEPARTMENT TARDINESS, Suspension notice on APRIL 22, 1994

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The report on tardiness for the period January to March 1994, showed that you incurred lates (sic) twenty six (26) times (11, 7, 8) the said numbers exceeded the maximum limit of four times each month. It is one of the fundamental duties of any employee to follow rules and regulations of the company, and (sic) one of the most basic is the observance of official time. Your 201 file kept two (2) written warnings on tardiness. This time, you are given a three (3) days suspension without pay effective May 10, 11 & 12, 1994. Please be advised to manage your time very well to avoid future offenses. [Signed] LUTZ PENAFLORIDA Acting Head Personnel On 28 February 1995, private respondent was served a fourth Memorandum.[10] For having incurred twentyone counts of tardiness for the months of [unreadable] to December 1994, the latter was meted another suspension, this time for seven days, or four days longer than the first. More specifically, it provides: TO FROM SUBJECT DATE : : : : MELENCIA ASEGURADO THE PERSONNEL DEPARTMENT TARDINESS, Suspension notice of February 28, 1995

--------------------------------------------------The report on tardiness for the period of [unreadable] to December 1994, (sic) showed that you incurred lates (sic) twenty-one (21) times (3, 9, 9), the said number exceeded the maximum limit of four times each month. Despite of (sic) previous notices and suspension, you still failed to meet the companys policy on attendance. Since the company is implementing [unreadable] Disciplinary Measures for this kind of infraction, you are hereby given seven (7) days suspension which will [unreadable] effective on March 6, 9, 14, 16, 21, 23 & 27, 1995. Please adhere to the policy [unreadable] failure to improve on this aspect will result in severe penalties. For your guidance. [Signed] LUTZ PENAFLORIDA Personnel Manager On 22 May 1995, private respondent filed an application for an indefinite leave of absence. In a Memorandum[11] dated 26 May 1995, petitioner corporations Head of Personnel denied said application, viz:

TO FROM SUBJECT DATE

: : : :

MELENCIA B. ASEGURADO THE PERSONNEL DEPARTMENT STATEMENT OF CHARGE May 26, 1995.

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Be informed that the indefinite leave of absence which you have filed last May 22, 1995 is not approved, this nature of leave is not being considered in our prescribed policy. Be reminded also that you have accumulated a total of fourteen (14) days absence for this month alone. Although, (sic) we understood (sic) your reason (no babysitter), we are also concerned about the smooth flow of work in your section. Since you went on leave, some GSD staff took turn (sic) in doing your function. Due to this situation, I am worried that this would led (sic) to confusion, error and delay because theres nobody who is completely in charged (sic) in monitoring their activities. I am giving you up to the end of the month to sort out your personal problem. Failure to go back to work on June 01, 1995 would make your extended leave of absence unauthorized (sic). This would constitutes (sic) a valid ground for the termination of your services. For your guidance. [Signed] LUTZ PENAFLORIDA Personnel Head On 29 August 1995, private respondent was suspended for the third time, this time for thirteen days. The reason given for the imposition of such penalty was the employees failure to meet the company policy on tardiness. The Memorandum[12] reads in full: TO FROM SUBJECT DATE : : : : MS. MELENCIA ASEGURADO PACKAGING CLERK THE PERSONNEL DEPARTMENT SUSPENSION, Notice of August 29, 1995

--------------------------------------------------Based on the Tardiness Report, you have accumulated a total of 17 lates for the quarter (April June). As per company policy, Head Office employees are limited only to four (4) lates per month or a total of twelve (12) per quarter. The said policy is being implemented to control excessive lateness and to prevent time being wasted for non-performance. Despite of (sic) previous warnings and/or suspension given, (March 1995) you still failed to meet the company policy on Tardiness. You are hereby given a (sic) 13 days suspension which will take effect on Sept. 6, 7, 11, 12, 13, 14, 18, 19, 20, 21, 25, 26 & 27, 1995. Be advised to observe the said policy accordingly. Future offense will be treated with more severe penalty. For your guidance.

[Signed] LUTZ PENAFLORIDA Head Personnel

On 12 November 1996, private respondent did not report for work allegedly due to the demolition of the place that her family was renting. On 2 December 1996, private respondent again absented herself from work this time because her child was allegedly hospitalized. Six days later, or on 8 December 1996, the Head of the Personnel Department of petitioner corporation issued a Notice of Termination[13] against private respondent. The memorandum reads: TO FROM SUBJECT DATE : : : : MELY ASEGURADO THE PERSONNEL DEPARTMENT NOTICE OF TERMINATION December 08, 1996

--------------------------------------------------Despite several warnings both verbal and written accompanied with suspension, you were found to be abusive in your lates and absences as shown by the result of 1996 Attendance Report for the quarter Jan-Mar. 12, April-June 21, July-Sept. 43, Oct.-Nov. 17. Only four (4) lates per month or twelve (12) per quarter is allowed. Regarding absences and leaves, you already exhausted the company provision of 8 days sick leave plus 7.5 vacation leave and had accumulated a total of [unreadable] days absences without pay as of December 7, 1996. This kind of performance is below company standard. Chronic absenteeism combined with abusive tardiness is considered as gross and habitual negligence that constitutes a valid ground for dismissal. Be reminded that you were suspended for 13 days (September 95) for similar infraction and were advised to improve your performance otherwise (sic) facing the maximum penalty is inevitable. The management has the prerogative to [unreadable] also discipline [unreadable] its employees who are not capable of following their fundamental duty to obey basic rules and regulations of the company in order to protect its interest. Several [unreadable] both verbal and written accompanied with suspension were issued to you but you failed to live up to a higher standard of responsibility. Please be informed that your services shall be terminated on January 15, 1997 due to gross and habitual neglect of your duty. For your guidance. [Signed] LUTZ PENAFLORIDA Personnel Head From the aforequoted memorandum, private respondents dismissal from service was brought on by her supposed exhaustion of the allowable sick and vacation leaves per month constituting gross and habitual neglect of your duty.[14] Notice of the termination of her employment was received by private respondent under protest and six days after the fact, or only on 21 January 1997. The foregoing state of affairs prompted private respondent to file a case for illegal dismissal with the NLRC the very next day. In a Decision dated 22 May 1998, Labor Arbiter Emerson C. Tumanon rendered judgment declaring private respondent illegally dismissed from service. The Labor Arbiter held that petitioners failed to accord said employee due process of law; and found that private respondents dismissal from service was anchored on past infractions for which she had already been penalized. Accordingly, the dispositve of the decision states, to wit: WHEREFORE, judgment is hereby rendered declaring the dismissal of complainant unlawful and unjustified and ordering the respondents jointly and severally to reinstate said complainant to her

former or equivalent position without loss of seniority rights with full backwages which as of the date of this Decision has ballooned to the amount of P79,716.00 plus other benefits such as 13 th month pay in the amount of P6,643.00 and service incentive leave pay in the amount of P2,628.00. Respondents are also ordered to pay complainants counsel ten (10%) percent of the total award recovered as attorneys fees pursuant to law.[15] On appeal, in a Resolution dated 17 November 1999, public respondent NLRC rendered a decision dismissing petitioners appeal for allegedly being filed out of time long after the assailed decision of the Labor Arbiter had supposedly become final and executory. Accordingly, the assailed decision was affirmed in toto. The decretal portion of the Resolution reads: WHEREFORE, premises considered, the instant appeal is hereby DISMISSED for lack of merit. The appealed decision dated May 22, 1998 is hereby AFFIRMED.[16] Petitioners filed a Motion its Resolution dated 17 April 2000. for Reconsideration[17] which public respondent NLRC denied in

Undaunted, herein petitioners went to the Court of Appeals via a Petition for Certiorari under Rule 65 of the Rules of Court, as amended, ascribing grave abuse of discretion to the National Labor Relations Commission for ordering the payment of backwages, damages and attorneys fees to an employee who had been dismissed for just cause. On 16 May 2001, the Court of Appeals promulgated its Decision dismissing the petition, the dispositive of which states that: IN LIGHT OF ALL THE FOREGOING, the Petition is DENIED due course and is hereby DISMISSED.[18] In essence, the Court of Appeals held that herein petitioners failed to marshal the obligatory quantum of evidence needed to substantiate a finding of legitimacy or validity in the termination of employment of private respondent, the reason for which was supposedly her repeated defiance of company policy. According to the appellate court, petitioners failure to adduce in evidence a copy of the contravened company policy was fatal to their cause. Absent proof of evidence of such document embodying the flouted rule, the appellate court, along with the labor arbiter and the NLRC, was unable to make a categorical finding on the issue of whether or not the private respondents accumulated absences and/or tardiness were, indeed, in violation of petitioner companys rules and regulations. Further, as to the allegation of chronic absenteeism and/or tardiness for the period of 1991 to 1995, the appellate court likewise held that the non-presentation of the Daily Time Records (DTRs) for said period was a grave error. It held that the numerous memoranda issued to private respondent were mere self-serving evidence and made the following observations Petitioners stance is even incongruent with the evidence on record. Thus, the Private Respondent was employed, (sic) on a probationary basis or status x x x [she] incurred tardiness in the accumulated time of one (1) hour and thirty (30) minutes for the month of August, 1991, and yet, the Private Respondent was promoted and made a permanent employee on March 1, 1992. [A]fter her one (1) hour and thirty four (34) minute tardiness in September 1991, nothing on record reveals that she had been tardy for the year 1992. The Memorandum reminding the Private Respondent about her tardiness did not establish that Private Respondent again incurred any tardiness. It is noted that Private Respondent was not tardy in the year 1993. Although she was tardy during the period from January to March 1994, however, she was ordered suspended on May 10 to 12, 1994. Thereafter, Private Respondent did not report late for the rest of the year as the next Memorandum of the Petitioner Corporation was issued on February 28, 1995, informing Private Respondent of her suspension on March 6, 9, 14, 16, 21, 23 and 27, 1995. Based on the Memorandum of the Petitioners, the Private Respondent was tardy for seventeen (17) times for the quarter from April to June, 1995. However, the Memorandum of the Petitioners did not indicate the dates and precise times when the Private Respondent was tardy. Without the Daily Time Records of the Respondent during the period envisaged in the Memoranda of the Petitioners, it cannot be ascertained whether Private Respondents tardiness was habitual and incorrigible.[19]

Anent the finding by the NLRC that herein petitioners appeal was filed out of time, the Court of Appeals clarified that Sec. 224 of the Labor Code requires that both party and counsel must be served their respective copies of the decision of the Labor Arbiter. In the instant case, herein petitioners received a copy of the Labor Arbiters decision only on 5 March 1999. They then filed an appeal, 15 March 1999. Therefore, it cannot be said that their recourse to the NLRC was filed out of time. In fine, the Court of Appeals ruled that the appeal, having been filed with the NLRC within the reglementary period, dismissal of the employee was too severe a penalty and, thus, unwarranted. Such conclusion was based on the finding that even on the assumption that Private Respondent incurred tardiness and/or absences in the course of her employment, she had been duly penalized therefor.[20] Hence, petitioners, through the instant Petition for Review on Certiorari under Rule 45 of the Rules of Court, as amended, seek recourse to this Court and raise the following issues: [21] I. THE HONORABLE COURT OF APPEALS, WITH ALL DUE RESPECT, COMMITTED PALPABLE AND REVERSIBLE ERROR OF LAW WHEN IT DECLARED RESPONDENT TO HAVE BEEN ILLEGALLY DISMISSED DESPITE OVERWHELMING EVIDENCE SHOWING THAT SHE INCURRED EXCESSIVE TARDINESS AND ABSENTEEISM IN VIOLATION OF THE COMPANYS RULES AND REGULATIONS WHICH WARRANTED HER TERMINATION FROM WORK; [and] II. THE HONORABLE COURT OF APPEALS, WITH ALL DUE RESPECT, COMMITTED PALPABLE AND REVERSIBLE ERROR OF LAW WHEN IT ORDERED RESPONDENT REINSTATED TO HER FORMER POSITION OR TO REINSTATE HER TO HER FOREMER OR EQUIVALENT POSITION WITH FULL BACKWAGES PLUS OTHER BENEFITS[,] SUCH AS 13TH MONTH PAY AND SERVICE INCENTIVE LEAVE PAY. At the outset, it is pertinent to note that the first issue raised by petitioners inquires into the factual findings of the Court of Appeals. They are fundamentally assailing the appellate courts finding that whatever evidence is on record, it is insufficient to establish that company policies were contravened by private respondent. In effect, petitioners would have us sift through the data on record and pass upon whether or not there is sufficient basis to hold private respondent accountable for continually disobeying the established company policy respecting tardiness and absenteeism allegedly amounting to gross and habitual negligence. This clearly involves a factual inquiry, the determination of which is the statutory function of the NLRC.[22] Elementary is the principle that this Court is not a trier of facts; only errors of law are generally reviewed in petitions for review oncertiorari criticizing decisions of the Court of Appeals. Questions of fact are not entertained.[23] And in labor cases, this doctrine applies with greater force. [24] Factual questions are for labor tribunals to resolve. Judicial Review of labor cases does not go beyond the evaluation of the sufficiency of the evidence upon which its labor officials findings rest.[25] As such, the findings of facts and conclusion of the NLRC are generally accorded not only great weight and respect but even clothed with finality and deemed binding on this Court as long as they are supported by substantial evidence.[26] This Court finds no basis for deviating from said doctrine without any clear showing that the findings of the Labor Arbiter, as affirmed by the NLRC, are bereft of substantiation. Particularly when passed upon and upheld by the Court of Appeals, they are binding and conclusive upon the Supreme Court and will not normally be disturbed.[27] Nevertheless, we have reviewed the records of the case at bar and find no reversible error committed by the Court of Appeals concerning the merits of the present petition. Bearing in mind the facts of the case, petitioners assert that private respondents numerous tardiness and/or absenteeism is tantamount to gross habitual neglect of duty amounting to gross negligence; thus, a valid ground for dismissal of an employee. We find the instant petition to be without merit. The Labor Code, specifically Article 277(b), guarantees the right of an employee to security of tenure. It provides that

ART. 277. MISCELLANEOUS PROVISIONS. x x x (b) Subject to the constitutional right of workers to security of tenure and their right to be protected against dismissal except for a just and authorized cause and without prejudice to the requirement of notice under Article 283 of this Code, the employer shall furnish the worker whose employment is sought to be terminated a written notice containing a statement of the causes for termination and shall afford the latter ample opportunity to be heard and to defend himself with the assistance of his representative if he so desires in accordance with company rules and regulations x x x. From the foregoing, it is quite clear that the dismissal of private respondent may be upheld only if shown to have been made for a just or authorized cause and attended with due process. Corollary to the preceding legal policy is the equally basic principle of labor law, that, it is the employer who has the burden of proving that the dismissal is for just cause, and failure to do so would necessarily mean that the dismissal was unjustified; and, therefore, illegal. In the present petition, the labor arbiter evaluated the evidence presented by herein parties and concluded that private respondent Asegurado was not afforded the due process guaranteed by law and jurisprudence. Moreover, the alluded incidences of absenteeism and tardiness which constituted the charge of habitual neglect of duty amounting to gross negligence were past infractions that have already been penalized. On appeal, the NLRC affirmed the finding of illegal dismissal. In agreement with the assailed decisions, the Court of Appeals, heedful of the legal principle that it is the employer which has the onus probandi to prove that private respondents dismissal was based on valid ground, ruled that the Commission committed no grave abuse of discretion when it affirmed the finding by the labor arbiter that the evidence on record was insufficient to sustain the legality of private respondent Asegurados dismissal fr om service; therefore, the appellate court dismissed the petition for certiorari filed by petitioners. As earlier stated, we find no basis for deviating from the oft-espoused legal tenet that findings of facts and conclusion of the labor arbiter are generally accorded not only great weight and respect but even clothed with finality and deemed binding on this Court as long as they are supported by substantial evidence, without any clear showing that such findings of fact, as affirmed by the NLRC, are bereft of substantiation. More so, when passed upon and upheld by the Court of Appeals, they are binding and conclusive upon us and will not normally be disturbed;[28] accordingly, the finding that the alleged absences and incidences of tardiness of private respondent are but past infractions for which petitioners had already imposed several sanctions and for which private respondent had been duly penalized. And being past infractions, they cannot be taken collectively as a justification for the dismissal from service of the employee.[29] But even assuming for the sake of argument that the past infractions could still validly be the subject of future punishment, still there is no basis for petitioners claim that private respondents supposed habitual absenteeism and tardiness is a form of gross and habitual neglect of duty. Under Article 282(b) of the Labor Code, gross and habitual neglect of duty by the employee of his duties is a just cause for the termination of the latters employment. To warrant removal from service, however, the negligence should not merely be gross but also habitual.[30] In this case, assuming the absences and tardiness of private respondent Asegurado to be habitual, can they also be categorized as gross? Gross negligence implies a want or absence of or failure to exercise even slight care or diligence, or the entire absence of care. It evinces a thoughtless disregard of consequences without exerting any effort to avoid them.[31] Though there may have been times when private respondents absences were undertaken without the necessary approved leave applications, nevertheless, she would send word for when these would occur. Moreover, quite telling is the fact that nowhere in the memoranda sent to private respondent was there any mention of a complaint relating to the quality of her work. As the present case does not show the presence of one of the two requisites to make the finding of negligence a just cause for dismissal. At the most, private respondent should have been further suspended from service for taking for granted that her leave would be approved by the personnel department of petitioner corporation. The penalty of dismissal is too harsh, considering that private respondent had been with the company for five years and, apparently, the management had no complaint as regards the formers quality of work.

Herein, to our mind, petitioners have not sufficiently shown that private respondent had willfully disobeyed the company rules and regulations respecting absences and tardiness. The cause for the termination of private respondents employment was not simply habitual tardiness and/or absenteeism. Petitioners have alleged time and again that the basis upon which the dismissal of private respondent was anchored was breach or violation of company policy. It was their contention that private respondents habitual tardiness and/or a bsences were in violation of petitioner companys rules and regulations. Ironically, though petitioners referred to their company policies, they never presented a copy of these in evidence except in their Motion for Reconsideration too late in the day. Being the basis of the charge against private respondent, it is without doubt the best evidence available to substantiate the allegations. The purpose of the rule requiring the production of the best evidence is the prevention of fraud, because if a party is in possession of such evidence and withholds it, and seeks to substitute inferior evidence in its place (or none at all save for mere allegation), the presumption naturally arises that the better evidence is withheld for fraudulent purposes which its production would expose and defeat.[32] By failing to prove the existence of the company rules in due time, i.e., non-presentation of an authenticated copy, unarguably the best evidence, casts skepticism on the factual basis of the charge of violation thereof; arguably, therefore, it cannot be said that the assailed conduct can be considered gross neglect of duty. It is indeed true that administrative agencies, like the NLRC, are not bound by the technical rules of procedure and evidence in the adjudication of cases.[33] However, this procedural liberty must not be interpreted to mean an unfettered license to put forth assertions without at least presenting tangible proof to back them up. Otherwise, such assertions would just be allegations, and allegations are not evidence. [34] What is involved here transcends mere procedural technicality and concerns the more paramount principles and requirements of due process, which may not be sacrificed at the altar of expediency. Upon this principle, the failure to present a copy of the supposed Company Policy to prove the allegation of their existence must be seen and taken for what they are inadmissible hearsay. Mere allegation or assertion, by any stretch of reasoning, cannot be considered substantial evidence of their existence and of the subsequent violation complained of. From the preceding discussion, the dearth of reliable evidence on record constitutes serious doubt as to the factual basis of the charge of violation of company policy filed against private respondent. This doubt shall be resolved in her favor in line with the policy under the Labor Code to afford protection to labor and construe doubts in favor of labor.[35] The consistent rule is that if doubts exist between the evidence presented by the employer and the employee, the scales of justice must be titled in favor of the latter. The employer must affirmatively show rationally adequate evidence that the dismissal was for a justifiable cause. [36] Having failed to satisfy this burden of proof, we find that petitioners dismissed private respondent without just cause. Consequently, the termination of her employment was illegal. To finish, as a final nail to the coffin that is the petitioners recourse to this Court, we find that private respondent was not accorded due process by petitioners prior to being dismissed from service. Despite the fact that private respondent was repeatedly warned through the numerous memoranda sent to her for coming in late or not reporting at all to the office, she was never asked to defend her position, much less voice an objection to the charges leveled at her. Law and jurisprudence require an employer to furnish the employee two written notices before termination of his employment may be ordered. The first notice must inform him of the particular acts or omissions for which his dismissal is sought; the second, of the employers decision to dismiss the employee after he has been given the opportunity to be heard and defend himself.[37] With regard to private respondent, prior to the Notice of Termination, no occasion was given to her to explain her side on why she should not be terminated. There is no evidence that there was an exchange of communication between petitioners and private respondent regarding the latters supposed infractions. Lest it be forgotten, every opportunity and assistance must be accorded to the employee by the management to enable him to prepare adequately for his defense, including legal representation.[38] No chance whatsoever was given to private respondent in this case. She was simply served her termination notice without being heard in her defense. In retrospection, if, indeed, private respondent was a delinquent and an errant employee, why did petitioners put up with such behavior for no less than five years? WHEREFORE, premises considered, the instant petition is hereby DENIED. The assailed Decision dated 16 May 2001, and Resolution dated 19 September 2001, both of the Court of Appeals in CA-G.R. SP No. 59471, are AFFIRMED. Costs against petitioners Acebedo Optical, Inc. and Miguel Acebedo III. SO ORDERED.

Manila KING OF KINGS TRANSPORT, INC., CLAIRE DELA FUENTE, and MELISSA LIM, Petitioners,

SECOND DIVISION

G.R. No. 166208 Present: QUISUMBING, J., Chairperson, CARPIO, CARPIO MORALES, TINGA, and VELASCO, JR., JJ. Promulgated:

- versus -

SANTIAGO O. MAMAC, Respondent. June 29, 2007 x-----------------------------------------------------------------------------------------x DECISION VELASCO, JR., J.: Is a verbal appraisal of the charges against the employee a breach of the procedural due process? This is the main issue to be resolved in this plea for review under Rule 45 of the September 16, 2004 Decision[1] of the Court of Appeals (CA) in CA-GR SP No. 81961. Said judgment affirmed the dismissal of bus conductor Santiago O. Mamac from petitioner King of Kings Transport, Inc. (KKTI), but ordered the bus company to pay full backwages for violation of the twin-notice requirement and 13th-month pay. Likewise assailed is the December 2, 2004 CA Resolution[2] rejecting KKTIs Motion for Reconsideration. The Facts Petitioner KKTI is a corporation engaged in public transportation and managed by Claire Dela Fuente and Melissa Lim. Respondent Mamac was hired as bus conductor of Don Mariano Transit Corporation (DMTC) on April 29, 1999. The DMTC employees including respondent formed the Damayan ng mga Manggagawa, Tsuper at Conductor-Transport Workers Union and registered it with the Department of Labor and Employment. Pending the holding of a certification election in DMTC, petitioner KKTI was incorporated with the Securities and Exchange Commission which acquired new buses. Many DMTC employees were subsequently transferred to KKTI and excluded from the election. The KKTI employees later organized the Kaisahan ng mga Kawani sa King of Kings (KKKK) which was registered with DOLE. Respondent was elected KKKK president. Respondent was required to accomplish a Conductors Trip Report and submit it to the company after each trip. As a background, this report indicates the ticket opening and closing for the particular day of duty. After submission, the company audits the reports. Once an irregularity is discovered, the company issues an Irregularity Report against the employee, indicating the nature and de tails of the irregularity. Thereafter, the concerned employee is asked to explain the incident by making a written statement or counter-affidavit at the back of the same Irregularity Report. After considering the explanation of the employee, the company then makes a determination of whether to accept the explanation or impose upon the employee a penalty for committing an infraction. That decision shall be stated on said Irregularity Report and will be furnished to the employee. Upon audit of the October 28, 2001 Conductors Report of respondent, KKTI noted an irregularity. It discovered that respondent declared several sold tickets as returned tickets causing KKTI to lose an income of eight hundred and ninety pesos. While no irregularity report was prepared on the October 28, 2001 incident, KKTI nevertheless asked respondent to explain the discrepancy. In his letter,[3]respondent said that the erroneous declaration in his October 28, 2001 Trip Report was unintentional. He explained that during that days trip, the

windshield of the bus assigned to them was smashed; and they had to cut short the trip in order to immediately report the matter to the police. As a result of the incident, he got confused in making the trip report. On November 26, 2001, respondent received a letter [4] terminating his employment effective November 29, 2001. The dismissal letter alleged that the October 28, 2001 irregularity was an act of fraud against the company. KKTI also cited as basis for respondents dismissal the other offenses he allegedly committed since 1999. On December 11, 2001, respondent filed a Complaint for illegal dismissal, illegal deductions, nonpayment of 13th-month pay, service incentive leave, and separation pay. He denied committing any infraction and alleged that his dismissal was intended to bust union activities. Moreover, he claimed that his dismissal was effected without due process. In its April 3, 2002 Position Paper,[5] KKTI contended that respondent was legally dismissed after his commission of a series of misconducts and misdeeds. It claimed that respondent had violated the trust and confidence reposed upon him by KKTI. Also, it averred that it had observed due process in dismissing respondent and maintained that respondent was not entitled to his money claims such as service incentive leave and 13th-month pay because he was paid on commission or percentage basis. On September 16, 2002, Labor Arbiter Ramon Valentin C. Reyes rendered judgment dismissing respondents Complaint for lack of merit.[6] Aggrieved, respondent appealed to the National Labor Relations Commission (NLRC). On August 29, 2003, the NLRC rendered a Decision, the dispositive portion of which reads: WHEREFORE, the decision dated 16 September 2002 is MODIFIED in that respondent King of Kings Transport Inc. is hereby ordered to indemnify complainant in the amount of ten thousand pesos (P10,000) for failure to comply with due process prior to termination. The other findings are AFFIRMED. SO ORDERED.[7] Respondent moved for reconsideration but it was denied through the November 14, 2003 Resolution[8] of the NLRC. Thereafter, respondent filed a Petition for Certiorari before the CA urging the nullification of the NLRC Decision and Resolution. The Ruling of the Court of Appeals Affirming the NLRC, the CA held that there was just cause for respondents dismissal. It ruled that respondents act in declaring sold tickets as returned tickets x x x constituted fraud or acts of dishonesty justifying his dismissal. [9] Also, the appellate court sustained the finding that petitioners failed to comply with the required procedural due process prior to respondents termination. However, following the doctrine in Serrano v. NLRC,[10] it modified the award of PhP 10,000 as indemnification by awarding full backwages from the time respondents employment was terminated until finality of the decision. Moreover, the CA held that respondent is entitled to the 13th-month pay benefit. Hence, we have this petition. The Issues

Petitioner raises the following assignment of errors for our consideration: Whether the Honorable Court of Appeals erred in awarding in favor of the complainant/private respondent, full back wages, despite the denial of his petition for certiorari.

Whether the Honorable Court of Appeals erred in ruling that KKTI did not comply with the requirements of procedural due process before dismissing the services of the complainant/private respondent. Whether the Honorable Court of Appeals rendered an incorrect decision in that [sic] it awarded in favor of the complaint/private respondent, 13 th month pay benefits contrary to PD 851.[11] The Courts Ruling The petition is partly meritorious. The disposition of the first assigned error depends on whether petitioner KKTI complied with the due process requirements in terminating respondents employment; thus, it shall be discus sed secondly. Non-compliance with the Due Process Requirements Due process under the Labor Code involves two aspects: first, substantivethe valid and authorized causes of termination of employment under the Labor Code; and second, proceduralthe manner of dismissal.[12] In the present case, the CA affirmed the findings of the labor arbiter and the NLRC that the termination of employment of respondent was based on a just cause. This ruling is not at issue in this case. The question to be determined is whether the procedural requirements were complied with. Art. 277 of the Labor Code provides the manner of termination of employment, thus: Art. 277. Miscellaneous Provisions.x x x (b) Subject to the constitutional right of workers to security of tenure and their right to be protected against dismissal except for a just and authorized cause without prejudice to the requirement of notice under Article 283 of this Code, the employer shall furnish the worker whose employment is sought to be terminated a written notice containing a statement of the causes for termination and shall afford the latter ample opportunity to be heard and to defend himself with the assistance of his representative if he so desires in accordance with company rules and regulations promulgated pursuant to guidelines set by the Department of Labor and Employment. Any decision taken by the employer shall be without prejudice to the right of the worker to contest the validity or legality of his dismissal by filing a complaint with the regional branch of the National Labor Relations Commission. The burden of proving that the termination was for a valid or authorized cause shall rest on the employer. Accordingly, the implementing rule of the aforesaid provision states: SEC. 2. Standards of due process; requirements of notice.In all cases of termination of employment, the following standards of due process shall be substantially observed: I. For termination of employment based on just causes as defined in Article 282 of the Code: (a) A written notice served on the employee specifying the ground or grounds for termination, and giving said employee reasonable opportunity within which to explain his side. (b) A hearing or conference during which the employee concerned, with the assistance of counsel if he so desires is given opportunity to respond to the charge, present his evidence, or rebut the evidence presented against him. (c) A written notice of termination served on the employee, indicating that upon due consideration of all the circumstances, grounds have been established to justify his termination. [13] In case of termination, the foregoing notices shall be served on the employees last known address.[14] To clarify, the following should be considered in terminating the services of employees:

(1) The first written notice to be served on the employees should contain the specific causes or grounds for termination against them, and a directive that the employees are given the opportunity to submit their written explanation within a reasonable period. Reasonable opportunity under the Omnibus Rules means every kind of assistance that management must accord to the employees to enable them to prepare adequately for their defense.[15] This should be construed as a period of at least five (5) calendar days from receipt of the notice to give the employees an opportunity to study the accusation against them, consult a union official or lawyer, gather data and evidence, and decide on the defenses they will raise against the complaint. Moreover, in order to enable the employees to intelligently prepare their explanation and defenses, the notice should contain a detailed narration of the facts and circumstances that will serve as basis for the charge against the employees. A general description of the charge will not suffice. Lastly, the notice should specifically mention which company rules, if any, are violated and/or which among the grounds under Art. 282 is being charged against the employees. (2) After serving the first notice, the employers should schedule and conduct a hearing or conference wherein the employees will be given the opportunity to: (1) explain and clarify their defenses to the charge against them; (2) present evidence in support of their defenses; and (3) rebut the evidence presented against them by the management. During the hearing or conference, the employees are given the chance to defend themselves personally, with the assistance of a representative or counsel of their choice. Moreover, this conference or hearing could be used by the parties as an opportunity to come to an amicable settlement. (3) After determining that termination of employment is justified, the employers shall serve the employees a written notice of termination indicating that: (1) all circumstances involving the charge against the employees have been considered; and (2) grounds have been established to justify the severance of their employment. In the instant case, KKTI admits that it had failed to provide respondent with a charge sheet. [16] However, it maintains that it had substantially complied with the rules, claiming that respondent would not have issued a written explanation had he not been informed of the charges against him.[17] We are not convinced. First, respondent was not issued a written notice charging him of committing an infraction. The law is clear on the matter. A verbal appraisal of the charges against an employee does not comply with the first notice requirement. In Pepsi Cola Bottling Co. v. NLRC,[18] the Court held that consultations or conferences are not a substitute for the actual observance of notice and hearing. Also, in Loadstar Shipping Co., Inc. v. Mesano,[19] the Court, sanctioning the employer for disregarding the due process requirements, held that the employees written explanation did not excuse the fact that there was a complete absence of the first notice. Second, even assuming that petitioner KKTI was able to furnish respondent an Irregularity Report notifying him of his offense, such would not comply with the requirements of the law. We observe from the irregularity reports against respondent for his other offenses that such contained merely a general description of the charges against him. The reports did not even state a company rule or policy that the employee had allegedly violated. Likewise, there is no mention of any of the grounds for termination of employment under Art. 282 of the Labor Code. Thus, KKTIs standard charge sheet is not sufficient notice to the employee. Third, no hearing was conducted. Regardless of respondents written explanation, a hearing was still necessary in order for him to clarify and present evidence in support of his defense. Moreover, respondent made the letter merely to explain the circumstances relating to the irregularity in his October 28, 2001 Conductors Trip Report. He was unaware that a dismissal proceeding was already being effected. Thus, he was surprised to receive the November 26, 2001 termination letter indicating as grounds, not only his October 28, 2001 infraction, but also his previous infractions. Sanction for Non-compliance with Due Process Requirements As stated earlier, after a finding that petitioners failed to comply with the due process requirements, the CA awarded full backwages in favor of respondent in accordance with the doctrine in Serrano v. NLRC.[20] However, the doctrine in Serrano had already been abandoned in Agabon v. NLRC by ruling that if the dismissal is done without due process, the employer should indemnify the employee with nominal damages. [21] Thus, for non-compliance with the due process requirements in the termination of respondents employment, petitioner KKTI is sanctioned to pay respondent the amount of thirty thousand pesos (PhP 30,000) as damages. Thirteenth (13th)-Month Pay

Section 3 of the Rules Implementing Presidential Decree No. 851 [22] provides the exceptions in the coverage of the payment of the 13th-month benefit. The provision states: SEC. 3. Employers covered.The Decree shall apply to all employers except to: xxxx e) Employers of those who are paid on purely commission, boundary, or task basis, and those who are paid a fixed amount for performing a specific work, irrespective of the time consumed in the performance thereof, except where the workers are paid on piece-rate basis in which case the employer shall be covered by this issuance insofar as such workers are concerned. Petitioner KKTI maintains that respondent was paid on purely commission basis; thus, the latter is not entitled to receive the 13th-month pay benefit. However, applying the ruling in Philippine Agricultural Commercial and Industrial Workers Union v. NLRC,[23] the CA held that respondent is entitled to the said benefit. It was erroneous for the CA to apply the case of Philippine Agricultural Commercial and Industrial Workers Union. Notably in the said case, it was established that the drivers and conductors praying for 13th- month pay were not paid purely on commission. Instead, they were receiving a commission in addition to a fixed or guaranteed wage or salary. Thus, the Court held that bus drivers and conductors who are paid a fixed or guaranteed minimum wage in case their commission be less than the statutory minimum, and commissions only in case where they are over and above the statutory minimum, are entitled to a 13th-month pay equivalent to one-twelfth of their total earnings during the calendar year. On the other hand, in his Complaint,[24] respondent admitted that he was paid on commission only. Moreover, this fact is supported by his pay slips[25] which indicated the varying amount of commissions he was receiving each trip. Thus, he was excluded from receiving the 13th-month pay benefit. WHEREFORE, the petition is PARTLY GRANTED and the September 16, 2004 Decision of the CA is MODIFIED by deleting the award of backwages and 13th-month pay. Instead, petitioner KKTI is ordered to indemnify respondent the amount of thirty thousand pesos (PhP 30,000) as nominal damages for failure to comply with the due process requirements in terminating the employment of respondent. No costs. SO ORDERED.

THIRD DIVISION G.R. No. 168475 EMILIO E. DIOKNO, et al Petitioners, - versus -

HON. HANS LEO J. CACDAC Respondents. x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x DECISION CHICO-NAZARIO, J.: This is a Petition for Review on Certiorari under Rule 45 of the 1997 Revised Rules of Civil Procedure, seeking the nullification of the Decision[1] and Resolution[2] of the Court of Appeals in CA-G.R. SP No. 83061, dated 17 June 2004 and 10 June 2005, respectively, which dismissed petitioners Petition for Certiorari and denied their Motion for Reconsideration thereon. The Facts The First Line Association of Meralco Supervisory Employees (FLAMES) is a legitimate labor organization which is the supervisory union of Meralco. Petitioners and private respondents are members of FLAMES. On 1 April 2003, the FLAMES Executive Board created the Committee on Election (COMELEC) for the conduct of its union elections scheduled on 7 May 2003.[3] The COMELEC was composed of petitioner Dante M. Tong as its chairman, and petitioners Jaime C. Mendoza and Romeo M. Macapulay as members. Subsequently, private respondents Jimmy S. Ong, Nardito C. Alvarez, Alfredo J. Escall, and Jaime T. Valeriano filed their respective certificates of candidacy. On 12 April 2003, the COMELEC rejected Jimmy S. Ongs candidacy on the ground that he was not a member of FLAMES. Meanwhile, the certificates of candidacy of Nardito C. Alvarez, Alfredo J. Escall, and Jaime T. Valeriano were similarly rejected on the basis of the exclusion of their department from the scope of the existing collective bargaining agreement (CBA). The employees assigned to the aforesaid department are allegedly deemed disqualified from membership in the union for being confidential employees. On 24 April 2003, private respondents Jimmy S. Ong, Nardito C. Alvarez, Alfredo J. Escall, Jaime T. Valeriano (Ong, et al.), and a certain Leandro M. Tabilog filed a Petition[4] before the Med-Arbitration Unit of the Department of Labor and Employment (DOLE). They prayed, inter alia, for the nullification of the order of the COMELEC which disallowed their candidacy.[5] They further prayed that petitioners be directed to render an accounting of funds with full and detailed disclosure of expenditures and financial transactions; and that a representative from the Bureau of Labor Relations (BLR) be designated to act as chairman of the COMELEC in lieu of petitioner Dante M. Tong. [6] On 30 April 2003, DOLE-NCR Regional Director Alex E. Maraan issued an Order[7] directing DOLE personnel to observe the conduct of the FLAMES election on 7 May 2003.[8] On 2 May 2003, petitioners filed a Petition [9] with the COMELEC seeking the disqualification of private respondents Edgardo Daya, Pablo Lucas, Leandro Tabilog, Reynaldo Espiritu, Jose Vito, Antonio de Luna, Armando Yalung, Edwin Layug, Nards Pabilona, Reynaldo Reyes, Evangeline Escall, Alberto Alcantara, Rogelio Cervitillo, Marcelino Morelos, and Faustino Ermino (Daya, et al.). Petitioners alleged that Daya, et al., allowed themselves to be assisted by non-union members, and committed acts of disloyalty which are inimical to the interest of FLAMES. In their campaign, they allegedly colluded with the officers of the Meralco Savings and Loan Association (MESALA) and the Meralco Mutual Aid and Benefits Association (MEMABA) and exerted undue influence on the members of FLAMES. On 6 May 2003, the COMELEC issued a Decision,[10] declaring Daya, et al., officially disqualified to run and/or to participate in the 7 May 2003 FLAMES elections. The COMELEC also resolved to exclude their names from the list of candidates in the polls or precincts, and further declared that any vote cast in their favor shall not be counted. According to the COMELEC, Daya, et al., violated Article IV, Section 4(a)(6)[11] of the FLAMES Constitution and By-Laws (CBL) by allowing non-members to aid them in their campaign. Their acts of solicitation for support from non-union members were deemed inimical to the interest of FLAMES. On 7 May 2003, the COMELEC proclaimed the following candidates, including some of herein petitioners as winners of the elections, to wit[12]:

NAME Emilio E. Diokno Vicente P. Alcantara Antonio Z. Vergara, Jr. Alberto L. Mabugat Roberto D. Masiglat, Jr. Leandro C. Atienza Felito C. Macasaet Edgardo R. Villanueva Romulo C. Aquino Jesus D. Samia Gaudencio C. Camit Rodante B. [Parao] Jose Z. Tullo Bernardo C. Sevilla Francis B. Escoto

POSITION President Executive Vice President External Executive Vice President Internal Vice-President Organizing Vice-President Education Vice-President Chief Steward Secretary Asst. Secretary Treasurer Asst. Treasurer Auditor Asst. Auditor Central Coordinator North Coordinator South Coordinator

On 8 May 2003, private respondents Daya, et al., along with Ong, et al., filed with the Med-Arbitration Unit of the DOLE-NCR, a Petition[13] to: a) Nullify Order of Disqualification; b) Nullify Election Proceedings and Counting of Votes; c) Declare Failure of Election; and d) Declare Holding of New Election to be Controlled and Supervised by the DOLE. The Petition was docketed as Case No. NCR-OD-0304-002-LRD.

On 14 May 2003, another group led by private respondent Gaudencio Jimenez, Jr., along with private respondents Johnson S. Reyes, Gavino R. Vidanes, Arnaldo G. Tayao, Bonifacio F. Cirujano, Edgardo G. Cadavona, Maximo A. Caoc, Jose O. Maclit, Jr., Luzmindo D. Acorda, Jr., Lemuel R. Ragasa and Gil G. de Vera (Jimenez, et al.) filed a Petition with the Med-Arbitration Unit of the DOLE-NCR against petitioners to nullify the 7 May 2003 election on the ground that the same was not free, orderly, and peaceful. It was docketed as Case No. NCR-OD-0305-004-LRD, which was subsequently consolidated with the Petition of Daya, et al. and the earlier Petition of Ong, et al. Meanwhile, the records show that a subsequent election was held on 30 June 2004, which was participated in and won by herein private respondents Daya, et al. The validity of the 30 June 2004 elections was assailed by herein petitioners before the DOLE[14] and taken to the Court of Appeals in CA-G.R. SP No. 88264 on certiorari, which case does not concern us in the instant Petition. The Court of Appeals, in the aforesaid case, rendered a Decision[15] dated 12 January 2007, upholding the validity of the 30 June 2004 elections, and the declaration of herein private respondents Daya, et al., as the duly elected winners therein. The Decision of the Med-Arbiter

On 7 July 2003, Med-Arbiter Tranquilino B. Reyes, Jr. issued a Decision[16] in favor of private respondents, Daya, et al. However, the petition of Jimenez, et al., was dismissed because it was premature, it appearing that the COMELEC had not yet resolved their protest prior to their resort to the Med-Arbiter. Finally, the Petition of Ong, et al., seeking to declare themselves as bona fide members of FLAMES was ordered dismissed. The Med-Arbiter noted in his decision that during a conference which was held on 15 May 2003, the parties agreed that the issue anent the qualifications of private respondents Ong, et al. had been rendered moot and academic.[17] The Med-Arbiter reversed the disqualification imposed by the COMELEC against private respondents Daya, et al. He said that the COMELEC accepted all the allegations of petitioners against private respondents Daya, et al., sans evidence to substantiate the same. Moreover, he found that the COMELEC erred in relying on Article IV, Section 4(a) (6) of the CBL as basis for their disqualification. The Med-Arbiter read the aforesaid provision to refer to the dismissal and/or expulsion of a member from FLAMES, but not to the disqualification of a member as a candidate in a union election. He rationalized that the COMELEC cannot disqualify a candidate on the same grounds for expulsion of members, which power is vested by the CBL on the Executive Board. The Med-Arbiter also held that there was a denial of due process because the COMELEC failed to receive private respondents Daya, et al.s motion for reconsideration of the order of their disqualification. The COMELEC was also found to have refused to receive their written protest in violation of the unions CBL.[18]

Lastly, the Med-Arbiter defended his jurisdiction over the case. He concluded that even as the election of union officers is an internal affair of the union, his office has the right to inquire into the merits and conduct of the election when its jurisdiction is sought.[19] The decretal portion of the Med-Arbiters Decision states, viz: WHEREFORE, premises considered, the [P]etition to Nullify the Order of Disqualification; Nullify Election proceedings and counting of Votes; and Declare a Failure of Elections is hereby granted. The disqualification of [private respondent] Ed[gardo] Daya, et al., is hereby considered as null and void. Perforce, the election of union officers of FLAMES on May 7, 2003 is declared a failure and a new election is ordered conducted under the supervision of the Department of Labor and Employment. The [P]etition to conduct an accounting of union funds and to stop the release of funds to [petitioner] Diokno, et al., is ordered dismissed for lack of merit. And the Petition to Declare [private respondents] Jimmy Ong, Alfredo [E]scall, Nardito Alvarez, and Jaime Valeriano as members of FLAMES is hereby ordered dismissed for lack of merit. The [P]etition to Nullify the election filed by [private respondents] Gaudencio Jimenez, et al., is likewise ordered dismissed.[20] Aggrieved, petitioners filed an appeal before the Director of the BLR.

The Ruling of the BLR Director On 3 December 2003, the Director of the BLR issued a Resolution, [21] affirming in toto the assailed Decision of the Med-Arbiter. Public respondent Director Hans Leo J. Cacdac ruled, inter alia, that the COMELECs reliance on Article IV, Section 4(a) (6) of the CBL, as a ground for disqualifying private respondents Daya, et al., was premature. He echoed the interpretation of the Med-Arbiter that the COMELEC erroneously resorted to the aforecited provision which refers to the expulsion of a member from the union on valid grounds and with due process, along with the requisite 2/3 vote of the Executive Board. Hence, the COMELEC cut short the expulsion proceedings in disqualifying private respondents Daya, et al.[22] The BLR Director further held that the case involves a question of disqualification on account of the alleged commission by private respondents Daya, et al., of illegal campaign acts, which acts were not specifically mentioned in the guidelines for the conduct of election as issued by the COMELEC. Likewise, on the alleged refusal of private respondents Daya, et al., to submit to the jurisdiction of the COMELEC by failing to file a petition to nullify its order of disqualification, the BLR Director deemed the same as an exception to the rule on exhaustion of administrative remedies. Thus: By themselves, such acts could not be taken as repugnant of COMELECs a uthority. Sensing that they were prejudiced by the disqualification order, it was only incumbent upon [private respondents Daya, et al.] to seek remedy before a body, which they thought has a more objective perspective over the situation. In short, they opted to bypass the administrative remedies within the union. Such a move could not be taken against [private respondents Daya, et al.] considering that non-exhaustion of administrative remedies is justified in instances where it would practically amount to a denial of justice, or would be illusory or vain, as in the present controversy. [23]

The BLR Director disposed in this wise: WHEREFORE, the appeal is DISMISSED for lack of merit. The Decision of Med-Arbiter Tranquilino B. Reyes, DOLE-NCR, dated 7 July 2003 is AFFIRMED in its entirety.

Let the records of this case be returned to the DOLE-NCR for the immediate conduct of election of officers of the First Line Association of Meralco Supervisory Employees (FLAMES) under the supervision of DOLE-NCR personnel.[24]

Subsequently, petitioners sought a reversal of the 3 December 2003 Resolution, but the BLR Director issued a Resolution dated 10 February 2003,[25] refusing to reverse his earlier Resolution for lack of merit. Petitioners elevated the case to the Court of Appeals via a Petition for Certiorari.

The Ruling of the Court of Appeals The Court of Appeals found petitioners appeal to be bereft of merit. The appellate court held that the provision relied upon by the COMELEC concerns the dismissal and/or expulsion of union members, which power is vested in the FLAMES Executive Board, and not the COMELEC. It affirmed the finding of the BLR Director that the COMELEC, in disqualifying private respondents Daya, et al., committed a procedural shortcut. It held: Without the requisite two-thirds (2/3) vote of the Executive Board dismissing and/or expelling private respondents for acts contemplated thereunder, the COMELEC was clearly violating the unions constitution and bylaws (sic) by utilizing the aforequoted provision in its said May 6, 2003 decision and, in the process, arrogating unto itself a power it did not possess. As the document embodying the covenant between a union and its members and the fundamental law governing the members rights and obligations, it goes without saying that the constitution and bylaws (sic) should be upheld for as long as they are not contrary to law, good morals or public policy.[26] On the matter of the failure of private respondents Daya, et al. to come up with 30 percent (30%) members support in filing the Petition to Nullify the COMELECs Decision before the Med -Arbiter, the Court of Appeals said that the petition did not involve the entire membership of FLAMES, so there was no need to comply with the aforesaid requirement. Furthermore, the appellate court applied the exception to the rule on exhaustion of administrative remedies on the ground, inter alia, that resort to such a remedy would have been futile, illusory or vain. [27] Indeed, the Court of Appeals emphasized that private respondents Daya, et al., were directed by the COMELEC to file their Answer to the petition for their disqualification only on 5 May 2003. Private respondents Daya, et al., filed their Answer on 6 May 2003. On the same day, the COMELEC issued its Decision disqualifying them. A day after, the 7 May 2003 election was held. The Court of Appeals further stressed that private respondents Daya, et al.s efforts to have their disqualification reconsidered were rebuffed by the COMELEC; hence, they were left with no choice but to seek the intervention of the BLR,[28] which was declared to have jurisdiction over intra-union disputes even at its own initiative under Article 226[29] of the Labor Code.

Petitioners sought a reconsideration of the 17 June 2004 Decision of the Court of Appeals, but the same was denied in a Resolution[30]dated 10 June 2005. Hence, the instant Petition.

At the outset, petitioners contend that the instant Petition falls under the exceptions to the rule that the Supreme Court is not a trier of facts. They implore this Court to make factual determination anent the conduct of the 7 May 2003 elections. They also question the jurisdiction of the BLR on the case at bar because of the failure of private respondents Daya, et al., to exhaust administrative remedies within the union. It is the stance of petitioner that Article 226[31] of the Labor Code which grants power to the BLR to resolve inter-union and intra-union disputes is dead law, and has been amended by Section 14 of Republic Act No. 6715, whereby the conciliation, mediation and voluntary arbitration functions of the BLR had been transferred to the National Conciliation and Mediation Board. Petitioners similarly assert that the 7 May 2003 election was conducted in a clean, honest, and orderly manner, and that private respondents, some of whom are not bona fide members of FLAMES, were validly disqualified by the COMELEC from running in the election. They also rehashed their argument that non-members of the union were allowed by private respondents Daya, et al., to participate in the affair. They challenge the finding of the BLR Director that the reliance by the COMELEC on Article IV, Section 4(a)(6) of the CBL, was premature. Petitioners insist that the COMELEC had the sole and exclusive power to pass upon the qualification of any candidate, and therefore, it has the correlative power to disqualify any candidate in accordance with its guidelines.

For their part, private respondents Daya, et al., maintain that the Petition they filed before the DOLE-NCR Med-Arbiter questioning the disqualification order of the COMELEC and seeking the nullification of the 7 May 2003 election involves an intra-union dispute which is within the jurisdiction of the BLR. They further claim that the COMELEC, in disqualifying them, mistakenly relied on a provision in the FLAMES CBL that addresses the expulsion of members from the union, and no expulsion proceedings were held against them. Finally, they underscore the finding of the appellate court that there was disenfranchisement among the general membership of FLAMES due to their wrongful disqualification which restricted the members choices of candidates. They reiterate the conclusion of the Court of Appeals that had the COMELEC tabulated the votes cast in their favor, there would have been, at least, a basis for the declaration that they lost in the elections.

Issues Petitioners attribute to the Court of Appeals several errors to substantiate their Petition. [32] They all boil down, though, to the question of whether the Court of Appeals committed grave abuse of discretion when it affirmed the jurisdiction of the BLR to take cognizance of the case and then upheld the ruling of the BLR Director and Med-Arbiter, nullifying the COMELECs order of disqualification of private respondents Daya et al., and annulling the 7 May 2003 FLAMES elections.

The Courts Ruling The Petition is devoid of merit.

We affirm the finding of the Court of Appeals upholding the jurisdiction of the BLR. Article 226 of the Labor Code is hereunder reproduced, to wit: ART. 226. BUREAU OF LABOR RELATIONS. The Bureau of Labor Relations and the Labor Relations Divisions in the regional offices of the Department of Labor shall have original and exclusive authority to act, at their own initiative or upon request of either or both parties, on all inter-union and intra-union conflicts, and all disputes, grievances or problems arising from or affecting labor-management relations in all workplaces whether agricultural or nonagricultural, except those arising from the implementation or interpretation of collective bargaining agreements which shall be the subject of grievance procedure and/or voluntary arbitration. The Bureau shall have fifteen (15) working days to act on labor cases before it, subject to extension by agreement of the parties. The amendment to Article 226, as couched in Republic Act No. 6715,[33] which is relied upon by petitioners in arguing that the BLR had been divested of its jurisdiction, simply reads, thus:

Sec. 14. The second paragraph of Article 226 of the same Code is likewise hereby amended to read as follows: "The Bureau shall have fifteen (15) calendar days to act on labor cases before it, subject to extension by agreement of the parties."

This Court in Bautista v. Court of Appeals, [34] interpreting Article 226 of the Labor Code, was explicit in declaring that the BLR has the original and exclusive jurisdiction on all inter-union and intra-union conflicts. We said that since Article 226 of the Labor Code has declared that the BLR shall have original and exclusive authority to act on all inter-union and intra-union conflicts, there should be no more doubt as to its jurisdiction. As defined, an intraunion conflict would refer to a conflict within or inside a labor union, while an inter-union controversy or dispute is one occurring or carried on between or among unions.[35] More specifically, an intra-union dispute is defined under Section (z), Rule I of the Rules Implementing Book V of the Labor Code, viz:

(z) Intra-Union Dispute refers to any conflict between and among union members, and includes all disputes or grievances arising from any violation of or disagreement over any provision of the constitution and by-laws of a union, including cases arising from chartering or affiliation of labor organizations or from any violation of the rights and conditions of union membership provided for in the Code.

The controversy in the case at bar is an intra-union dispute. There is no question that this is one which involves a dispute within or inside FLAMES, a labor union. At issue is the propriety of the disqualification of private respondents Daya, et al., by the FLAMES COMELEC in the 7 May 2003 elections. It must also be stressed that even as the dispute involves allegations that private respondents Daya,et al., sought the help of non-members of the union in their election campaign to the detriment of FLAMES, the same does not detract from the real character of the controversy. It remains as one which involves the grievance over the constitution and bylaws of a union, and it is a controversy involving members of the union. Moreover, the non-members of the union who were alleged to have aided private respondents Daya, et al., are not parties in the case. We are, therefore, unable to understand petitioners persistence in placing the controversy outside of the jurisdiction of the BLR. The law is very clear. It requires no further interpretation. The Petition which was initiated by private respondents Daya, et al., before the BLR was properly within its cognizance, it being an intra-union dispute. Indubitably, when private respondents Daya, et al., brought the case to the BLR, it was an invocation of the power and authority of the BLR to act on an intra-union conflict.

After having settled the jurisdiction of the BLR, we proceed to determine if petitioners correctly raised the argument that private respondents Daya, et al., prematurely sought the BLRs jurisdiction on the ground that they failed to exhaust administrative remedies within the union. On this matter, we affirm the findings of the Court of Appeals which upheld the application by the BLR Director of the exception to the rule of exhaustion of administrative remedies. In this regard, this Court is emphatic that before a party is allowed to seek the intervention of the court, it is a pre-condition that he should have availed of all the means of administrative processes afforded him. Hence, if a remedy within the administrative machinery can still be resorted to by giving the administrative officer concerned every opportunity to decide on a matter that comes within his jurisdiction when such remedy should be exhausted first before the courts judicial power can be sought. The premature invocation of courts judicial intervention is fatal to ones cause of action.[36]

Verily, there are exceptions to the applicability of the doctrine.[37] Among the established exceptions are: 1) when the question raised is purely legal; 2) when the administrative body is in estoppel; 3) when the act complained of is patently illegal; 4) when there is urgent need for judicial intervention; 5) when the claim involved is small; 6) when irreparable damage will be suffered; 7) when there is no other plain, speedy, and adequate remedy; 8) when strong public interest is involved; 9) when the subject of the proceeding is private land; 10) in quo warranto proceedings;[38] and 11) where the facts show that there was a violation of due process.[39] As aptly determined by the BLR Director, private respondents Daya, et al., were prejudiced by the disqualification order of the COMELEC. They endeavored to seek reconsideration, but the COMELEC failed to act thereon.[40] The COMELEC was also found to have refused to receive their written protest. [41] The foregoing facts sustain the finding that private respondents Daya, et al., were deprived of due process. Hence, it becomes incumbent upon private respondents Daya, et al., to seek the aid of the BLR. To insist on the contrary is to render their exhaustion of remedies within the union as illusory and vain.[42] These antecedent circumstances convince this Court that there was proper application by the Med-Arbiter of the exception to the rule of exhaustion of administrative remedies, as affirmed by the BLR Director, and upheld by the Court of Appeals.

We cannot accept, and the Court of Appeals rightfully rejected, the contention of petitioners that the private respondents Daya, et al.s complaint filed before the Med-Arbiter failed to comply with the jurisdictional requirement because it was not supported by at least thirty percent (30%) of the members of the union. Section 1 of Rule XIV of the Implementing Rules of Book V mandates the thirty percent (30%) requirement only in cases where the issue involves the entire membership of the union, which is clearly not the case before us. The issue is obviously limited to the disqualification from participation in the elections by particular union members.

Having resolved the jurisdictional cobwebs in the instant case, it is now apt for this Court to address the issue anent the disqualification of private respondents and the conduct of the 7 May 2003 elections.

On this matter, petitioners want this Court to consider the instant case as an exception to the rule that the Supreme Court is not a trier of facts; hence, importuning that we make findings of fact anew. It bears stressing that in a petition for review on certiorari, the scope of this Courts judicial review of decisions of the Court of Appeals is generally confined only to errors of law,[43] and questions of fact are not entertained. We elucidated on our fidelity to this rule, and we said: Thus, only questions of law may be brought by the parties and passed upon by this Court in the exercise of its power to review. Also, judicial review by this Court does not extend to a reevaluation of the sufficiency of the evidence upon which the proper labor tribunal has based its determination.[44]

It is aphoristic that a re-examination of factual findings cannot be done through a petition for review on certiorari under Rule 45 of the Rules of Court because as earlier stated, this Court is not a trier of facts; it reviews only questions of law.[45] The Supreme Court is not duty-bound to analyze and weigh again the evidence considered in the proceedings below.[46] This is already outside the province of the instant Petition for Certiorari. While there may be exceptions to this rule, petitioners miserably failed to show why the exceptions should be applied here. With greater force must this rule be applied in the instant case where the factual findings of the Med-Arbiter were affirmed by the BLR Director, and then, finally, by the Court of Appeals. The findings below had sufficient bases both in fact and in law. The uniform conclusion was that private respondents Daya, et al., were wrongfully disqualified by the COMELEC; consequently, the FLAMES election should be annulled.

On the issue of disqualification, there was a blatant misapplication by the COMELEC of the FLAMES CBL. As has been establishedad nauseam, the provision[47] relied upon by the COMELEC in disqualifying private respondents Daya, et al., applies to a case of expulsionof members from the union.

In full, Article IV, Section 4 (a) (6) of the FLAMES CBL, provides, to wit: Section 4(a). Any member may be DISMISSED and/or EXPELLED from the UNION, after due process and investigation, by a two-thirds (2/3) vote of the Executive Board, for any of the following causes: xxxx (6) Acting in a manner harmful to the interest and welfare of the UNION and/or its MEMBERS.[48]

We highlight five points, thus: First, Article IV, Section 4(a)(6) of the FLAMES CBL, embraces exclusively the case of dismissal and/or expulsion of members from the union. Even a cursory reading of the provision does not tell us that the same is to be automatically or directly applied in the disqualification of a candidate from union elections, which is the matter at bar. It cannot be denied that the COMELEC erroneously relied onArticle IV, Section 4(a)(6) because the same does not contemplate the situation of private respondents Daya, et al. The latter are not sought to be expelled or dismissed by the Executive Board. They were brought before the COMELEC to be disqualified as candidates in the 7 May 2003 elections. Second, the aforecited provision evidently enunciates with clarity the procedural course that should be taken to dismiss and expel a member from FLAMES. The CBL is succinct in stating that the dismissal and expulsion of a member from the union should be after due process and investigation, the same to be exercised by two-thirds (2/3) vote of the Executive Board for any of the causes[49] mentioned therein. The unmistakable directive is that in cases of expulsion and dismissal, due process must be observed as laid down in the CBL.

Third, nevertheless, even if we maintain a lenient stance and consider the applicability of Article IV, Section 4(a)(6) in the disqualification of private respondents Daya, et al., from the elections of 7 May 2003, still, the disqualification made by the COMELEC pursuant to the subject provision was a rank disregard of the clear due process requirement embodied therein. Nowhere do we find that private respondents Daya, et al. were investigated by the Executive Board. Neither do we see the observance of the voting requirement as regards private respondents Daya, et al. In all respects, they were denied due process. Fourth, the Court of Appeals, the BLR Director, and the Med-Arbiter uniformly found that due process was wanting in the disqualification order of the COMELEC. We are in accord with their conclusion. If, indeed, there was a violation by private respondents Daya, et al., of the FLAMES CBL that could be a ground for their expulsion and/or dismissal from the union, which in turn could possibly be made a ground for their disqualification from the elections, the procedural requirements for their expulsion should have been observed. In any event, therefore, whether the case involves dismissal and/or expulsion from the union or disqualification from the elections, the proper procedure must be observed. The disqualification ruled by the COMELEC against private respondents Daya, et al., must not be allowed to abridge a clear procedural policy established in the FLAMES CBL. If we uphold the COMELEC, we are countenancing a clear case of denial of due process which is anathema to the Constitution of the Philippines which safeguards the right to due process. Fifth, from another angle, the erroneous disqualification of private respondents Daya, et al., constituted a case of disenfranchisement on the part of the member-voters of FLAMES. By wrongfully excluding them from the 7 May 2003 elections, the options afforded to the union members were clipped. Hence, the mandate of the union cannot be said to have been rightfully determined. The factual irregularities in the FLAMES elections clearly provide proper bases for the annulment of the union elections of 7 May 2003. On a final note, as it appears that the question of the qualifications of private respondents Ong, et al. had been rendered moot and academic,[50] we do not find any reason for this Court to rule on the matter. As borne out by the records, the question had been laid to rest even when the case was still before the Med-Arbiter.[51]

WHEREFORE, the Petition is DENIED. The Decision of the Court of Appeals dated 17 June 2004, and its Resolution dated 10 June 2005 in CA-G.R. SP No. 83061 are AFFIRMED. Costs against petitioners.

SO ORDERED.

FIRST DIVISION PILIPINO TELEPHONE CORPORATION, Petitioner, - versus PILIPINO TELEPHONE EMPLOYEES ASSOCIATION (PILTEA), et al Respondents. x-----------------------------x PILIPINO TELEPHONE EMPLOYEES ASSOCIATION (PILTEA), PELAGIO S. BRIONES II, GEORGE L. DE LEON, and GEM TORRES, Petitioners, - versus G.R. No. 160094 Present: PUNO, C.J., Chairperson, SANDOVAL-GUTIERREZ, CORONA, AZCUNA, and GARCIA, JJ. Promulgated: June 22, 2007 G.R. No. 160058

NATIONAL LABOR RELATIONS COMMISSION and PILIPINO TELEPHONE CORPORATION, Respondents.

x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x DECISION PUNO, C.J.: At bar are two consolidated petitions seeking review of the decision [1] and resolution[2] of the Court of Appeals (CA) in CA-G.R. SP No. 59799 which modified the decision[3] of the National Labor Relations Commission (NLRC) by affirming the illegality of the strike conducted by Pilipino Telephone Employees Association (the Union) but reducing the penalty against union officers Pelagio S. Briones II, George De Leon, Lecel M. Fidel and Gem Torres from dismissal to suspension for six (6) months. First, we unfurl the facts. The Collective Bargaining Agreement (CBA) between the Union and Pilipino Telephone Corporation (the Company) was due to expire on December 31, 1997. On October 30, 1997, the Union submitted to the Company its proposals for the renegotiation of the non-representation aspects of their CBA. As there was a standstill on several issues, the parties submitted their dispute to the National Conciliation and Mediation Board (NCMB) for preventive mediation.[4] The conciliation proceedings before the NCMB failed. On July 13, 1998, the Union filed a Notice of Strike[5] with the NCMB for unfair labor practice due to the alleged acts of "restraint and coercion of union members and interference with their right to self-organization" committed by the Companys Revenue Assurance Department (RAD) Manager Rosales and its Call Center Department Manager, Manny Alegado, to wit: 1. Requiring employees to execute undated resignation letters prior to regularization as a condition for continued employment. 2. Preventing employees from displaying Union flags and CBA's slogans. 3. Prohibiting employees from conducting and preventing employees from participating in Union activities.

4. Requiring employees to render forced overtime to prevent them from attending Union meetings and activities after office hours. 5. Using vulgar and insulting "Kahit sa puwet n'yo isaksak ang mga banderang yan!" language such as

6. Threatening employees who join concerted Union activities with disciplinary action. 7. Discouraging employees from participating in Union activities by branding the activities illegal and prohibited by law. 8. Abuse of Company Rules and Regulations to prevent the free exercise by the Union and its members of their right to self organization and free expression (e.g. issuing show cause memos for refusal to render overtime and vandalism). 9. Utilizing security guards to harass employees who participate in Union activities by requiring the guards to take down the names of employees who participate in the Union activities.[6] The Company filed a petition for Consolidated Assumption of Jurisdiction with the Office of the Secretary of Labor. On August 14, 1998, then Secretary Bienvenido E. Laguesma issued an Order, the dispositive portion of which states: WHEREFORE, premises considered, this Office hereby assumes jurisdiction over the entire labor dispute at Pilipino Telephone Corporation pursuant to Art. 263(g) of the Labor Code, as amended. Accordingly, any strike or lockout, whether actual or intended, is hereby enjoined. Furthermore, the parties are likewise directed to cease and desist from committing any or all acts that might exacerbate the situation. To expedite the resolution of the dispute, the parties are hereby directed to file their respective position papers and documentary evidence within TEN (10) days from receipt of this Order. SO ORDERED.[7] (Emphases supplied.) On September 4, 1998, the Union filed a second Notice of Strike[8] with the NCMB on the grounds of: a) union busting, for the alleged refusal of the Company to turn over union funds; and b) the mass promotion of union members during the CBA negotiation, allegedly aimed at excluding them from the bargaining unit during the CBA negotiation. On the same day, the Union went on strike. On September 9, 1998, Secretary Laguesma directed the striking Union officers and members to return to work within twenty-four (24) hours from receipt of the Order and for the Company to accept all strikers under the same terms and conditions of employment prior to the strike. The Union and its members complied. On December 7, 1998, the Company filed with the NLRC a petition [9] to declare the Union's September 4, 1998 strike illegal. OnAugust 16, 1999, Labor Arbiter Aliman D. Mangandog issued a decision, the dispositive portion of which states: WHEREFORE, premises considered, the September 4, 1998 strike conducted by PILTEA is declared illegal. Accordingly, the following union officers of PILTEL/MKP, namely: George de Leon, Pelagio S. Briones, Nelson C. Pineda, Rolando U. Sta. Ana,Elna E. Escalante, Gem P. Torres, Ma. Rica D. Hilotin, Gerald Joseph P. Tayas, Lecel M. Fidel and Jose Rudylin R. Gamboa are declared to have lost their employment status. While the following members, namely: Romeo Anonuevo, Jonathan Molaer, Cris Herrera, Edgar Alan Aquino, Aris Ablis, Dorothy Zulieta, Ronald Cornel, Arnel Garcia, Ranelio Mendoza, Oliver Antonio, Alvin Usman, Augusto Francisco, Celia Mogol and Erlinda Madrid are hereby suspended for six (6) months without pay. SO ORDERED.[10] The Labor Arbiter found the strike illegal for having been conducted in defiance of Secretary Laguesma's August 14, 1998 assumption order and for non-compliance with the procedural requirements for the conduct of a strike under the Labor Code and its implementing rules. The Labor Arbiter

cited Scholastica's College v. Ruben Torres[11] which ruled that a strike undertaken despite the issuance of an assumption or certification order by the Secretary of Labor is a prohibited activity, hence, illegal under Article 264 of the Labor Code. He found that the grounds relied upon by the Union in its second notice of strike were substantially the same as those set forth in its first notice of strike. Moreover, he held that the Company's alleged refusal to turn over the checked-off union dues was not a strikeable issue as it was not a gross and blatant violation of the economic provisions of the CBA. He also held that the mass promotion of the Union's members was not tantamount to dismissal, hence, did not constitute union busting. The staging of the strike was likewise found to suffer from fatal procedural defects, to wit: a) the notice of strike was filed on the same day that the strike was conducted; b) the fifteen (15)-day cooling-off period was not observed; c) the Union failed to conduct a strike vote within the time prescribed by law; and d) the result of the strike vote was not furnished to the NCMB at least seven (7) days prior to the intended strike. Certain illegal acts were likewise found to have been committed during the strike, among which were the following: 1) striker Manny Costales prevented the Company's Director, Lilibeth Pasa, from entering the Bankers Centre Building; 2) union officers Judilyn Gamboa and Rolly Sta. Ana physically blocked the front entrance of the same building; 3) striker Aris Ablis drove a company vehicle and used it to block the driveway of PILTEL Centre II, thus, the cars inside the building were prevented from going out. The tires of said company vehicle were found deflated the following day; 4) strikers Dorothy Zulieta and Ronald Cornel prevented the Warehousing Manager assigned at the PILTEL Metropolitan Warehouse from going out of his office; 5) the strikers, led by Nelson Pineda, blocked the Detachment Supervisor of Protection Specialists and the uniformed company guards from delivering food to the non-striking employees trapped inside PILTEL Call Center at the Manila Memorial Park Building; 6) in General Santos City, some union members tied the entrance doors of the PILTEL Building and tied the company vehicles together; 7) Fe Carandang, Estrella Anonical, Zaldy Logos and JovencioLaderas blocked the main entrance of the Boac, Marinduque office of the Company; 8) strikers Edna Carrion, Celia Mogol, Erlinda Madrid, Raul Montalan, Rolly Miraflor, Zaldy de Chavez and Dina Madla of the Company's office in Boac, Marinduque were also heard telling the Company's clients not to transact business with the company; and 9) strikers Zaldy Logos, Rizaldy de Chavez, Raul Montalan, Rolly Milaflorand Jovencio Laderas were seen preventing the free ingress and egress of the Company's office premises in Boac, Marinduque. The Labor Arbiter ruled that since the September 4, 1998 strike was illegal, the Union officers were deemed to have lost their employment status. He further ruled that the illegal acts committed during the strike were not serious enough to merit the dismissal of the erring Union members as they were merely acting at the order of their leaders. Hence, the erring union members were merely suspended for six (6) months. On appeal, the NLRC affirmed the decision of the Labor Arbiter in toto.[12] The Union, its dismissed officers and its suspended members filed a motion for reconsideration, to no avail.[13] The Union, its officers Briones, De Leon, Fidel and Torres, and its members Francisco, Antonio, Coronel and Herrera filed a Petition for Certiorari under Rule 65 of the Rules of Court with the CA, attributing grave abuse of discretion amounting to excess of jurisdiction on the part of the NLRC. [14] On September 20, 2002, the CA modified the ruling of the NLRC as follows: WHEREFORE, the assailed decision of the NLRC dated February 29, 2000 is MODIFIED. Petitioners Pelagio S. Briones, George L. De Leon,Lecel M. Fidel and Gem Torres shall be suspended for six (6) months without pay instead of being dismissed. If already dismissed, petitioners shall be reinstated back to their former positions, or, if already filled, then to any other equal positions and shall be entitled to backwages computed from date of dismissal until date of actual reinstatement less the pay for the six (6) months suspension they were supposed to serve. The suspension of petitioners AugustoC. Francisco, Oliver B. Antonio, Ronaldo B. Coronel and Christopher L. Herrera for six (6) months without pay and the finding of illegality of the September 4, 1998 strike STANDS. SO ORDERED.[15]

Both parties filed their respective partial motions for reconsideration - the company assailed the CA decision decreasing the penalty of the union officers while the Union and its dismissed officers assailed the decision declaring the strike illegal. Both motions were denied.[16] Hence, the instant petitions. In G.R. No. 160058, the Company raises the issue of: [WHETHER] THE ASSAILED 20 SEPTEMBER 2002 DECISION AND 17 SEPTEMBER 2003 RESOLUTION OF THE COURT OF APPEALS ARE CONTRARY TO LAW AND JURISPRUDENCE.[17]

It prays that the September 20, 2002 Decision and September 17, 2003 Resolution of the CA be reversed in part and judgment be rendered affirming in toto the February 29, 2000 Decision of the NLRC. In G.R. No. 160094, the Union and Union officers Briones, De Leon and Torres raise the issue of: [WHETHER] THE HONORABLE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN UPHOLDING NLRCS FINDING THAT THE 4 SEPTEMBER 1998 STRIKE HELD BY PILTEA WAS ILLEGAL AS IT IS NOT IN ACCORDANCE WITH EXISTING LAW OR JURISPRUDENCE.[18] They pray that this Court modify the September 20, 2002 Decision and September 17, 2003 Resolution of the CA and: a) declare the Union's September 4, 1998 strike as legal; b) nullify the six-month suspension imposed on Briones, De Leon and Torres; and c) order the Company to pay them backwages covering the period of their suspension. The twin issues to be resolved are: a) the legality of the Union's strike and b) the penalty to be imposed on the Union officers, if any. First, the legality of the strike. The Union and its officers maintain that their September 4, 1998 strike was legal. They allege that the Company was guilty of union busting in promoting a substantial number of Union members and officers to positions outside the bargaining unit during the period of CBA negotiations. Allegedly, said Union members and officers maintained the same jobs and duties despite their promotion. They also capitalize on the CAs finding that the company was guilty of unfair labor practice in refusing to turn over the deducted contingency fees of the union members to the union. Citing Bacus v. Ople,[19] Panay Electric Company v. NLRC[20] and PNOC Dockyard and Engineering Corporation v. NLRC,[21] they contend that this finding of unfair labor practice precludes the CA from ruling that the strike was illegal and that the Union was in bad faith in conducting the strike. These arguments do not sway. Article 263 of the Labor Code, as amended by Republic Act (R.A.) No. 6715,[22] and Rule XXII, Book V of the Omnibus Rules Implementing the Labor Code outline the following procedural requirements for a valid strike: 1) A notice of strike, with the required contents, should be filed with the DOLE, specifically the Regional Branch of the NCMB, copy furnished the employer of the union; 2) A cooling-off period must be observed between the filing of notice and the actual execution of the strike thirty (30) days in case of bargaining deadlock and fifteen (15) days in case of unfair labor practice. However, in the case of union busting where the unions existence is threatened, the cooling-off period need not be observed. xxx xxx xxx

4) Before a strike is actually commenced, a strike vote should be taken by secret balloting, with a 24-hour prior notice to NCMB. The decision to declare a strike requires the secretballot approval of majority of the total union membership in the bargaining unit concerned. 5) The result of the strike vote should be reported to the NCMB at least seven (7) days before the intended strike or lockout, subject to the cooling-off period.[23] It is settled that these requirements are mandatory in nature and failure to comply therewith renders the strike illegal.[24] In the case at bar, the Union staged the strike on the same day that it filed its second notice of strike. The Union violated the seven-day strike ban. This requirement should be observed to give the Department of Labor and Employment (DOLE) an opportunity to verify whether the projected strike really carries the approval of the majority of the union members. [25]

Moreover, we agree with the CA that there was no union busting which would warrant the non-observance of the cooling-off period. To constitute union busting under Article 263 of the Labor Code, there must be: 1) a dismissal from employment of union officers duly elected in accordance with the union constitution and by-laws; and 2) the existence of the union must be threatened by such dismissal. In the case at bar, the second notice of strike

filed by the Union merely assailed the mass promotion of its officers and members during the CBA negotiations. Surely, promotion is different from dismissal. As observed by the Labor Arbiter: x x x Neither does that (sic) PILTELs promotion of some members of respondent union constitutes (sic) union busting which could be a valid subject of strike because they were not being dismissed. In fact, these promoted employees did not personally come forward to protest their promotion vis--vis their alleged option to remain in the union bargaining unit of the rank and filers.[26] This is consistent with our ruling in Bulletin Publishing Corporation v. Sanchez[27] that a promotion which is manifestly beneficial to an employee should not give rise to a gratuitous speculation that it was made to deprive the union of the membership of the benefited employee. The contention of the Union and its officers that the finding of unfair labor practice by the CA precludes the ruling that the strike was illegal is unmeritorious. The refusal of the Company to turn over the deducted contingency funds to the union does not justify the disregard of the mandatory seven-day strike ban and the 15day cooling-off period. The Unions reliance on Bacus v. Ople,[28] Panay Electric Company v. NLRC[29] and PNOC Dockyard and Engineering Corporation v. NLRC[30] is likewise unavailing. Nowhere in Panay Electric Company and PNOC Dockyard and Engineering Corporation did the Court rule that the procedural requirements for a valid strike may be dispensed with if the striking workers believed in good faith that the company was committing acts of unfair labor practice. In both cases, the striking union members complied with the procedural requirements for a valid strike. It is correct that this Court, in Bacus, held that "a strike staged by the workers inspired by good faith does not automatically make the same illegal," but said case was decided before the effectivity of R.A. No. 6715 on March 21, 1989. We have ruled that with the enactment of R.A. No. 6715, the requirements as to the filing of a notice of strike, strike vote, and notice given to the DOLE are mandatory in nature.[31] Moreover, we agree with the NLRC that the subject strike defied the assumption order of the Secretary of Labor. The NLRC correctly affirmed the Labor Arbiter that the second notice of strike was based on substantially the same grounds as the first notice of strike. The Union and its officers and members alleged that the mass promotion of the union officers and members and the non-remittance of the deducted contingency fees were the reasons for their concerted activities which annoyed the Companys RAD Manager and made him commit acts of unfair labor practice, eventually leading to the Unions filing of the first notice of strike. Clearly then, the issues which were made as grounds for the second notice of strike, viz, the mass promotion of the union members and officers and the nonremittance of the deducted contingency fees, were already existing when the Secretary of Labor assumed jurisdiction over the entire labor dispute between the Company and the Union on August 14, 1998. Article 264 of the Labor Code provides: Art. 264. Prohibited activities.x x x No strike or lockout shall be declared after assumption of jurisdiction by the President or the Secretary or after certification or submission of the dispute to compulsory or voluntary arbitration or during the pendency of cases involving the same grounds for the strike or lockout. Having settled that the subject strike was illegal, we shall now determine the proper penalty to be imposed on the union officers who knowingly participated in the strike. Both the Labor Arbiter and the NLRC imposed the penalty of dismissal on the striking union officers after finding that: a) the strike was illegal for having been conducted in defiance of Secretary Laguesma's August 14, 1998 Order of assumption of jurisdiction and for non-compliance with the procedural requirements for the conduct of a strike under the Labor Code and its implementing rules; b) the grounds relied upon by the Union in its second notice of strike were substantially the same as those set forth in its first notice of strike; c) the Company's alleged refusal to turn over the checked-off union dues was not a strikeable issue as it was not a gross and blatant violation of the economic provisions of the CBA; d) the mass promotion of the Union's members was also not tantamount to dismissal, hence, did not constitute union busting; and e) certain illegal acts were found to have been committed during the strike.

On the other hand, the CA reduced the penalty of the union officers from dismissal to suspension for six months after finding that the "supreme penalty of dismissal" imposed on union officers Briones, De Leon, Fidel and Torres was "so harsh" considering that the Union did not defy the Secretary of Labor's Assumption Order and that the Company did not have "clean hands" when it filed the instant case for having committed an unfair labor practice by refusing to turn over the union dues to the Union. We find that the CA committed a reversible error in modifying the rulings of the Labor Arbiter and the NLRC. For a petition for certiorari under Rule 65 of the Rules of Court to prosper, the tribunal, board or officer exercising judicial or quasi-judicial functions must be proven to have acted without or in excess of its or his jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction. [32] Grave abuse of discretion has been defined as a capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction. Mere abuse of discretion is not enough, it must be so grave as when the power is exercised in an arbitrary or despotic manner by reason of passion or personal hostility, and must be so patent and so gross as to amount to an evasion of a positive duty or to a virtual refusal to perform the duty enjoined or to act at all in contemplation of law. [33] We note that although the CA modified the ruling of the NLRC, nowhere in its decision did it attribute grave abuse of discretion to the NLRC. And rightly so. Article 264 of the Labor Code further provides: Art. 264. Prohibited activities. x x x Any workers whose employment has been terminated as a consequence of an unlawful lockout shall be entitled to reinstatement with full back wages. Any union officer who knowingly participates in illegal strike and any worker or union officer who knowingly participates in the commission of illegal acts during a strike may be declared to have lost his employment status: Provided, that mere participation of a worker in a lawful strike shall not constitute sufficient ground for termination of his employment, even if a replacement had been hired by the employer during such lawful strike. x x x We have explained the meaning of this provision as follows: The effects of illegal strikes, as outlined in Article 264 of the Labor Code, make a distinction between ordinary workers and union officers who participate therein. Under established jurisprudence, a union officer may be terminated from employment for knowingly participating in an illegal strike. The fate of union members is different. Mere participation in an illegal strike is not a sufficient ground for termination of the services of the union members. The Labor Code protects ordinary, rank-and-file union members who participated in such a strike from losing their jobs provided that they did not commit illegal acts during the strike.[34] In Gold City Integrated Port Service, Inc. v. NLRC ,[35] the Court held that "[t]he law, in using the word may, grants the employer the option of declaring a union officer who participated in an illegal strike as having lost his employment." Thus, in a number of cases,[36] proof that an employee who knowingly participated in an illegal strike is a union officer was enough to warrant his dismissal from employment. This rule was relaxed in the case of PAL v. Brillantes[37] where the Court "invoke[d] its judicial prerogative to resolve disputes in a way to render to each interested party the most judicious solution, and in the ultimate scheme, a resolution of a dispute tending to preserve the greater order of society." In said case, the Court dismissed the petition of PAL seeking the termination from employment of certain Union members and officers who staged a strike in violation of the Secretary of Labor's return-to-work order. The Court found that both parties contributed to the volatile atmosphere that emerged despite the Secretary of Labor's status quo order as PAL terminated en masse the employment of 183 union officers and members. It noted the finding of the Acting Secretary of Labor that PAL "did not come to this office with 'clean hands' in seeking the termination of the officers and members of PALEA who participated in the 16 June 1994 strike."[38] This Court exercised this judicial prerogative sparingly in Nissan Motors Philippines, Inc. v. Secretary of Labor.[39] In said case, the Court also found Nissan equally guilty of exacerbating the situation after the assumption order of the Secretary for suspending a substantial number of Union officers and members with threat of eventual dismissal and perceived illegal lockout and union busting. However, while it affirmed the ruling of the Secretary of Labor suspending the union members who participated in the illegal strike, the Court sustained the dismissal of the union officers, viz:

While the employer is authorized to declare a union officer who participated in an illegal strike as having lost his employment, his/its option is not as wide with respect to union members or workers for the law itself draws a line and makes a distinction between union officers and members/ordinary workers. An ordinary striking worker or union member cannot, as a rule, be terminated for mere participation in an illegal strike; there must be proof that he committed illegal acts during the strike.[40] The Court further explained the reason: x x x Thus in Association of Independent Union in the Philippines vs. NLRC,[41] we held that the responsibility of union officers, as main players in an illegal strike, is greater than that of the members and, therefore, limiting the penalty of dismissal only for the former for participation in an illegal strike is in order. Of the same tenor, albeit formulated a bit differently is our holding in Gold City Integrated Port Service, Inc. vs. NLRC.[42](Emphasis supplied.) In the case at bar, we do not find any reason to deviate from our rulings in Gold City Integrated Port Service, Inc. and Nissan Motors Philippines, Inc. It bears emphasis that the strike staged by the Union in the instant case was illegal for its procedural infirmities and for defiance of the Secretarys assumption order. The CA, the NLRC and the Labor Arbiter were unanimous in finding that bad faith existed in the conduct of the subject strike. The relevant portion of the CA Decision states: x x x We cannot go to the extent of ascribing good faith to the means taken in conducting the strike. The requirement of the law is simple, that is 1. Give a Notice of Strike; 2. Observe the cooling period; 3. Observe the mandatory seven day strike ban; 3. If the act is union busting, then the union may strike doing away with the cooling-off period, subject only to the seven-day strike ban. To be lawful, a strike must simply have a lawful purpose and should be executed through lawful means. Here, the union cannot claim good faith in the conduct of the strike because, as can be gleaned from the findings of the Labor Arbiter, this was an extensively coordinated strike having been conducted all through out the offices of PILTEL all over the country. Evidently, the strike was planned. Verily, they cannot now come to court hiding behind the shield of good faith. Be that as it may, petitioners claim good faith only in so far as their grounds for the strike but not on the conduct of the strike. Consequently, they still had to comply with the procedural requirements for a strike, which, in this case, they failed to do so.[43] Thus, in imposing the penalty of dismissal, the NLRC correctly held: x x x the point We wish to stress is that the [open, blatant] and willful defiance by the respondents of the Order emanating from the Secretary of Labor and Employment in this labor dispute only goes to show that the respondents have little or no regard at all for lawful orders from duly constituted authorities. For what their officers and members have suffered they have no one else to blame.[44] It cannot be overemphasized that strike, as the most preeminent economic weapon of the workers to force management to agree to an equitable sharing of the joint product of labor and capital, exert some disquieting effects not only on the relationship between labor and management, but also on the general peace and progress of society and economic well-being of the State.[45] This weapon is so critical that the law imposes the supreme penalty of dismissal on union officers who irresponsibly participate in an illegal strike and union members who commit unlawful acts during a strike. The responsibility of the union officers, as main players in an illegal strike, is greater than that of the members as the union officers have the duty to guide their members to respect the law. [46] The policy of the state is not to tolerate actions directed at the destabilization of the social order, where the relationship between labor and management has been endangered by abuse of one partys bargaining prerogative, to the extent of disregarding not only the direct order of the government to maintain the status quo, but the welfare of the entire workforce though they may not be involved in the dispute. The grave penalty of dismissal imposed on the guilty parties is a natural consequence, considering the interest of public welfare. [47] IN VIEW WHEREOF, the petition in G.R. No. 160094 is DENIED. The petition in G.R. No. 160058 is GRANTED. The Decision and Resolution of the CA in CA-G.R. SP No. 59799 dated September 20, 2002 and September 17, 2003, respectively, areREVERSED and the Decision and Resolution of the NLRC dated February 29, 2000 and April 28, 2000, respectively, are REINSTATED. SO ORDERED.

Manila THIRD DIVISION PHILIPPINE TRANSMARINE CARRIERS, INC., Petitioner, G.R. NO. 157975 Present: YNARES-SANTIAGO, J., Chairperson, AUSTRIA-MARTINEZ, CHICO-NAZARIO, and NACHURA, JJ.

- versus -

FELICISIMO CARILLA, Promulgated: Respondent. June 26, 2007 x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x DECISION AUSTRIA-MARTINEZ, J.: Before us is a Petition for Review on Certiorari filed by Philippine Transmarine Carriers, Inc. (petitioner) seeking to annul and set aside the Decision[1] of the Court of Appeals (CA) dated November 26, 2002 and its Resolution[2] dated April 10, 2003 in CA-G.R. SP No. 67220. On November 18, 1993, Felicisimo Carilla (respondent) was hired by petitioner, a manning agent, in behalf of its principal, Anglo-Eastern Shipmanagement Ltd., to work as Master on board MV Handy-Cam Azobe for twelve months. Their approved POEA contract provided that respondent would get a basic monthly pay of US$1700.00, fixed monthly overtime of US$765.00, master's allowance of US$170.00 and leave with pay of six days per month or US$340.00 or a total of US$2,975.00 a month. On November 29, 1993, respondent boarded the vessel in Abidjan, Ivory Coast, Africa. On June 6, 1994, while the vessel was inBombay, India, respondent was dismissed and repatriated to the Philippines. On August 25, 1994, respondent filed with the Philippine Overseas and Employment Agency (POEA) a complaint[3] for illegal dismissal with claims for salaries and other benefits for the unexpired portion of his contract as well as unremitted allotments and damages. He alleged that: he was dismissed without notice and hearing and without any valid reason; petitioner's unlawful act deprived him of his expected monthly benefits for the unexpired portion of his contract which totaled to US$16,660.00 i.e., US$2975.00 x 5 months and 18 days; petitioner withheld his allotment for the entire month of May 1994 in the sum of US$1,700 and from June 1 to 7 in the amount of US$396.67 or a total of US$2,096.67, as well as his accrued leave pay for the entire time respondent served on the vessel in the amount of US$2,119.33. Respondent prayed for payment of these amounts, attorney's fees and damages. Petitioner filed its Answer[4] contending that: respondent's termination was for cause; he failed to take the necessary steps to ensure the safety of the vessel and its cargo while plying the waters of South Korea and Keelung port causing petitioner to incur a huge amount of damages on cargo claims and vessel repairs; respondent's incompetence is therefore penalized with dismissal; despite the fact that respondent was warned of his lapses, he had not shown any improvement which forced petitioner to dismiss and replace him with a competent one; thus, cost had to be incurred. Petitioner asked for moral and exemplary damages and attorneys fees as its counterclaim. The parties submitted their respective position papers. The case was subsequently transferred to the Arbitration Branch of the National Labor Relations Commission (NLRC) pursuant to Republic Act (RA) No. 8042, otherwise known as the Migrant Workers and Overseas Filipinos Act of 1995.[5]

On December 1, 1999, the Labor the dispositive portion of which reads:

Arbiter

(LA)

rendered

decision[6] in

favor

of

respondent,

WHEREFORE, premises all considered, judgment is hereby rendered finding complainant's dismissal illegal and ordering the respondent to pay complainant the unexpired portion of the contract equivalent to US$16,660.00; unremitted amount of US$2,096.67; as well as leave pay equivalent to US$ 2,119.33.[7] The LA found that respondent's long experience as a seaman and his various recommendations from his previous employers contradicted any finding of incompetence; that the unauthenticated logbook extract submitted by petitioner lacked even an iota of admissibility as the entries appearing therein had been merely copied from the original logbook. The LA gave credence to respondent's allegation that he was unceremoniously removed from his job and found that petitioner had not submitted any proof of payment of respondent's claims. Aggrieved, petitioner filed its appeal with the NLRC. In its Decision [8] dated June 14, 2001, the NLRC dismissed the appeal and affirmed the LA's decision. The NLRC found that petitioner's evidence which consisted of a document dated June 1, 1994, entitled Logs of Events During Respondent's Command and the Senior Officer Evaluation Reports, did not prove anything as these documents, besides being unauthenticated, were self-serving and unreliable. Petitioner's motion for reconsideration was subsequently denied in a Resolution [9] dated July 17, 2001. Petitioner filed with the CA a Petition for Certiorari under Rule 65, alleging grave abuse of discretion committed by the NLRC in upholding the LA decision. In a Decision dated November 26, 2002, the CA denied the petition for lack of merit. Petitioner's motion for reconsideration was denied in a Resolution dated April 10, 2003. Hence, the instant petition for review on certiorari on the following grounds: (1) The Court of Appeals committed a mistake of law when it upheld the ruling of the NLRC that the documentary evidence presented by petitioner herein are self -serving and unreliable. (2) It was not in accord with law and jurisprudence for the Court of Appeals to uphold the decision of the NLRC that respondent herein was illegally dismissed and was thus entitled to the monetary value of the unserved portion of his employment contract including pay for unserved overtime and pay for unearned leave credits.[10] Petitioner argues that respondent's dismissal could have been completely justified if only the LA, NLRC and the CA accorded merit to its documentary evidence; that when the LA and the NLRC found petitioner's evidence as self-serving and unreliable, it was made clear that only the vessel logbook was the acceptable evidence; that the vessel logbook was prepared by the ship master who happened to be the respondent himself who could not be expected to reflect any derogatory reports on his own performance; that respondent's incompetence and negligence resulted in costly damage to the shipowners which warranted his termination from service; that the evaluation reports of the vessel's Chief Officer and Chief Engineer showed that respondent failed to meet the standards required by his job, which evaluation was largely based on the events that led to monetary losses; that petitioner has a wider latitude of discretion in terminating respondent, being a managerial employee. Petitioner further avers that the LA discredited its documents based on the sheer length of respondent's experience as seafarer; that one's previous experience cannot attest to the fact of respondent's actual performance at the present time, since every shipboard service is a unique experience which entails varying problems and circumstances; that petitioner would not dismiss respondent without valid cause considering the costs and inconvenience of replacing a captain/master mariner. Petitioner further claims that it was error to award the full value of the unserved portion of the contract; that the LA awarded a total amount of US$20,876.00 without a detailed computation; that under the no work no pay principle, overtime and unearned leave credits shall not be paid, thus the award for approximately US$7,140.00 in

overtime pay and leave pay was unwarranted; that R.A. No. 8042[11] limits the award to three months of the seafarer's basic pay; thus, US$1,700.00 x 3 months is equal to US$5,100.00. In his Comment, respondent contends that petitioner raises pure questions of fact which may not be raised in a petition for review oncertiorari; that the CA did not err in upholding the NLRC findings; that R.A. No. 8042 is not applicable since it took effect only on July 15, 1995 after the instant complaint was filed on August 30, 1994. Petitioner filed a Reply wherein it alleges that the issues raised are not merely questions of fact but of law; that the bone of contention is whether or not the disqualification of its documentary evidence was proper. The parties subsequently filed their respective Memoranda as required in our Resolution [12] dated June 1, 2005. We find no merit in the petition. To begin with, the question of whether respondent was dismissed for just cause is a question of fact which is beyond the province of a petition for review on certiorari. It is fundamental that the scope of our judicial review under Rule 45 of the Rules of Court is confined only to errors of law and does not extend to questions of fact. More so, in labor cases where the doctrine applies with greater force. [13] The LA and the NLRC have ruled on the factual issues, and these were affirmed by the CA. Thus, they are accorded not only great respect but also finality, [14] and are deemed binding upon us so long as they are supported by substantial evidence.[15] In termination cases, the burden of proof rests upon the employer to show that the dismissal of the employee is for just cause [16]and failure to do so would mean that the dismissal is not justified. A dismissed employee is not required to prove his innocence of the charges leveled against him by his employer. [17] The determination of the existence and sufficiency of a just cause must be exercised with fairness and in good faith and after observing due process.[18] Respondent was dismissed because of his alleged incompetence. To prove respondent's incompetence while on board the vessel, petitioner presented a piece of paper dated June 1, 1994 entitled Logs of Events During Capt Carilla (sic) Command,[19] enumerating therein the alleged incidents where damages to timber products and on the vessel occurred; and the Senior Officer Evaluation Reports[20]showing respondent's unsatisfactory performance, prepared by Chief Officer R. Miu and Chief Engineer N.K. Jaggi, who allegedly had served with respondent and had seen his work on board the vessel. We agree with the LA, NLRC and the CA in their finding that petitioner's documents were not authenticated and, hence, were self-serving and unreliable. It appears from the Logs of Events During Capt. Carilla Command that it is merely a typewritten enumeration of several alleged incidents of damages to the cargoes and to the vessel, but it does not state the source and who prepared the same. While petitioner claims that it was prepared by the vessel's technical superintendent, he was not identified at all. The log of events did not also provide a detailed account of respondent's act of incompetence which caused those alleged incidents. There is no way of verifying the truth of these entries, and if they were actually recorded in the vessel logbook on the dates the alleged incidents took place. In its Memorandum of Appeal filed with the NLRC, petitioner claims that the original copies were not available, as they were on file with the vessel at that time. Be that as it may, it was still petitioner's duty to secure the same to prove the validity of respondent's dismissal. In Wallem Maritime Services, Inc. v. National Labor Relations Commission ,[21] we rejected a typewritten collation of excerpts from what could be the logbook and found that what should have been submitted as evidence was the logbook itself or even authenticated copies of pertinent pages thereof, which could have been easily xeroxed or photocopied, considering the present technology on reproduction of documents. In Abacast Shipping and Management Agency, Inc. v. National Labor Relations Commission ,[22] we held: The log book is a respectable record that can be relied upon to authenticate the charges filed and the procedure taken against the employees prior to their dismissal. Curiously, however, no entry from such log book was presented at all in this case. What was offered instead was the shipmasters report, which was later claimed to be a collation of excerpts from such book. It would have been a simple matter, considering the ease of reproducing the same, to make photocopies of the pertinent pages of the log book to substantiate the petitioner's contention. Why this was not done is something that reasonably arouses the curiosity of this Court and suggests that

there probably were no entries in the log book at all that could have proved the alleged offenses of the private respondents. " . Petitioners arguments are that respondent, being the person responsible for accompli shing the vessel logbook by writing entries on the day-to-day events on board, could not be expected to reflect any derogatory reports about his own performance; and that the officers next in rank, who are the technical superintendent and the chief engineer are the only ones who could check on respondent's performance. These arguments are not sufficient to disturb the findings of the CA. Assuming the vessel logbook kept by respondent did not reflect the different untoward incidents that occurred in the vessel, petitioner should have presented other evidence to substantiate these incidents. Petitioner's log of events purports to show that the timber products on the vessel were damaged, and that the vessel was towed to a port for repair. It was also alleged in petitioner's pleadings that it had incurred huge amounts for damages on cargo claims. However, petitioner failed to present these cargo claims from the shipper/consignees, and petitioner's payment thereof as well as its expenses for the cost of the repair of the vessel. Moreover, the two sets of Senior Officer Evaluation Reports allegedly prepared by the officers next in rank to respondent did not help to justify respondent's dismissal for incompetency. While the reports showed that respondent was given an unsatisfactory performance rating and a recommendation for his replacement, they failed to show the exact designations of the persons who prepared the same, and neither do their signatures appear over the typewritten names. In fact, these alleged officers did not even execute an affidavit to attest to the truth of those reports. Thus, we agree with the LA and the NLRC that these documents, being unauthenticated, have no probative value. Respondent was terminated without having been given the opportunity to defend himself. He was summarily dismissed and repatriated to the Philippines without being informed of the charges against him; nor was he given the chance to refute the charges. Petitioners claim that it has a wider latitude of discretion in terminating respondent, since the latter was a managerial employee, is not plausible. It is well settled in this jurisdiction that confidential and managerial employees cannot be arbitrarily dismissed at any time, and without cause as reasonably established in an appropriate investigation.[23] Such employees, too, are entitled to security of tenure, fair standards of employment and the protection of labor laws.[24] Managerial employees, no less than rank-and-file laborers, are entitled to due process.[25] The captain of a vessel is a confidential and managerial employee within the meaning of this doctrine.[26] Thus, respondent was illegally dismissed as he was not accorded a fair investigation as required by law and the ground invoked for his dismissal was not proven. In cases regarding contract workers who were dismissed without just cause which arose before the effectivity[27] of R.A. No. 8042, it is settled that if the contract is for a fixed term and the employee is dismissed without just cause, he is entitled to the payment of his salaries corresponding to the unexpired portion of his contract.[28] In this case, respondent's contract was until November 18, 1994, but he was dismissed and repatriated to the Philippines on June 6, 1994, not for a just cause; thus, respondent is entitled to be paid his salary corresponding to the unexpired portion of his contract. The LA awarded the amount of US$16,660.00 as prayed for by respondent in his complaint based on his monthly salary and allowances multiplied by the unexpired portion of the contract equivalent to 5 months and 18 days. Based on such computation, overtime pay and leave pay were included. Petitioner contends that the same should be deleted. We agree. Respondent's overtime and leave pays should not be included in the computation of the unexpired portion, since he was no longer rendering services during that period of time, as he had already been repatriated. In Legahi v. National Labor Relations Commission,[29] we held: Petitioner's dismissal without a valid cause constitute a breach of contract. Consequently, he should only be paid the unexpired portion of his employment contract. However, the payment of the overtime pay should be disallowed in the light of our ruling in the case of Cagampan v. NLRC, where we held that: Petitioners have conveniently adopted the view that the "guaranteed or fixed overtime pay of 30% of the basic salary per month" embodied in their employment contract should be awarded to them as part of a "package benefit." They have theorized that even without sufficient evidence of actual rendition of overtime work, they would automatically be

entitled to overtime pay. Their thinking is erroneous for being illogical and unrealistic. Their thinking even runs counter to the intention behind the provision. The contract provision means that the fixed overtime pay of 30% would be the basis for computing the overtime pay if and when overtime work would be rendered. Simply stated, the rendition of overtime work and the submission of sufficient proof that said work was actually performed are conditions to be satisfied before a seaman could be entitled to overtime pay which should be computed on the basis of 30% of the basic monthly salary. In short, the contract provision guarantees the right to overtime pay but the entitlement to such benefit must first be established. Realistically speaking, a seaman, by the very nature of his job, stays on board a ship or vessel beyond the regular eight-hour work schedule. For the employer to give him overtime pay for the extra hours when he might be sleeping or attending to his personal chores or even just lulling away his time would be extremely unfair and unreasonable. We already resolved the question of overtime pay of worker aboard a vessel in the case of National Shipyards and Steel Corporation v. CIR (3 SCRA 890). We ruled: We can not agree with the Court below that respondent Malondras should be paid overtime compensation for every hour in excess of the regular working hours that he was on board his vessel or barge each day, irrespective of whether or not he actually put in work during those hours. Seamen are required to stay on board their vessels by the very nature of their duties, and it is for this reason that, in addition to their regular compensation, they are given free living quarters and subsistence allowances when required to be on board. It could not have been the purpose of our law to require their employers to pay them overtime even when they are not actually working; otherwise, every sailor on board a vessel would be entitled to overtime for sixteen hours each a day, even if he spent all those hours resting or sleeping in his bunk, after his regular tour of duty. The correct criterion in determining whether or not sailors are entitled to overtime pay is not, therefore, whether they were on board and can not leave ship beyond the regular eight working hours a day, but whether they actually rendered service in excess of said number of hours. (Emphasis supplied) In the same vein, the claim for day's leave pay for the unexpired portion of the contract is unwarranted since the same is given during the actual service of the seaman.[30] Notably, the LA also made a separate award of leave pay in the amount of US$2,119.33 based on respondent's allegation in his complaint that his leave pay had been illegally withheld for the entire time he served on the vessel. Petitioner failed to refute such allegation and had not presented any evidence to prove otherwise. The burden of proving that payment has been made rests upon petitioner as respondents employer. The ruling of the Court in Seaborne Carriers Corporation v. National Labor Relations Commission,[31] to wit: The private respondent's allegation of non-payment of these benefits, to which he is by law entitled, is a negative allegation which need not be supported by evidence unless it is an essential part of the cause of action. It must be noted that the main cause of action of the private respondent is his illegal dismissal, and the claim for the monetary benefits is but an incident of the protest against such dismissal. Thus, the burden of proving that payment of said benefits has been made rests upon the party who will suffer if no evidence at all is presented by either party, that is, the petitioners as private respondent's employer.[32] may be applied by analogy. WHEREFORE, the petition is PARTLY GRANTED. The Decision of the Court of Appeals dated November 26, 2002 and its Resolution dated April 10, 2003 are AFFIRMED with MODIFICATION that the monthly overtime as well as leave pay included in the computation of the unexpired portion of the contract should be deducted from the awarded amount of US$16,660.00. No costs. SO ORDERED.

THIRD DIVISION MARIVAL TRADING, INC., VIRGINIA A. MANUEL and BEATRICE A. MANUEL, Petitioners, - versus NATIONAL LABOR RELATIONS COMMISSION (NLRC) and MA. VIANNEY D. ABELLA, Respondents. G.R. No. 169600 Present: YNARES-SANTIAGO, J., Chairperson, AUSTRIA-MARTINEZ, CHICO-NAZARIO, and NACHURA, JJ. Promulgated: June 26, 2007 x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x DECISION CHICO-NAZARIO, J.: This Petition for Review on Certiorari under Rule 45 of the Rules of Court seeks to reverse the Decision[1] dated 30 June 2005 of the Court of Appeals in CA-G.R. SP No. 87820 entitled, Ma. Vianney D. Abella v. National Labor Relations Commission, Marival Trading, Inc., Virginia A. Manuel and Beatriz A. Manuel, which affirmed with modifications the Decision of the National Labor Relations Commission (NLRC) dated 10 September 2002 and the Decision of the Labor Arbiter dated 30 May 2001. The Labor Arbiter ruled and was affirmed by the NLRC, that while the disorderly behavior of herein private respondent Ma. Vianney D. Abella (Abella) should not have gone unpunished, such infraction should not be vested with the extreme penalty of dismissal; thus, he ordered the reinstatement of Abella to her former position without backwages, as well as the payment of her proportionate 13th month pay and unpaid salaries for the year 2000. On Appeal, the Court of Appeals categorically found that Abellas misconduct was not so gross as would warrant her dismissal, and awarded her backwages and attorneys fees. The facts of the case are as follows: Abella worked as chemist/quality controller at herein petitioner Marival Trading Inc. (Marival), for almost eight years. Marival is a corporation engaged in the production, distribution and sale of veterinary products, while petitioners Virginia and Beatriz Manuel are its President and Vice President (VP)-Personnel, respectively. On 14 July 2000, Ma. Roxanney A. Manuel (Manuel), Vice President and General Manager of Marival, conducted a staff meeting together with the other officers of the company, Gregorio Albeza (Albeza) and Ma. Claire Distor (Distor), packaging supervisor and importation manager, respectively. After the meeting, Manuel asked Albeza and Distor to stay behind to discuss other matters. She requested two male employees to move some tables and placed Abellas belongings on one of these tables. Apparently, while the rearrangement of the tables was going on, Abella was not in the room. She came in when Manuel, Albeza, and Distor were already having their own meeting. While Abella was attending to her things, her shoulder bag fell loudly on the floor, disrupting the officers meeting. Manuel approached Abella to ask what the problem was and the latter expressed her resentment over the fact that the employees were not informed first before their tables were moved. Manuel asked Abella to leave the room but she refused to do so. It was only upon Albezas prodding that Abella later left the room. Abella then stayed in the laboratory for the rest of the afternoon. Three days later, Abella received a memo from Manuel directing her to explain within 24 hours why no disciplinary action should be imposed for her disrespectful insubordination and unprofessional conduct. The memorandum reads: On July 14, 2000, as a result of the physical rearrangement of the tables, you behaved in a most disrespectful insubordination and unprofessional manner towards me.

This incident which lasted approximately for fifteen to twenty minutes (15-20 minutes) was witnessed by Ms. Claire Distor, Jenny Samson and George Albeza. In this regard you are hereby directed to explain within 24 hours from receipt of this letter why no disciplinary action should be imposed on you for insubordination. [2] In her response, Abella denied[3] the accusations against her. She clarified that her shoulder bag accidentally fell to the floor, and such should not have caused any offense to the officers present at the meeting. She maintained that she aired her side regarding the table rearrangement in a tactful and courteous manner; that the order for her to get out of the room was unjustified; and that her freedom to lawfully air her grievance in relation to her security of tenure at work should be respected. Unconvinced by the explanation and finding no justifiable reason for the employees outburst, Marival, through a letter signed by Beatriz Manuel/VP-Personnel, fired Abella on 21 July 2000. Thus, Abella filed a complaint for illegal dismissal with the Labor Arbiter, alleging that she was dismissed from work without just cause and without due process. She prayed for reinstatement with full backwages and without loss of seniority rights and other benefits including payment of her unpaid salary for 16-24 July 2000 and damages, among other claims. The parties failed to settle the matter amicably, and both submitted their position papers presenting their respective narrations of the incident. Abellas position paper, in gist, reiterated the contents of her letter to Manuel and challenged the severity of the penalty imposed upon her. She questioned the version of events as narrated by Manuel: Ms. Manuels version was that after the rearrangement of the tables and during the meeting with the officers, they were all startled by Ms. Abellas banging of folders and papers on her desk and the forceful throwing of her shoulder bag. She approached Ms. Abella and asked if there was a problem. The latter sneered and rudely answered, Sana naman next time na uurungin yung gamit namin eh, sasabihin muna sa amin. The superior, piqued by this remark, told her, I can do anything I want with the things in this office, its a company proper ty and I am the owner of the company. As far as I am concerned the only personal belonging you have in this office is your shoulder bag and I did not touch it. What youre doing to me is insubordination. Ms. Abella returned to her desk and resumed her defiant table-banging to which Ms. Manuel asked, Anong ipinagdadabog mo? The former retorted, Eh sa nahulog yung bag ko, anong magagawa ko? Ms. Manuel at that moment asked her to get out of the office, and Mr. Albeza had to persuade the latter to leave. The respondents side of the story regarding the employees demeanor was supported by Mr. Albeza and Ms. Distor, both of whose affidavits were attached to the employers position paper. [4] Abella presented her own version of events in a verified Joint Reply and Counter-Affidavit signed by her and her officemates, Rosemarie Cruz and Jenny Samson, which states that: They claimed therein, inter alia, that [Abellas] shoulder bag indeed just fell on the floor and that [Abella] was never arrogant. Her comment was politely delivered to their superior and in fact, it was Ms. Manuel who was the angry and hysterical (sic), telling [Abel la], umalis ka na at ayoko nang makita ang pagmumukha mo, to which the latter (sic) immediately left. Rosemarie Cruz likewise asserted that Ms. Manuel, who was fuming mad, bluntly told her, ang kakapal ng mukha ninyo, lahat na ng paraan ginawa ko para umalis lang kayo sa trabaho at bakit ayaw pa ninyong umalis. They all opined that this is an orchestrated, clever, and convenient ploy to dismiss them, especially [Abella].[5] On 30 May 2001, the Labor Arbiter ruled that Marival had grounds to take disciplinary action against Abella, but since this is Abellas first offense, the Labor Arbiter considered the penalty of dismissal too severe and ordered her reinstatement to her former position. The dispositive portion of the Labor Arbiters decision reads: Wherefore, judgment is hereby rendered ordering [Marival] to reinstate [Abella] to her former position but without backwages.

[Marival] are also ordered to pay [Abella] her proportionate 13 th month pay and unpaid salaries for the year 2000. All other claims are dismissed for lack of merit.[6] Unsatisfied, Abella appealed her case to the NLRC. She insisted that the table rearrangement incident was not work-related and that no grave misconduct or willful disobedience can be imputed to her; hence, she likewise deserves backwages, appropriate damages and attorneys fees. On 10 September 2002, the NLRC dismissed Abellas partial appeal and held that her act constituted serious misconduct. While the NLRC upheld the Labor Arbiter that Abella was disrespectful to her superior and that her act constituted serious misconduct, it nevertheless agreed with the finding of the Labor Arbiter that such act do not constitute sufficient ground for dismissal. Pertinent portion of the NLRC Decision is hereby reproduced, to wit: To begin with, the Arbiter a quo was well within his parameters when he denied [Abella] the award of backwages although he ordered her reinstatement. A judicious examination of the evidences on record shows that [Abella] was indeed seriously disrespectful to her superior. The meeting being held by [Manuel] would not be disturbed by the mere accidental drop of [Abella]s bag on the floor. As [ Manuel] claimed which was corroborated by two witnesses, [Abella] kept on banging her things on her desk continuously and answering the latter in a disrespectful manner as a form of resentment to the movement of her desk without her knowledge. Thus, an employee who utters obscene, insulting or offensive words against a superior may be dismissed. His act is a sufficient ground for dismissal. It is not only destructive of his co-employees morale and a violation of the company rules and regulations, but also constitute gross misconduct, a ground provided by law for terminating an employees services. (Asian Design and Manufacturing Corporation vs. Hon. Deputy Minister of Labor, G.R. No. 70552, May 2, 1986). [7] A Motion for Reconsideration was filed, but the same was denied in a Resolution dated 27 September 2004. The NLRC, in upholding the Labor Arbiters finding that Abella was disrespectful to her superior, reasoned: There is no shadow of doubt that [Abella] was dismissed for serious misconduct which is a valid ground for dismissal. Her attitude at the time she was confronted by Ms. [Roxanney] Manuel, VicePresident of the company, clearly reveals her true worth and character as a person. Instead of showing calmness and respect since the person she is talking (sic) is the Vice-President of the company, [Abella] has exhibited contemptuous acts of discourtesy and insubordination. It is possible that her emotions were at its highest level at that time that she was not able to control herself when she was confronted by [Manuel], but this cannot be considered sufficient justification for her to react that way since the superior occupies a lofty position in the company hierarchy. Clearly, this is a case of insubordination and disrespect of the highest order and for which complainant must suffer the consequences. xxxx The contention of [Manuel] that the incident regarding movement of Abellas chair without her consent which happened on July 14, 2000 is not work-related and therefore should not be classified as grave misconduct is entirely out of context and bereft of merit. It should be stressed that this happened within the premises of the respondent company and when on official meeting took place and as such, there can be no doubt that [Abella] was in the performance of her assigned duties and responsibilities when the confrontation between her and Roxanney Manuel took place. [8] Still feeling aggrieved, Abella appealed to the Court of Appeals alleging that she is likewise entitled to backwages and damages from the time of her dismissal, as the same was without just cause. On 30 June 2005, the Court of Appeals rendered a Decision affirming with modification the NLRC and the Labor Arbiters Decisions. The Court of Appeals ruled that Abellas behavior amounted to misconduct and disrespect in violation of company rules, but it was not so gross as to be meted the ultimate penalty of dismissal. The Court of Appeals ruled thus:

WHEREFORE, THE Petition is hereby DENIED and the assailed NLRC Decision and Resolution affirming the Labor Arbiters decision are hereby AFFIRMED with the following MODIFICATION, adding that: 1. 2. Petitioner is awarded 10% on the total monetary judgment as attorneys fees; and Respondent Marival Trading, Inc. is ordered to immediately reinstate Ma. Vianney Abella and pay the salaries due her from May 30, 2001until her actual reinstatement or until this judgment attains finality.[9]

A Motion for Reconsideration was filed by Marival, but it was denied in a Resolution dated 5 September 2005.[10] Hence, this Petition raising the lone issue, that: THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THE ACTS COMMITTED BY PRIVATE RESPONDENT ABELLA CONSTITUTED MERE MISCONDUCT FOR WHICH THE PENALTY OF DISMISSAL WAS TOO SEVERE AND IGNORED THE WELL SETTLED RULE THAT FINDINGS OF FACT OF QUASI JUDICIAL BODIES LIKE THE NLRC, PARTICULARLY WHEN THEY COINCIDE WITH THOSE OF THE LABOR ARBITER ARE ACCORDED WITH RESPECT AND FINALITY IF SUPPORTED BY SUBSTANTIAL EVIDENCE[11] This Court denies the petition. As a preliminary matter, this Court must first address the procedural infirmity ascribed by petitioner to the Court of Appeals when it allegedly ignored the well-settled rule that findings of fact of quasi judicial bodies like the NLRC, particularly when they coincide with those of the Labor Arbiter, are accorded respect and finality if supported by substantial evidence. Petitioners contend that the Court of Appeals should have just affirmed the factual findings of the Labor Arbiter and the NLRC. It has long been settled in the landmark case of St. Martin Funeral Home v. National Labor Relations Commission,[12] that the mode for judicial review of decisions of the NLRC is by a petition for certiorari under Rule 65 of the revised Rules of Civil Procedure. The different modes of appeal, namely, writ of error (Rule 41), petition for review (Rules 42 and 43), and petition for review on certiorari (Rule 45), cannot be availed of because there is no provision on appellate review of the NLRC decisions in the Labor Code, as amended. [13] Although the same case recognizes that both the Court of Appeals and the Supreme Court have original jurisdiction over such petitions, it has chosen to impose the strict observance of the hierarchy of courts. Hence, a petition for certiorari of a decision or resolution of the NLRC should first be filed with the Court of Appeals; direct resort to the Supreme Court shall not be allowed unless the redress desired cannot be obtained in the appropriate courts or where exceptional and compelling circumstances justify an availment of a remedy within and calling for the exercise by the Supreme Court of its primary jurisdiction. The extent of judicial review by certiorari of decisions or resolutions of the NLRC, as exercised previously by the Supreme Court and now by the Court of Appeals, is described in Zarate, Jr. v. Olegario,[14] thus The rule is settled that the original and exclusive jurisdiction of this Court to review a decision of respondent NLRC (or Executive Labor Arbiter as in this case) in a petition for certiorari under Rule 65 does not normally include an inquiry into the correctness of its evaluation of the evidence. Errors of judgment, as distinguished from errors of jurisdiction, are not within the province of a special civil action for certiorari, which is merely confined to issues of jurisdiction or grave abuse of discretion. It is thus incumbent upon petitioner to satisfactorily establish that respondent Commission or executive labor arbiter acted capriciously and whimsically in total disregard of evidence material to or even decisive of the controversy, in order that the extraordinary writ of certiorariwill lie. 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 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. The Court of Appeals, therefore, can grant the Petition for Certiorari if it finds that the NLRC, in its assailed decision or resolution, committed grave abuse of discretion by capriciously, whimsically, or arbitrarily disregarding

evidence which is material or decisive of the controversy; and the Court of Appeals cannot make this determination without looking into the evidence presented by the parties. Necessarily, the appellate court can only evaluate the materiality or significance of the evidence, which is alleged to have been capriciously, whimsically, or arbitrarily disregarded by the NLRC, in relation to all other evidence on record. As this Court elucidated in Garcia v. National Labor Relations Commission[15] -[I]n Ong v. People, we ruled that certiorari can be properly resorted to where the factual findings complained of are not supported by the evidence on record. Earlier, in Gutib v. Court of Appeals, we emphasized thus: [I]t has been said that a wide breadth of discretion is granted a court of justice in certiorari proceedings. The cases in which certiorari will issue cannot be defined, because to do so would be to destroy its comprehensiveness and usefulness. So wide is the discretion of the court that authority is not wanting to show that certiorari is more discretionary than either prohibition or mandamus. In the exercise of our superintending control over inferior courts, we are to be guided by all the circumstances of each particular case as the ends of justice may require. So it is that the writ will be granted where necessary to prevent a substantial wrong or to do substantial justice. And in another case of recent vintage, we further held: In the review of an NLRC decision through a special civil action for certiorari, resolution is confined only to issues of jurisdiction and grave abuse of discretion on the part of the labor tribunal. Hence, the Court refrains from reviewing factual assessments of lower courts and agencies exercising adjudicative functions, such as the NLRC. Occasionally, however, the Court is constrained to delve into factual matters where, as in the instant case, the findings of the NLRC contradict those of the Labor Arbiter. In this instance, the Court in the exercise of its equity jurisdiction may look into the records of the case and re-examine the questioned findings. As a corollary, this Court is clothed with ample authority to review matters, even if they are not assigned as errors in their appeal, if itfinds that their consideration is necessary to arrive at a just decision of the case. The same principles are now necessarily adhered to and are applied by the Court of Appeals in its expanded jurisdiction over labor cases elevated through a petition for certiorari; thus, we see no error on its part when it made anew a factual determination of the matters and on that basis reversed the ruling of the NLRC. (Underscoring supplied.) The Court of Appeals can even grant the Petition for Certiorari when the factual findings complained of are not supported by the evidence on record; when it is necessary to prevent a substantial wrong or to do substantial justice; when the findings of the NLRC contradict those of the Labor Arbiter; and when necessary to arrive at a just decision of the case. In the case at bar, the Court of Appeals necessarily had to look into the evidence at hand to determine if there was substantial evidence to support the findings of the Labor Arbiter and the NLRC. In doing so, the Court of Appeals, apparently, did not make any factual findings contrary to those of the Labor Arbiter and the NLRC. It, in fact, affirmed the Decisions of the Labor Arbiter and the NLRC in ruling that Abella was disrespectful to her superior and dismissal was too harsh a penalty. The Court of Appeals only modified the Labor Arbiter and the NLRC Decisions when it ruled that Abellas act does not constitute gross or serious misconduct, thus, entitling her to payment of backwages and award of Attorneys fees equivalent to 10% of the total monetary judgment. [16] The Court of Appeals acted well within its jurisdiction when it reviewed the factual findings in, and modified, the Labor Arbiter and NLRC Decisions, as it was necessary to arrive at a just resolution of the case. We now proceed to the main issue for resolution in this case which is whether the Court of Appeals committed a reversible error of law in modifying the Decisions of the Labor Arbiter and the NLRC. The Court of Appeals ruled that Abella should be awarded 10% of the total monetary judgment as attorneys fees; and that she not only be reinstated, but that she be paid the salaries due her from 20 May 2001 until her actual reinstatement or until the judgment attains finality.

However, to arrive at a resolution of the foregoing main issue, this Court must first make a determination of the following: (1) (2) whether a valid cause existed to justify Abellas dismissal; and whether the cause of Abellas dismissal amounts to serious misconduct.

The just causes for the termination of employment are specifically enumerated in Article 282 of the Labor Code. Article 282 provides thus: ART. 282. Termination by employer.- An employer may terminate an employment for any of the following causes: (a) (b) (c) (d) (e) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his work; Gross and habitual neglect by the employee of his duties; Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative; Commission of a crime or offense by the employee against the person of his employer or any immediate member of his family or his duly authorized representative; Other causes analogous to the foregoing.

The Labor Arbiter and the NLRC agreed that Abellas act constituted misconduct but both held that the penalty of dismissal was not proper under the circumstances. The Labor Arbiter and the NLRC in arriving in its conclusion relied as the affidavits executed by Manuel, Albeza and Distor. The Affidavit of Manuel, in part, reads: 2. On July 14, 2000, I had a meeting with the laboratory staff of our corporation at its location in San Mateo, Rizal; 3. Before the meeting broke-up, I requested Mr. George Albeza, and Ms. Claire N. Distor to stay behind as we had other details to discuss. I also requested two (2) male employees to remain and help move some tables; 4. As I was meeting with Ms. Distor and Mr. Albeza, and after the rearrangement of some tables was done, we were startled by loud banging noises which we saw was being done by Ma. Vianney D. Abella who was banging her folders and papers on her desk top; 5. As the noise was quite disruptive and rude, I asked Vianney, what her problem was (Vianney may problema ba?); 6. In response, Vianney came to our table with a very unpleasant sneer on her face and replied, Sana naman next time na uurungin yung gamit naming, eh sasabihin muna sa amin; 7. That unexpexted response being so rudely made, I retorted: I can do anything I want with the things in this office. Its companys property. As far (sic) I am concerned, the only personal belonging you have in this office is your shoulder bag and I did not touch it. What youre doing to me is insubordination; 8. Thereafter, Vianney returned to her table and resumed her banging sound so I approached her table and asked her anong ipinagdadabog mo? and Vianney replied in a sarcastic manner, eh a nahulog yung bag ko, anong magagawa ko? 9. At this point, to avoid any further problem, I asked Vianney to leave the office. In reply, she went to her table, sat down and acted as if nothing had happened. George Albeza then approached her and pleaded with her to leave, only then did Vianney leave the room.[17] According to Albezas affidavit:

3.

As we were meeting and the tables were being moved by Mr. Cruz and Mr. Reues, Ms. Vianney D. Abella returned to the room and began dropping her folders and other papers loudly on her table, in so doing, Ms. Abella threw her bag to the floor; When Ms. Manuel asked Vianey what her problem was, Ms. Abella approached us and in a loud voice answered Sana ho kung maglilipat kayo ng gamit magpaalam muna sa may-ari (or words of the same meaning).[18]

4.

And Distor recounts in her affidavit that: 5. 6. While Ms. Manuel was talking to Mr. Albeza, Vianney Abella entered the room and started fixing her papers on her table but she was doing it in a very loud way that our meeting was disrupted; Ms. Manuel asked Vianney what her problem was and Abella approached our table with a very hostile sneer on her face and rudely said: Maam Honey sa sussunod huwag ninyo muna kami pababain bago ninyo ayusin and mga tables.[19]

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 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 employees work to constitute just cause for his separation. [20] 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 employees duties; and (c) must show that the employee has become unfit to continue working for the employer. [21] Indeed, an employer may not be compelled to continue to employ such person whose continuance in the service would be patently inimical to his employers business.[22] However, as discussed above, in order to consider it a serious misconduct that would justify dismissal under the law, it must have been done in relation to the performance of her duties as would show her unfit to continue working for her employer. The acts complained of, under the circumstances they were done, did not in any way pertain to her duties as chemist/quality controller. This case should be distinguished from the previous cases where we held that the use of insulting and offensive language constitutes gross misconduct justifying an employees dismissal. Thus: In De La Cruz v. National Labor Relations Commission, [23] the dismissed employee shouted, Sayang ang pagka-professional mo! and Putang ina mo at the company physician when the latter refused to give him a referral slip. In Autobus Workers Union (AWU) v. National Labor Relations Commission, [24] the dismissed employee told his supervisor Gago ka and taunted the latter by saying, Bakit anong gusto mo, tang ina mo. In Asian Design and Manufacturing Corporation v. Deputy Minister of Labor, [25] the dismissed employee made false and malicious statements against the foreman (his superior) by telling his co-employees: If you dont give a goat to the foreman you will be terminated. If you want to remain in this company, you have to give a goat. The dismissed employee therein likewise posted a notice in the comfort room of the company premises, which read: Notice to all Sander - Those who want to remain in this company, you must give anything to your foreman. In Reynolds Philippines Corporation v. Eslava, [26] the dismissed employee circulated several letters to the members of the companys board of directors calling the executive vice -president and general manager a big fool, anti-Filipino and accusing him of mismanagement, inefficiency, lack of planning and f oresight, petty favoritism, dictatorial policies, one-man rule, contemptuous attitude to labor, anti-Filipino utterances and activities. In the case at bar, records do not show that Abella made any such false and malicious statements against her superiors. Quite obviously, affiants failed to cite particular acts or circumstances which would show that Abella was extremely disrespectful to her superior. Affiants merely alleged that respondent threw her bag and other things noisily and uttered unpleasant remarks at her employer. Abella merely uttered, Sana naman next time na uurungin yung gamit naming (sic), eh sasabihin muna sa amin. We do not find the remarks unpleasant. Quite the contrary, the words SANA NAMAN which Abella supposedly uttered, suggest that she was merely making a request or entreaty to her superior for a little more consideration. The utter lack of respect for her superior was not

patent. False and malicious statements were not made by Abella. Her acts were not intended to malign or to cast aspersion on Manuel, Marivals Vice-President and General Manager. The affidavits were not sufficient to prove Abellas gross misconduct. Viewed in its context, the act is not of such serious and grave character to warrant dismissal. Given the factual circumstances of this case, Abellas act clearly do not constitute serious misconduct as to justify her dismissal. The Court reiterates the settled doctrine that in termination of employment disputes, the burden of proof is always on the employer to prove that the dismissal was for a just and valid cause, [27] which Marival herein failed to discharge. 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. [28] This Court agrees with the Court of Appeals conclusion that, under the attendant factual antecedents, the dismissal meted out on Abella for misconduct appears to be too harsh a penalty. It must be noted that Abella is being held liable for a first-time offense, despite eight years of unblemished service. Even when an employee is found to have transgressed the employers rules, in the actual imposition of penalties upon the erring employees, consideration must still be given to his length of service and the number of violations committed during his employment.[29] Terminating employment is one of Marivals prerogatives as an employer. As an employer, Marival has the right to regulate, according to its discretion and best judgment, work assignment, working methods, processes to be followed, working regulations, transfer of employees, work supervision, lay-off of workers; and the discipline, dismissal and recall of workers. Management has the prerogative to discipline its employees and to impose appropriate penalties on erring workers pursuant to company rules and regulations.[30] This Court has upheld a companys management prerogatives so long as they are exercised in good faith for the advancement of the employers interest and not for the purpose of defeating or circumventing the rights of the employees under special laws and valid agreements.[31] The Court is wont to reiterate that while an employer has its own interest to protect, and pursuant thereto, it may terminate an employee for a just cause, such prerogative to dismiss or lay off an employee must be exercised without abuse of discretion. Its implementation should be tempered with compassion and understanding. The employer should bear in mind that, in the execution of said prerogative, what is at stake is not only the employees position, but his very livelihood,[32] his very breadbasket. Dismissal is the ultimate penalty that can be meted to an employee. The Constitution does not condone wrongdoing by an employee; nevertheless, it urges a moderation of the sanction that may be applied to him.[33] Where a penalty less punitive would suffice, whatever missteps may have been committed by the worker ought not to be visited with a consequence so severe such as dismissal from employment. For the Constitution guarantees the right of the workers to security of tenure. The misery and pain attendant to the loss of jobs then could be avoided if there is acceptance of the view that under certain circumstances of the case the workers should not be deprived of their means of livelihood.[34] Indeed, the consistent rule is that if doubt exists between the evidence presented by the employer and the employee, the scales of justice must be tilted in favor of the latter. The employer must affirmatively show rationally adequate evidence that the dismissal was for a justifiable cause. [35] Under Article 279 of the Labor Code, an employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges, and to the payment of his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent, computed from the time his compensation was withheld from him up to the time of his actual reinstatement. [36] These remedies give life to the workers constitutional right to security of tenure.[37] After a finding of illegal dismissal herein, we apply the foregoing provision entitling the employee to reinstatement without loss of seniority rights and other privileges and full backwages, inclusive of allowances and other benefits or their monetary equivalent computed from the time the compensation was not paid up to the time of his reinstatement. [38] Thus, the award of backwages by the Court of Appeals is in order. However, the Court of Appeals period of computation of the award of backwages must be modified. The Court of Appeals ruled that: As regards backwages, it must be stressed that not every case of illegal dismissal will automatically entail its grant. While generally an order of reinstatement carries with it an award of backwages, the court may not only mitigate, but also absolve the employer from liability of backwages where good faith is evident. In the instant case, the employer believed that Ms. Abellas dismissal was based on a valid ground. Her hostile attitude was uncalled for, and Ms. Manuel cannot

be blamed for her anger, being provoked by the disrespect accorded her by the employee. This militates against the propriety of granting [Abella] backwages, even moral and exemplary damages, as to sanction [Abellas] unprofessional conduct. xxxx Lastly, [Abella] informs this Court that Marival until now has not yet reinstated her since the May 30, 1991 Labor Arbiters decision, arguing that the NLRC failed to make a clarificatory ruling regarding her immediate reinstatement. As correctly argued by [Abella], reinstatement is self executory and without need of writ of execution. It is mandatory upon Marival to actually reinstate Ms. Abella or reinstate her in the payroll. Having failed to do so entitles her to the salaries and other benefits from the time of the Labor Arbiters decision until the finality of this judgment.[39] In line with the aforecited provision of the Labor Code (Article 279) and prevailing jurisprudence, the award of backwages should be modified in the sense that backwages should be computed from the time the compensation was not paid up to the time of reinstatement. Finally, Marival, et al., lament that the Court of Appeals erred in granting Abella attorneys fees. The award of attorneys fees, though not prayed for, is sanctioned by law and must be upheld. This Court held in San Miguel Corporation v. Aballa[40] that in actions for recovery of wages or where an employee was forced to litigate and thus incurred expenses to protect his rights and interests, a maximum of 10% of the total monetary award by way of attorneys fees is justifiable under Article 111 of the Labor Code, Section 8, Rule VIII, Book III of its Implementing Rules; and paragraph 7, Article 2208 of the Civil Code. Article 111 of the Labor Code reads: ART. 111. Attorneys fees.- (a) In cases of unlawful withholding of wages the culpable party may be assessed attorneys fees equivalent to ten percent of the amount of wages recovered. (b) It shall be unlawful for any person to demand or accept, in any judicial or administrative proceeding for the recovery of the wages, attorneys fees which exceed ten percent of the amount of wages recovered. Section 8, Rule VIII, Book III of its Implementing Rules, provides: SEC. 8. Attorneys fees.- Attorneys fees in any judicial or administrative proceedings for the recovery of wages shall not exceed 10% of the amount awarded. The fees may be deducted from the total amount due the winning party. Paragraph 7, Article 2208 of the Civil Code, reads: ART. 2208. In the absence of stipulation, attorneys fees and expenses of litigation, other than judicial costs, cannot be recovered, except: xxxx (7) In actions for the recovery of wages of household helpers, laborers and skilled workers; x x x. The award of attorneys fees is proper and there need not be any showing that the employer acted maliciously or in bad faith when it withheld the wages. What is important is merely a showing that the lawful wages were not paid accordingly, as in the instant controversy. WHEREFORE, the instant Petition is hereby DENIED. The Decision dated 30 June 2005 of the Court of Appeals in CA-G.R. SP No. 87820 is hereby AFFIRMED with MODIFICATION that backwages be awarded from the time that compensation was not paid up to the time of her actual reinstatement. Let the records of this case be remanded to the Computation and Examination Unit of the NLRC for proper computation of subject money claims as abovediscussed. Costs against petitioners. SO ORDERED.

SECOND DIVISION ALBERTO NAVARRO, Petitioner, G.R. No. 162583

Present: - versus QUISUMBING, J.,*Chairperson, CARPIO, CARPIO MORALES,** TINGA, and VELASCO, JR., JJ. Promulgated: June 8, 2007 x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x DECISION QUISUMBING, J.: This is an appeal to reverse and set aside both the Decision[1] dated August 27, 2003 and the Resolution[2] dated March 8, 2004 of the Court of Appeals in CA-G.R. SP No. 63379. The appellate court had reversed the Resolution[3] of the National Labor Relations Commission (NLRC) and held that petitioner Alberto Navarro was validly dismissed by the respondents. The facts are undisputed. Petitioner was an employee of the respondent Coca-Cola Bottlers Phils., Inc. (Coca-Cola) for more than a decade. Specifically, heworked as a forklift operator for Coca-Cola from November 1, 1987 to February 27, 1998. The respondent company has an Employees Code of Disciplinary Rules and Regulations, which includes Rule 00285. Section 4(i) of the rule provided for the penalty of DISCHARGE for a tenth AWOP[4]/AWOL,[5] whether consecutive or not, following other AWOP/AWOLs within one calendar year. On August 11, 1997, petitioner did not report to work because of heavy rains which flooded the entire barangay where he resided. In a Memorandum dated October 1, 1997, he was required to explain in writing within 24 hours why no disciplinary action should be imposed on him for his tenth absence without permission. In response, petitioner submitted a written explanation accompanied by a Certification [6] from his Barangay Captain, stating that his absence was due to heavy rains and subsequent flooding that hit his barangay. Later, petitioner filed a Supplemental Written Explanation,[7] in lieu of answers to a questionnaire provided by the company. Petitioner stated that on August 11, 1997, his house was heavily flooded and that on the next day, he immediately filed an application for leave of absence. Despite his compliance and explanation, petitioner was dismissed on February 27, 1998 and given a notice of termination[8] which enumerated the dates of his absences without permission. Thereafter, petitioner filed a complaint for illegal dismissal with the Labor Arbiter, which was dismissed for lack of merit. On appeal, the NLRC reversed the Decision of the Labor Arbiter. The dispositive portion of the NLRC Resolution reads: WHEREFORE, premises considered, Complainants appeal is GRANTED. The Labor Arbiters decision in the above-entitled case is hereby ANNULLED and SET ASIDE. A new one is entered declaring that Complainant Navarros dismissal from his employment is illegal.

COCA-COLA BOTTLERS PHILS., INC., MANUEL GARCIA and RUSTUM ALEJANDRINO, Respondents.

Respondent Coca-Cola Bottlers Phils., Inc. is hereby ordered to immediately reinstate Complainant Navarro to his former position without loss of seniority rights and other privileges and to pay his full backwages, inclusive of allowances, and his other benefits or their monetary equivalent computed from the time he was illegally dismissed up to the time of his actual reinstatement. Respondent Coca-Cola Bottlers Phils., Inc. is likewise ordered to pay Complainant Navarro attorneys fees equivalent to ten percent (10%) of his total monetary award. SO ORDERED.[9] Respondent elevated the case to the Court of Appeals. The Court of Appeals annulled the resolution of the NLRC. It ruled as follows: WHEREFORE, premises considered, the Decision (sic) as well as the Resolution of the National Labor Relations Commission is hereby SET ASIDE and the Decision of the Labor Arbiter is reinstated with the MODIFICATION that petitioner Coca-Cola Bottlers Phils., Inc. is ordered to pay private respondent Alberto Navarro separation pay equivalent to one-half (1/2) month salary for every year of service starting from November 1, 1987 until his dismissal on February 27, 1998. SO ORDERED.[10]

The appellate court also denied petitioners motion for reconsideration. Hence the instant petition before us, raising the following issues: -AWHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED REVERSIBLE ERROR AND GRAVELY ABUSED ITS DISCRETION IN REVERSING AND SETTING ASIDE THE DECISION OF THE NLRC AND REINSTATING, WITH MODIFICATION, THAT OF THE LABOR ARBITER WHEN, OBVIOUSLY, THE RULING OF THE COMMISSION IS MORE IN ACCORD WITH THE EVIDENCE AND SETTLED JURISPRUDENCE. -BTHE HONORABLE COURT OF APPEALS DID NOT HEED THE INJUNCTION OF THIS HONORABLE COURT THAT: AS IS WELL-SETTLED, IF DOUBTS EXIST BETWEEN THE EVIDENCE PRESENTED BY THE EMPLOYER AND THE EMPLOYEE, THE SCALES OF JUSTICE MUST BE TILTED IN FAVOR OF THE EMPLOYEE. SINCE IT IS A TIMEHONORED RULE THAT IN CONTROVERSIES BETWEEN A LABORER AND HIS MASTER, DOUBTS REASONABLY ARISING FROM THE EVIDENCE, OR IN THE INTERPRETATION OF AGREEMENTS AND WRITINGS SHOULD BE RESOLVED IN THE FORMERS FAVOR IN RENDERING THE DISPUTED DECISION AND RESOLUTION.[11]

Raised also as the threshold issue in this petition is: WHETHER PETITIONERS APPLICATION FOR LEAVE OF ABSENCE SHOULD HAVE BEEN ALLOWED BY THE COMPANY. Respondents contend that the application for leave was correctly denied, and that petitioner violated the Employees Code of Disciplinary Rules and Regulations when he incurred his tenth absence. Petitioner, on the other hand, argues that his absence was excusable under the circumstances. On this point, we are in agreement that petitioners application for leave should have been a pproved by the company. His absence was due to a fortuitous event outside of petitioners control. In our view, petitioner had no wrongful, perverse or even negligent attitude, intended to defy the order of his employer when he absented himself. He did so because heavy rains flooded their residential area which was along the railroad.[12] In his favor, the BarangayCaptain certified that indeed there was flooding in their place of residence. A worker cannot be reasonably expected to anticipate times of sickness nor emergency. Hence, to require prior notice of such times would be absurd. He can only give proper notice after the occurrence of the event which is what petitioner did in this case.

In earlier cases, we have expressed disapproval of dismissal of employees who have absented themselves due to emergency circumstances. In Brew Master International, Inc. v. National Federation of Labor Unions (NAFLU),[13] the employees absence was precipitated by a grave family problem when his wife unexpectedly deserted him and abandoned the family. Under said circumstances, his absence was deemed justified. Similarly, in this case, the reason for petitioners absence was not of his own doing much less to his liking, thus we are of the view that he did not merit the extreme penalty of dismissal from the service. We reiterate that the State policy is to afford full protection to labor. When conflicting interests of labor and capital are weighed on the scales of social justice, the heavier influence of capital should be counterbalanced by the compassion that the law accords the less privileged workingman.[14] Under Article 279[15] of the Labor Code, an employee who is unjustly dismissed is entitled to reinstatement, without loss of seniority rights and other privileges, and to the payment of full backwages, inclusive of allowances, and other benefits or their monetary equivalent, computed from the time his compensation was withheld from him.[16] WHEREFORE, both the assailed Decision dated August 27, 2003 of the Court of Appeals and its Resolution dated March 8, 2004denying the motion for reconsideration are REVERSED and SET ASIDE. Respondent Coca-Cola Bottlers Phils., Inc. is hereby ORDERED: (1) to immediately reinstate petitioner Navarro to his former position without loss of seniority rights and other privileges; (2) to pay his full backwages, inclusive of allowances, and his other benefits or their monetary equivalent computed from the time he was illegally dismissed up to the time of his actual reinstatement; and (3) to pay petitioner Navarro attorneys fees equivalent to 10% of his total monetary award. Costs against respondents. SO ORDERED.

SECOND DIVISION LAKAS SA INDUSTRIYA NG KAPATIRANG HALIGI NG ALYANSA-PINAGBUKLOD NG MANGGAGAWANG PROMO NGBURLINGAME, Petitioner, - versus G.R. No. 162833 Present: QUISUMBING, J., Chairperson, CARPIO, CARPIO MORALES,* TINGA, and VELASCO, JR., JJ.

BURLINGAME CORPORATION, Respondent.

Promulgated: June 15, 2007

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x DECISION QUISUMBING, J.: This is an appeal to reverse and set aside both the Decision [1] dated August 29, 2003 of the Court of Appeals and its Resolution[2]dated March 15, 2004 in CA-G.R. SP No. 69639. The appellate court had reversed the decision[3] dated December 29, 2000 of the Secretary of Labor and Employment which ordered the holding of a certification election among the rank-and-file promo employees of respondent Burlingame Corporation. The facts are undisputed. On January 17, 2000, the petitioner Lakas sa Industriya ng Kapatirang Haligi ng Alyansa-Pinagbuklod ng Manggagawang Promo ng Burlingame (LIKHA-PMPB) filed a petition for certification election before the Department of Labor and Employment (DOLE). LIKHA-PMPB sought to represent all rank-and-file promo employees of respondent numbering about 70 in all. The petitioner claimed that there was no existing union in the aforementioned establishment representing the regular rank-and-file promo employees. It prayed that it be voluntarily recognized by the respondent to be the collective bargaining agent, or, in the alternative, that a certification/consent election be held among said regular rank-and-file promo employees. The respondent filed a motion to dismiss the petition. It argued that there exists no employer-employee relationship between it and the petitio ners members. It further alleged that the petitioners members are actually employees of F. Garil Manpower Services (F. Garil), a duly licensed local employment agency. To prove such contention, respondent presented a copy of its contract for manpower services with F. Garil. On June 29, 2000, Med-Arbiter Renato D. Parungo dismissed[4] the petition for lack of employer-employee relationship, prompting the petitioner to file an appeal[5] before the Secretary of Labor and Employment. On December 29, 2000, the Secretary of Labor and Employment ordered the immediate conduct of a certification election.[6] A motion for reconsideration of the said decision was filed by the respondent on January 19, 2001, but the same was denied in the Resolution[7] of February 19, 2002 of the Secretary of Labor and Employment. Respondent then filed a complaint with the Court of Appeals, which then reversed[8] the decision of the Secretary. The petitioner then filed a motion for reconsideration,[9] which the Court of Appeals denied[10] on March 15, 2004.

Hence the instant petition for review on certiorari. The issue raised in the petition is: WHETHER THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN DECLARING THAT THERE IS NO EMPLOYER-EMPLOYEE RELATIONSHIP BETWEEN PETITIONERS MEMBERS AND BURLINGAME BECAUSE F. GARIL MANPOWER SERVICES IS AN INDEPENDENT CONTRACTOR.[11]

Respondent contends that there is no employer-employee relationship between the parties.[12] Petitioner, on the other hand, insists that there is.[13] The resolution of this issue boils down to a determination of the true status of F. Garil, i.e., whether it is an independent contractor or a labor-only contractor. The case of De Los Santos v. NLRC[14] succinctly enunciates the statutory criteria: Job contracting is permissible only if the following conditions are met: 1) the contractor carries on an independent business and undertakes the contract work on his own account under his own responsibility according to his own manner and method, free from the control and direction of his employer or principal in all matters connected with the performance of the work except as to the results thereof; and 2) the contractor has substantial capital or investment in the form of tools, equipment, machineries, work premises, and other materials which are necessary in the conduct of the business.[15]

According to Section 5 of DOLE Department Order No. 18-02, Series of 2002:[16] Section 5. Prohibition against labor-only contracting. Labor-only contracting is hereby declared prohibited. For this purpose, labor-only contracting shall refer to an arrangement where the contractor or subcontractor merely recruits, supplies or places workers to perform a job, work or service for a principal, and any of the following elements are [is] present: i) The contractor or sub-contractor does not have substantial capital or investment which relates to the job, work or service to be performed and the employees recruited, supplied or placed by such contractor or subcontractor are performing activities which are directly related to the main business of the principal; or The contractor does not exercise the right to control over the performance of the work of the contractual employee.

ii)

The foregoing provisions shall be without prejudice to the application of Article 248(C) of the Labor Code, as amended. Substantial capital or investment refers to capital stocks and subscribed capitalization in the case of corporations, tools, equipment, implements, machineries and work premises, actually and directly used by the contractor or subcontractor in the performance or completion of the job, work or service contracted out. The right to control shall refer to the right reserved to the person for whom the services of the contractual workers are performed, to determine not only the end to be achieved, but also the manner and means to be used in reaching that end.

Given the above criteria, we agree with the Secretary that F. Garil is not an independent contractor. First, F. Garil does not have substantial capitalization or investment in the form of tools, equipment, machineries, work premises, and other materials, to qualify as an independent contractor. No proof was adduced to show F. Garils capitalization.

Second, the work of the promo-girls was directly related to the principal business or operation of Burlingame. Marketing and selling of products is an essential activity to the main business of the principal. Lastly, F. Garil did not carry on an independent business or undertake the performance of its service contract according to its own manner and method, free from the control and supervision of its principal, Burlingame. The four-fold test will show that respondent is the employer of petitioners members. The elements to determine the existence of an employment relationship are: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employers power to control the employees conduct. The most important element is the employers control of the employees conduct, not only as to the result of the work to be done, but also as to the means and methods to accomplish it.[17] A perusal of the contractual stipulations between Burlingame and F. Garil shows the following: 1. The AGENCY shall provide Burlingame Corporation or the CLIENT, with sufficient number of screened, tested and pre-selected personnel (professionals, highly-skilled, skilled, semi-skilled and unskilled) who will be deployed in establishment selling products manufactured by the CLIENT. 2. The AGENCY shall be responsible in paying its workers under this contract in accordance with the new minimum wage including the daily living allowances and shall pay them overtime or remuneration that which is authorized by law. 3. It is expressly understood and agreed that the worker(s) supplied shall be considered or treated as employee(s) of the AGENCY. Consequently, there shall be no employer-employee relationship between the worker(s) and the CLIENT and as such, the AGENCY shall be responsible to the benefits mandated by law. 4. For and in consideration of the service to be rendered by the AGENCY to the CLIENT, the latter shall during the terms of agreement pay to the AGENCY the sum of Seven Thousand Five Hundred Pesos Only (P7,500.00) per month per worker on the basis of Eight (8) hours work payable up-to-date, semi-monthly, every 15th and 30th of each calendar month. However, these rates may be subject to change proportionately in the event that there will be revisions in the Minimum Wage Law or any law related to salaries and wages. 5. The CLIENT shall report to the AGENCY any of its personnel assigned to it if those personnel are found to be inefficient, troublesome, uncooperative and not observing the rules and regulations set forth by the CLIENT. It is understood and agreed that the CLIENT may request any time the immediate replacement of any personnel(s) assigned to them.[18]

It is patent that the involvement of F. Garil in the hiring process was only with respect to the recruitment aspect, i.e. the screening, testing and pre-selection of the personnel it provided to Burlingame. The actual hiring itself was done through the deployment of personnel to establishments by Burlingame. The contract states that Burlingame would pay the workers through F. Garil, stipulating that Burlingame shall pay F. Garil a certain sum per worker on the basis of eight-hour work every 15th and 30th of each calendar month. This evinces the fact that F. Garil merely served as conduit in the payment of wages to the deployed personnel. The interpretation would have been different if the payment was for the job, project, or services rendered during the month and not on a per worker basis. In Vinoya v. National Labor Relations Commission,[19] we held: The Court takes judicial notice of the practice of employers who, in order to evade the liabilities under the Labor Code, do not issue payslips directly to their employees. Under the current practice, a third person, usually the purported contractor (service or manpower placement agency), assumes the act of paying the wage. For this reason, the lowly worker is unable to show proof that it was directly paid by the true employer. Nevertheless, for the workers, it is enough that they actually receive their pay, oblivious of the need for payslips, unaware of its legal implications. Applying this principle to the case at bar, even though the wages were coursed through PMCI, we note that the funds actually came from the pockets of RFC. Thus, in the end, RFC is still the one who paid the wages of petitioner albeit indirectly.[20] The contract also provides that any personnel found to be inefficient, troublesome, uncooperative and not observing the rules and regulations set forth by Burlingame shall be reported to F. Garil and may be replaced upon

request. Corollary to this circumstance would be the exercise of control and supervision by Burlingame over workers supplied by F. Garil in order to establish the inefficient, troublesome, and uncooperative nature of undesirable personnel. Also implied in the provision on replacement of personnel carried upon request byBurlingame is the power to fire personnel. These are indications that F. Garil was not left alone in the supervision and control of its alleged employees. Consequently, it can be concluded that F. Garil was not an independent contractor since it did not carry a distinct business free from the control and supervision ofBurlingame. It goes without saying that the contractual stipulation on the nonexistence of an employer-employee relationship between Burlingame and the personnel provided by F. Garil has no legal effect. While the parties may freely stipulate terms and conditions of a contract, such contractual stipulations should not be contrary to law, morals, good customs, public order or public policy. A contractual stipulation to the contrary cannot override factual circumstances firmly establishing the legal existence of an employer-employee relationship. Under this circumstance, there is no doubt that F. Garil was engaged in labor-only contracting, and as such, is considered merely an agent of Burlingame. In labor-only contracting, the law creates an employer-employee relationship to prevent a circumvention of labor laws. The contractor is considered merely an agent of the principal employer and the latter is responsible to the employees of the labor-only contractor as if such employees had been directly employed by the principal employer.[21] Since F. Garil is a labor-only contractor, the workers it supplied should be considered as employees of Burlingame in the eyes of the law. WHEREFORE, the challenged Decision of the Court of Appeals dated August 29, 2003 and the Resolution dated March 15, 2004denying the motion for reconsideration are REVERSED and SET ASIDE. The decision of the Secretary of Labor and Employment ordering the holding of a certification election among the rank-and-file promo employees of Burlingame is reinstated. Costs against respondent. SO ORDERED.

SECOND DIVISION FACULTY ASSOCIATION OF TECHNOLOGY (FAMIT), Petitioner, MAPUA INSTITUTE OF G.R. No. 164060 Present: QUISUMBING, J., Chairperson, CARPIO, CARPIO MORALES,* TINGA, and VELASCO, JR., JJ.

- versus -

HON. COURT OF APPEALS, and MAPUA INSTITUTE OF Promulgated: TECHNOLOGY, Respondents. June 15, 2007 x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x DECISION QUISUMBING, J.:

This is an appeal to reverse and set aside the Decision[1] dated August 21, 2003 and the Resolution[2] dated June 3, 2004 of the Court of Appeals in CA-G.R. SP No. 71479. The appellate court had reversed the Decision of the Office of the Voluntary Arbitrators. It held that the incorporation of the new faculty ranking to the 2001 Collective Bargaining Agreement (CBA) between petitioner and private respondent has been the intention of the parties to the CBA. The facts in this case are undisputed. In July 2000, private respondent Mapua Institute of Technology (MIT) hired Arthur Andersen to develop a faculty ranking and compensation system. On January 29, 2001, in the 5th CBA negotiation meeting, MIT presented the new faculty ranking instrument to petitioner Faculty Association of Mapua Institute of Technology (FAMIT). [3] The latter agreed to the adoption and implementation of the instrument, with the reservation that there should be no diminution in rank and pay of the faculty members. On April 17, 2001, FAMIT and MIT entered into a new CBA effective June 1, 2001.[4] It incorporated the new ranking for the college faculty in Section 8 of Article V which states that, A new faculty ranking shall be imp lemented in June 2001. However, there shall be no diminution in the existing rank and the policy same rank, same pay shall apply.[5] The faculty ranking sheet was annexed to the CBA as Annex B, while the college faculty rates sheet for permanent faculty and which included the point ranges and corresponding pay rates per faculty level was added as Annex C. When the CBA took effect, the Vice President for Academic Affairs issued a memorandum to all deans and subject chairs to evaluate and re-rank the faculty under their supervision using the new ranking instrument. Eight factors were to be considered and given their corresponding weights/points according to levels attained per factor. Among these were: (1) educational attainment; (2) professional honors received; (3) relevant training; (4) relevant professional experience; (5) scholarly work and creative efforts; (6) award winning works; (7) officership in relevant technical and professional organizations; and (8) administrative positions held at MIT.[6] After a month, MIT called FAMITs attention to what it perceived to be flaws or omissions in the CBA signed by the parties. In a letter[7] dated July 5, 2001 to FAMIT, MIT requested for an amendment of the following CBA annexes Annex B (Faculty Ranking Sheet); Annex C (College Faculty Rates for Permanent Faculty Only); and Annex D (H.S. Faculty Rates for Permanent Faculty Only). MIT claimed that with respect to Annexes C and D, these contained data under the heading TOTAL POINTS that were not germane to the two other columns in both annexes. With regard to the Faculty Ranking Point Range sheet of the new faculty ranking instrument, MIT avers that this was inadvertently not attached to the CBA.

FAMIT rejected the proposal. It said that these changes would constitute a violation of the ratified 2001 CBA and result in the diminution of rank and benefits of FAMIT college faculty. It argued that the proposed amendment in the ranking system for the college faculty revised the point ranges earlier agreed upon by the parties and expands the 19 faculty ranks to 23. Meanwhile, MIT instituted some changes in the curriculum during the school year 2000-2001 which resulted in changes in the number of hours for certain subjects. Thus, MIT adopted a new formula for determining the pay rates of the high school faculty: Rate/Load x Total Teaching Load = Salary where total teaching load equals number of classes multiplied by hours of service per week divided by 3 hours (as practiced, one unit subject is equal to 3 hours service). Upon learning of the changes, FAMIT opposed the formula. It averred that unknown to FAMIT, MIT has not been implementing the relevant provisions of the 2001 CBA. In particular, FAMIT cites Section 2 of Article VI, which states as follows: ARTICLE VI General Wage Clause xxxx Section 2. The INSTITUTE shall pay the following rate per load for high school faculty according to corresponding faculty rank, to wit: 25% increase in per rate/load for all high school faculty members effective November 2000; 10% increase in per rate/load for all permanent high school faculty members effective June 2001.[8] (Emphasis supplied.)

On July 20, 2001, FAMIT met with MIT to settle this second issue but to no avail. MIT maintained that it was within its right to change the pay formula used. Hence, together with the issue pertaining to the ranking of the college faculty, FAMIT brought the matter to the National Conciliation and Mediation Board for mediation. Proceedings culminated in the submission of the case to the Panel of Voluntary Arbitrators for resolution. The Panel of Voluntary Arbitrators ruled in favor of the petitioner. It ordered the private respondent to: 1. Implement the agreed upon point range system with 19 faculty ranks, along with the corresponding pay levels for the college faculty, consistent with the provisions of Article V, Section 8 of the 2001 CB[A] and Annex C of the said CBA, and 2. Comply with the provisions of Article VI, Section 2 of the existing CBA, using past practices or formula in computing the pay of high school faculty based on rate per load and to pay the faculty their corresponding rates on this basis, Both actions of which (sic) should be made concurrent with the effectivity of the current CBA. SO ORDERED.[9]

On appeal, the Court of Appeals reversed the ruling of the Panel of Voluntary Arbitrators and decreed as follows: WHEREFORE, the petition is hereby GRANTED. The assailed decision of the voluntary arbitrators is REVERSED. Accordingly, petitioners proposal to include the faculty point range sheet in Annex B of the 2001 CBA, as well as to replace Annex C with the document on the 23 -level faculty ranking instrument and replace the column containing the heading Total Points which is attached in Anexes C and Dhe 2001 CBA with the correct data is also GRANTED. SO ORDERED.[10]

Hence, the instant petition. The petitioner enumerated issues for resolution, to wit: I WHETHER THE PRIVATE RESPONDENT MAY PROPERLY, LEGALLY AND VALIDLY ALTER, CHANGE AND/OR MODIFY UNILATERAL[L]Y PROVISIONS OF THE COLLECTIVE [BARGAINING] AGREEMENT (CBA) IT HAD NEGOTIATED, ENTERED INTO AND SIGNED WITH THE PETITIONER AND SUBSEQUENTLY RATIFIED AND ENFORCED BY THE PARTIES; AND II WHETHER PRIVATE RESPONDENT MAY PROPERLY, LEGALLY AND VALIDLY CHANGE[,] ALTER AND/OR REPLACE UNILATERAL[L]Y A PROVISION OR FORMULA EMBODIED IN A PERFECTED, EXISTING AND ALREADY ENFORCED CBA TO THE PREJUDICE, OR MORE SPECIFICALLY TO THE DIMINUTION OF SALARY/BENEFITS AND DOWNGRADING OF RANKS, OF ITS COLLEGE AND HIGH SCHOOL FACULTY. [11]

Simply put, the issues for our determination are: (1) I s MITs new proposal, regarding faculty ranking and evaluation, lawful and consistent with the ratified CBA? and (2) Is MITs development of a new pay formula for the high school department, without the knowledge of FAMIT, lawful and consistent with the ratified CBA? On the first issue, FAMIT avers that MITs new proposal on faculty ranking and evaluation for the college faculty is an unlawful modification, alteration or amendment of the existing CBA without approval of the contracting parties. On the other hand, MIT argues that the new faculty ranking instrument was made in good faith and in the exercise of its inherent prerogative to freely regulate according to its own discretion and judgment all aspects of employment. Considering the submissions of the parties, in the light of the existing CBA, we find that the new point range system proposed by MIT is an unauthorized modification of Annex C of the 2001 CBA. It is made up of a faculty classification that is substantially different from the one originally incorporated in the current CBA between the parties. Thus, the proposed system contravenes the existing provisions of the CBA, hence, violative of the law between the parties. As observed by Office of the Voluntary Arbitrators, the evaluation system differs from past evaluation practices (e.g., those that give more weight to tenure and faculty load) such that the system can lead to a demotion in rank for a faculty member. A perfect example of this scenario was cited by FAMIT in its Memorandum: xxxx Take the case of a faculty member with 17 years of teaching experience who has a Phd. Degree. For school year 2000-2001 his corresponding rank is Professor 3 with 4001-4500 points using the previous CBA. If the college faculty member is ranked based on the ratified 2001 CBA, his/her corresponding rank would increase to Professor 5 with 5001-5500 points. But if the proposal of private respondent is used, the professor, would be ranked as Associate Professor 5 with 5001-5749 points, instead of Professor 5 as recognized by the 2001 CBA. True, there may be an increase in points but there is also a resulting diminution in rank from Professor 3 based on the previous CBA to Associate Professor 5. This would translate to a reduction of the salary increase he is entitled to under the 2001 CBA.[12] According to FAMIT, this patently is a violation of Section 8, Article V of the 2001 CBA. Noteworthy, Article 253 of the Labor Code states:

ART. 253. Duty to bargain collectively when there exists a collective bargaining agreement. When there is a collective bargaining agreement, the duty to bargain collectively shall also mean that neither party shall terminate nor modify such agreement during its lifetime. However, either party can serve a written notice to terminate or modify the agreement at least sixty (60) days prior to its expiration date. It shall be the duty of both parties to keep the status quo and to continue in full force and effect the terms and conditions of the existing agreement during the 60-day period and/or until a new agreement is reached by the parties. REVISED PAGE

Until a new CBA is executed by and between the parties, they are duty-bound to keep the status quo and to continue in full force and effect the terms and conditions of the existing agreement. The law does not provide for any exception nor qualification on which economic provisions of the existing agreement are to retain its force and effect. Therefore, it must be understood as encompassing all the terms and conditions in the said agreement. [13] The CBA during its lifetime binds all the parties. The provisions of the CBA must be respected since its terms and conditions constitute the law between the parties. Those who are entitled to its benefits can invoke its provisions. In the event that an obligation therein imposed is not fulfilled, the aggrieved party has the right to go to court and ask redress.[14] The CBA is the norm of conduct between petitioner and private respondent and compliance therewith is mandated by the express policy of the law. [15] On the second issue, FAMIT avers that MIT unilaterally modified the CBA formula in determining the salary of a high school faculty. MIT counters that it is entitled to consider the actual number of teaching hours to arrive at a fair and just salary of its high school faculty. Again, we are in agreement with FAMITs submission. We rule that MIT cannot adopt its unilateral interpretation of terms in the CBA. It is clear from the provisions of the 2001 CBA that the salary of a high school faculty member is based on a rate per load and not on a rate per hour basis. Section 2, Article VI of the 2001 CBA provides: xxxx Section 2. The INSTITUTE shall pay the following rate per load for high school faculty according to corresponding faculty rank, to wit: 25% increase in per rate/load for all high school faculty members effective November 2000. 10% increase in per rate/load for all permanent high school faculty members effective June 2001.[16] (Emphasis supplied.)

In our view, there is no room for unilateral change of the formula by MIT. Needless to stress, the Labor Code is specific in enunciating that in case of doubt in the interpretation of any law or provision affecting labor, such should be interpreted in favor of labor.[17] The appellate court committed a grave error in the interpretation of the CBA provision and the governing law. WHEREFORE, the instant petition is GRANTED. The Decision dated August 21, 2003 and the Resolution dated June 3, 2004 of the Court of Appeals denying the motion for reconsideration are REVERSED and SET ASIDE. The decision of the Office of the Voluntary Arbitrators is REINSTATED. MITs unilateral change in the ranking of college faculty from 19 levels to 23 levels, and the computation of high school faculty salary from rate per load to rate per hour basis is DECLARED NULL AND VOID for being violative of the parties CBA and the applicable law. Costs against private respondent MIT. SO ORDERED.