ARMANDO ALILING, G.R. No.

185829
Petitioner,
Present:

- versus - VELASCO, JR., J.,

Chairperson
PERALTA,
JOSE B. FELICIANO, ABAD,
MANUEL BERSAMIN, JJ. MENDOZA, and
F. SAN MATEO III, JOSEPH PERLAS-BERNABE, JJ.
R.
LARIOSA, and WIDE
WIDE Promulgated: Promulgated:
WORLD EXPRESS
CORPORATION, April 25, 2012
Respondents.
x-----------------------------------------------------------------------------------------x

DECISION

VELASCO, JR., J.:

The Case

This Petition for Review on Certiorari under Rule 45 assails and seeks to
set aside the July 3, 2008 Decision[1] and December 15, 2008 Resolution[2] of the
Court of Appeals (CA), in CA-G.R. SP No. 101309, entitled Armando Aliling v.
National Labor Relations Commission, Wide Wide World Express Corporation,
Jose B. Feliciano, Manuel F. San Mateo III and Joseph R. Lariosa. The assailed
issuances modified the Resolutions dated May 31, 2007 [3] and August 31,
2007[4]rendered by the National Labor Relations Commission (NLRC) in NLRC
NCR Case No. 00-10-11166-2004, affirming the Decision dated April 25,
2006[5] of the Labor Arbiter.
The Facts

Via a letter dated June 2, 2004,[6] respondent Wide Wide World Express
Corporation (WWWEC) offered to employ petitioner Armando Aliling (Aliling)
as Account Executive (Seafreight Sales), with the following compensation
package: a monthly salary of PhP 13,000, transportation allowance of PhP 3,000,
clothing allowance of PhP 800, cost of living allowance of PhP 500, each
payable on a per month basis and a 14th month pay depending on the profitability
and availability of financial resources of the company. The offer came with a six
(6)-month probation period condition with this express caveat: Performance
during [sic] probationary period shall be made as basis for confirmation to
Regular or Permanent Status.

On June 11, 2004, Aliling and WWWEC inked an Employment Contract[7] under
the following terms, among others:

Conversion to regular status shall be determined on the basis of work

performance; and

Employment services may, at any time, be terminated for just cause or

in accordance with the standards defined at the time of engagement.[8]

Training then started. However, instead of a Seafreight Sale assignment,

WWWEC asked Aliling to handle Ground Express (GX), a new company
product launched on June 18, 2004 involving domestic cargo forwarding service
for Luzon. Marketing this product and finding daily contracts for it formed the
core of Alilings new assignment.

Barely a month after, Manuel F. San Mateo III (San Mateo), WWWEC
Sales and Marketing Director, emailed Aliling[9] to express dissatisfaction with
the latters performance, thus:

Armand,

My expectations is [sic] that GX Shuttles should be 80% full by the

3rd week (August 5) after launch (July 15). Pls. make that happen. It
has been more than a month since you came in. I am expecting sales
to be pumping in by now. Thanks.

Nonong

Thereafter, in a letter of September 25, 2004,[10] Joseph R. Lariosa (Lariosa),

Human Resources Manager of WWWEC, asked Aliling to report to the Human
Resources Department to explain his absence taken without leave from
September 20, 2004.
Aliling responded two days later. He denied being absent on the days in question,
attaching to his reply-letter[11] a copy of his timesheet[12] which showed that he
worked from September 20 to 24, 2004. Alilings explanation came with a query
regarding the withholding of his salary corresponding to September 11 to 25,
2004.

In a separate letter dated September 27, 2004,[13] Aliling wrote San Mateo stating:
Pursuant to your instruction on September 20, 2004, I hereby tender my
resignation effective October 15, 2004. While WWWEC took no action on his
tender, Aliling nonetheless demanded reinstatement and a written apology,
claiming in a subsequent letter dated October 1, 2004[14] to management that San
Mateo had forced him to resign.

Lariosas response-letter of October 1, 2004,[15] informed Aliling that his case

was still in the process of being evaluated. On October 6, 2004,[16] Lariosa
again wrote, this time to advise Aliling of the termination of his services
effective as of that date owing to his non-satisfactory performance during his
probationary period. Records show that Aliling, for the period indicated, was
paid his outstanding salary which consisted of:

PhP 4,988.18 (salary for the September 25, 2004 payroll)

1,987.28 (salary for 4 days in October 2004)
-------------
PhP 6,975.46 Total

Earlier, however, or on October 4, 2004, Aliling filed a Complaint [17] for illegal
dismissal due to forced resignation, nonpayment of salaries as well as damages
with the NLRC against WWWEC. Appended to the complaint was Alilings
Affidavit dated November 12, 2004,[18] in which he stated: 5. At the time of my
engagement, respondents did not make known to me the standards under which I
will qualify as a regular employee.
Refuting Alilings basic posture, WWWEC stated in its Position Paper dated
November 22, 2004[19] that, in addition to the letter-offer and employment
contract adverted to, WWWEC and Aliling have signed a letter of
appointment[20] on June 11, 2004 containing the following terms of engagement:

Additionally, upon the effectivity of your probation, you and your

immediate superior are required to jointly define your
objectives compared with the job requirements of the position. Based
on the pre-agreed objectives, your performance shall be reviewed
 on the 3rd month to assess your competence and work attitude.
The 5th month Performance Appraisal shall be the basis in
elevating or confirming your employment status from
Probationary to Regular.

Failure to meet the job requirements during the probation stage means
that your services may be terminated without prior notice and without
recourse to separation pay.

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

In a Reply-Affidavit dated December 13, 2004,[22] Aliling denied having received

a copy of San Mateos September 20, 2004 letter.

Issues having been joined, the Labor Arbiter issued on April 25, 2006 [23] a
Decision declaring Alilings termination as unjustified. In its pertinent parts, the
decision reads:

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

Unexpired Portion of the Contract:

Basic Salary P13,000.00

Transportation 3,000.00
 Clothing Allowance 800.00
ECOLA 500.00
--------------
P17,300.00

10/06/04 12/07/04
P17,300.00 x 2.7 mos. = P35,811.00

Complainants 13th month pay proportionately for 2004 was not shown
to have been paid to complainant, respondent be made liable to him
therefore computed at SIX THOUSAND FIVE HUNDRED THIRTY
TWO PESOS AND 50/100 (P6,532.50).

For engaging the services of counsel to protect his interest,

complainant is likewise entitled to a 10% attorneys fees of the
judgment amount. Such other claims for lack of basis sufficient to
support for their grant are unwarranted.

WHEREFORE, judgment is hereby rendered ordering respondent

company to pay complainant Armando Aliling the sum of THIRTY
FIVE THOUSAND EIGHT HUNDRED ELEVEN PESOS
(P35,811.00) representing his salaries and other benefits as discussed
above.

Respondent company is likewise ordered to pay said complainant the

amount of TEN THOUSAND SEVEN HUNDRED SIXTY SIX
PESOS AND 85/100 ONLY (10.766.85) representing his
proportionate 13th month pay for 2004 plus 10% of the total judgment
as and by way of attorneys fees.

Other claims are hereby denied for lack of merit. (Emphasis

supplied.)

The labor arbiter gave credence to Alilings allegation about not receiving and,
therefore, not bound by, San Mateos purported September 20, 2004 memo. The
memo, to reiterate, supposedly apprised Aliling of the sales quota he was, but
failed, to meet. Pushing the point, the labor arbiter explained that Aliling cannot
be validly terminated for non-compliance with the quota threshold absent a prior
advisory of the reasonable standards upon which his performance would be
evaluated.

Both parties appealed the above decision to the NLRC, which affirmed the
Decision in toto in its Resolution dated May 31, 2007. The separate motions for
reconsideration were also denied by the NLRC in its Resolution dated August 31,
2007.

Therefrom, Aliling went on certiorari to the CA, which eventually rendered the
assailed Decision, the dispositive portion of which reads:
WHEREFORE, the petition is PARTLY GRANTED. The assailed
Resolutions of respondent (Third Division) National Labor Relations
Commission are AFFIRMED, with the following
MODIFICATION/CLARIFICATION: Respondents Wide Wide
World Express Corp. and its officers, Jose B. Feliciano, Manuel F.
San Mateo III and Joseph R. Lariosa, are jointly and severally
liableto pay petitioner Armando Aliling: (A) the sum of Forty Two
Thousand Three Hundred Thirty Three & 50/100 (P42,333.50) as the
total money judgment, (B) the sum of Four Thousand Two Hundred
Thirty Three & 35/100 (P4,233.35) as attorneys fees, and (C) the
additional sum equivalent to one-half (1/2) month of petitioners salary
as separation pay.

SO ORDERED.[24] (Emphasis supplied.)

The CA anchored its assailed action on the strength of the following premises: (a)
respondents failed to prove that Alilings dismal performance constituted gross
and habitual neglect necessary to justify his dismissal; (b) not having been
informed at the time of his engagement of the reasonable standards under which
he will qualify as a regular employee, Aliling was deemed to have been hired
from day one as a regular employee; and (c) the strained relationship existing
between the parties argues against the propriety of reinstatement.

Alilings motion for reconsideration was rejected by the CA through the assailed
Resolution dated December 15, 2008.

Hence, the instant petition.

The Issues
Aliling raises the following issues for consideration:

A. The failure of the Court of Appeals to order reinstatement

(despite its finding that petitioner was illegally dismissed from
employment) is contrary to law and applicable jurisprudence.

B. The failure of the Court of Appeals to award backwages

(even if it did not order reinstatement) is contrary to law and
applicable jurisprudence.
C. The failure of the Court of Appeals to award moral and
exemplary damages (despite its finding that petitioner was dismissed
to prevent the acquisition of his regular status) is contrary to law and
applicable jurisprudence.[25]

In their Comment,[26] respondents reiterated their position that WWWEC

hired petitioner on a probationary basis and fired him before he became a regular
employee.

The Courts Ruling

The petition is partly meritorious.

Petitioner is a regular employee

On a procedural matter, petitioner Aliling argues that WWWEC, not having

appealed from the judgment of CA which declared Aliling as a regular employee
from the time he signed the employment contract, is now precluded from
questioning the appellate courts determination as to the nature of his
employment.

Petitioner errs. The Court has, when a case is on appeal, the authority to
review matters not specifically raised or assigned as error if their consideration is
necessary in reaching a just conclusion of the case. We said as much in Sociedad
Europea de Financiacion, SA v. Court of Appeals,[27] It is axiomatic that an
appeal, once accepted by this Court, throws the entire case open to review, and
that this Court has the authority to review matters not specifically raised or
assigned as error by the parties, if their consideration is necessary in arriving at a
just resolution of the case.
 The issue of whether or not petitioner was, during the period material, a
probationary or regular employee is of pivotal import. Its resolution is doubtless
necessary at arriving at a fair and just disposition of the controversy.

The Labor Arbiter cryptically held in his decision dated April 25, 2006 that:

Be that as it may, there appears no showing that indeed the said

September 20, 2004 Memorandum addressed to complainant was
received by him. Moreover, complainants tasked where he was
assigned was a new developed service. In this regard, it is noted:

Due process dictates that an employee be apprised

beforehand of the conditions of his employment and of the terms
of advancement therein. Precisely, implicit in Article 281 of the
Labor Code is the requirement that reasonable standards be
previously made known by the employer to the employee at the
time of his engagement (Ibid, citing Sameer Overseas Placement
Agency, Inc. vs. NLRC, G.R. No. 132564, October 20, 1999).[28]

From our review, it appears that the labor arbiter, and later the NLRC,
considered Aliling a probationary employee despite finding that he was not
informed of the reasonable standards by which his probationary employment was
to be judged.

The CA, on the other hand, citing Cielo v. National Labor Relations
Commission,[29] ruled that petitioner was a regular employee from the outset
inasmuch as he was not informed of the standards by which his probationary
employment would be measured. The CA wrote:

Petitioner was regularized from the time of the execution of the

employment contract on June 11, 2004, although respondent company
had arbitrarily shortened his tenure. As pointed out, respondent
company did not make known the reasonable standards under
which he will qualify as a regular employee at the time of his
engagement. Hence, he was deemed to have been hired from day
one as a regular employee.[30] (Emphasis supplied.)

WWWEC, however, excepts on the argument that it put Aliling on notice

that he would be evaluated on the 3rd and 5th months of his probationary
employment. To WWWEC, its efforts translate to sufficient compliance with the
requirement that a probationary worker be apprised of the reasonable standards
for his regularization. WWWEC invokes the ensuing holding in Alcira v.
National Labor Relations Commission[31] to support its case:

Conversely, an employer is deemed to substantially comply with

the rule on notification of standards if he apprises the employee that
he will be subjected to a performance evaluation on a particular date
after his hiring. We agree with the labor arbiter when he ruled that:

In the instant case, petitioner cannot successfully say that

he was never informed by private respondent of the standards
that he must satisfy in order to be converted into regular
status. This rans (sic) counter to the agreement between the
parties that after five months of service the petitioners
performance would be evaluated. It is only but natural that the
evaluation should be made vis--vis the performance standards
for the job. Private respondent Trifona Mamaradlo speaks of
such standard in her affidavit referring to the fact that petitioner
did not perform well in his assigned work and his attitude was
below par compared to the companys standard required of him.
(Emphasis supplied.)

WWWECs contention is untenable.

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

To note, the June 2, 2004 letter-offer itself states that the regularization
standards or the performance norms to be used are still to be agreed upon by
Aliling and his supervisor. WWWEC has failed to prove that an agreement as
regards thereto has been reached. Clearly then, there were actually no
performance standards to speak of. And lest it be overlooked, Aliling was
assigned to GX trucking sales, an activity entirely different to the Seafreight
Sales he was originally hired and trained for. Thus, at the time of his engagement,
the standards relative to his assignment with GX sales could not have plausibly
been communicated to him as he was under Seafreight Sales. Even for this
reason alone, the conclusion reached in Alcira is of little relevant to the instant
case.

Based on the facts established in this case in light of extant jurisprudence,

the CAs holding as to the kind of employment petitioner enjoyed is correct. So
was the NLRC ruling, affirmatory of that of the labor arbiter. In the final analysis,
one common thread runs through the holding of the labor arbiter, the NLRC and
the CA, i.e., petitioner Aliling, albeit hired from managements standpoint as a
probationary employee, was deemed a regular employee by force of the
following self-explanatory provisions:

Article 281 of the Labor Code

ART. 281. Probationary employment. - Probationary

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

Section 6(d) of the Implementing Rules of Book VI, Rule VIII-A

of the Labor Code

Sec. 6. Probationary employment. There is probationary

employment where the employee, upon his engagement, is made to
undergo a trial period where the employee determines his fitness to
qualify for regular employment, based on reasonable standards made
known to him at the time of engagement.
Probationary employment shall be governed by the following
rules:

xxxx
 (d) In all cases of probationary employment, the employer
shall make known to the employee the standards under which he
will qualify as a regular employee at the time of his
engagement. Where no standards are made known to the
employee at that time, he shall be deemed a regular
employee. (Emphasis supplied.)

To repeat, the labor arbiter, NLRC and the CA are agreed, on the basis of
documentary evidence adduced, that respondent WWWEC did not inform
petitioner Aliling of the reasonable standards by which his probation would be
measured against at the time of his engagement. The Court is loathed to interfere
with this factual determination. As We have held:

Settled is the rule that the findings of the Labor Arbiter,

when affirmed by the NLRC and the Court of Appeals, are
binding on the Supreme Court, unless patently erroneous. It is not
the function of the Supreme Court to analyze or weigh all over again
the evidence already considered in the proceedings below. The
jurisdiction of this Court in a petition for review on certiorari is
limited to reviewing only errors of law, not of fact, unless the factual
findings being assailed are not supported by evidence on record or the
impugned judgment is based on a misapprehension of facts.[32]

The more recent Peafrancia Tours and Travel Transport, Inc., v.

Sarmiento[33] has reaffirmed the above ruling, to wit:

Finally, the CA affirmed the ruling of the NLRC and adopted as

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

WWWEC also cannot validly argue that the factual findings being
assailed are not supported by evidence on record or the impugned judgment
is based on a misapprehension of facts. Its very own letter-offer of employment
argues against its above posture. Excerpts of the letter-offer:

Additionally, upon the effectivity of your probation, you and

your immediate superior are required to jointly define your
objectives compared with the job requirements of the
position. Based on the pre-agreed objectives, your performance shall
be reviewed on the 3rd month to assess your competence and work
attitude. The 5th month Performance Appraisal shall be the basis in
elevating or confirming your employment status from Probationary to
Regular.

Failure to meet the job requirements during the probation stage

means that your services may be terminated without prior notice and
without recourse to separation pay. (Emphasis supplied.)

Respondents further allege that San Mateos email dated July 16, 2004
shows that the standards for his regularization were made known to petitioner
Aliling at the time of his engagement. To recall, in that email message, San
Mateo reminded Aliling of the sales quota he ought to meet as a condition for his
continued employment, i.e., that the GX trucks should already be 80% full by
August 5, 2004. Contrary to respondents contention, San Mateos email cannot
support their allegation on Aliling being informed of the standards for his
continued employment, such as the sales quota, at the time of his engagement.
As it were, the email message was sent to Aliling more than a month after he
signed his employment contract with WWWEC. The aforequoted Section 6 of
the Implementing Rules of Book VI, Rule VIII-A of the Code specifically
requires the employer to inform the probationary employee of such reasonable
standards at the time of his engagement, not at any time later; else, the latter
shall be considered a regular employee. Thus, pursuant to the explicit provision
of Article 281 of the Labor Code, Section 6(d) of the Implementing Rules of
Book VI, Rule VIII-A of the Labor Code and settled jurisprudence, petitioner
Aliling is deemed a regular employee as of June 11, 2004, the date of his
employment contract.

Petitioner was illegally dismissed

 To justify fully the dismissal of an employee, the employer must, as a rule,
prove that the dismissal was for a just cause and that the employee was afforded
due process prior to dismissal. As a complementary principle, the employer has
the onus of proving with clear, accurate, consistent, and convincing evidence the
validity of the dismissal.[34]

WWWEC had failed to discharge its twin burden in the instant case.

First off, the attendant circumstances in the instant case aptly show that the
issue of petitioners alleged failure to achieve his quota, as a ground for
terminating employment, strikes the Court as a mere afterthought on the part of
WWWEC. Consider: Lariosas letter of September 25, 2004 already betrayed
managements intention to dismiss the petitioner for alleged unauthorized
absences. Aliling was in fact made to explain and he did so satisfactorily. But, lo
and behold, WWWEC nonetheless proceeded with its plan to dismiss the
petitioner for non-satisfactory performance, although the corresponding
termination letter dated October 6, 2004 did not even specifically state Alilings
non-satisfactory performance, or that Alilings termination was by reason of his
failure to achieve his set quota.

What WWWEC considered as the evidence purportedly showing it gave

Aliling the chance to explain his inability to reach his quota was a purported
September 20, 2004 memo of San Mateo addressed to the latter. However,
Aliling denies having received such letter and WWWEC has failed to refute his
contention of non-receipt. In net effect, WWWEC was at a loss to explain the
exact just reason for dismissing Aliling.

At any event, assuming for argument that the petitioner indeed failed to
achieve his sales quota, his termination from employment on that ground would
still be unjustified.

Article 282 of the Labor Code considers any of the following acts or
omission on the part of the employee as just cause or ground for terminating
employment:

(a) Serious misconduct or willful disobedience by the employee

of the lawful orders of his employer or representative in connection
with his work;

(b) Gross and habitual neglect by the employee of his duties;

 (c) Fraud or willful breach by the employee of the trust reposed
in him by his employer or duly authorized representative;

(d) Commission of a crime or offense by the employee against

the person of his employer or any immediate member of his family or
his duly authorized representatives; and

(e) Other causes analogous to the foregoing. (Emphasis

supplied)

In Lim v. National Labor Relations Commission,[35] the Court considered

inefficiency as an analogous just cause for termination of employment under
Article 282 of the Labor Code:

We cannot but agree with PEPSI that gross inefficiency falls

within the purview of other causes analogous to the foregoing, this
constitutes, therefore, just cause to terminate an employee under
Article 282 of the Labor Code. One is analogous to another if it is
susceptible of comparison with the latter either in general or in some
specific detail; or has a close relationship with the latter. Gross
inefficiency is closely related to gross neglect, for both involve
specific acts of omission on the part of the employee resulting in
damage to the employer or to his business. In Buiser vs. Leogardo,
this Court ruled that failure to observed prescribed standards to
inefficiency may constitute just cause for dismissal. (Emphasis
supplied.)

It did so anew in Leonardo v. National Labor Relations Commission[36] on

the following rationale:
An employer is entitled to impose productivity standards for its
workers, and in fact, non-compliance may be visited with a penalty
even more severe than demotion. Thus,

[t]he practice of a company in laying off workers because

they failed to make the work quota has been recognized in
this jurisdiction. (Philippine American Embroideries vs.
Embroidery and Garment Workers, 26 SCRA 634, 639). In the
case at bar, the petitioners' failure to meet the sales quota
assigned to each of them constitute a just cause of their
 dismissal, regardless of the permanent or probationary status of
their employment. Failure to observe prescribed standards of
work, or to fulfill reasonable work assignments due to
inefficiency may constitute just cause for dismissal. Such
inefficiency is understood to mean failure to attain work goals or
work quotas, either by failing to complete the same within the
allotted reasonable period, or by producing unsatisfactory
results. This management prerogative of requiring standards
may be availed of so long as they are exercised in good
faith for the advancement of the employer's
interest. (Emphasis supplied.)

In fine, an employees failure to meet sales or work quotas falls under the
concept of gross inefficiency, which in turn is analogous to gross neglect of duty
that is a just cause for dismissal under Article 282 of the Code. However, in order
for the quota imposed to be considered a valid productivity standard and thereby
validate a dismissal, managements prerogative of fixing the quota must be
exercised in good faith for the advancement of its interest. The duty to prove
good faith, however, rests with WWWEC as part of its burden to show that the
dismissal was for a just cause. WWWEC must show that such quota was
imposed in good faith. This WWWEC failed to do, perceptibly because it could
not. The fact of the matter is that the alleged imposition of the quota was a
desperate attempt to lend a semblance of validity to Alilings illegal dismissal. It
must be stressed that even WWWECs sales manager, Eve Amador (Amador), in
an internal e-mail to San Mateo, hedged on whether petitioner performed below
or above expectation:

Could not quantify level of performance as he as was tasked to handle

a new product (GX). Revenue report is not yet administered by IT on
a month-to-month basis. Moreover, this in a way is an experimental
activity. Practically you have a close monitoring with Armand with
regards to his performance. Your assessment of him would be more
accurate.

Being an experimental activity and having been launched for the first time,
the sales of GX services could not be reasonably quantified. This would explain
why Amador implied in her email that other bases besides sales figures will be
used to determine Alilings performance. And yet, despite such a neutral
observation, Aliling was still dismissed for his dismal sales of GX services. In
any event, WWWEC failed to demonstrate the reasonableness and the bona
fides on the quota imposition.

Employees must be reminded that while probationary employees do not

enjoy permanent status, they enjoy the constitutional protection of security of
tenure. They can only be terminated for cause or when they otherwise fail to
meet the reasonable standards made known to them by the employer at the time
of their engagement.[37] Respondent WWWEC miserably failed to prove the
termination of petitioner was for a just cause nor was there substantial evidence
to demonstrate the standards were made known to the latter at the time of his
engagement. Hence, petitioners right to security of tenure was breached.

Alilings right to procedural due process was violated

As earlier stated, to effect a legal dismissal, the employer must show not
only a valid ground therefor, but also that procedural due process has properly
been observed. When the Labor Code speaks of procedural due process, the
reference is usually to the two (2)-written notice rule envisaged in Section 2 (III),
Rule XXIII, Book V of the Omnibus Rules Implementing the Labor Code, which
provides:

Section 2. Standard of due process: requirements of notice. In

all cases of termination of employment, the following standards of
due process shall be substantially observed.

I. For termination of employment based on just causes as

defined in Article 282 of the Code:
(a) A written notice served on the employee specifying the
ground or grounds for termination, and giving to said employee
reasonable opportunity within which to explain his side;

(b) A hearing or conference during which the employee

concerned, with the assistance of counsel if the employee so
desires, is given opportunity to respond to the charge, present
his evidence or rebut the evidence presented against him; and

(c) A written notice [of] termination served on the

employee indicating that upon due consideration of all the
circumstance, grounds have been established to justify his
termination.
 In case of termination, the foregoing notices shall be served on
the employees last known address.

MGG Marine Services, Inc. v. NLRC[38] tersely described the mechanics of

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

King of Kings Transport, Inc. v. Mamac[39] expounded on this procedural

requirement in this manner:

(1) The first written notice to be served on the employees

should contain the specific causes or grounds for termination against
them, and a directive that the employees are given the opportunity to
submit their written explanation within a reasonable period.
Reasonable opportunity under the Omnibus Rules means every kind
of assistance that management must accord to the employees to
enable them to prepare adequately for their defense. This should be
construed as a period of at least five calendar days from receipt of the
notice xxxx Moreover, in order to enable the employees to
intelligently prepare their explanation and defenses, the notice should
contain a detailed narration of the facts and circumstances that will
serve as basis for the charge against the employees. A general
description of the charge will not suffice. Lastly, the notice should
specifically mention which company rules, if any, are violated and/or
which among the grounds under Art. 288 [of the Labor Code] is being
charged against the employees

(2) After serving the first notice, the employees should schedule
and conduct a hearing or conference wherein the employees will be
given the opportunity to (1) explain and clarify their defenses to the
charge against them; (2) present evidence in support of their defenses;
and (3) rebut the evidence presented against them by the management.
During the hearing or conference, the employees are given the chance
 to defend themselves personally, with the assistance of a
representative or counsel of their choice x x x.

(3) After determining that termination is justified, the employer

shall serve the employees a written notice of terminationindicating
that: (1) all the circumstances involving the charge against the
employees have been considered; and (2) grounds have been
established to justify the severance of their employment. (Emphasis in
the original.)

Here, the first and second notice requirements have not been properly
observed, thus tainting petitioners dismissal with illegality.

The adverted memo dated September 20, 2004 of WWWEC supposedly

informing Aliling of the likelihood of his termination and directing him to
account for his failure to meet the expected job performance would have had
constituted the charge sheet, sufficient to answer for the first notice requirement,
but for the fact that there is no proof such letter had been sent to and received by
him. In fact, in his December 13, 2004 Complainants Reply
Affidavit, Aliling goes on to tag such letter/memorandum as fabrication.
WWWEC did not adduce proof to show that a copy of the letter was duly served
upon Aliling. Clearly enough, WWWEC did not comply with the first notice
requirement.

Neither was there compliance with the imperatives of a hearing or

conference. The Court need not dwell at length on this particular breach of the
due procedural requirement. Suffice it to point out that the record is devoid of
any showing of a hearing or conference having been conducted. On the contrary,
in its October 1, 2004 letter to Aliling, or barely five (5) days after it served the
notice of termination, WWWEC acknowledged that it was still evaluating his
case. And the written notice of termination itself did not indicate all the
circumstances involving the charge to justify severance of employment.
Aliling is entitled to backwages
and separation pay in lieu of reinstatement

As may be noted, the CA found Alilings dismissal as having been illegally

effected, but nonetheless concluded that his employment ceased at the end of the
probationary period. Thus, the appellate court merely affirmed the monetary
award made by the NLRC, which consisted of the payment of that amount
corresponding to the unserved portion of the contract of employment.
 The case disposition on the award is erroneous.

As earlier explained, Aliling cannot be rightfully considered as a mere

probationary employee. Accordingly, the probationary period set in the contract
of employment dated June 11, 2004 was of no moment. In net effect, as of that
date June 11, 2004, Aliling became part of the WWWEC organization as a
regular employee of the company without a fixed term of employment. Thus, he
is entitled to backwages reckoned from the time he was illegally dismissed on
October 6, 2004, with a PhP 17,300.00 monthly salary, until the finality of this
Decision. This disposition hews with the Courts ensuing holding in Javellana v.
Belen:[40]

Article 279 of the Labor Code, as amended by Section 34 of

Republic Act 6715 instructs:

Art. 279. Security of Tenure. - In cases of regular

employment, the employer shall not terminate the services of an
employee except for a just cause or when authorized by this
Title. An employee who is unjustly dismissed from work
shall be entitled to reinstatement without loss of seniority
rights and other privileges and to his full backwages,
inclusive of allowances, and to his other benefits or their
monetary equivalent computed from the time his
compensation was withheld from him up to the time of his
actual reinstatement. (Emphasis supplied)

Clearly, the law intends the award of backwages and similar

benefits to accumulate past the date of the Labor Arbiters decision
until the dismissed employee is actually reinstated. But if, as in this
case, reinstatement is no longer possible, this Court has consistently
ruled that backwages shall be computed from the time of illegal
dismissal until the date the decisionbecomes final. (Emphasis
supplied.)

Additionally, Aliling is entitled to separation pay in lieu of reinstatement on

the ground of strained relationship.

In Golden Ace Builders v. Talde,[41] the Court ruled:

 The basis for the payment of backwages is different from that
for the award of separation pay. Separation pay is granted where
reinstatement is no longer advisable because of strained relations
between the employee and the employer. Backwages represent
compensation that should have been earned but were not collected
because of the unjust dismissal. The basis for computing backwages is
usually the length of the employee's service while that for separation
pay is the actual period when the employee was unlawfully prevented
from working.

As to how both awards should be computed, Macasero v.

Southern Industrial Gases Philippines instructs:

[T]he award of separation pay is inconsistent with a

finding that there was no illegal dismissal, for under Article 279
of the Labor Code and as held in a catena of cases, an employee
who is dismissed without just cause and without due process is
entitled to backwages and reinstatement or payment of
separation pay in lieu thereof:

Thus, an illegally dismissed employee is entitled to

two reliefs: backwages and reinstatement. The two
reliefs provided are separate and distinct. In instances
where reinstatement is no longer feasible because of
strained relations between the employee and the
employer, separation pay is granted. In effect, an
illegally dismissed employee is entitled to either
reinstatement, if viable, or separation pay if
reinstatement is no longer viable, and backwages.

The normal consequences of respondents illegal

dismissal, then, are reinstatement without loss of seniority
rights, and payment of backwages computed from the time
compensation was withheld up to the date of actual
reinstatement. Where reinstatement is no longer viable as
an option, separation pay equivalent to one (1) month
salary for every year of service should be awarded as an
 alternative. The payment of separation pay is in addition to
payment of backwages. x x x

Velasco v. National Labor Relations Commission emphasizes:

The accepted doctrine is that separation pay may avail in
lieu of reinstatement if reinstatement is no longer practical or in
the best interest of the parties. Separation pay in lieu of
reinstatement may likewise be awarded if the employee decides
not to be reinstated. (emphasis in the original; italics supplied)

Under the doctrine of strained relations, the payment of

separation pay is considered an acceptable alternative to
reinstatement when the latter option is no longer desirable or
viable. On one hand, such payment liberates the employee from what
could be a highly oppressive work environment. On the other hand, it
releases the employer from the grossly unpalatable obligation of
maintaining in its employ a worker it could no longer trust.

Strained relations must be demonstrated as a fact, however,

to be adequately supported by evidence substantial evidence to show
that the relationship between the employer and the employee is indeed
strained as a necessary consequence of the judicial controversy.

In the present case, the Labor Arbiter found that actual

animosity existed between petitioner Azul and respondent as a
result of the filing of the illegal dismissal case. Such finding,
especially when affirmed by the appellate court as in the case at
bar, is binding upon the Court, consistent with the prevailing
rules that this Court will not try facts anew and that findings of
facts of quasi-judicial bodies are accorded great respect, even
finality. (Emphasis supplied.)

As the CA correctly observed, To reinstate petitioner [Aliling] would only

create an atmosphere of antagonism and distrust, more so that he had only a short
stint with respondent company.[42] The Court need not belabor the fact that the
patent animosity that had developed between employer and employee generated
what may be considered as the arbitrary dismissal of the petitioner.
 Following the pronouncements of this Court Sagales v. Rustans
Commercial Corporation,[43] the computation of separation pay in lieu of
reinstatement includes the period for which backwages were awarded:

Thus, in lieu of reinstatement, it is but proper to award

petitioner separation pay computed at one-month salary for every
year of service, a fraction of at least six (6) months considered as
one whole year. In the computation of separation pay, the period
where backwages are awarded must be included. (Emphasis
supplied.)

Thus, Aliling is entitled to both backwages and separation pay (in lieu of
reinstatement) in the amount of one (1) months salary for every year of service,
that is, from June 11, 2004 (date of employment contract) until the finality of this
decision with a fraction of a year of at least six (6) months to be considered as
one (1) whole year. As determined by the labor arbiter, the basis for the
computation of backwages and separation pay will be Alilings monthly salary at
PhP 17,300.

Finally, Aliling is entitled to an award of PhP 30,000 as nominal damages

in consonance with prevailing jurisprudence[44] for violation of due process.

Petitioner is not entitled to moral and exemplary damages

In Nazareno v. City of Dumaguete,[45] the Court expounded on the requisite

elements for a litigants entitlement to moral damages, thus:

Moral damages are awarded if the following elements exist in

the case: (1) an injury clearly sustained by the claimant; (2) a culpable
act or omission factually established; (3) a wrongful act or omission
by the defendant as the proximate cause of the injury sustained by the
claimant; and (4) the award of damages predicated on any of the cases
stated Article 2219 of the Civil Code. In addition, the person claiming
moral damages must prove the existence of bad faith by clear and
convincing evidence for the law always presumes good faith. It is not
enough that one merely suffered sleepless nights, mental anguish, and
serious anxiety as the result of the actuations of the other party.
Invariably such action must be shown to have been willfully done in
bad faith or with ill motive. Bad faith, under the law, does not
simply connote bad judgment or negligence. It imports a
 dishonest purpose or some moral obliquity and conscious doing of
a wrong, a breach of a known duty through some motive or
interest or ill will that partakes of the nature of fraud. (Emphasis
supplied.)

In alleging that WWWEC acted in bad faith, Aliling has the burden of
proof to present evidence in support of his claim, as ruled in Culili v. Eastern
Telecommunications Philippines, Inc.:[46]

According to jurisprudence, basic is the principle that good faith

is presumed and he who alleges bad faith has the duty to prove the
same. By imputing bad faith to the actuations of ETPI, Culili has the
burden of proof to present substantial evidence to support the
allegation of unfair labor practice. Culili failed to discharge this
burden and his bare allegations deserve no credit.

This was reiterated in United Claimants Association of NEA (UNICAN) v.

National Electrification Administration (NEA),[47] in this wise:

It must be noted that the burden of proving bad faith rests on the
one alleging it. As the Court ruled in Culili v. Eastern
Telecommunications, Inc., According to jurisprudence, basic is the
principle that good faith is presumed and he who alleges bad faith has
the duty to prove the same. Moreover, in Spouses Palada v. Solidbank
Corporation, the Court stated, Allegations of bad faith and fraud must
be proved by clear and convincing evidence.

Similarly, Aliling has failed to overcome such burden to prove bad faith on
the part of WWWEC. Aliling has not presented any clear and convincing
evidence to show bad faith. The fact that he was illegally dismissed is
insufficient to prove bad faith. Thus, the CA correctly ruled that [t]here was no
sufficient showing of bad faith or abuse of management prerogatives in the
personal action taken against petitioner.[48] In Lambert Pawnbrokers and Jewelry
Corporation v. Binamira,[49] the Court ruled:

A dismissal may be contrary to law but by itself alone, it does

not establish bad faith to entitle the dismissed employee to moral
damages. The award of moral and exemplary damages cannot be
justified solely upon the premise that the employer dismissed his
employee without authorized cause and due process.
 The officers of WWWEC cannot be held
jointly and severally liable with the company

The CA held the president of WWWEC, Jose B. Feliciano, San Mateo and
Lariosa jointly and severally liable for the monetary awards of Aliling on the
ground that the officers are considered employers acting in the interest of the
corporation. The CA cited NYK International Knitwear
Corporation Philippines (NYK) v. National Labor Relations Commission[50] in
support of its argument. Notably, NYK in turn cited A.C. Ransom Labor
Union-CCLU v. NLRC.[51]

Such ruling has been reversed by the Court in Alba v. Yupangco,[52] where
the Court ruled:

By Order of September 5, 2007, the Labor Arbiter denied

respondents motion to quash the 3rd alias writ. Brushing aside
respondents contention that his liability is merely joint, the Labor
Arbiter ruled:

Such issue regarding the personal liability of the officers of a

corporation for the payment of wages and money claims to its
employees, as in the instant case, has long been resolved by the
Supreme Court in a long list of cases [A.C. Ransom Labor
Union-CLU vs. NLRC (142 SCRA 269) and reiterated in the cases
of Chua vs. NLRC (182 SCRA 353), Gudez vs. NLRC (183 SCRA
644)]. In the aforementioned cases, the Supreme Court has expressly
held that the irresponsible officer of the corporation (e.g. President) is
liable for the corporations obligations to its workers. Thus, respondent
Yupangco, being the president of the respondent YL Land and Ultra
Motors Corp., is properly jointly and severally liable with the
defendant corporations for the labor claims of Complainants Alba and
De Guzman. x x x

xxxx

As reflected above, the Labor Arbiter held that respondents

liability is solidary.
 There is solidary liability when the obligation expressly so states,
when the law so provides, or when the nature of the obligation so
requires. MAM Realty Development Corporation v. NLRC, on
solidary liability of corporate officers in labor disputes, enlightens:

x x x A corporation being a juridical entity, may act only

through its directors, officers and employees. Obligations
incurred by them, acting as such corporate agents are not theirs
but the direct accountabilities of the corporation they represent.
True solidary liabilities may at times be incurred but only when
exceptional circumstances warrant such as, generally, in the
following cases:

1. When directors and trustees or, in appropriate

cases, the officers of a corporation:

(a) vote for or assent to patently unlawful acts of the

corporation;

(b) act in bad faith or with gross negligence in

directing the corporate affairs;

xxxx

In labor cases, for instance, the Court has held corporate

directors and officers solidarily liable with the corporation for the
termination of employment of employees done with malice or in bad
faith.

A review of the facts of the case does not reveal ample and satisfactory
proof that respondent officers of WWEC acted in bad faith or with malice in
effecting the termination of petitioner Aliling. Even assuming arguendo that the
actions of WWWEC are ill-conceived and erroneous, respondent officers cannot
be held jointly and solidarily with it. Hence, the ruling on the joint and solidary
liability of individual respondents must be recalled.

Aliling is entitled to Attorneys Fees and Legal Interest

 Petitioner Aliling is also entitled to attorneys fees in the amount of ten
percent (10%) of his total monetary award, having been forced to litigate in order
to seek redress of his grievances, pursuant to Article 111 of the Labor Code and
following our ruling in Exodus International Construction Corporation v.
Biscocho,[53] to wit:

In Rutaquio v. National Labor Relations Commission, this Court held

that:
It is settled that in actions for recovery of wages or where an
employee was forced to litigate and, thus, incur expenses to
protect his rights and interest, the award of attorneys fees is
legally and morally justifiable.

In Producers Bank of the Philippines v. Court of Appeals this

Court ruled that:

Attorneys fees may be awarded when a party is compelled to

litigate or to incur expenses to protect his interest by reason of
an unjustified act of the other party.

While in Lambert Pawnbrokers and Jewelry Corporation,[54] the Court

specifically ruled:

However, the award of attorneys fee is warranted pursuant to

Article 111 of the Labor Code. Ten (10%) percent of the total award
is usually the reasonable amount of attorneys fees awarded. It is
settled that where an employee was forced to litigate and, thus, incur
expenses to protect his rights and interest, the award of attorneys fees
is legally and morally justifiable.

Finally, legal interest shall be imposed on the monetary awards herein

granted at the rate of 6% per annum from October 6, 2004 (date of termination)
until fully paid.

WHEREFORE, the petition is PARTIALLY GRANTED. The July 3,

2008 Decision of the Court of Appeals in CA-G.R. SP No. 101309 is
hereby MODIFIED to read:

WHEREFORE, the petition is PARTIALLY

GRANTED. The assailed Resolutions of respondent (Third Division)
 National Labor Relations Commission are AFFIRMED, with the
following MODIFICATION/CLARIFICATION: Respondent Wide
Wide World Express Corp. is liable to pay Armando Aliling the
following: (a) backwages reckoned from October 6, 2004 up to the
finality of this Decision based on a salary of PhP 17,300 a month,
with interest at 6% per annum on the principal amount from October
6, 2004 until fully paid; (b) the additional sum equivalent to one (1)
month salary for every year of service, with a fraction of at least six (6)
months considered as one whole year based on the period from June
11, 2004 (date of employment contract) until the finality of this
Decision, as separation pay; (c) PhP 30,000 as nominal damages; and
(d) Attorneys Fees equivalent to 10% of the total award.
SO ORDERED.

PRESBITERO J. VELASCO, JR.

Associate Justice
JIMMY ARENO, JR., G.R. No. 180302
Petitioner,

Present:

CARPIO, J., Chairperson,

- versus - BRION,
DEL CASTILLO,
ABAD, and
PEREZ, JJ.

SKYCABLE PCC-BAGUIO, Promulgated:

Respondent. February 5, 2010
x------------------------------------------------------------
-x

DECISION

DEL CASTILLO, J.:

Disciplinary action against an erring employee is a management prerogative which,

generally, is not subject to judicial interference. However, this policy can be justified
only if the disciplinary action is dictated by legitimate business reasons and is not
oppressive, as in this case.

This petition for review on certiorari[1] assails the Decision[2] dated May 28, 2007 and
the Resolution[3] dated October 16, 2007 of the Court of Appeals (CA) in CA-G.R. SP
No. 94485, which affirmed the February 28, 2006 Decision[4] of the National Labor
Relations Commission (NLRC) upholding the legality of petitioner Jimmy Areno Jr.s
suspension and subsequent termination from employment.

Factual Antecedents

On January 17, 1995, petitioner was employed as a cable technician by respondent

Skycable PCC-Baguio. On January 17, 2002, an accounting clerk of respondent,
Hyacinth Soriano (Soriano), sent to the human resource manager a
letter-complaint[5] against petitioner alleging that on two separate occasions, the latter
spread false rumors about her (the first in the middle of 2001 and the second on
December 22, 2001). On January 27, 2002, she was again insulted by petitioner when
the latter approached her and said that she was seen going out with Aldrin Estrada,
their field service supervisor, at Central Park, Baguio City. During that incident,
petitioner uttered, Ikaw lang ang nakakaalam ng totoo with malicious intent and in a
provocative manner. Soriano averred that petitioners unscrupulous behavior
constituted serious and grave offense in violation of the companys Code of Discipline.

On the same day, respondent issued a Memorandum[6] requiring petitioner to submit

an explanation within 76 hours from notice thereof. Petitioner submitted his written
explanation[7] dated January 23, 2002 denying all the allegations in Sorianos
letter-complaint and further denying having uttered the statement imputed on him,
explaining thus:

2. That on the 7th of January, 2002 at SkyCable office, I greeted

her HELLO, HYA. I thought she didnt hear me greet her so I continued
saying NAKITA NAMIN KAYO AHSA CENTRAL PARK. With that she
answered, KASAMA KO SI EMMAN. Then I added, BAT NANDOON
YUNG 114? Then she reacted TSISMOSO KA KASI! In that instance, I
didnt intend to insult her as she was saying because I never really implied
anything with my statement nor delivered it with malicious intent. So I
ended by saying, BAT DI MO SABIHIN YUNG PROBLEMA MO SA
AKIN? IKAW LANG ANG NAKAKAALAM NIYAN E! In this statement, I
was asking her to tell me frankly the reasons why shes mad at me. I want
to stress that I never delivered the statement in a provocative manner.[8]

An administrative investigation was accordingly conducted on January 31, 2002. In a

Memo[9] dated February 6, 2002, the investigating committee found petitioner guilty of
having made malicious statements against Soriano during the January 7,
2002conversation, which is categorized as an offense under the Company Code of
Discipline. Consequently, petitioner was suspended for three days without pay
effective February 13-15, 2002. The Memo was allegedly served on February 7,
2002 but petitioner refused to sign it.

Notwithstanding the suspension order, however, petitioner still reported for work
on February 13, 2002. By reason thereof, respondent sent petitioner a letter
denominated as 1st Notice of Termination[10] requiring him to explain in writing why
he should not be terminated for insubordination. On February 18, 2002, petitioner
inquired from respondent whether he is already dismissed or merely suspended since
he was refused entry into the company premises on February 14, 2002.[11] Respondent
replied that petitioner was merely suspended and gave him additional time to tender
his written explanation to the 1st Notice of Termination.

On March 2, 2002, petitioner again wrote to respondent, this time requesting for
further investigation on his alleged act of spreading rumors against Soriano in order for
him to confront his accuser and present his witnesses with the assistance of
counsel. Respondent denied the request reiterating that there has been substantial
compliance with due process and that a reinvestigation is moot because the suspension
was already served.

Anent the new charge of insubordination, petitioner submitted to respondent his

written explanation[12] averring that he still reported for work on the first day of his
suspension because the accusation of Soriano is baseless and her testimony is
hearsay. Besides, according to petitioner, he did not defy any order related to his duties,
no representative of the management prevented him from working and that reporting
to work without being paid for the service he rendered on that day did not in any way
affect the companys productivity.

On March 15, 2002, an investigation on the insubordination case was conducted which
was attended by the parties and their respective counsels. Through a Final Notice of
Termination dated April 1, 2002,[13] petitioner was dismissed from service on the
ground of insubordination or willful disobedience in complying with the suspension
order.

Proceedings before the Labor Arbiter

On April 5, 2002, petitioner filed a complaint[14] before the Arbitration Branch of the
NLRC against respondent assailing the legality of his suspension and eventual
dismissal. He claimed that his suspension and dismissal were effected without any
basis, and that he was denied his right to due process.

On July 31, 2003, the Labor Arbiter rendered a Decision[15] dismissing petitioners
complaint for lack of merit. The Labor Arbiter ruled that the act of petitioner in
spreading rumors or intriguing against the honor of a co-employee was persistent and
characterized by willful and wrongful intents. It thus held that the order suspending
petitioner is a legitimate exercise of management prerogative and that the deliberate
refusal of petitioner to comply therewith constitutes willful disobedience.

Proceedings before the NLRC

Petitioner appealed to the NLRC, which, in a Decision[16] dated July 22, 2005 found
his suspension and dismissal illegal. It held that the testimonies given during
the January 31, 2002 administrative investigation and used as basis for petitioners
suspension are hearsay.The NLRC likewise held that petitioner was deprived of his
basic right to due process when he was not allowed to confront his accuser despite his
repeated requests.

Respondent moved for reconsideration.[17] Petitioner, for his part, filed a Motion for
Partial Reconsideration[18] with respect to the limited award of backwages and to claim
payment of attorneys fees and damages as well.

The NLRC, in its February 28, 2006 Decision,[19] reconsidered its earlier Decision and
reinstated the Labor Arbiters Decision dismissing the complaint. In reversing itself, the
NLRC opined that as shown by the transcripts of the investigation conducted
on January 31, 2002, the testimony of Soriano was not, after all, hearsay. The NLRC
also considered the Memorandum dated December 10, 2001 which placed petitioner
under deactivation for three months due to an offense he earlier committed. While
under said deactivation period, the commission of any further infraction warrants the
imposition of the penalty of suspension. Finally, the NLRC struck down petitioners
claim that he has no knowledge of the suspension order since this was never raised
before the Labor Arbiter but only on appeal.

Proceedings before the Court of Appeals

Aggrieved, petitioner filed with the CA a petition for certiorari.[20] On May 28, 2007,
the CA affirmed the findings of the NLRC, ruling that the suspension of petitioner was
not predicated on hearsay evidence; that petitioner was not deprived of due process
both at the company level and during the proceedings held before the NLRC; and that
petitioners failure to comply with respondents suspension order, despite notice thereof,
is a case of willful disobedience of a lawful order which is a valid ground for
dismissal.

Petitioner moved for reconsideration.[21] Before acting thereon, the CA required

respondent to file its comment.[22] Although 19 days late, the CA admitted respondents
comment[23] in the interest of justice.[24]

On October 16, 2007, the CA resolved petitioners Motion for Reconsideration as

follows:
Finding no cogent reason with which to modify, much less reverse Our
assailed Decision dated May 28, 2007, petitioners Motion for
Reconsideration filed on June 18, 2007 is hereby DENIED.

SO ORDERED.[25]

Issues

Hence, the present petition with the following assignment of errors:

I.
WHETHER OR NOT THE COURT OF APPEALS SERIOUSLY
ERRED IN AFFIRMING THE WHIMSICAL AND CAPRICIOUS
DECISION OF THE NLRC WHICH REVERSED ITS ORIGINAL
DECISION FINDING THAT WITNESS HYACINTH SORIANOS
TESTIMONY IS NOT HEARSAY AFTER ALL:

A. BY MEANS OF SELECTIVE CITATION ON A

PORTION ON PAGE TWO OF THE FIVE-PAGE UNSWORN
TESTIMONY OF HYACINTH SORIANO THAT HER
TESTIMONY IS NOT HEARSAY AFTER ALL WHEN IN ITS
ENTIRETY THE TESTIMONIES ARE
DOUBLE-TRIPLE-HEARSAY AS FOUND [BY] THE
RESPONDENT NLRC IN ITS ORIGINAL DECISION, ASIDE
FROM THE FACT THAT IN THAT JANUARY 31, 2002
HEARING WITNESS HYACINTH SORIANO DID NOT
TESTIFY UNDER OATH AND THE ENTIRE PROCEEDINGS
OF THE MINUTES WAS NOT SIGNED BY THE 3-MEMBER
INVESTIGATION COMMITTEE, HENCE THE BASIS OF THE
PETITIONERS SUSPENSION WHICH PUBLIC RESPONDENTS
FOUND TO BE A LEGAL ORDER IS NOTHING BUT A SCRAP
OF PAPER.

B. BY SIMPLY STATING THAT PETITIONER WAS

NOT DENIED DUE PROCESS BECAUSE HE WAS FURNISHED
COPY OF THE TERMINATION NOTICE STATING THE
GROUNDS THERETO ALTHOUGH IN THE PLANT LEVEL
INVESTIGATION/HEARING ON JANUARY 31, 2002,
 PETITIONER WAS EXCLUDED OR HIS PRESENCE WAS NOT
ALLOWED DURING THE GUIDED/COUCHED
INTERROGATIONS FOR THE TESTIMONIES OF WITNESS
HYACINTH SORIANO AND AFTER WITNESS SORIANOS
GUIDED/COUCHED TESTIMONIES ENDED, THE PANEL OF
INVESTIGATORS SUBSEQUENTLY TOOK THE
TESTIMONIES OF THE PETITIONER, ONE AFTER THE
OTHER. IN SHORT, DESPITE HIS REPEATED DEMANDS
FROM THE PRIVATE RESPONDENT MANAGEMENT THAT
HE BE ALLOWED TO CONFRONT HIS ACCUSER HYACINTH
SORIANO, PETITIONER WAS NOT ALLOWED TO
CONFRONT HIS ACCUSER.

II.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS
SERIOUSLY ERRED IN FAILING TO CONSIDER THE
UNCONTROVERTED FACT THAT THE SO-CALLED THREE-DAY
SUSPENSION WAS ANCHORED ON A SCRAP OF PAPER
BECAUSE IT WAS NOT SIGNED AND ISSUED BY A COMPANY
OFFICIAL OF THE PRIVATE RESPONDENT AUTHORIZED TO
EFFECT ANY DISMISSAL OR SUSPENSION ORDER, THUS
PETITIONER DID NOT VIOLATE ANY LAWFUL ORDER.

III.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS
SERIOUSLY ERRED IN AFFIRMING THE WHIMSICAL AND
CAPRICIOUS SECOND DECISION OF THE RESPONDENT NLRC
WHICH REVERSED ITS ORIGINAL DECISION ON THE ALLEGED
GROUND:

A. THAT THE PETITIONER KNEW OF HIS

SUSPENSION WHEN HE REPORTED FOR DUTY ON
FEBRUARY 13, 2002 AS DECREED IN THE
UNSIGNED SO-CALLED SUSPENSION ORDER ALLEGEDLY
CONSTITUTING INSUBORDINATIONWHEN THE FACTS
DISCLOSE THAT PETITIONER DECLINED TO RECEIVE IT
PERSONALLY AND HE ASKED THAT IT BE SENT TO HIM
THROUGH REGISTERED MAIL AND THIS FACT IS
 ADMITTED BY PRIVATE RESPONDENT, THUS PUBLIC
RESPONDENTS FINDINGS AND CONCLUSION ARE NOT
ONLY CONTRARY TO THE ADMISSION OF BOTH PARTIES
BUT BASED ON CONJECTURES AND SURMISES.

B. THAT AS FOUND BY THE COURT OF APPEALS IT

IS ONLY ON APPEAL THAT PETITIONER INTERPOSES THE
ARGUMENT THAT HE COULD NOT HAVE KNOWN ABOUT
HIS SUSPENSION THUS HE COULD NOT VIOLATE AN
ORDER WHICH HE HAD NOT KNOWN IN THE FIRST PLACE,
IS NOT IN ACCORD WITH THE APPLICABLE
JURISPRUDENCE, MOREOVER, UPON SCRUTINY IT WAS
NOT SIGNED BY A COMPANY OFFICIAL AUTHORIZED TO
EFFECT DISMISSAL OR SUSPENSION ORDER. THUS THE
COURT OF APPEALS SERIOUSLY ERRED IN ITS FINDING
ON THIS MATTER.

IV.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS
SERIOUSLY ERRED IN ADMITTING THE PRIVATE
RESPONDENTS COMMENT DESPITE x x x NON-COMPLIANCE
WITH THE COURT OF APPEALS ORDER TO FILE COMMENT
[DISREGARDING] THE STRICT OBSERVANCE OF THE RULES
WHICH IS MANDATORY. FURTHERMORE, WHETHER OR NOT
THE COURT OF APPEALS [VIOLATED] THE MANDATE OF
SECTION 14, ARTICLE VIII OF THE CONSTITUTION IN ITS
DENIAL OF PETITIONERS MOTION FOR RECONSIDERATION
WITHOUT STATING THE LEGAL BASIS THEREFOR.[26]
Petitioner contends that his suspension was without any basis since the
testimony of Soriano is hearsay and was not made under oath. Also, the minutes of the
investigative proceeding/hearing was not signed by the investigators. Petitioner
likewise contends that he was denied due process as he was not given the opportunity
to contest the evidence against him. He further insists that the suspension order is a
scrap of paper as it was not signed and issued by an official who is authorized to
effectuate such order. And even assuming that the suspension order is valid, no proof
was ever presented to show that he was indeed served or that he received a copy
thereof. Therefore, he could not have violated any lawful order to justify his dismissal.

Our Ruling
 The petition is devoid of merit.

The CA did not err in admitting the comment of

respondent despite its late filing.

Petitioner argues that the CA erred in admitting respondents Comment to

petitioners Motion for Reconsideration which was filed 19 days late.

A close scrutiny of Section 6, Rule 65 of the Rules of Court,[27] which grants

discretionary authority to the CA in ordering parties to file responsive and other
pleadings in petitions for certiorari filed before it, will reveal that such rule is merely
directory in nature. This is so because the word may employed by the rule shows that
it is not mandatory but discretionary on the part of the CA to require the filing of
pleadings which it deems necessary to assist it in resolving the controversies.[28] In the
same way, the admission of any responsive pleading filed by party-litigants is a matter
that rests largely on the sound discretion of the court. At any rate, rules of procedure
may be relaxed in the interest of substantial justice and in order to afford litigants
maximum opportunity for the proper and just determination of their causes.[29] Strict
adherence to technical adjective rules should never be unexceptionally required
because a contrary precept would result in a failure to decide cases on their
merits.[30] The CA could not have erred in admitting the comment, albeit filed late,
when it viewed that the interest of justice would be better served by the policy of
liberality.

CA stated legal basis for denying petitioners

motion for reconsideration.

Petitioner next alleges that the CA denied reconsideration without indicating its
legal basis in violation of the mandate of Section 14, Article VIII of the Constitution,
which provides that no petition for review or motion for reconsideration of a decision
of the court shall be refused due course or denied without stating the legal basis
therefor. This requirement, however, was complied with in the instant case, when the
CA, in its resolution denying petitioners motion for reconsideration, stated that it found
no cogent reason to modify, much less reverse itself.[31]

Suspension validly meted out by respondent on

petitioner.
 Going now to the merits of the case, the 3-day suspension of petitioner is not
tainted with substantive or procedural infirmities. For one, petitioners insistent claim
that his suspension was predicated on hearsay testimony deserves scant consideration.

The NLRC initially ruled that Sorianos testimony during the investigation on the
alleged act of petitioner in spreading rumors is hearsay. Nevertheless, it reversed itself
by holding that while Soriano stated that her allegation with regard to the first two
instances that petitioner was spreading false information about her is based on what
she heard from other people, her narration of the third instance relating to what has
transpired during their January 7, 2002 conversation is not hearsay. The NLRC ruled
quoting in part the relevant testimony of Soriano as recorded in the transcript of the
investigation:

x x x. Indeed, complainant had been spreading malicious

information against Ms. Soriano. It appears that Ms. Soriano had averred
that this happened on three (3) occasions. The first two (2) instances
happened in midyear of 2001 and another in December 2001. the [sic]first
two (2) instances were merely referred to by the complainant in passing.
Thus, she stated:

Raul: So ang pag-uusapan natin dito ay yung number 3, yung

January 7?

Hya: Opo. Kasi yung mid last year at yung December 23,
iniignore ko lang hanggang nung Jan 7 harap harapan
na.

Tessa: Are you considering numbers 1 and 2? Kasi dito naman

nag-ugat yun e.

Hya: Maam kasi ang parang point ko dito is to cite na ngayon

may proof na ako kasi hinarap na nya ako
unlike noon napuro hearsay lang. Ngayon parang
Napatunayan ko na thru Jan 7 na totoo nga. Parang ang
ano ko kasi dito is yung intrigue. Yung 1 & 2 Rumors
lang pero nung Jan 7, intrigue na un kasi may mga taong
nakarinig.
 Raul: So ang sinasabi mo ba is talagang ang offense is yung
pag-insulto nya? Parang ang talagang intension nya is
awayin ka? Parang alam nya maiinis ka.
Hya: Opo

Raul: Kasi di ba when youre provoking a fight usually

hinahamon mo? In this case ba yung sinabi ni Toto ay
parang gumawa sya ng statement na hindi maganda sa
iyo at yung reaction mo ay x x
Hya: Sir siguro sa part ni Toto hindi kasi hes used to it na e.
Pero on my part x x x

Raul: So yun ang interpretation mo sa offense ni x x x.

Hya: Opo.

The foregoing reveals that Ms. Sorianos testimony is not hearsay and
neither is it say-so.[32]

On appeal, the CA affirmed this ruling when it likewise found that the following
statements of Soriano were limited to matters of personal knowledge:

Hya: 12:15, pagbungad ko palang, O HYA KUMAIN PALA KAYO SA

CENTRAL PARK? Sabi ko OO KASAMA KO SI EMAN,
sasabihin ko palang yung hindi na nakasama si May, Ang sabi niya
na E NASA LABAS NAMAN YUNG SASAKYAN NI. tapos
sinabi nya yung plate # ni sir Aldrin.

Tessa: Nasa labas daw yung sasakyan ni Aldrin.

Hya: Opo, e di nagtaka ako, nag-argue na kami, tinitingnan na kami ng

mga Aes tapos iniwan ko sya.[33]

The CA and NLRC are in agreement with this finding and since both are
supported by evidence on record, the same must be accorded due respect and finality.

Petitioner still contends that the testimonies elicited during the investigative
hearing were not made under oath, that the record of the proceeding is not admissible
for being unsigned, and that he was not given a chance to confront his accuser, thus,
invoking denial of due process.

In this case, petitioner was asked to explain and was informed of the complaint
against him. A committee was formed which conducted an investigation on January
31, 2002 by exhaustively examining and questioning both petitioner and his accuser,
Soriano, separately. Petitioner actively participated therein by answering the questions
interposed by the panel members. The proceeding was recorded, and the correctness of
which was certified by respondent thru its Regional Manager, Raul
Bandonill.[34] Undoubtedly, petitioner was given enough opportunity to be heard and
defend himself. It has already been held that the essence of due process is simply an
opportunity to be heard, a formal or trial-type hearing is not essential as the due
process requirement is satisfied where the parties are afforded fair and reasonable
opportunity to explain their side.[35]

The decision to suspend petitioner was rendered after investigation and a finding
by respondent that petitioner has indeed made malicious statements against a
co-employee. The suspension was imposed due to a repeated infraction within a
deactivation period set by the company relating to a previous similar offense
committed. It is axiomatic that appropriate disciplinary sanction is within the purview
of management imposition.[36] What should not be overlooked is the prerogative of an
employer company to prescribe reasonable rules and regulations necessary for the
proper conduct of its business and to provide certain disciplinary measures in order to
implement said rules to assure that the same would be complied with.[37] Respondent
then acted within its rights as an employer when it decided to exercise its management
prerogative to impose disciplinary measure on its erring employee.

Petitioner was validly dismissed on the ground of

willful disobedience in refusing to comply with the
suspension order.

The CA refused to give credence to petitioners assertion of having no

knowledge of the suspension because he refused to receive the suspension order
preferring that it be sent by registered mail. The appellate court affirmed the factual
finding of the NLRC that petitioner was definitely aware of his suspension but only
feigned ignorance of the same. As a rule, we refrain from reviewing factual
assessments of agencies exercising adjudicative functions. Factual findings of
administrative agencies that are affirmed by the CA are conclusive on the parties and
not reviewable by this Court so long as these findings are supported by substantial
evidence.[38]
 Anyhow, evidence on record repudiates petitioners pretension. His insistence
that he had no notice of his suspension is belied by evidence as it shows that the
suspension order was served on petitioner on February 7, 2002 by his immediate
superior, Al Luzano, but petitioner declined to sign it. No acceptable reason was
advanced for doing so except petitioners shallow excuse that it should be sent to him
by registered mail.

Petitioner also challenges the validity of the suspension order for being
unsigned. The same has no merit. Upon careful examination, it appears that the
contention was raised for the first time in petitioners motion for reconsideration of the
Decision of the CA. In Arceno v. Government Service Insurance System,[39] the
hornbook principle that new issues cannot be raised for the first time on appeal was
reiterated. We emphasized therein that the rule is based on principles of fairness and
due process and is applicable to appealed decisions originating from regular courts,
administrative agencies or quasi-judicial bodies, whether rendered in a civil case, a
special proceeding or a criminal case, citing the case of Tan v. Commission on
Elections.[40] Even assuming that it was raised, the same would be without merit
because the suspension order bears the signature of respondents engineering manager
and petitioners immediate superior, Al Luzano, who, in fact, is a member of the panel
committee that conducted an investigation on the complaint of Soriano against
petitioner.

As a just cause for dismissal of an employee under Article 282[41] of the Labor
Code, willful disobedience of the employers lawful orders requires the concurrence of
two elements: (1) the employees assailed conduct must have been
willful, i.e., characterized by a wrongful and perverse attitude; and (2) 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.[42] Both requisites are
present in the instant case. It is noteworthy that upon receipt of the notice of
suspension, petitioner did not question such order at the first instance. He immediately
defied the order by reporting on the first day of his suspension. Deliberate disregard or
disobedience of rules by the employee cannot be countenanced. It may encourage him
to do even worse and will render a mockery of the rules of discipline that employees
are required to observe.[43]

Petitioner was served the first notice of termination and was given time to
submit his written explanation. A hearing was conducted wherein both parties with
their respective counsels were present. After finding cause for petitioners termination,
a final notice apprising him of the decision to terminate his employment was
served. All things considered, respondent validly dismissed petitioner for cause after
complying with the procedural requirements of the law.
The allegation of fraud should be proven.

On the last point, petitioner posits that the unfavorable Decision of the Labor
Arbiter and the Decision of the NLRC were issued and obtained by means of fraud,
which is a valid ground for their annulment. In our jurisdiction, however, fraud is
never presumed and should be proved as mere allegations are not enough.[44] The
burden of proof rests on petitioner, which, in this case, he failed to discharge.

WHEREFORE, the petition is DENIED for lack of merit. The assailed May
28, 2007 Decision and October 16, 2007Resolution of the Court of Appeals in
CA-G.R. SP No. 94485 are AFFIRMED.

SO ORDERED.

JUDY O. DACUITAL,[1] EUGENIO G.R. No. 176748

L. MONDANO, JR., JOSEPH
GALER, [2]MARIANO MORALES,
ROBERTO RUANCE, JOSEPH
PORCADILLA, RAULITO PALAD,
RICARDO DIGAMON, NONITO
PRISCO , EULOGIO M. TUTOR,
MELVIN PEPITO, HELYTO N.
REYES,[3]RANDOLF C. BALUDO,
ALBERTO EPONDOL, RODELO Present:
A. SUSPER,[4]EVARISTO
VIGORI, [5] JONATHAN P.
AYAAY, FELIPE ERILLA, ARIS A. CARPIO, J.,
GARCIA, ROY A. GARCIA, and Chairperson,
RESTITUTO TAPANAN, NACHURA,
Petitioners, BERSAMIN,*
ABAD, and
- versus - MENDOZA, JJ.
 Promulgated:
L.M. CAMUS ENGINEERING
CORPORATION and/or LUIS M. September 1, 2010
CAMUS,
Respondents.

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

DECISION

NACHURA, J.:

This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court,
assailing the Court of Appeals (CA) Decision[6] dated September 25, 2006 and
Resolution[7] dated February 14, 2007 in CA-G.R. SP No. 90377.

The case stemmed from the following factual and procedural antecedents:

Respondent L.M. Camus Engineering Corporation (LMCEC) is a domestic

corporation duly organized and existing under and by virtue of Philippine laws,
engaged in construction, engineering, and air-conditioning business; while
respondent Luis M. Camus (Camus) is the company president.

Petitioners Judy O. Dacuital (Dacuital), Eugenio L. Mondano, Jr., Joseph Galer

(Galer), Mariano Morales, Roberto Ruance (Ruance), Joseph Porcadilla, Raulito
Palad (Palad), Ricardo Digamon (Digamon), Nonito Prisco, Eulogio M. Tutor,
Melvin Pepito, Helyto N. Reyes (Reyes), Randolf C. Baludo (Baludo), Alberto
Epondol, Rodelo A. Susper, Evaristo Vigori, Jonathan P. Ayaay, Felipe Erilla,
Aris A. Garcia (Aris), Roy A. Garcia (Roy), and Restituto Tapanan (Tapanan)
were hired by LMCEC as welder, tinsmith, pipefitter, and mechanical
employees.[8]
During the months of January, February and March 2001, petitioners were
required by LMCEC to surrender their identification cards and ATM cards and
were ordered to execute contracts of employment. Most of the petitioners did not
comply with the directive as they believed that it was only respondents strategy
to get rid of petitioners regular status since they would become new employees
disregarding their length of service. Petitioners were later dismissed from
employment.[9]

Hence, the complaint for illegal dismissal and non-payment of monetary benefits
filed by petitioners and other LMCEC employees who were similarly situated,
namely: Guillermo S. Lucas (Lucas), Alvin Bontugay, Rector Palajos, and
Hermes B. Pacatang (Pacatang), against respondents before the National Labor
Relations Commission (NLRC). The employees alleged that they were illegally
dismissed from employment and that their employer failed to pay them their
holiday pay, premium pay for holiday, rest day, service incentive leave pay, and
13th month pay during the existence and duration of their employment. They also
averred that they were not provided with sick and vacation leaves.[10]

Respondents denied that petitioners were illegally dismissed from employment.

They claimed that petitioners were project employees and, upon the completion
of each project, they were served notices of project completion.[11] They clarified
that the termination of petitioners employment was due to the completion of the
projects for which they were hired.[12]

Petitioners, however, countered that they were regular employees as they

had been engaged to perform activities which are usually necessary or desirable
in the usual business or trade of LMCEC. They denied that they were project or
contractual employees because their employment was continuous and
uninterrupted for more than one (1) year. Finally, they maintained that they were
part of a work pool from which LMCEC drew its workers for its various
projects.[13]

On July 24, 2002, Labor Arbiter (LA) Lilia S. Savari rendered a

decision,[14] the dispositive portion of which reads:

WHEREFORE, a Decision is hereby rendered declaring the

dismissal of the complainants illegal. Corollarily, except for
complainant Helyto N. Reyes, who has voluntarily withdrawn his case
against the respondents, all the other complainants are hereby ordered
to report to respondents for reinstatement but without backwages.
 All other claims are dismissed for lack of merit.

SO ORDERED.[15]

The LA did not give credence to respondents claim that petitioners were project
employees because of the formers failure to present evidence showing that
petitioners contracts of employment reflected the duration of each project for
which they were employed and that respondents duly reported to the Department
of Labor and Employment every termination of employment and project. As
petitioners dismissal was without just and valid cause, the LA ruled that their
termination from employment was illegal. However, the LA refused to award
backwages and other monetary claims on the ground that petitioners employment
was not continuous as they belonged to the regular work pool of LMCEC.[16]

The employees jointly filed a partial appeal to the NLRC, except Pacatang and
Lucas who filed their separate appeal. On the other hand, the Administrative
Officer of LMCEC issued individual communications to petitioners directing
their reinstatement pursuant to the LA decision.[17]

On June 9, 2004, the NLRC modified[18] the LA decision, the dispositive

portion of which reads:

WHEREFORE, the employees enumerated above are hereby

ordered reinstated with limited backwages, without loss of seniority
rights and other privileges.

The computation division of the RAB-NCR is hereby ordered to

compute the award as herein established.

SO ORDERED.[19]

The NLRC agreed with the LA that petitioners were illegally dismissed from
employment. As a consequence of this pronouncement, the tribunal deemed it
proper not only to reinstate them to their original position but also to give them
their backwages. However, in view of the delayed resolution of the case that
could not be attributed to respondents, the NLRC limited the award of backwages
from the date of dismissal up to six (6) months after the case was elevated on
appeal on September 23, 2002.[20] The appeal filed by Pacatang and Lucas was
dismissed for having been filed out of time.

Respondents and complainants Pacatang and Lucas moved for the

reconsideration of the NLRC decision. In a Resolution[21] dated April 11, 2005,
the NLRC denied the motion for reconsideration filed by respondents, but
granted that of Pacatang and Lucas, thereby entitling the latter to receive
backwages.

Petitioners subsequently moved for the execution of the NLRC decision.

Respondents, however, filed a Clarificatory Motion and Opposition to the
Motion for Issuance of Entry of Judgment and Writ of Execution and for
Recomputation of the Monetary Award[22] in view of respondents petition before
the CA and the reinstatement of some of the employees.

In an Order[23] dated August 23, 2005, the NLRC granted the motion. The
NLRC took into consideration the fact that some of the employees who were
earlier dismissed from employment had actually been reinstated. Hence, it
limited the award of backwages from illegal dismissal up to the date of actual
reinstatement. These employees who were actually reinstated were Galer, Ruance,
Palad, Digamon, Aris, Roy, and Baludo.[24]

In the meantime, in their petition before the CA, respondents obtained a

favorable decision when the appellate court declared petitioners termination from
employment valid and legal and consequently set aside the award of
backwages.[25] The pertinent portion of the decision reads:

IN VIEW WHEREOF, the Petition is GRANTED. The assailed

Decision (dated June 9, 2004) of the National Labor Relations
Commission is hereby MODIFIED. The termination from
employment of the public respondents herein are declared valid and
legal. Their award of backwages computed from the date of their
termination are (sic) SET ASIDE.

SO ORDERED.[26]

Contrary to the conclusions of the LA and the NLRC, the CA held that
petitioners were project employees as their employment contracts provided that
their respective tenures of employment were dependent on the duration of the
construction projects. As such employees, their employment could lawfully be
terminated upon the completion of the project for which they were hired.
Consequently, there was no illegal dismissal.[27] Petitioners motion for
reconsideration was denied on February 14, 2007.[28]

Aggrieved, petitioners come to us seeking a review of the CA Decision, anchored

on the following issues:

I. Whether or not the Findings of the Honorable Labor

Arbiter as affirmed by the Honorable National Labor Relations
Commission should be accorded high respect and finality.

II. Whether or not Petitioners were regular employees of

respondent Corporation.

III. Whether or not Complainants were illegally dismissed

from their employment.[29]

Petitioners aver that the CA erred in completely disregarding the findings

of the LA, as affirmed by the NLRC, in view of the settled rule that findings of
fact and conclusions of law of quasi-judicial agencies like the NLRC are
generally entitled to great respect and even finality. They also insist that they
were regular employees, considering that the services they rendered were not
only necessary but also indispensable to LMCECs business. They likewise claim
that they had been in the service for a continuous period and a considerable
length of time, and are in fact members of a work pool from which LMCEC
draws its workers for its projects. Hence, even if they were initially hired as
project employees, they eventually attained the status of regular employees.
Petitioners also insist that they were illegally dismissed as their employment was
terminated without just and valid cause, and without affording them due process
of law. Lastly, petitioners claim that the NLRC had previously rendered
decisions in favor of LMCEC employees who were similarly situated, hence,
their case should also be decided in favor of labor.[30]

The petition is meritorious.

We discuss first the procedural issues.

Respondents point out that the decision of the LA had attained finality,
except as to Palad, because of their failure to appeal. They explain that the
Memorandum on Appeal filed with the NLRC was verified only by Palad
without stating therein that he did it in representation of the other petitioners. In
view of the finality of the NLRC decision, the instant petition should not prosper.

We do not agree.

Our pronouncement in Pacquing v. Coca-Cola Philippines, Inc.[31] is

instructive.

As to the defective verification in the appeal memorandum

before the NLRC, the same liberality applies. After all, the
requirement regarding verification of a pleading is formal, not
jurisdictional. Such requirement is simply a condition affecting the
form of pleading, the non-compliance of which does not necessarily
render the pleading fatally defective. Verification is simply intended
to secure an assurance that the allegations in the pleading are true and
correct and not the product of the imagination or a matter of
speculation, and that the pleading is filed in good faith. The court or
tribunal may order the correction of the pleading if verification is
lacking or act on the pleading although it is not verified, if the
attending circumstances are such that strict compliance with the rules
may be dispensed with in order that the ends of justice may thereby be
served.

Moreover, no less than the Labor Code directs labor officials to

use reasonable means to ascertain the facts speedily and objectively,
with little regard to technicalities or formalities; while Section 10,
Rule VII of the New Rules of Procedure of the NLRC provides that
technical rules are not binding. Indeed, the application of technical
rules of procedure may be relaxed in labor cases to serve the demand
of substantial justice. Thus, the execution of the verification in the
appeal memorandum by only two complainants in behalf of the other
complainants also constitute substantial compliance.[32]

Clearly, the NLRC properly took cognizance of the appeal of all the named
complainants even though it was signed by only one of them. While the right to
appeal is a statutory and not a natural right, it is nonetheless an essential part of
our judicial system. Courts are, therefore, advised to proceed with caution, so as
not to deprive a party of the right to appeal. Litigants should have the amplest
opportunity for the proper and just disposition of their cause free, as much as
possible, from the constraints of procedural technicalities.[33] Thus, contrary to
respondents claim, the decision had not attained finality even as to those who did
not sign the appeal memorandum.
Now on the substantive aspect.

The issues boil down to whether the CA was correct in concluding that
petitioners were project employees and that their dismissal from employment
was legal.

We answer in the negative.

Even if the questions that need to be settled are factual in nature, this Court
nevertheless feels obliged to resolve them due to the incongruent findings of the
NLRC and the LA and those of the CA.[34]
Article 280 of the Labor Code distinguishes a project employee from a
regular employee in this wise:

Article 280. Regular and casual employment.The provisions of

written agreement to the contrary notwithstanding and regardless of
the oral agreement of the parties, an employment shall be deemed to
be regular where the employee has been engaged to perform activities
which are usually necessary or desirable in the usual business or trade
of the employer, except where the employment has been fixed for a
specific project or undertaking the completion or termination of
which has been determined at the time of the engagement of the
employee or where the work or services to be performed is seasonal in
nature and the employment is for the duration of the season.

An employment shall be deemed to be casual if it is not covered

by the preceding paragraph: Provided, That, any employee who has
rendered at least one year of service, whether such service is
continuous or broken, shall be considered a regular employee with
respect to the activity in which he is employed and his employment
shall continue while such activity exists.[35]

A project employee is assigned to a project which begins and ends at determined

or determinable times.[36] Employees who work under different project
employment contracts for several years do not automatically become regular
employees; they can remain as project employees regardless of the number of
years they work. Length of service is not a controlling factor in determining the
nature of ones employment.[37] Their rehiring is only a natural consequence of the
fact that experienced construction workers are preferred.[38] In fact, employees
who are members of a work pool from which a company draws workers for
deployment to its different projects do not become regular employees by reason
of that fact alone. The Court has consistently held that members of a work pool
can either be project employees or regular employees.[39]

The principal test used to determine whether employees are project employees is
whether or not the employees were assigned to carry out a specific project or
undertaking, the duration or scope of which was specified at the time the
employees were engaged for that project.[40]

Admittedly, respondents did not present the employment contracts of petitioners

except that of Dacuital. They explained that it was no longer necessary to present
the other contracts since petitioners were similarly situated. Having presented
one contract, respondents believed that they sufficiently established petitioners
status as project employees.

Even though the absence of a written contract does not by itself grant
regular status to petitioners, such a contract is evidence that petitioners were
informed of the duration and scope of their work and their status as project
employees.[41] In this case, where no other evidence was offered, the absence of
the employment contracts raises a serious question of whether the employees
were properly informed at the onset of their employment of their status as project
employees.[42]

While it is true that respondents presented the employment contract of

Dacuital, the contract does not show that he was informed of the nature, as well
as the duration of his employment. In fact, the duration of the project for which
he was allegedly hired was not specified in the contract. The pertinent provision
thereof is quoted hereunder for easy reference:

3. In accordance with Policy No. 20 of the Labor Code of the

Philippines, parties agree that the effective date of this employment is
4-5-00 up to the duration of the
DUCTWORK/ELECTRICAL/MECHANICAL phase of the project
estimated to be finished in the month of _______, 19______ or
earlier.[43]
Even if we assume that under the above provision of the contract, Dacuital was
informed of the nature of his employment and the duration of the project, that
same contract is not sufficient evidence to show that the other employees were so
informed. It is undisputed that petitioners had individual employment contracts,
yet respondents opted not to present them on the lame excuse that they were
similarly situated as Dacuital. The non-presentation of these contracts gives rise
to the presumption that the employees were not informed of the nature and
duration of their employment. It is doctrinally entrenched that in illegal dismissal
cases, the employer has the burden of proving with clear, accurate, consistent,
and convincing evidence that the dismissal was valid. Absent any other proof that
the project employees were informed of their status as such, it will be presumed
that they are regular employees.[44]

Moreover, Department Order No. 19 (as well as the old Policy Instructions
No. 20) requires employers to submit a report of an employees termination to the
nearest public employment office everytime the employment is terminated due to
the completion of a project.[45] In this case, there was no evidence that there was
indeed such a report. LMCECs failure to file termination reports upon the
cessation of petitioners employment was an indication that petitioners were not
project but regular employees.

Well-established is the rule that regular employees enjoy security of tenure and
they can only be dismissed for just or valid cause and upon compliance with due
process, i.e., after notice and hearing. In cases involving an employees dismissal,
the burden is on the employer to prove that the dismissal was legal. [46] This
burden was not amply discharged by LMCEC in this case. Being regular
employees, petitioners were entitled to security of tenure, and their services may
not be terminated except for causes provided by law.[47]
Finally, records failed to show that LMCEC afforded petitioners, as regular
employees, due process prior to their dismissal, through the twin requirements of
notice and hearing. Petitioners were not served notices informing them of the
particular acts for which their dismissal was sought. Nor were they required to
give their side regarding the charges made against them, if any. Certainly,
petitioners dismissal was not carried out in accordance with law and was,
therefore, illegal.[48]
Article 279 of the Labor Code, as amended, provides that an illegally dismissed
employee shall be entitled to reinstatement, full backwages, inclusive of
allowances, and to his other benefits or their monetary equivalent from the time
his compensation was withheld from him up to the time of his actual
reinstatement.[49]
Contrary to the conclusion of the NLRC, the backwages due petitioners must be
computed from the time they were unjustly dismissed until actual reinstatement
to their former positions. Thus, until LMCEC implements the reinstatement
aspect, its obligation to petitioners, insofar as accrued backwages and other
benefits are concerned, continues to accumulate.[50]

The fact that petitioners did not appeal the NLRC decision on this matter does
not bar this Court from ordering its modification. As held in Cocomangas Hotel
Beach Resort v. Visca[51]

While as a general rule, a party who has not appealed is not entitled to
affirmative relief other than the ones granted in the decision of the
court below, this Court is imbued with sufficient authority and
discretion to review matters, not otherwise assigned as errors on
appeal, if it finds that their consideration is necessary in arriving at a
complete and just resolution of the case or to serve the interests of
justice or to avoid dispensing piecemeal justice.

Besides, substantive rights like the award of backwages

resulting from illegal dismissal must not be prejudiced by a rigid and
technical application of the rules. The computation of the award for
backwages from the time compensation was withheld up to the time
of actual reinstatement is a mere legal consequence of the finding that
respondents [petitioners] were illegally dismissed by petitioners
[respondents].[52]

As to respondent Camus liability as LMCEC president, it is settled that in

the absence of malice, bad faith, or specific provision of law, a director or officer
of a corporation cannot be made personally liable for corporate liabilities.[53]

As held in Lowe, Inc. v. Court of Appeals,[54] citing McLeod v. NLRC:[55]

Personal liability of corporate directors, trustees or

officers attaches only when (1) they assent to a patently unlawful act
of the corporation, or when they are guilty of bad faith or gross
negligence in directing its affairs, or when there is a conflict of
interest resulting in damages to the corporation, its stockholders or
other persons; (2) they consent to the issuance of watered down stocks
or when, having knowledge of such issuance, do not forthwith file
 with the corporate secretary their written objection; (3) they agree to
hold themselves personally and solidarily liable with the corporation;
or (4) they are made by specific provision of law personally
answerable for their corporate action.[56]

To be sure, Camus has a personality which is distinct and separate from that
of LMCEC. There was no proof that Camus acted in bad faith in dismissing
petitioners from employment. The mere fact that he is the president of the
company does not make him personally liable for the payment of backwages.

Finally, the Court notes that although Tapanan was named as petitioner, he was
never included as a complainant before the NLRC. As such, he is not a party to
this case. Moreover, as clearly stated in the LA decision, Reyes has voluntarily
withdrawn his case against respondents. Thus, although he is one of the
petitioners here, he is not covered by this Decision. Lastly, some of the
petitioners had already been actually reinstated by LMCEC. We emphasize that
the computation of their backwages should be up to the date of actual
reinstatement.

WHEREFORE, premises considered, the petition is GRANTED. The Court of

Appeals Decision dated September 25, 2006 and Resolution dated February 14,
2007 in CA-G.R. SP No. 90377 are REVERSED and SET ASIDE. Petitioners
dismissal from employment is declared illegal and, except Helyto N. Reyes and
Restituto Tapanan, they are entitled to full backwages from the time of illegal
dismissal until actual reinstatement.

SO ORDERED.

G.R. No. 198656 September 8, 2014

NANCY S. MONTINOLA, Petitioner,

vs.
PHILIPPINE AIRLINES, Respondnet.

DECISION

LEONEN, J.:

Illegally suspended employees, similar to illegally dismissed employees,

are entitled to moral damages when their suspension was attended by bad
faith or fraud, oppressive to labor, or done in a manner contrary to morals,
good customs, or public policy.

Petitioner Nancy S. Montinola (Montinola) comes to this court via a

petition for review on certiorari under Rule 45 of the Rules of Court. She
assails the decision1 of the Court of Appeals2 dated June 28, 2011 and its
resolution3 dated September 20, 2011 in Philippine Airlines v. National
Labor Relations Commission and Nancy S. Montinola.4 The Court of
Appeals affirmed the finding of the National Labor Relations Commission
that petitioner was suspended illegally but deleted the award of moral and
exemplary damages and attorneys fees.5

The deletion of the award of attorneys fees and moral and exemplary
damages is the subject of this petition.

Montinola was employed as a flightattendant of Philippine Airlines (PAL)

since 1996.6 On January 29, 2008, Montinola and other flight crew
members were subjected to custom searches in Honolulu, Hawaii, USA.
Items from the airline were recovered from the flight crew by customs
officials. Nancy Graham (Graham), US Customs and Border Protection
Supervisor, sent an email to PAL regarding the search. The
email7 contained a list of PAL flight crewmembers involved in the search:

FP CHUIDIAN, JUAN DE GUZMAN

FS CARTAGENA, REGINALD

FS NAVA, PETER DE GUZMAN

FS PADILLA, ANGELITO

FA CRUZ, MARIA FA MONTINOLA, NANCY

FA VICTA, ROSE ANN (Emphasis supplied)

Another email8 enumerated the list of items taken from the crew members:

Katie,

Here is the list.

Flight Crew Blitz in gate area 10 crew. Seven of the 10 crew members had
items removed from the aircraft on their possession. Two additional bags
were found on jet-way after blitz. No bonded items were found but crew
removed food items as listed:

18 bags Doritos

15 bags Banana Chips

5 pkg instant chocolate

5 bars Granola

18 bars Kit Kat

34 Chocolate flavored Goldilocks

16 Regular Goldilocks cakes

9 1st class Bulgari Kits

2 magazines

6 rolls toilet paper

9 cans soda

16 bottles of water

1 yogurt

12 small ice creams

2 jars salsa

2 bottles Orange Juice

1 bottle Cranberry Juice

1 bottle smoothie

All items returned to Philippine Airlines.

Nancy I. Graham
Supervisory CBPO

A-TCET Air

Honolulu Hi

PAL conducted an investigation. Montinola was among those implicated

because she was mentioned in Grahams email.9 On February 1, 2008,
PALs Cabin Services Sub-Department required Montinola to comment on
the incident.10 She gave a handwritten explanation three days after,
stating that she did not take anything from the aircraft. She also committed
to give her full cooperation should there be any further inquiries on the
matter.11

On February 22, 2008, PALs International Cabin Crew Division Manager,

Jaime Roberto A. Narciso (Narciso), furnished Montinola the emails from
the Honolulu customs official.12 This was followed by a notice of
administrative charge13 which Narciso gave Montinola on March 25, 2008.
On April 12, 2008, there was a clarificatory hearing.14The clarificatory
hearing was conducted by a panel of PALs Administrative Personnel,
namely, Senior Labor Counsel Atty. Crisanto U. Pascual (Atty. Pascual),
Narciso, Salvador Cacho, June Mangahas,Lina Mejias, Carolina Victorino,
and Ruby Manzano.15

Montinola alleged that her counselobjected during the clarificatory hearing

regarding PALs failure to specify her participation in the alleged
pilferage.16 Atty. Pascual threatened Montinola that a request for
clarification would result in a waiver of the clarificatory hearing.17 This
matter was not reflected in the transcript of the hearing.18 Despite her
counsels objections, Montinola allowed the clarificatory hearings to
proceed because she "wanted to extend her full cooperation [in] the
investigation[s]."19

During the hearing, Montinola admitted that in Honolulu, US customs

personnel conducted a search of her person. At that time, she had in her
possession only the following food items: cooked camote, 3-in-1 coffee
packs, and Cadbury hot chocolate.20

PAL, through Senior Assistant Vice President for Cabin Services Sub-
Department Sylvia C.Hermosisima, found Montinola guilty of 11
Violations21 of the companys Code ofDiscipline and Government
Regulation. She was meted with suspension for one (1) year without
pay.22 Montinola asked for a reconsideration.23 Hermosisima, however,
denied her motion for reconsideration a month after.24

Montinola brought the matter before the Labor Arbiter.25 The Labor
Arbiter26 found her suspension illegal,27 finding that PAL never presented
evidence that showed Montinola as the one responsible for any of the
illegally taken airline items.28 The Labor Arbiter ordered Montinolas
reinstatement with backwages, inclusive of allowances and benefits
amounting to 378,630.00.29

In addition, the Labor Arbiter awarded moral damagesin the amount of

100,000.00 and exemplary damages amounting to 100,000.00 for the
following reasons:30

This Office observes that the records are replete with substantial evidence
that the circumstances leading to complainants one-year suspension
without pay are characterized by arbitrariness and bad faith on the part of
respondents. The totality ofrespondents acts clearly shows that
complainant had been treated unfairly and capriciously, for which
complainant should be awarded moral damages in the amount of One
Hundred Thousand Pesos (100,000.00) and exemplary damages also in
the amount of One Hundred Thousand Pesos (100,000.00).31

The Labor Arbiter also awarded attorneys feesto Montinola because she
was "forced to litigate and incur expenses to protect [her] rights."32

PAL appealed the Labor Arbitersdecision to the National Labor Relations

Commission (NLRC).33 During the pendency of the appeal, PAL submitted
new evidence consisting of an affidavit executed by Nancy Graham, the
Customs and Border Protection Supervisor who witnessed the January 29,
2008 search in Honolulu.34 This affidavit enumerated the names of the
flight crew members searchedby the Honolulu customs officials. However,
the National Labor RelationsCommission observed that "it was
categorically admitted in the said declaration that Ms. Graham did not
know which items were attributable to eachof the seven crew members
whom she identified and there was no individual inventories (sic)."35
Through the resolution36 dated June 9, 2009,the National Labor Relations
Commission37 affirmed the decision of the Labor Arbiter. PAL appealed
the Commissions decision to the Court of Appeals through a petition for
certiorari.38

The Court of Appeals affirmed the decisions of the Labor Arbiter and
National Labor Relations Commission in finding the suspension
illegal.39 However, the Court of Appeals modified the award:

WHEREFORE, premises considered, the petition is DENIED. Respondent

NLRCs Decision in NLRC LAC No. 01000263-09 (NLRC NCR CN
08-11137-08), dated June 9, 2009, is AFFIRMED with MODIFICATION in
that the award of moral and exemplary damages and attorneys fees to
private respondent are deleted.40 (Emphasis supplied)

The Court of Appeals deleted the moral and exemplary damages and
attorneys fees stating that:

Relevant to the award of moral damages, not every employee who is

illegally dismissed or suspended isentitled to damages. Settled is the rule
that moral damages are recoverable only where the dismissal or
suspension of the employee was attended by bad faith or fraud, or
constituted an act oppressive to labor, or was done in a manner contrary
to morals, good customs or public policy. Bad faith does not simply mean
negligence or bad judgment. It involves a state of mind dominated by ill
will or motive. It implies a conscious and intentional design to do a
wrongful act for a dishonest purpose orsome moral obliquity. The person
claiming moral damages must prove the existence of bad faith by clear
and convincing evidence for the law always presumes good faith.

In the case at bar, there is no showing that PAL was moved by any ill will
or motive in suspending private respondent. It is evident that petitioner
gave private respondent every opportunity to refute the charges against
her and to present her side as part of due process.These negate the
existence of bad faith on the part of petitioner. Under the circumstances,
we hold that private respondent is not entitled to moral damages and
exemplary damages. Furthermore, the Court finds the award of attorneys
fees improper. The award of attorneys fees was merely cited in the
dispositive portion of the decision without the RTC [sic] stating any legal or
factual basis for said award.41 (Citations omitted)
Montinola filed a partial motion for reconsideration,42 praying that the
award of moral and exemplary damages and attorneys fees be
reintegrated into the decision. PAL also filed a motion for
reconsideration,43 but its motion sought a complete reversal of the
decision.

The Court of Appeals denied both motions.44 Only Montinola sought to

continue challenging the Court of Appeals decision through a petition for
review on certiorari45 brought to this court.

The sole issue in this case is whether Montinolas illegal suspension

entitled her to an award of moral and exemplary damages and attorneys
fees.

Montinola claims that she is entitled to moral damages because her illegal
suspension was attended by bad faith, causing her to suffer "mental
anguish, fright, serious anxiety, and moral shock."46 Furthermore, the
illegal suspension tarnished her good standing.47 Prior to this incident and
in her 12 years of service, she was never charged administratively.48 The
illegal suspension likewise affected her family because it created "a state
of uncertainty and adversity."49

Montinola underscores that the investigation against her was conducted in

a "hasty, impetuous, harsh and unjust"50manner. She was not properly
apprised of the charges against her.51 She requested for proper notice of
the acts violative of PALs Codeof Discipline. Instead of giving proper
notice, PAL threatened that she would be waiving her right to a
clarificatory hearing if she insisted on her request.52

Montinola likewise alleges that PAL violated its own rules by not applying
the same penalty uniformly.53 Flight Purser Juan Chuidian III was involved
in the same incident and was likewise suspended. However, on motion for
reconsideration, PAL allowed him to retire early without serving the
penalty of suspension.54

The claim for exemplary damages isanchored on Montinolas belief that

such damages "are designed to permit the courts to mould behaviour that
has socially deleterious consequences, and their imposition is required by
public policy to suppress the wanton acts of the offender."55 In Montinolas
view, PAL suspended her in a "wanton, oppressive, and malevolent
manner."56

Finally, Montinola argues that she is entitled to attorneys fees because

she was forced to litigate. In Article 2208, paragraph (2) of the Civil Code,
individuals forced to litigate may ask for attorneys fees.

On the other hand, PAL argues that moral damages are only recoverable
when "the dismissal of the employee was attended by bad faith or fraud, or
constituted an act oppressive to labor, or was done in a manner contrary
to morals, good customs or public policy."57 The company believes that
Montinola failed to present clear and convincing proof of bad faith.

PAL stands by how it investigated the alleged pilferage of the in-flight

items in the January 29, 2008 flight. Itbelieves that it afforded due process
to Montinola and the other implicated crew members. From PALs point of
view, she was given an opportunity to explain her side and was even
assisted by counsel of her choice.58

PAL claims that since moral damages have not been proven, exemplary
damages should likewise not be awarded.59

Moreover, PAL argues that Montinola failed to provide basis for the award
of attorneys fees. Attorneys fees are only awarded when the trial court (or
in this case, the Labor Arbiter) states a factual, legal, or equitable
justification for awarding the same.60

Montinola is entitled to moral and exemplary damages. She is also entitled

to attorneys fees.

The Labor Code provides:

Art. 279. Security of Tenure In cases of regular employment, the

employer shall not terminate the services of an employee except for a just
cause or when authorized by this Title. An employee who is unjustly
dismissed from work shall be entitled to reinstatement without loss of
seniority rights and other privileges and to 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.

Security of tenure of workers is not only statutorily protected, it is also a

constitutionally guaranteed right.61 Thus, any deprivation of this right must
be attended by due process of law.62 This means that any disciplinary
action which affects employment must pass due process scrutiny in both
its substantive and procedural aspects.

The constitutional protection for workers elevates their work to the status
of a vested right. It is a vested right protected not only against state action
but against the arbitrary acts of the employers as well. This court in
Philippine Movie Pictures Workers Association v. Premier Productions,
Inc.63 categorically stated that "[t]he rightof a person to his labor is deemed
to be property within the meaning of constitutional
64
guarantees." Moreover, it is of that species of vestedconstitutional right
that also affects an employees liberty and quality of life. Work not only
contributes to defining the individual, it also assists in determining
onespurpose. Work provides for the material basis of human dignity.

Suspension from work is prima facie a deprivation of this right. Thus,

termination and suspension from workmust be reasonable to meet the
constitutional requirement of due process of law. It will be reasonable if it
is based on just or authorized causes enumerated in the Labor Code.65

On the other hand, articulation of procedural due process in labor cases is

found in Article 277(b) ofthe Labor Code, which states:

(b) Subject to the constitutional right of workers to security of tenure and

their right tobe 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 the company rules and regulations
promulgated pursuant to guidelines set by the Department of Labor and
Employment. Any decision taken bythe employer shall be without
prejudice to the right of the worker to consent 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.

The procedure can be summarized in this manner. First, the employer

must furnish the employee with a written notice containing the cause for
termination. Second, the employer must give the employee an opportunity
to be heard. This could be done either through a position paper or through
a clarificatory hearing.66 The employee may alsobe assisted by a
representative or counsel. Finally, the employer must give another written
noticeapprising the employee of its findings and the penalty to be imposed
against the employee, if any.67 In labor cases, these requisites meet the
constitutional requirement of procedural due process, which
"contemplates notice and opportunity to be heard before judgment is
rendered, affecting ones person or property."68

In this case, PAL complied with procedural due process as laid out in
Article 277, paragraph (b) of the LaborCode.1wphi1PAL issued a written
notice of administrative charge, conducted a clarificatory hearing, and
rendered a written decision suspending Montinola. However, we
emphasize that the written notice of administrative charge did not serve
the purpose required under due process. PAL did not deny her allegation
that there would be a waiver of the clarificatory hearing ifshe insisted on a
specific notice of administrative charge. With Montinola unable to clarify
the contents of the notice of administrative charge, there were
irregularities in the procedural due process accorded to her.

Moreover, PAL denied Montinola substantial due process.

Just cause has to be supported by substantial evidence. Substantial

evidence, or "such relevant evidence as a reasonable mind might accept
as adequate to support a conclusion,"69 is the quantum of evidence
required in administrative bodies such as the National Labor Relations
Commission. It is reasonable to expect the employer to consider
substantial evidence in disciplinary proceedings against its employees.
The employers decision will be subject to review by the LaborArbiter and
National Labor Relations Commission.

The employer has the burden of proof in showing that disciplinary action
was made for lawful cause.70 The employer must consider and show facts
adequate to support the conclusionthat an employee deserves to be
disciplined for his or her acts or omissions.

PAL, however, merely relied on these pieces of information in finding

administrative liability against Montinola:

1) a list of offenses found in PALs Code of Discipline that Montinola

allegedly violated;

2) a list of flight crew members that were checked at the Honolulu airport;
and

3) a list of all items confiscated from allthese flight crew members.

The lists are not sufficient to show the participation of any of the flight crew
members,least of all Montinola. None of the evidence presented show that
the customs officials confiscated any of these items from her. Thus, the
evidence by themselves do not show that Montinola pilfered airline items.

Together with the manner in which the investigation proceeded, i.e., that
Montinola was prevented from asking for clarification of the charges
against her, the absence of substantial evidence is so apparent that
disciplining an employee only on these bases constitutes bad faith. Under
the Labor Code, Labor Arbitersare authorized by law to award moral and
exemplary damages:

Art. 217. Jurisdiction of Labor Arbiters and the Commission. (a) Except
as otherwise provided under this Code, the Labor Arbiters shall have
original and exclusive jurisdiction to hear and decide within thirty (30)
calendar days after the submission of the case by the parties for decision
without extension, even in the absence of stenographic notes, the
following cases involving all workers, whether agricultural or
non-agricultural:

....

4. Claims for actual, moral, exemplary and other forms of damages arising
from the employer-employee relations[.]

The nature of moral damages is defined under our Civil Code. Article 2220
states that "[w]illful injury to property may be a legal ground for awarding
moral damages if the court should find that, under the circumstances,
such damages are justlydue. The same rule applies to breaches of
contract where the defendantacted fraudulently or in bad faith." In Primero
v. Intermediate Appellate Court,71 this court stated that damages, as
defined in the Civil Code, is recoverable in labor cases. Thus, moral
damages:

. . . cannot be justified solely upon the premise (otherwise sufficient for

redress under the Labor Code) that the employer fired his employee
without just cause or due process. Additional facts must be pleaded and
proven to warrant the grant of moral damages under the Civil Code, these
being, to repeat, that the act of dismissal wasattended by bad faith or
fraud, or was oppressive to labor, or done ina manner contrary to morals,
good customs, or public policy;and, of course, that social humiliation,
wounded feelings, grave anxiety, etc., resulted therefrom.72

The employee is entitled to moral damages when the employer acted a) in

bad faith or fraud; b) in a manner oppressive to labor; or c) in a manner
contrary to morals, good customs, or public policy.

Bad faith "implies a conscious and intentional design to do a wrongful act

for a dishonest purpose or moral obliquity."73 Cathay Pacific Airways v.
Spouses Vazquez74 established that bad faith must be proven through
clear and convincing evidence.75 This is because "[b]adfaith and fraud . . .
are serious accusations that can be so conveniently and casually invoked,
and that is why they are never presumed. They amount to mere slogans or
mudslinging unless convincingly substantiated by whoever is alleging
them."76 Here, there was clear and convincing evidence of bad faith
adduced in the lower tribunals.

PALs actions in implicating Montinola and penalizing her for no clear

reason show bad faith. PALs denial of her request to clarify the charges
against her shows its intent to do a wrongful act for moral obliquity. If it
were acting in good faith, it would have gathered more evidence from its
contact in Honolulu or from other employees before it started pointing
fingers. PAL should not have haphazardly implicated Montinola and
denied her livelihood even for a moment.

PAL apparently granted Montinola procedural due process by giving her a

notice of administrative charge and conducting a hearing. However, this
was more apparent than real. The notice of administrative charge did not
specify the acts committed by Montinola and how these acts violated
PALs Code of Discipline. The notice did not state which among the items
confiscated by the US customs officials were originally found in
Montinolas possession. Worse, the panel of PAL officers led by Atty.
Pascual did not entertain any query toclarify the charges against her.

There is denial of an opportunity to be heard if the employee is not clearly

apprised of the acts she committed that constituted the cause for
disciplinary action. The Omnibus Rules Implementing the Labor Code
requires that "a written notice [be] served on the employee specifying the
ground or grounds for termination, and giving said employee reasonable
opportunity within which to explain his side."77 Reasonable opportunity
has been described as "every kind of assistance that managementmust
accord to the employees to enable them to prepare adequately for their
defense."78

When the alleged participation of the employee in the illicit act which
serves as a basis for the disciplinary action is not clear from the notice, the
opportunity to be heard will not be reasonable. The notice fails to meet
reasonable standards. It does not have enough information to enable the
employee to adequatelyprepare a defense.

Moreover, the list of provisions in PALs Code of Discipline allegedly

violated was long and exhaustive.1wphi1 PALs notice of administrative
charge stated that it had probable cause to administratively
chargeMontinola of the following:

I. ILLEGAL ACTS Section 2/Article 20

....

As a cabin attendant you should know very well the laws, rules
and regulations of every country in which the Company
operates including the entry/exit requirements to which your
cabin crew must adhere.

II. VIOLATION OF LAW/GOVERNMENT REGULATIONS

Section 6/Article 46

....
Incident is a violation of the Entry/Exit requirements in HNL
Station, as quoted:

"Note: U.S. Customs Trade Law/Sec. 301 on Intellectual

Property Right prohibits bringing of counterfeit consumer goods
such as fake bags, clothes, shoes, colognes, books, medicine,
audio/video tapes & CDs." (ref. Entry-Exit Requirements Quick
Reference GuideTranspacific)

III. ANTI-COMPANY OFFENSES Article 44/Section 5

....

As noted on the e-mail report from HNL Station dated 30

January 2008, PAL will be penalized by customs and border
protection HNL due to cabin crew took items again from the
aircraft upon arrival.

Article 26 NON-OBSERVANCE OF QUALITY STANDARDS

....

As a cabin attendant, it is yourresponsibility to strictly adhered

[sic] to the rules, regulations, prescriptions, mandates and
policies of the Company.

Article 28 INEFFICIENCY AND WASTE

....

The subject items confiscated at the holding gate area are

Company supplies and resources which must only be
consumed or utilized reasonably inflight [sic].

Article 37 ANTI-TEAMWORK OFFENSES

....

In the email report from HNL Station, Ms. Nancy Graham, CBP
Supervisor your name was specifically listed as part of the cabin
crew members who were involved in the Flight
 Crew Blitz in gate area.

Article 38 INSUBORDINATIONS OR WILLFUL

DISOBEDIENCE

....

Article 58 MISHANDLING/MISUSE OF COMPANY FUNDS,

PROPERTY OR RECORDS

....

The subject items confiscated at the holding gate area are

Company supplies and resources which must only be
consumed or utilized reasonably inflight [sic].

Article 59 THEFT, PILFERAGE, OR EMBEZZLEMENT

....

As noted on the e-mail reports from HNL Station both from

Station Supervisor, Ms. Keity Wells and Ms. Nancy Graham,
CBPSupervisor, The different items confiscated are taken by
the cabin crew from the aircraft upon arrival.

Article 61 UNOFFICIAL USE OF COMPANY PROPERTY AND

FACILITIES

....

IV. FAILURE ON THE JOB Article 25/Section 2

....

As a cabin attendant, you should know very well the certain laws, rules
and regulations ofevery country in which the Company operates. Thus,
adherence (sic) to these rules and regulations is a must.79

To constitute proper notice, the facts constitutive of the violations of these

rules and not just the rules of conduct must be clearly stated. Proper
notice also requires that the alleged participation of the employee be
clearly specified. Without these, the most fundamental requirement of a
fair hearing cannot be met.

Parenthetically, we note that the enumeration of rules violated even

included violation of "U.S. Customs Trade Law/Sec. 301 on Intellectual
Property Right." This has no bearing on the basis for the termination or
suspension of the employee. It only serves to confuse. At worse, it is
specified simply to intimidate.

Montinola was found by PAL to be guilty of allthe charges against her.

According to PAL, "[t]hese offenses call for the imposition of the penalty of
Termination, however, we are imposing upon you the reduced penalty of
One (01) year Suspension."80 It is not clear how she could violate all the
prestations in the long list of rules she allegedly violated. There is also no
clear explanation why termination would be the proper penalty to impose.
That the penalty was downgraded, without legal explanation, to
suspension appears as a further badgeof intimidation and bad faith on the
part of the employer.

Nothing in PALs action supports the finding that Montinola committed

specific acts constituting violations of PALs Code of Discipline.

This act of PAL is contrary tomorals, good customs, and public policy. PAL
was willing to deprive Montinola of the wages she would have earned
during her year of suspension even if there was no substantial evidence
that she was involved in the pilferage.

Moral damages are, thus, appropriate. In Almira v. B.F. Goodrich

Philippines, this court noted that unemployment "brings untold hardships
and sorrows on those dependent on the wage-earner."81 This is also true
for the case of suspension. Suspension istemporary unemployment.
During the year of her suspension, Montinola and her family had to survive
without her usual salary. The deprivation of economic compensation
caused mental anguish, fright, serious anxiety, besmirched reputation,
and wounded feelings. All these are grounds for an award of moral
damages under the Civil Code.82

II

Montinola is also entitled to exemplary damages.

Under Article 2229 of the Civil Code, "[e]xemplary or corrective damages
are imposed, by way of example or correction for the public good, in
addition to the moral, temperate, liquidated or compensatory damages."
As this court has stated in the past: "Exemplary damages are designed by
our civil law to permit the courts to reshape behaviour that is socially
deleterious in its consequence by creating negative incentives or
deterrents against such behaviour."83

If the case involves a contract, Article 2332 of the Civil Code provides that
"the court may award exemplary damages if the defendant acted in a
wanton, fraudulent, reckless,oppressive or malevolent manner." Thus, in
Garcia v. NLRC,84 this court ruled that in labor cases, the court may award
exemplary damages "if the dismissal was effected in a wanton, oppressive
or malevolent manner."85

It is socially deleterious for PAL to suspend Montinola without just cause in

the manner suffered by her.Hence, exemplary damages are necessary to
deter future employers from committing the same acts.

III

Montinola is also entitled to attorneys fees.

Article 2208 of the Civil Code enumerates the instances when attorneys
fees can be awarded:

ART. 2208. In the absence of stipulation, attorneys fees and expenses of

litigation,other than judicialcosts, cannot be recovered, except:

(1) When exemplary damages are awarded;

(2) When the defendants act or omission has compelled the plaintiff to
litigate with third persons or to incur expenses to protect his interest;

(3) In criminal cases of malicious prosecution against the plaintiff;

(4) In case of a clearly unfounded civil action or proceeding against the

plaintiff;

(5) Where the defendant acted ingross and evident bad faith in refusing to
satisfy the plaintiffs plainly valid, just and demandable claim;
(6) In actions for legal support;

(7) In actions for the recovery of wages of household helpers, laborers and
skilled workers;

(8) In actions for indemnity under workmens compensation and

employers liability laws;

(9) In a separate civil action to recover civil liability arising from a crime;

(10) When at least double judicial costs are awarded;

(11) In any other case where the court deems it just and equitable that
attorneys fees and expenses of litigation should be recovered.

In all cases, the attorneys fees and expenses of litigation must be

reasonable. (Emphasis supplied)

This case qualifies for the first, second, and seventh reasons why
attorneys fees are awarded under the Civil Code.

First, considering thatwe have awarded exemplary damages in this case,

attorneys fees canlikewise be awarded.

Second, PALs acts and omissionscompelled Montinola to incur expenses

to protect her rights with the National Labor Relations Commission and the
judicial system. She went through four tribunals, and she was assisted by
counsel. These expenses would have been unnecessary if PAL had
sufficient basis for its decision to discipline Montinola.

Finally, the action included recovery for wages. To bring justice to the
illegal suspension of Montinola, she asked for backwages for her year of
suspension:

PAL argued that the factual, legal, or equitable justification for awarding
attorney's fees must be stated in the Labor Arbiter's decision. The legal
justification of the Labor Arbiter is apparent in the decision:

Complainant's claim for attorney's fees is also justified. It is settled that

where an employee was forced 'to litigate and incur expenses to protect
his rights and interest, as in the instant case, he is entitled to an award of
attorney's fees (Building Case Corp. vs. NLRC, G.R. No. 94237, February
26, 1997). She is thus granted attorney's fees equivalent to ten percent of
the total award.86

We find no factual, legal, or equitable reason to depart from this

justification. Hence, we also affirm the award of attorney's fees equivalent
to 10% of the total award, or 57,863.00.87

We acknowledge the right of PAL to be constantly vigilant to prevent and

deter pilferage. After all, that is equally its property which is also protected
by the Constitution. However, PAL cannot assume liability on the
employee. It has to endeavor to move through its administrative
investigations more humanely and more in consonance with the law. Its
employees may only have their work. It is their work, no matter what the
classification and how significant they may be in the eyes of their employer,
that should give them their dignity.

WHEREFORE, the petition is GRANTED. The decision of the Court of

Appeals in CA-G.R. SP No. 112552 is MODIFIED in order to
REINTEGRATE the award for moral damages of 100,000.00, exemplary
damages of 100,000.00, and attorney's fees of 57,863.00.

SO ORDERED.

MARVIC M.V.F. LEONEN

Associate Justice

G.R. No. 161006, October 14, 2015

ROGELIO BARONDA, Petitioner, v. HON. COURT OF APPEALS,
AND HIDECO SUGAR MILLING CO., INC., Respondents.

DECISION

BERSAMIN, J.:

The reinstatement aspect of the Voluntary Arbitrator's award or

decision is immediately executory from its receipt by the
parties.chanRoblesvirtualLawlibrary

The Case

The petitioner assails the decision1 promulgated on August 21,

2003 in CA-G.R. SP No. 67059, whereby the Court of Appeals (CA)
annulled and set aside the order issued by the Voluntary
Arbitrator2 granting his motion for the issuance of the writ of
execution.3chanRoblesvirtualLawlibrary
Antecedents

Respondent Hideco Sugar Milling Co., Inc. (HIDECO) employed

the petitioner as a mud press truck driver with a daily salary of
P281.00. On May 1, 1998, he hit HIDECO's transmission lines
while operating a dump truck, causing a total factory blackout
from 9:00 pm until 2:00 am of the next day. Power was eventually
restored but the restoration cost HIDECO damages totaling
P26,481.11. Following the incident, HIDECO served a notice of
offense requiring him to explain the incident within three days
from notice. He complied. Thereafter, the management conducted
its investigation, and, finding him guilty of negligence,
recommended his dismissal.4 On June 15, 1998, the resident
manager served a termination letter and informed him of the
decision to terminate his employment effective at the close of
office hours of that day. Hence, HIDECO no longer allowed him to
report to work on the next day.5chanroblesvirtuallawlibrary

In August 1998, the petitioner, along with another employee also

dismissed by HIDECO, filed in the Office of the Voluntary
Arbitrator of the National Conciliation and Mediation Board in
Tacloban City a complaint for illegal dismissal against HIDECO.

Voluntary Arbitrator Antonio C. Lopez, Jr. handled the case and

eventually rendered his decision on January 13, 1999 by finding
the petitioner's dismissal illegal, and ordering his reinstatement.
Voluntary Arbitrator Lopez, Jr. deemed the petitioner's separation
from the service from June 16, 1998 to January 15, 1999 as a
suspension from work without pay, and commanded him to pay
on installment basis the damages sustained by HIDECO from the
May 1, 1998 incident he had caused,6 to
wit:7chanroblesvirtuallawlibrary

Wherefore, in so far as the case of ROGELIO BARONDA is

concerned, this Office finds his dismissal illegal and
reinstatement is therefore ordered. His separation on June
16, 1998 up to January 15, 1999 is deemed suspension without
pay for his negligent acts, and is further ordered to pay
respondent employer the sum of P26,484.41 for actual damages
at P1,500.00 every month deductible from his salary until
complete payment is made.

HIDECO filed a motion for reconsideration,8 but the Voluntary

Arbitrator denied the motion on August 11, 2000.9 Accepting the
outcome, HIDECO reinstated the petitioner on September 29,
2000.10chanroblesvirtuallawlibrary

Thereafter, on October 9, 2000, the petitioner filed his

manifestation with motion for the issuance of the writ of execution
in the Office of the Voluntary Arbitrator,11 praying for the
execution of the decision, and insisting on being entitled to
backwages and other benefits corresponding to the period from
January 16, 1999 up to September 28, 2000 totaling P192,268.66
based on 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'').

HIDECO opposed the petitioner's motion for execution,12 and

simultaneously presented its own motion for execution to enforce
the decision of the Voluntary Arbitrator directing the petitioner to
pay the actual damages totaling P26,484.41 at the rate of
P1,500.00/month deductible from his salary starting in January
2001 until complete payment was
made.13chanroblesvirtuallawlibrary

In his order dated March 20, 2001,14 the Voluntary Arbitrator

denied the petitioner's motion for execution on the ground that
the decision did not award any backwages; and granted HIDECO's
motion for execution by directing the petitioner to pay HIDECO
P26,484.41 at the rate of P1,500.00/month.

On May 17, 2001, the petitioner filed another motion for execution
praying that a writ of execution requiring HIDECO to pay to him
unpaid wages, 13th month pay and bonuses from January 16,
2001, the date when his reinstatement was effected, until his
actual reinstatement.15 HIDECO opposed the petitioner's second
motion for execution because "the items prayed for by the
complainant in his Motion for Issuance of Writ of Execution are not
included in the dispository portion of the decision of the voluntary
arbitrator, neither are the said items mentioned in any part of the
same decision."16chanroblesvirtuallawlibrary

On July 25, 2001, however, the Voluntary Arbitrator granted the

petitioner's second motion for execution,17 to wit:

Wherefore, for failure of complainant to re-admit

complainant nor reinstate him in the payroll for the period
 from January 21, [1999] up to September 28, 2000, let an
order or execution issue for the satisfaction of his
reinstatement wages in the amount of P155,647.00 (554 days
at P281.00 per day), 13 month pay in the amount of P7,200.00,
bonus in the amount of P8,000.00 for 1999, and P8,000.00 for
his signing bonus.

The sheriff of the National Labor Relations Commission,

Regional Arbitration Branch No. VIII is directed to
implement the writ.

So ordered.

The Voluntary Arbitrator cited as basis Article 223 of the Labor

Code, which pertinently provides:

Art. 223. Appeal -

x x x x

In any event, the decision of the Labor Arbiter reinstating

a dismissed or separated employee, insofar as the
reinstatement aspect is concerned, shall immediately be
executory, even pending appeal. The employee shall either
be admitted back to work under the same terms and conditions
prevailing prior to his dismissal or separation or, at the
option of the employer, merely reinstated in the payroll.
The posting of a bond by the employer shall not stay the
execution for reinstatement provided herein.

Having received a copy of the order of July 25, 2001 on August 7,

2001,18 HIDECO instituted a special civil action for certiorari in
the Court of Appeals (CA) on October 2,
2001.19chanRoblesvirtualLawlibrary
 Decision of the CA

HIDECO's petition for certiorari averred that the Voluntary

Arbitrator had acted with grave abuse of discretion amounting to
lack or excess of jurisdiction in issuing the July 25, 2001 order. It
listed the following issues, namely:

I. The voluntary arbitrator, in rendering the assailed order

actually granted an award without giving due process to the
20
herein petitioner. chanroblesvirtuallawlibrary

II. The voluntary arbitrator resolved the (second) motion

by applying Art. 223 of the Labor Code. Was this the correct
law to apply under the circumstances? Did he have
jurisdiction to apply this
21
law? chanroblesvirtuallawlibrary

III. The decision dated January 13, 1999 clearly stated the
relief that had been granted to the complainant Baronda,
which was reinstatement. Baronda was reinstated on
September 29, 2000, thus [HIDECO] had complied with the
decision. The questions therefore: Could a relief that is
not written in the decision be executed? Since the voluntary
arbitrator clearly did this in this case, is it not correct
to say that he committed grave abuse of
22
discretion? chanroblesvirtuallawlibrary

IV. In the assailed Order dated July 25, 2001 the Voluntary
Arbitrator said, among others, that it treated a second
motion for the issuance of a writ of execution, and that a
first motion had already been denied on the ground that no
backwages had been awarded to the complainant Baronda. Did
he have any legal basis then to issue two different and
 contradictory orders for what are essentially similar
23
motions? chanrobleslaw

In his comment,24 the petitioner countered that the petition

for certiorari should be dismissed considering that HIDECO should
have appealed the decision of the Voluntary Arbitrator under Rule
43 of the Rules of Court because certiorari was not a substitute
for a lost appeal; that HIDECO did not file a motion for
reconsideration of the questioned order, which would have been
an adequate remedy at law; that the petition for certiorari did not
raise any jurisdictional error on the part of the Voluntary
Arbitrator but only factual and legal issues not proper in certiorari;
and that the Voluntary Arbitrator did not commit any error, much
less grave abuse of discretion amounting to lack or excess of
jurisdiction in rendering the questioned order.

In the decision promulgated on August 21, 2003,25 the CA treated

HIDECO's petition for certiorari as a petition for review brought
under Rule 43, and brushed aside the matters raised by the
petitioner. It observed that the petition for certiorari included the
contents required by Section 6, Rule 43 for the petition for review;
that the writ of execution was proper only when the decision to be
executed carried an award in favor of the movant; that the
Voluntary Arbitrator had issued the writ of execution for
backwages despite his decision lacking such award for backwages;
and that the reliance by the Voluntary Arbitrator on Article 223 of
the Labor Code was misplaced because said provision referred to
decisions, awards or orders of the Labor Arbiter, not the Voluntary
Arbitrator. It disposed as follows:

WHEREFORE, the instant petition is hereby GRANTED and the

questioned Order dated July 25, 2001 of the public
respondent ANNULLED and SET ASIDE.

26
SO ORDERED. chanroblesvirtuallawlibrary
 Issues

In this appeal, the petitioner submits the following

issues,27 namely

I.

THE HONORABLE COURT OF APPEALS COMMITTED AN ERROR

OF LAW WHEN IT CONSIDERED THE PETITION FOR
CERTIORARI FILED BY PRIVATE RESPONDENT AS ONE
FILED UNDER RULE 43 OF THE RULES OF COURT WHEN SAID
PETITION EXPRESSLY DECLARED THAT IT WAS FILED
UNDER RULE 65 OF THE RULES OF COURT. EVEN GRANTING
FOR THE SAKE OF ARGUMENT THAT SAID PETITION COULD
BE CONSIDERED AS FILED UNDER RULE 43 OF THE RULES
OF COURT, THE HONORABLE COURT OF APPEALS COMMITTED
AN ERROR OF LAW IN NOT CONSIDERING THAT IT WAS FILED
OUT OF TIME.chanRoblesvirtualLawlibrary

II.

THE HONORABLE COURT OF APPEALS COMMITTED AN ERROR OF LAW WHEN

IT DID NOT DISMISS THE PETITION FILED BY THE PRIVATE
RESPONDENT FOR NOT HAVING PREVIOUSLY FILED A MOTION FOR
RECONSIDERATION BEFORE RESORTING TO THE PETITION FOR
CERTIORARI.chanRoblesvirtualLawlibrary

III.

THE HONORABLE COURT OF APPEALS COMMITTED AN ERROR OF LAW WHEN

IT CONSIDERED THE WRIT OF EXECUTION AS ISSUED FOR THE
SATISFACTION OF BACKWAGES INSTEAD OF FOR REINSTATEMENT
WAGES.chanRoblesvirtualLawlibrary
 IV.

THE HONORABLE COURT OF APPEALS COMMITTED AN ERROR OF LAW AND

SANCTIONED A VIOLATION OF THE EQUAL PROTECTION OF THE LAWS
WHEN IT RULED THAT THE REINSTATEMENT ASPECT OF THE DECISION
OF THE VOLUNTARY ARBITRATOR IS NOT IMMEDIATELY
EXECUTORY.chanRoblesvirtualLawlibrary

V.

THE HONORABLE COURT OF APPEALS COMMITTED AN ERROR OF LAW WHEN

IT DECLARED THAT PRIVATE RESPONDENT WAS DENIED DUE PROCESS
OF LAW.

In other words, the decisive issues for consideration and

resolution are: (a) whether or not the CA erred in granting
HIDECO's petition for certiorari despite its procedural flaws; and
(b) whether or not the reinstatement aspect of the Voluntary
Arbitrator's decision was executory pending
appeal.chanRoblesvirtualLawlibrary

Ruling

The appeal is meritorious.chanRoblesvirtualLawlibrary

I
HIDECO's proper recourse was to appeal
by petition for review; hence, the CA erred
in granting HIDECO's petition for certiorari

The order issued on July 25, 2001 by the Voluntary Arbitrator,

albeit directing the execution of the award or decision of January
13, 1999, was a final order, as contrasted from a merely
interlocutory order, because its issuance left nothing more to be
done or taken by the Voluntary Arbitrator in the case.28 It thus
completely disposed of what the reinstatement of the petitioner as
ordered by the Voluntary Arbitrator in the award or decision of
January 13, 1999 signified.

The proper remedy from such order was to appeal to the CA by

petition for review under Rule 43 of the Rules of Court, whose
Section 1 specifically provides:

Section 1. Scope. - This Rule shall apply to appeals from

judgments or final orders of the Court of Tax Appeals and
from awards, judgments, final orders or resolutions of or
authorized by any quasi-judicial agency in the exercise of
its quasi-judicial functions. Among these agencies are the
Civil Service Commission, Central Boards of Assessment
Appeals, Securities and Exchange Commission, Office of the
President, Land Registration Authority, Social Security
Commission, Civil Aeronautics Board, Bureau of Patents,
Trademarks and Technology Transfer, National
Electrification Administration, Energy Regulation Board,
National Telecommunications Commission, Department of
Agrarian Reform under Republic Act No. 6657, Government
Service Insurance System, Employees Compensation
Commission, Agricultural Inventions Board, Insurance
Commission, Philippine Atomic Energy Commission, Board of
Investments, Construction Industry Arbitration Commission,
and voluntary arbitrators authorized by law.

The period of appeal was 10 days from receipt of the copy of the
order of July 25, 2001 by the parties. It is true that Section 4 of
Rule 43 stipulates that the appeal shall be taken within 15 days
from notice of the award, judgment, final order or resolution, or
from the date of its last publication, if publication is required by
law for its effectivity, or of the denial of the petitioner's motion for
new trial or reconsideration duly filed in accordance with the
governing law of the court or agency a quo. However, Article
262-A of the Labor Code, the relevant portion of which follows,
expressly states that the award or decision of the Voluntary
Arbitrator shall be final and executory after 10 calendar days from
receipt of the copy of the award or decision by the parties, viz.:

Art. 262-A. Procedures. -

x x x x

The award or decision of the Voluntary Arbitrator or panel

of Voluntary Arbitrators shall contain the facts and the law
on which it is based. It shall be final and executory after
ten (10) calendar days from receipt of the copy of the award
or decision by the parties.

Upon motion of any interested party, the Voluntary

Arbitrator or panel of Voluntary Arbitrators or the Labor
Arbiter in the region where the movant resides, in case of
the absence or incapacity of the Voluntary Arbitrator or
panel of Voluntary Arbitrators for any reason, may issue a
writ of execution requiring either the sheriff of the
Commission or regular courts or any public official whom the
parties may designate in the submission agreement to execute
the final decision, order or award. (Emphasis supplied)

On account of Article 262-A of the Labor Code, the period to

appeal was necessarily 10 days from receipt of the copy of the
award or decision of the Voluntary Arbitrator or panel of Voluntary
Arbitrators; otherwise, the order of July 25, 2001 would become
final and immutable, because only a timely appeal or motion for
reconsideration could prevent the award or decision from
attaining finality and immutability.
Yet, HIDECO filed the petition for certiorari, not a petition for
review under Rule 43, and the CA liberally treated the petition
for certiorari as a petition for review under Rule 43.

We hold that such treatment by the CA was procedurally

unwarranted.

To begin with, even if the error sought to be reviewed concerned

grave abuse of discretion on the part of the Voluntary
Arbitrator,29 the remedy was an appeal in due course by filing the
petition for review within 10 days from notice of the award or
decision. This was because certiorari, as an extraordinary remedy,
was available only when there was no appeal, or any plain, speedy
and adequate remedy in the ordinary course of law.30 In other
words, the justification for HIDECO's resort to the extraordinary
equitable remedy of certiorari did not exist due to the availability
of appeal, or other ordinary remedies in law to which HIDECO as
the aggrieved party could resort.

Although it is true that certiorari cannot be a substitute for a lost

appeal, and that either remedy was not an alternative of the other,
we have at times permitted the resort to certiorari despite the
availability of appeal, or of any plain speedy and adequate remedy
in the ordinary course of law in exceptional situations, such as: (1)
when the remedy of certiorari is necessary to prevent irreparable
damages and injury to a party; (2) where the trial judge
capriciously and whimsically exercised his judgment; (3) where
there may be danger of a failure of justice; (4) where appeal
would be slow, inadequate and insufficient; (5) where the issue
raised is one purely of law; (6) where public interest is involved;
and (7) in case of urgency.31 Verily, as pointed out in Jaca v.
Davao Lumber Company,32 the availability of the ordinary course
of appeal does not constitute sufficient ground to prevent a party
from making use of certiorari where the appeal is not an adequate
remedy or equally beneficial, speedy and sufficient; for it is
inadequacy, not the mere absence of all other legal remedies and
the danger of failure of justice without the writ that must usually
determine the propriety of certiorari. It is nonetheless necessary
in such exceptional situations for the petitioner to make a strong
showing in such situations that the respondent judicial or
quasi-judicial official or tribunal lacked or exceeded its jurisdiction,
or gravely abused its discretion amounting to lack or excess of
jurisdiction.

HIDECO did not establish that its case came within any of the
aforestated exceptional situations.

And, secondly, HIDECO filed the petition for certiorari on October

2, 2001. Even assuming, as the CA held, that the petition
for certiorari contained the matters required by Rule 43, such
filing was not timely because 56 days had already lapsed from
HIDECO's receipt of the denial by the Voluntary Arbitrator of the
motion for reconsideration. In short, HIDECO had thereby
forfeited its right to appeal. We have always emphasized the
nature of appeal as a merely statutory right for the aggrieved
litigant, and such nature requires the strict observance of all the
rules and regulations as to the manner of its perfection and as to
the time of its taking. Whenever appeal is belatedly resorted to,
therefore, the litigant forfeits the right to appeal, and the higher
court ipso facto loses the authority to review, reverse, modify or
otherwise alter the judgment. The loss of such authority is
jurisdictional, and renders the adverse judgment both final and
immutable.chanRoblesvirtualLawlibrary

II
Voluntary Arbitrator's order of reinstatement of
the petitioner was immediately executory

The next query is whether the order of reinstatement of the

petitioner by the Voluntary Arbitrator was immediately executory
or not.
We answer the query in the affirmative. Although the timely filing
of a motion for reconsideration or of an appeal forestalls the
finality of the decision or award of the Voluntary Arbitrator,33 the
reinstatement aspect of the Voluntary Arbitrator's decision or
award remains executory regardless of the filing of such motion
for reconsideration or appeal.

The immediate reinstatement of the employee pending the appeal

has been introduced by Section 12 of Republic Act No. 6715,
which amended Article 223 of the Labor Code, to wit:

SEC. 12. Article 223 of the same code is amended to read as

follows:

Art. 223. Appeal. -

x x x x

In any event, the decision of the Labor Arbiter reinstating

a dismissed or separated employee, in so far as the
reinstatement aspect is concerned, shall immediately be
executory, even pending appeal. The employee shall either
be admitted back to work under the same terms and conditions
prevailing prior to his dismissal or separation or, at the
option of the employer, merely reinstated in the payroll.
The posting of a bond by the employer shall not stay the
execution for reinstatement provided herein, (bold
underscoring supplied for emphasis)

The normal consequences of a finding that an employee was

illegally dismissed are, firstly, that the employee becomes
entitled to reinstatement to his former position without loss of
seniority rights; and, secondly, the payment of wages
corresponding to the period from his illegal dismissal up to the
time of actual reinstatement. These two consequences give
meaning and substance to the constitutional right of labor to
security of tenure.34 Reinstatement pending appeal thus affirms
the constitutional mandate to protect labor and to enhance social
justice, for, as the Court has said in Aris (Phil.) Inc. v. National
Labor Relations Commission:35chanroblesvirtuallawlibrary

In authorizing execution pending appeal of the

reinstatement aspect of a decision of a Labor Arbiter
reinstating a dismissed or separated employee, the law
itself has laid down a compassionate policy which, once more,
vivifies and enhances the provisions of the 1987
Constitution on labor and the working-man.

x x x x

These duties and responsibilities of the State are imposed

not so much to express sympathy for the workingman as to
forcefully and meaningfully underscore labor as a primary
social and economic force, which the Constitution also
expressly affirms with equal intensity. Labor is an
indispensable partner for the nation's progress and
stability.

If in ordinary civil actions execution of judgment pending

appeal is authorized for reasons the determination of which
is merely left to the discretion of the judge, We find no
plausible reason to withhold it in cases of decisions
reinstating dismissed or separated employees. In such cases,
the poor employees had been deprived of their only source
of livelihood, their only means of support for their family
their lifeblood. To Us, this special circumstance is far
better than any other which a judge, in his sound discretion,
may determine. In short, with respect to decisions
reinstating employees, the law itself has determined
sufficiently overwhelming reason for its execution pending
 appeal.

x x x Then, by and pursuant to the same power (police power),

the State may authorize an immediate implementation,
pending appeal, of a decision reinstating a dismissed or
separated employee since that saving act is designed to stop,
although temporarily since the appeal may be decided in
favor of the appellant, a continuing threat or danger to the
survival or even the life of the dismissed or separated
36
employee and its family. chanroblesvirtuallawlibrary

We also see no reason to obstruct the reinstatement decreed by

the Voluntary Arbitrator, or to treat it any less than the
reinstatement that is ordered by the Labor Arbiter. Voluntary
arbitration really takes precedence over other dispute settlement
devices. Such primacy of voluntary arbitration is mandated by no
less than the Philippine Constitution,37 and is ingrained as a policy
objective of our labor relations law.38 The reinstatement order by
the Voluntary Arbitrator should have the same authority, force
and effect as that of the reinstatement order by the Labor Arbiter
not only to encourage parties to settle their disputes through this
mode, but also, and more importantly, to enforce the
constitutional mandate to protect labor, to provide security of
tenure, and to enhance social justice.

The 2001 Procedural Guidelines in the Execution of Voluntary

Arbitration Awards/Decisions (Guidelines), albeit not explicitly
discussing the executory nature of the reinstatement order,
seems to align with the Court's stance by punishing the
noncompliance by a party of the decision or order for
reinstatement. Section 2, Rule III of the Guidelines states:

Sec. 2. Issuance, Form and Contents of a Writ of

Execution. -
 x x x x

b) If the execution be for the reinstatement of any person

to any position, office or employment, such writ shall be
served by the sheriff upon the losing party or in case of
death of the losing party upon his successor-in-interest,
executor or administrator andsuch party or person may be
punished for contempt if he disobeys such decision or order
for reinstatement. (bold underscoring supplied for
emphasis)

The 2005 NCMB Revised Procedural Guidelines in the Conduct of

Voluntary Arbitration Proceedings also supports this Court's
position, for Section 6 of its Rule VIII reads:

Sec. 6. Effect of Filing of Petition for Ceriiorari on

Execution. The filing of a petition for certiorari with the
Court of Appeals or the Supreme Court shall not stay the
execution of the assailed decision unless a temporary
restraining order or injunction is issued by the Court of
Appeals or the Supreme Court pending resolution of such
petition.(Emphasis Ours)

We declare, therefore, that the reinstatement decreed by the

Voluntary Arbitrator was immediately executory upon the receipt
of the award or decision by the parties.

WHEREFORE, the Court GRANTS the petition for review

on certiorari; REINSTATES the order dated July 25, 2001 of the
Voluntary Arbitrator; and ORDERS respondent Hideco Sugar
Milling Co., Inc. to pay the costs of suit.

SO ORDERED.cralawlawlibrary
Sereno, C.J., Leonardo-De Castro, Perez, and Perlas-Bernabe,
JJ., concur.

ESTATE OF NELSON R. G.R. No. 172642

DULAY, represented by his wife
MERRIDY JANE P. DULAY, Present:
Petitioner,
PERALTA, J., Acting Chairperson,*
ABAD,
- versus VILLARAMA, JR.,**
MENDOZA, and
PERLAS-BERNABE, JJ.

ABOITIZ JEBSEN MARITIME, Promulgated:

INC. and GENERAL
CHARTERERS, INC., June 13, 2012
Respondents.
x-----------------------------------------------------------------------------------------x

DECISION
PERALTA, J.:

Before the Court is a petition for review on certiorari under Rule 45 of the Rules
of Court seeking to reverse and set aside the Decision[1] and Resolution[2] dated
July 11, 2005 and April 18, 2006 of the Court of Appeals (CA) in CA-G.R. SP
No. 76489.

The factual and procedural antecedents of the case, as summarized by the CA,
are as follows:
Nelson R. Dulay (Nelson, for brevity) was employed by [herein
respondent] General Charterers Inc. (GCI), a subsidiary of
co-petitioner [herein co-respondent] Aboitiz Jebsen Maritime Inc.
since 1986. He initially worked as an ordinary seaman and later as
bosun on a contractual basis. From September 3, 1999 up to July 19,
2000, Nelson was detailed in petitioners vessel, the MV Kickapoo
Belle.

On August 13, 2000, or 25 days after the completion of his

employment contract, Nelson died due to acute renal failure
secondary to septicemia. At the time of his death, Nelson was a bona
fide member of the Associated Marine Officers and Seamans Union
of the Philippines (AMOSUP), GCIs collective bargaining agent.
Nelsons widow, Merridy Jane, thereafter claimed for death benefits
through the grievance procedure of the Collective Bargaining
Agreement (CBA) between AMOSUP and GCI. However, on
January 29, 2001, the grievance procedure was declared deadlocked
as petitioners refused to grant the benefits sought by the widow.

On March 5, 2001, Merridy Jane filed a complaint with the NLRC

Sub-Regional Arbitration Board in General Santos City against GCI
for death and medical benefits and damages.

On March 8, 2001, Joven Mar, Nelsons brother,

received P20,000.00 from [respondents] pursuant to article 20(A)2
of the CBA and signed a Certification acknowledging receipt of the
amount and releasing AMOSUP from further liability. Merridy Jane
contended that she is entitled to the aggregate sum of Ninety
Thousand Dollars ($90,000.00) pursuant to [A]rticle 20 (A)1 of the
CBA x x x
xxxx

Merridy Jane averred that the P20,000.00 already received by Joven

Mar should be considered advance payment of the total claim of
US$90,000.[00].

[Herein respondents], on the other hand, asserted that the NLRC had
no jurisdiction over the action on account of the absence of
employer-employee relationship between GCI and Nelson at the
time of the latters death. Nelson also had no claims against
petitioners for sick leave allowance/medical benefit by reason of the
completion of his contract with GCI. They further alleged that
private respondent is not entitled to death benefits because
petitioners are only liable for such in case of death of the seafarer
during the term of his contract pursuant to the POEA contract and
the cause of his death is not work-related. Petitioners admitted
liability only with respect to article 20(A)2 [of the CBA]. x x x

xxxx

However, as petitioners stressed, the same was already discharged.

The Labor Arbiter ruled in favor of private respondent. It took

cognizance of the case by virtue of Article 217 (a), paragraph 6 of
the Labor Code and the existence of a reasonable causal connection
between the employer-employee relationship and the claim asserted.
It ordered the petitioner to pay P4,621,300.00, the equivalent of
US$90,000.00 less P20,000.00, at the time of judgment x x x

xxxx

The Labor Arbiter also ruled that the proximate cause of Nelsons
death was not work-related.

On appeal, [the NLRC] affirmed the Labor Arbiters decision as to

the grant of death benefits under the CBA but reversed the latters
ruling as to the proximate cause of Nelsons death.[3]
 Herein respondents then filed a special civil action for certiorari with the
CA contending that the NLRC committed grave abuse of discretion in affirming
the jurisdiction of the NLRC over the case; in ruling that a different provision of
the CBA covers the death claim; in reversing the findings of the Labor Arbiter
that the cause of death is not work-related; and,in setting aside the release and
quitclaim executed by the attorney-in-fact and not considering the P20,000.00
already received by Merridy Jane through her attorney-in-fact.

On July 11, 2005, the CA promulgated its assailed Decision, the dispositive
portion of which reads as follows:

WHEREFORE, in view of the foregoing, the petition is hereby

GRANTED and the case is REFERRED to the National Conciliation
and Mediation Board for the designation of the Voluntary Arbitrator
or the constitution of a panel of Voluntary Arbitrators for the
appropriate resolution of the issue on the matter of the applicable
CBA provision.

SO ORDERED.[4]

The CA ruled that while the suit filed by Merridy Jane is a money claim,
the same basically involves the interpretation and application of the provisions in
the subject CBA. As such, jurisdiction belongs to the voluntary arbitrator and not
the labor arbiter.

Petitioner filed a Motion for Reconsideration but the CA denied it in its

Resolution of April 18, 2006.

Hence, the instant petition raising the sole issue of whether or not the CA
committed error in ruling that the Labor Arbiter has no jurisdiction over the case.

Petitioner contends that Section 10 of Republic Act (R.A.) 8042, otherwise

known as the Migrant Workers and Overseas Filipinos Act of 1995, vests
jurisdiction on the appropriate branches of the NLRC to entertain disputes
regarding the interpretation of a collective bargaining agreement involving
migrant or overseas Filipino workers. Petitioner argues that the abovementioned
Section amended Article 217 (c) of the Labor Code which, in turn, confers
jurisdiction upon voluntary arbitrators over interpretation or implementation of
collective bargaining agreements and interpretation or enforcement of company
personnel policies.

The pertinent provisions of Section 10 of R.A. 8042 provide as follows:

SEC. 10. Money Claims. - Notwithstanding any provision of law

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

Article 217(c) of the Labor Code, on the other hand, states that:

xxxx

(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 by the Labor Arbiter by referring the same to the grievance
machinery and voluntary arbitration as may be provided in said
agreements.
On their part, respondents insist that in the present case, Article 217, paragraph (c)
as well as Article 261 of the Labor Code remain to be the governing provisions
of law with respect to unresolved grievances arising from the interpretation and
implementation of collective bargaining agreements. Under these provisions of
law, jurisdiction remains with voluntary arbitrators.

Article 261 of the Labor Code reads, thus:

ARTICLE 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.

The petition is without merit.

It is true that R.A. 8042 is a special law governing overseas Filipino workers.
However, a careful reading of this special law would readily show that there is no
specific provision thereunder which provides for jurisdiction over disputes or
unresolved grievances regarding the interpretation or implementation of a
CBA. Section 10 of R.A. 8042, which is cited by petitioner, simply speaks, in
general, of claims arising out of an employer-employee relationship or by virtue
of any law or contract involving Filipino workers for overseas deployment
including claims for actual, moral, exemplary and other forms of damages. On
the other hand, Articles 217(c) and 261 of the Labor Code are very specific in
stating that voluntary arbitrators have jurisdiction over cases arising from the
interpretation or implementation of collective bargaining agreements. Stated
differently, the instant case involves a situation where the special statute (R.A.
8042) refers to a subject in general, which the general statute (Labor Code) treats
in particular.[5] In the present case, the basic issue raised by Merridy Jane in her
complaint filed with the NLRC is: which provision of the subject CBA applies
insofar as death benefits due to the heirs of Nelson are concerned. The Court
agrees with the CA in holding that this issue clearly involves the interpretation or
implementation of the said CBA. Thus, the specific or special provisions of the
Labor Code govern.

In any case, the Court agrees with petitioner's contention that the CBA is the law
or contract between the parties. Article 13.1 of the CBA entered into by and
between respondent GCI and AMOSUP, the union to which petitioner belongs,
provides as follows:

The Company and the Union agree that in case of dispute or

conflict in the interpretation or application of any of the
provisions of this Agreement, or enforcement of Company policies,
the same shall be settled through negotiation, conciliation or
voluntary arbitration. The Company and the Union further agree
that they will use their best endeavor to ensure that any dispute will be
discussed, resolved and settled amicably by the parties hereof within
ninety (90) days from the date of filing of the dispute or conflict and
in case of failure to settle thereof any of the parties retain their
freedom to take appropriate action.[6] (Emphasis supplied)

From the foregoing, it is clear that the parties, in the first place, really intended to
bring to conciliation or voluntary arbitration any dispute or conflict in the
interpretation or application of the provisions of their CBA. It is settled that when
the parties have validly agreed on a procedure for resolving grievances and to
submit a dispute to voluntary arbitration then that procedure should be strictly
observed.[7]

It may not be amiss to point out that the abovequoted provisions of the CBA are
in consonance with Rule VII, Section 7 of the present Omnibus Rules and
Regulations Implementing the Migrant Workers and Overseas Filipinos Act of
1995, as amended by Republic Act No. 10022, which states that [f]or OFWs with
collective bargaining agreements, the case shall be submitted for voluntary
arbitration in accordance with Articles 261 and 262 of the Labor Code. The
Court notes that the said Omnibus Rules and Regulations were promulgated by
the Department of Labor and Employment (DOLE) and the Department of
Foreign Affairs (DFA) and that these departments were mandated to consult with
the Senate Committee on Labor and Employment and the House of
Representatives Committee on Overseas Workers Affairs.
In the same manner, Section 29 of the prevailing Standard Terms and Conditions
Governing the Employment of Filipino Seafarers on Board Ocean Going Vessels,
promulgated by the Philippine Overseas Employment Administration (POEA),
provides as follows:

Section 29. Dispute Settlement Procedures. In cases of claims and

disputes arising from this employment, the parties covered by a
collective bargaining agreement shall submit the claim or dispute
to the original and exclusive jurisdiction of the voluntary
arbitrator or panel of arbitrators. If the parties are not covered by a
collective bargaining agreement, the parties may at their option
submit the claim or dispute to either the original and exclusive
jurisdiction of the National Labor Relations Commission (NLRC),
pursuant to Republic Act (RA) 8042, otherwise known as the Migrant
Workers and Overseas Filipinos Act of 1995 or to the original and
exclusive jurisdiction of the voluntary arbitrator or panel of arbitrators.
If there is no provision as to the voluntary arbitrators to be appointed
by the parties, the same shall be appointed from the accredited
voluntary arbitrators of the National Conciliation and Mediation
Board of the Department of Labor and Employment.

The Philippine Overseas Employment Administration (POEA) shall

exercise original and exclusive jurisdiction to hear and decide
disciplinary action on cases, which are administrative in character,
involving or arising out of violations of recruitment laws, rules and
regulations involving employers, principals, contracting partners and
Filipino seafarers. (Emphasis supplied)

It is clear from the above that the interpretation of the DOLE, in consultation
with their counterparts in the respective committees of the Senate and the House
of Representatives, as well as the DFA and the POEA is that with respect to
disputes involving claims of Filipino seafarers wherein the parties are covered by
a collective bargaining agreement, the dispute or claim should be submitted to
the jurisdiction of a voluntary arbitrator or panel of arbitrators. It is only in the
absence of a collective bargaining agreement that parties may opt to submit the
dispute to either the NLRC or to voluntary arbitration. It is elementary that rules
and regulations issued by administrative bodies to interpret the law which they
are entrusted to enforce, have the force of law, and are entitled to great
respect.[8] Such rules and regulations partake of the nature of a statute and are just
as binding as if they have been written in the statute itself.[9] In the instant case,
the Court finds no cogent reason to depart from this rule.

The above interpretation of the DOLE, DFA and POEA is also in consonance
with the policy of the state to promote voluntary arbitration as a mode of settling
labor disputes.[10]

No less than the Philippine Constitution provides, under the third paragraph,
Section 3, Article XIII, thereof that [t]he State shall promote the principle of
shared responsibility between workers and employers and the preferential use of
voluntary modes in settling disputes, including conciliation, and shall enforce
their mutual compliance therewith to foster industrial peace.

Consistent with this constitutional provision, Article 211 of the Labor Code
provides the declared policy of the State [t]o promote and emphasize the primacy
of free collective bargaining and negotiations, including voluntary arbitration,
mediation and conciliation, as modes of settling labor or industrial disputes.

On the basis of the foregoing, the Court finds no error in the ruling of the CA that
the voluntary arbitrator has jurisdiction over the instant case.

WHEREFORE, the petition is DENIED. The Decision and Resolution of

the Court of Appeals in CA-G.R. SP No. 76489 dated July 11, 2005 and April 18,
2006, respectively, are AFFIRMED.

SO ORDERED.

DIOSDADO M. PERALTA
Associate Justice

G.R. No. 166421 September 5, 2006

PHILIPPINE JOURNALISTS, INC., BOBBY DELA CRUZ, ARNOLD

BANARES and ATTY. RUBY RUIZ BRUNO,petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, HON. COMMS.
LOURDES JAVIER, TITO GENILO and ERNESTO VERCELES,
JOURNAL EMPLOYEES UNION, and THE COURT OF
APPEALS, respondents.

DECISION

CALLEJO, SR., J.:

This is a Petition for Certiorari under Rule 651 of the Rules of Court of the
Decision2 of the Court of Appeals (CA) in CA-G.R. SP No. 81544, as well
as the Resolution3 dated November 23, 2004 denying the motion for
reconsideration thereof.

The Antecedents

The Philippine Journalists, Inc. (PJI) is a domestic corporation engaged in

the publication and sale of newspapers and magazines. The exclusive
bargaining agent of all the rank-and-file employees in the company is the
Journal Employees Union (Union for brevity).

Sometime in April 2005, the Union filed a notice of strike before the
National Conciliation and Mediation Board (NCMB), claiming that PJI was
guilty of unfair labor practice. PJI was then going to implement a
retrenchment program due to "over-staffing or bloated work force and
continuing actual losses sustained by the company for the past three
years resulting in negative stockholders equity of P127.0 million." The
Secretary of the Department of Labor and Employment (DOLE)
certified4 the labor dispute to the National Labor Relations Commission
(NLRC) for compulsory arbitration pursuant to Article 263 (g) of the Labor
Code. The case was docketed as NCMB-NCR-NS-03-087-00.

The parties were required to submit their respective position papers. PJI
filed a motion to dismiss, contending that the Secretary of Labor had no
jurisdiction to assume over the case and thus erred in certifying it to the
Commission. The NLRC denied the motion. PJI, thereafter, filed a Motion
to Defer Further Proceedings, alleging, among others, that the filing of its
position paper might jeopardize attempts to settle the matter extrajudicially,
which the NLRC also denied. The case was, thereafter, submitted for
decision.5

In its Resolution6 dated May 31, 2001, the NLRC declared that the 31
complainants were illegally dismissed and that there was no basis for the
implementation of petitioner's retrenchment program. The NLRC noted
that the following circumstances belied PJI's claim that it had incurred
losses: (1) office renovations were made as evidenced by numerous
purchase orders; (2) certain employees were granted merit increases; and
(3) a Christmas party for employees was held at a plush hotel. It also
observed that PJI's executives refused to forego their quarterly bonuses if
the Union members refused to forego theirs.

Thus, the NLRC declared that the retrenchment of 31 employees was

illegal and ordered their reinstatement "to their former position without loss
of seniority rights and other benefits, with payment of unpaid salaries,
bonuses and backwages from the date of dismissal up to the actual date
of reinstatement plus 10% of the total monetary award as attorney's fees."
PJI was adjudged liable in the total amount of P6,447,008.57.7

Thereafter, the parties executed a Compromise Agreement8 dated July 9,

2001, where PJI undertook to reinstate the 31 complainant-employees
effective July 1, 2001 without loss of seniority rights and benefits; 17 of
them who were previously retrenched were agreed to be given full and
complete payment of their respective monetary claims, while 14 others
would be paid their monetary claims minus what they received by way of
separation pay. The agreement stated that the parties entered the
agreement "[i]n a sincere effort at peace and reconciliation as well as to
jointly establish a new era in labor management relations marked by
mutual trust, cooperation and assistance, enhanced by open, constant
and sincere communication with a view of advancing the interest of both
the company and its employees." The compromise agreement was
submitted to the NLRC for approval. All the employees mentioned in the
agreement and in the NLRC Resolution affixed their signatures thereon.
They likewise signed the Joint Manifesto and Declaration of Mutual
Support and Cooperation9 which had also been submitted for the
consideration of the labor tribunal.

The NLRC forthwith issued another Resolution10 on July 25, 2002,

declaring that the Clarificatory Motion of complainants Floro Andrin, Jr.
and Jazen M. Jilhani had been mooted by the compromise agreement as
they appeared to be included in paragraph 2.c and paragraph 2.d,
respectively thereof. As to the seven others who had filed a motion for
clarification, the NLRC held that they should have filed individual affidavits
to establish their claims or moved to consolidate their cases with the
certified case. Thus, the NLRC granted the computation of their benefits
as shown in the individual affidavits of the complainants. However, as to
the prayer to declare the Union guilty of unfair labor practice, to continue
with the CBA negotiation and to pay moral and exemplary damages, the
NLRC ruled that there was no sufficient factual and legal basis to modify
its resolution. Thus, the compromise agreement was approved and
NCMB-NCR-NS-03-087-00 was deemed closed and terminated.11

In the meantime, however, the Union filed another Notice of Strike on July
1, 2002, premised on the following claims:

1. OUTRIGHT DISMISSAL OF 29 EMPLOYEES

2. VIOLATION OF CBA BENEFITS

3. NON-PAYMENT OF ALLOWANCES, MEAL, RICE,

TRANSPORTATION, QUARTERLY BONUS, X-MAS BONUS,
ANNIVERSARY BONUS, HEALTH INSURANCE, DENTAL TO 29
EMPLOYEES

4. NON-PAYMENT OF BACKWAGES OF 38 REINSTATED

EMPLOYEES [JUNE 2001 SALARY AND ALLOWANCES, DIFFERENCE
(sic) OF ALLOWANCES AND BONUSES AWARDED BY NLRC]

5. TRANSPORTATION ALLOWANCE OF 5 UNION MEMBERS

6. NON-PAYMENT OF P1000 INCREASE PER CBA

7. DIMINUTION OF SALARY OF 200 EMPLOYEES TO 50%12

In an Order13 dated September 16, 2002, the DOLE Secretary certified the
case to the Commission for compulsory arbitration. The case was
docketed as NCMB-NCR-NS-07-251-02.

The Union claimed that 29 employees were illegally dismissed from

employment, and that the salaries and benefits14 of 50 others had been
illegally reduced.15 After the retrenchment program was implemented, 200
Union members-employees who continued working for petitioner had
been made to sign five-month contracts. The Union also alleged that the
company, through its legal officer, threatened to dismiss some 200 union
members from employment if they refused to conform to a 40% to 50%
salary reduction; indeed, the 29 employees who refused to accede to
these demands were dismissed on June 28, 2002. The Union prayed that
the dismissed employees be reinstated with payment of full backwages
and all other benefits or their monetary equivalent from the date of their
dismissal on July 3, 2002 up to the actual date of reinstatement; and that
the CBA benefits (as of November 2002) of the 29 employees and 50
others be restored.

In its Resolution16 dated July 31, 2003, the NLRC ruled that the
complainants were not illegally dismissed. The May 31, 2001 Resolution
declaring the retrenchment program illegal did not attain finality as "it had
been academically mooted by the compromise agreement entered into
between both parties on July 9, 2001." According to the Commission, it
was on the basis of this agreement that the July 25, 2002 Resolution
which declared the case closed and terminated was issued. Pursuant to
Article 223 of the Labor Code, this later resolution attained finality upon
the expiration of ten days from both parties' receipt thereof. Thus, the May
31, 2001 Resolution could not be made the basis to justify the alleged
continued employment regularity of the 29 complainants subsequent to
their retrenchment. The NLRC further declared that the two cases involved
different sets of facts, hence, the inapplicability of the doctrine of stare
decisis. In the first action, the issue was whether the complainants as
regular employees were illegally retrenched; in this case, whether the 29
complainants, contractual employees, were illegally dismissed on
separate dates long after their retrenchment.

The NLRC also declared that by their separate acts of entering into
fixed-term employment contracts with petitioner after their separation from
employment by virtue of retrenchment, they are deemed to have admitted
the validity of their separation from employment and are thus estopped
from questioning it. Moreover, there was no showing that the complainants
were forced or pressured into signing the fixed-term employment contracts
which they entered into. Consequently, their claims for CBA benefits and
increases from January to November 2002 should be dismissed. The
NLRC pointed out that since they were mere contractual employees, the
complainants were necessarily excluded from the collective bargaining
unit. The NLRC stressed that the complainants had refused to be
regularized and ceased to be employees of petitioner upon the expiration
of their last fixed-term employment contracts. Thus, the NLRC dismissed
the case for lack of merit, but directed the company to "give preference to
the separated 29 complainants should they apply for re-employment."

On the other issues raised by the complainants, the NLRC held:

We, furthermore find that JEU has no personality to represent the 29

Complainants for, as prudently discussed above, they were contractual
employees, not regular employees, from the time they entered into
fixed-term employment contracts after being retrenched up to the time
they ceased being employees of PJI due to the non-renewal of their last
fixed-term employment contracts. As contractual employees, they were
excluded from the Collective Bargaining Unit (Section 2, CBA) and hence,
not union members.

Complainants contend that PJI admitted that the 29 Complainants were

union members because PJI deducted union dues from their monthly
wages.

We, however, do not subscribe to this view.

Firstly, although PJI deducted union dues from the monthly wages of the
29 employees, it erroneously did so due to the distracting
misrepresentation of JEU that they were union members. Thus, if there is
any legal effect of these acts of misrepresentation and erroneous
deduction, it is certainly the liability of JEU for restitution of the erroneously
deducted amounts to PJI.

Secondly, the union membership admission due to erroneous union dues

deduction is incompatible with the fixed-term employment contracts
Complainants entered into with PJI.

We finally rule that JEU is not guilty of unfair labor practice. Although it
admitted the 29 contractual employees as its members and represented
them in the instant case and circulated derogatory letters and made
accusations against Respondents, it is, nevertheless, deemed to have
acted in good faith, there being no substantial evidence on record showing
that they did so in bad faith and with malice.

Much as we empathize with Complainants in their period of depressing

economic plight and hence, sincerely yearn to extricate them from them
such a situation, [w]e cannot do anything, for our hands are shackled by
the hard but true merits of the instant case. As an exception to this
incapacity, however, [w]e can request Respondents to give preference to
the 29 Complainants should they apply for re-employment.17

The Union assailed the ruling of the NLRC before the CA via petition for
certiorari under Rule 65.

In its Decision dated August 17, 2004, the appellate court held that the
NLRC gravely abused its discretion in ruling for PJI. The compromise
agreement referred only to the award given by the NLRC to the
complainants in the said case, that is, the obligation of the employer to the
complainants. The CA pointed out that the NLRC Resolution nevertheless
declared that respondent failed to prove the validity of its retrenchment
program, which according to it, stands even after the compromise
agreement was executed; it was the reason why the agreement was
reached in the first place.

The CA further held that the act of respondent in hiring the retrenched
employees as contractual workers was a ploy to circumvent the latter's
security of tenure. This is evidenced by the admission of PJI, that it hired
contractual employees (majority of whom were those retrenched) because
of increased, albeit uncertain, demand for its publications. The CA pointed
out that this was done almost immediately after implementing the
retrenchment program. Another "telling feature" is the fact that the said
employees were re-hired for five-month contracts only, and were later
offered regular employment with salaries lower than what they were
previously receiving. The CA also ruled that the dismissed employees
were not barred from pursuing their monetary claims despite the fact that
they had accepted their separation pay and signed their quitclaims. The
dispositive portion of the decision reads:

WHEREFORE, the petition is GRANTED. Respondent is ordered to

reinstate the 29 dismissed employees to their previous positions without
loss of seniority rights and payment of their full backwages from the time
of their dismissal up to their actual reinstatement. Respondent is likewise
ordered to pay the 29 and 50 employees, respectively, their rightful
benefits under the CBA, less whatever amount they have already
received. The records of this case are remanded to the NLRC for the
computation of the monetary awards.
SO ORDERED.18

The Present Petition

PJI, its President Bobby Dela Cruz, its Executive Vice-President Arnold
Banares, and its Chief Legal Officer Ruby Ruiz Bruno, the petitioners, now
come before this Court and submit that the CA erred as follows:

THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE

OF DISCRETION WHEN IT ADOPTED THE RESOLUTION DATED 31
MAY 2001 IN CERT. CASE NO. 000181-00 AND APPLIED THE SAME
TO THE INSTANT CASE DOCKETED AS CERT. CASE NO. 000229-02,
DESPITE THE SAID RESOLUTION
BEING ABANDONED AND ACADEMICALLY MOOTED BY THE
RESOLUTION DATED 25 JULY 2001, WHICH APPROVED THE

COMPROMISE AGREEMENT BETWEEN THE PARTIES IN CERT.

CASE NO. 000181-00. IN FINE; THE HONORABLE COURT OF
APPEALS APPLIED TO THE INSTANT CASE THE LOGIC AND LAW
OF AN ABANDONED RESOLUTION WHICH NEVER ATTAINED
FINALITY.

II

THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE

OF DISCRETION WHEN IT TRIED FACTS AND EVIDENCES WHICH
WERE NOT PRESENTED AND CONSIDERED BY THE COURT A QUO.
IN FINE, THE HONORABLE COURT OF APPEALS WENT BEYOND
ITS MANDATE AND AUTHORITY WHEN IT BECAME A TRIER OF
FACTS.

III

THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE

OF DISCRETION WHEN IT GRANTED TO AWARD 50 OTHER
PERSONS WHO ARE NOT PARTIES OR PRIVIES TO THE INSTANT
CASE. IN FINE, THE HONORABLE COURT OF APPEALS GRANTED
AWARDS TO THOSE WITH WHOM IT NEVER HAD JURISDICTION.19
At the outset, we note that this case was brought before us via petition for
certiorari under Rule 65 of the Revised Rules of Civil Procedure. The
proper remedy, however, was to file a petition under Rule 45. It must be
stressed that certiorari under Rule 65 is "a remedy narrow in scope and
inflexible in character. It is not a general utility tool in the legal
workshop."20 Moreover, the special civil action for certiorari will lie only
when a court has acted without or in excess of jurisdiction or with grave
abuse of discretion.21

Be that as it may, a petition for certiorari may be treated as a petition for

review under Rule 45. Such move is in accordance with the liberal spirit
pervading the Rules of Court and in the interest of substantial justice.22 As
the instant petition was filed within the prescribed fifteen-day period, and
in view of the substantial issues raised, the Court resolves to give due
course to the petition and treat the same as a petition for review on
certiorari.23

The primary issue before the Court is whether an NLRC Resolution, which
includes a pronouncement that the members of a union had been illegally
dismissed, is abandoned or rendered "moot and academic" by a
compromise agreement subsequently entered into between the dismissed
employees and the employer; this, in turn, raises the question of whether
such a compromise agreement constitutes res judicata to a new complaint
later filed by other union members-employees, not parties to the
agreement, who likewise claim to have been illegally dismissed.

Petitioners point out that a compromise agreement is the product of free

will and consent of the parties and that such agreement can be entered
into during any stage of the case. They insist that its terms are not dictated
or dependent on the court's findings of facts; it is valid as long as not
contrary to law, public order, public policy, morals or good customs.
According to petitioners, the execution of the compromise agreement
embodied and approved by the NLRC Resolution dated July 25, 2001
effectively closed and terminated Certified Case No. 000181-00.
Citing Golden Donuts, Inc., v. National Labor Relations
24
Commission. Thus, a judgment on a compromise agreement has the
force and effect of any other judgment.

Petitioners also point out that as correctly observed by the NLRC, the
resolution declaring respondents' retrenchment was promulgated on May
31, 2001. Petitioners' side was never presented in Certified Case No.
000181-00, and if it were not for the filing of the compromise agreement,
they would have moved to reconsider or at least filed the appropriate
pleadings to rectify the findings adverse to them. They insist that the
compromise agreement effectively abandoned all findings of facts and its
necessary consequences in favor of the amicable settlement. The
compromise agreement was thereafter approved on July 25, 2001 by the
NLRC. As clearly stated in Article 223 of the Labor Code, it is the
Resolution dated July 25, 2001 that attained finality after the expiration of
the ten-day period, and not the abandoned and mooted Resolution dated
May 31, 2001.

Petitioners claim that the letter of Atty. Adolfo Romero dated March 20,
2000 was never presented as evidence. Moreover, since the CA is not a
trier of facts, it was error on its part to "admit material evidence that was
never presented in the instant case (or to lift findings of facts from the
abandoned and mooted resolution dated 31 May 2001)." Thus, the NLRC
did not act with grave abuse of discretion when it found that the
retrenchment was legal as stated in the appealed decision dated July 31,
2003. Such use of the admissions contained in the said letter dated March
20, 2000 denied them due process as they were not given the opportunity
to contest or deny its validity or existence.

Petitioners further point out that while the instant petition was filed only by
29 complainants, the dispositive portion of the assailed decision was
extended to cover 50 other persons. They insist that the said letter, as well
as the findings of a "mooted decision," were used as evidence to support
the erroneous decision of the CA; in so doing, the appellate court acted
with grave abuse of discretion amounting to lack or excess of jurisdiction.

For their part, private respondents claim that the appellate court did not
commit any reversible error, and that the assailed decision is borne out by
the evidence on record. Since the dismissal of the retrenched employees
has been declared illegal, the 29 dismissed employees enjoy the status of
regular and permanent employees who cannot be dismissed except for
cause; hence, the CA correctly ordered their reinstatement.

They further point out that the fixing of five-month contracts of employment
entered into by the individual union members was intentionally employed
by petitioners to circumvent the provisions of the Labor Code on security
of tenure, hence, illegal. They also allege that petitioners did not comply
with the 30-day notice rule required by law to render any dismissal from
employment valid. The letter of dismissal was dated June 27, 2002, and
took effect a week after, or on July 3, 2002, a violation of the 30-day notice
rule. The Union members' salaries and benefits were obtained through
CBA negotiations and were included in the existing CBA. Thus,
petitioners' act of unilaterally removing such benefits and wage increases
constitutes gross violations of its economic provisions, and unfair labor
practice as defined by the Labor Code. Private respondents cite Philippine
Carpet Employees Association v. Philippine Carpet Manufacturing
Corporation25 to support their arguments. They insist that the illegally
retrenched employees were made to believe that their retrenchment was
valid, and thus, through mistake or fraud accepted their separation pay,
which, however, does not militate against their claims.

The Ruling of the Court

The petition is denied.

The nature of a compromise is spelled out in Article 2028 of the New Civil
Code: it is "a contract whereby the parties, by making reciprocal
concessions, avoid litigation or put an end to one already commenced."
Parties to a compromise are motivated by "the hope of gaining, balanced
by the dangers of losing."26 It contemplates mutual concessions and
mutual gains to avoid the expenses of litigation, or, when litigation has
already begun, to end it because of the uncertainty of the result.27 Article
227 of the Labor Code of the Philippines authorizes compromise
agreements voluntarily agreed upon by the parties, in conformity with the
basic policy of the State "to promote and emphasize the primacy of free
collective bargaining and negotiations, including voluntary arbitration,
mediation and conciliation, as modes of settling labor or industrial
disputes."28 As the Court

held in Reformist Union of R.B. Liner, Inc. v. NLRC,29 the provision

"bestows finality to unvitiated compromise agreements," particularly if
there is no allegation that either party did not comply with what was
incumbent upon them under the agreement. The provision reads:

ART. 227 Compromise Agreements. Any compromise settlement,

including those involving labor standard laws, voluntarily agreed upon by
the parties with the assistance of the Bureau or the regional office of the
Department of Labor, shall be final and binding upon the parties. The
National Labor Relations Commission or any court shall not assume
jurisdiction over issues involved therein except in case of noncompliance
thereof or if there is prima facie evidence that the settlement was obtained
through fraud, misrepresentation, or coercion.

Thus, a judgment rendered in accordance with a compromise agreement

is not appealable, and is immediately executory unless a motion is filed to
set aside the agreement on the ground of fraud, mistake, or duress, in
which case an appeal may be taken against the order denying the
motion.30 Under Article 2037 of the Civil Code, "a compromise has upon
the parties the effect and authority of res judicata," even when effected
without judicial approval; and under the principle of res judicata, an issue
which had already been laid to rest by the parties themselves can no
longer be relitigated.31

In AFP Mutual Benefit Association, Inc. v. Court of Appeals,32 the Court

spelled out the distinguishing features of a compromise agreement that is
basically intended to resolve a matter already in litigation, or what is
normally termed as a judicial compromise. The Court held that once
approved, the agreement becomes more than a mere contract binding
upon the parties, considering that it has been entered as the court's
determination of the controversy and has the force and effect of any other
judgment. The Court went on to state:

Adjective law governing judicial compromises annunciate that once

approved by the court, a judicial compromise is not appealable and it
thereby becomes immediately executory but this rule must be understood
to refer and apply only to those who are bound by the compromise and, on
the assumption that they are the only parties to the case, the litigation
comes to an end except only as regards to its compliance and the
fulfillment by the parties of their respective obligations thereunder. The
reason for the rule, said the Court in Domingo v. Court of Appeals [325
Phil. 469], is that when both parties so enter into the agreement to put
a close to a pending litigation between them and ask that a decision
be rendered in conformity therewith, it would only be "natural to
presume that such action constitutes an implicit waiver of the right
to appeal" against that decision. The order approving the
compromise agreement thus becomes a final act, and it forms part
and parcel of the judgment that can be enforced by a writ of
execution unless otherwise enjoined by a restraining order.33

Thus, contrary to the allegation of petitioners, the execution and

subsequent approval by the NLRC of the agreement forged between it
and the respondent Union did not render the NLRC resolution ineffectual,
nor rendered it "moot and academic." The agreement becomes part of the
judgment of the court or tribunal, and as a logical consequence, there is
an implicit waiver of the right to appeal.

In any event, the compromise agreement cannot bind a party who did not
voluntarily take part in the settlement itself and gave specific individual
consent.34 It must be remembered that a compromise agreement is also a
contract; it requires the consent of the parties, and it is only then that the
agreement may be considered as voluntarily entered into.

The case of Golden Donuts, Inc. v. National Labor Relations

Commission,35 which petitioners erroneously rely upon, is instructive on
this point. The Court therein was confronted with the following questions:

x x x (1) whether or not a union may compromise or waive the rights to

security of tenure and money claims of its minority members, without the
latter's consent, and (2) whether or not the compromise agreement
entered into by the union with petitioner company, which has not been
consented to nor ratified by respondents minority members has the effect
of res judicata upon them."36

Speaking through Justice Reynato C. Puno, the Court held that pursuant
to Section 23, Rule 13837 of the then 1964 Revised Rules of Court, a
special authority is required before a lawyer may compromise his client's
litigation; thus, the union has no authority to compromise the individual
claims of members who did not consent to the settlement.38The Court also
stated that "the authority to compromise cannot lightly be presumed and
should be duly established by evidence,"39 and that "a compromise
agreement is not valid when a party in the case has not signed the same
or when someone signs for and in behalf of such party without authority to
do so;" consequently, the affected employees may still pursue their
individual claims against their employer.40 The Court went on to state that
a judgment approving a compromise agreement cannot have the effect of
res judicata upon non-signatories since the requirement of identity of
parties is not satisfied. A judgment upon a compromise agreement has all
the force and effect of any other judgment, and, conclusive only upon
parties thereto and their privies, hence, not binding on third persons who
are not parties to it.41

A careful perusal of the wordings of the compromise agreement will show

that the parties agreed that the only issue to be resolved was the question
of the monetary claim of several employees. The prayer of the parties in
the compromise agreement which was submitted to the NLRC reads:

WHEREFORE, premises considered, it is respectfully prayed that the

Compromise Settlement be noted and considered; that the instant case
[be] deemed close[d] and terminated and that the Decision dated May 31,
2001 rendered herein by this Honorable Commission be deemed to be
fully implemented insofar as concerns the thirty-one (31) employees
mentioned in paragraphs 2c and 2d hereof; and, that the only issue
remaining to be resolved be limited to the question of the monetary claim
raised in the motion for clarification by the seven employees mentioned in
paragraph 2e hereof.42

The agreement was later approved by the NLRC. The case was
considered closed and terminated and the Resolution dated May 31, 2001
fully implemented insofar as the employees "mentioned in paragraphs 2c
and 2d of the compromise agreement" were concerned. Hence, the CA
was correct in holding that the compromise agreement pertained only to
the "monetary obligation" of the employer to the dismissed employees,
and in no way affected the Resolution in NCMB-NCR-NS-03-087-00 dated
May 31, 2001 where the NLRC made the pronouncement that there was
no basis for the implementation of petitioners' retrenchment program.

To reiterate, the rule is that when judgment is rendered based on a

compromise agreement, the judgment becomes immediately
executory, there being an implied waiver of the parties' right to appeal
from the decision.43 The judgment having become final, the Court can no
longer reverse, much less modify it.

Petitioners' argument that the CA is not a trier of facts is likewise

erroneous. In the exercise of its power to review decisions by the NLRC,
the CA can review the factual findings or legal conclusions of the labor
tribunal.44 Thus, the CA is not proscribed from "examining evidence anew
to determine whether the factual findings of the NLRC are supported by
the evidence presented and the conclusions derived therefrom accurately
ascertained."45

The findings of the appellate court are in accord with the evidence on
record, and we note with approval the following pronouncement:

Respondents alleged that it hired contractual employees majority of whom

were those retrenched because of the increased but uncertain demand for
its publications. Respondent did this almost immediately after its alleged
retrenchment program. Another telling feature in the scheme of
respondent is the fact that these contractual employees were given
contracts of five (5) month durations and thereafter, were offered regular
employment with salaries lower than their previous salaries. The Labor
Code explicitly prohibits the diminution of employee's benefits. Clearly, the
situation in the case at bar is one of the things the provision on security of
tenure seeks to prevent.

Lastly, it could not be said that the employees in this case are barred from
pursuing their claims because of their acceptance of separation pay and
their signing of quitclaims. It is settled that "quitclaims, waivers and/or
complete releases executed by employees do not stop them from
pursuing their claims if there is a showing of undue pressure or duress.
The basic reason for this is that such quitclaims, waivers and/or complete
releases being figuratively exacted through the barrel of a gun, are against
public policy and therefore null and void ab initio (ACD Investigation
Security Agency, Inc. v. Pablo D. Daquera, G.R. No. 147473, March 30,
2004)." In the case at bar, the employees were faced with impending
termination. As such, it was but natural for them to accept whatever
monetary benefits that they could get.46

CONSIDERING THE FOREGOING, the petition is DENIED and the

assailed Decision and Resolution AFFIRMED. Costs against the
petitioners.

SO ORDERED.

Panganiban, C.J., Chairperson, Ynares-Santiago, Austria-Martinez,

Chico-Nazario, J.J., concur.