381 Phil.

428

SECOND DIVISION
[ G.R. No. 121605, February 02, 2000 ]
PAZ MARTIN JO AND CESAR JO, PETITIONERS, VS.
NATIONAL LABOR RELATIONS COMMISSION AND PETER
MEJILA, RESPONDENTS.

DECISION

QUISUMBING, J.: 

This petition for certiorari seeks to set aside the Decision [1] of National Labor
Relations Commission (Fifth Division) promulgated on November 21, 1994, and its
Resolution dated June 7, 1995, which denied petitioners’ motion for
reconsideration.

Private respondent Peter Mejila worked as barber on a piece rate basis at

Dina’s Barber Shop. In 1970, the owner, Dina Tan, sold the barbershop to
petitioners Paz Martin Jo and Cesar Jo. All the employees, including private
respondent, were absorbed by the new owners. The name of the barbershop was
changed to Windfield Barber Shop.

The owners and the barbers shared in the earnings of the barber shop. The barbers
got two-thirds (2/3) of the fee paid for every haircut or shaving job done, while
one-third (1/3) went to the owners of the shop.

In 1977, petitioners designated private respondent as caretaker of the shop

because the former caretaker became physically unfit. Private respondent’s duties
as caretaker, in addition to his being a barber, were: (1) to report to the owners of
the barbershop whenever the airconditioning units malfunctioned and/or whenever
water or electric power supply was interrupted; (2) to call the laundry woman to
wash dirty linen; (3) to recommend applicants for interview and hiring; (4) to
attend to other needs of the shop. For this additional job, he was given an
honorarium equivalent to one-third (1/3) of the net income of the shop.

When the building occupied by the shop was demolished in 1986, the barbershop
closed. But soon a place nearby was rented by petitioners and the barbershop
resumed operations as Cesar’s Palace Barbershop and Massage Clinic. In this new
location, private respondent continued to be a barber and caretaker, but with a
fixed monthly honorarium as caretaker, to wit: from February 1986 to 1990 - P700;
from February 1990 to March 1991 - P800; and from July 1992 P1,300.
In November 1992, private respondent had an altercation with his co-barber, Jorge
Tinoy. The bickerings, characterized by constant exchange of personal insults
during working hours, became serious so that private respondent reported the
matter to Atty. Allan Macaraya of the labor department. The labor official
immediately summoned private respondent and petitioners to a conference. Upon
investigation, it was found out that the dispute was not between private respondent
and petitioners; rather, it was between the former and his fellow barber.
Accordingly, Atty. Macaraya directed petitioners’ counsel, Atty. Prudencio Abragan,
to thresh out the problem.

During the mediation meeting held at Atty. Abragan’s office a new twist was added.
Despite the assurance that he was not being driven out as caretaker-barber, private
respondent demanded payment for several thousand pesos as his separation pay
and other monetary benefits. In order to give the parties enough time to cool off,
Atty. Abragan set another conference but private respondent did not appear in such
meeting anymore.

Meanwhile, private respondent continued reporting for work at the barbershop. But,
on January 2, 1993, he turned over the duplicate keys of the shop to the cashier
and took away all his belongings therefrom. On January 8, 1993, he began working
as a regular barber at the newly opened Goldilocks Barbershop also in Iligan City.

On January 12, 1993, private respondent filed a complaint [2] for illegal dismissal
with prayer for payment of separation pay, other monetary benefits, attorney’s fees
and damages. Significantly, the complaint did not seek reinstatement as a positive
relief.

In a Decision dated June 15, 1993, the Labor Arbiter found that private respondent
was an employee of petitioners, and that private respondent was not dismissed but
had left his job voluntarily because of his misunderstanding with his co-worker.
[3]
The Labor Arbiter dismissed the complaint, but ordered petitioners to pay private
respondent his 13th month pay and attorney’s fees.

Both parties appealed to the NLRC. In a Decision dated November 21, 1994, it set
aside the labor arbiter’s judgment. The NLRC sustained the labor arbiter’s finding as
to the existence of employer-employee relationship between petitioners and private
respondent, but it ruled that private respondent was illegally dismissed. Hence, the
petitioners were ordered to reinstate private respondent and pay the latter’s
backwages, 13th month pay, separation pay and attorney’s fees, thus:
"For failure of respondents to observe due process before dismissing the
complainant, We rule and hold that he was illegally terminated. Consequently, he
should be reinstated and paid his backwages starting from January 1, 1993 up to
the time of his reinstatement and payment of separation pay, should reinstatement
not be feasible on account of a strained employer-employee relationship.

As complainant’s income was mixed, (commission and caretaker), he becomes

entitled to 13th month pay only in his capacity as caretaker at the last rate of pay
given to him.

With respect to separation pay, even workers paid on commission are given
separation pay as they are considered employees of the company. Complainant
should be adjudged entitled to separation pay reckoned from 1970 up to the time
he was dismissed on December 31, 1992 at one-half month pay of his earning as
a barber; and as a caretaker the same should be reckoned from 1977 up to
December 31, 1992.

As complainant has been assisted by counsel not only in the preparation of the
complaint, position paper but in hearings before the Labor Arbiter a quo, attorney’s
fees equivalent to 10% of the money awards should likewise be paid to
complainant.

WHEREFORE, the decision appealed from is Vacated and Set Aside and a new one

entered in accordance with the above-findings and awards.

SO ORDERED."[4]
Its motion for reconsideration having been denied in a Resolution dated June 7,
1995, petitioners filed the instant petition.

The issues for resolution are as follows:

1. Whether or not there exists an employer-employee relationship

between petitioners and private respondent.

2. Whether or not private respondent was dismissed from or had

abandoned his employment.

Petitioners contend that public respondent gravely erred in declaring that private
respondent was their employee. They claim that private respondent was their
"partner in trade" whose compensation was based on a sharing arrangement per
haircut or shaving job done. They argue that private respondent’s task as caretaker
could be considered an employment because the chores are very minimal.

At the outset, we reiterate the doctrine that the existence of an employer-

employeerelationship is ultimately a question of fact and that the findings thereon
by the labor arbiter and the NLRC shall be accorded not only respect but even
finality when supported by ample evidence.[5]

In determining the existence of an employer-employee relationship, the following

elements are considered: (1) the selection and engagement of the workers; (2)
power of dismissal; (3) the payment of wages by whatever means; and (4) the
power to control the worker’s conduct, with the latter assuming primacy in the
overall consideration. The power of control refers to the existence of the power and
not necessarily to the actual exercise thereof. It is not essential for the employer to
actually supervise the performance of duties of the employee; it is enough that
the employer has the right to wield that power.[6]
Absent a clear showing that petitioners and private respondent had intended to
pursue a relationship of industrial partnership, we entertain no doubt that private
respondent was employed by petitioners as caretaker-barber. Initially, petitioners,
as new owners of the barbershop, hired private respondent as barber by absorbing
the latter in their employ. Undoubtedly, the services performed by private
respondent as barber is related to, and in the pursuit of the principal business
activity of petitioners. Later on, petitioners tapped private respondent to serve
concurrently as caretaker of the shop. Certainly, petitioners had the power to
dismiss private respondent being the ones who engaged the services of the latter.
In fact, private respondent sued petitioners for illegal dismissal, albeit contested by
the latter. As a caretaker, private respondent was paid by petitioners wages in the
form of honorarium, originally, at the rate of one-third (1/3) of the shop’s net
income but subsequently pegged at a fixed amount per month. As a barber, private
respondent earned two-thirds (2/3) of the fee paid per haircut or shaving job done.

Furthermore, the following facts indubitably reveal that petitioners controlled

private respondent’s work performance, in that: (1) private respondent had to
inform petitioners of the things needed in the shop; (2) he could only recommend
the hiring of barbers and masseuses, with petitioners having the final decision; (3)
he had to be at the shop at 9:00 a.m. and could leave only at 9:00 p.m. because
he was the one who opened and closed it, being the one entrusted with the key.
[7]
 These duties were complied with by private respondent upon instructions of
petitioners. Moreover, such task was far from being negligible as claimed by
petitioners. On the contrary, it was crucial to the business operation of petitioners
as shown in the preceding discussion. Hence, there was enough basis to declare
private respondent an employee of petitioners. Accordingly, there is no cogent
reason to disturb the findings of the labor arbiter and NLRC on the existence
of employer-employee relationship between herein private parties.

With regard to the second issue, jurisprudence has laid out the rules regarding
abandonment as a just and valid ground for termination of employment. To
constitute abandonment, there must be concurrence of the intention to abandon
and some overt acts from which it may be inferred that the employee concerned
has no more interest in working.[8] In other words, there must be a clear, deliberate
and unjustified refusal to resume employment and a clear intention to sever
the employer-employee relationship on the part of the employee.[9]

In the case at bar, the labor arbiter was convinced that private respondent was not
dismissed but left his work on his own volition because he could no longer bear the
incessant squabbles with his co-worker. Nevertheless, public respondent did not
give credence to petitioners’ claim that private respondent abandoned his job. On
this score, public respondent gravely erred as hereunder discussed.

At the outset, we must stress that where the findings of the NLRC contradict those
of the labor arbiter, the Court, in the exercise of its equity jurisdiction, may look
into the records of the case and reexamine the questioned findings. [10]

In this case, the following circumstances clearly manifest private respondent’s

intention to sever his ties with petitioners. First, private respondent even bragged
to his co-workers his plan to quit his job at Cesar’s Palace Barbershop and Massage
Clinic as borne out by the affidavit executed by his former co-workers. [11] Second,
he surrendered the shop’s keys and took away all his things from the shop. Third,
he did not report anymore to the shop without giving any valid and justifiable
reason for his absence. Fourth, he immediately sought a regular employment in
another barbershop, despite previous assurance that he could remain in petitioners’
employ. Fifth, he filed a complaint for illegal dismissal without praying for
reinstatement.

Moreover, public respondent’s assertion that the institution of the complaint for
illegal dismissal manifests private respondent’s lack of intention to abandon his
job[12] is untenable. The rule that abandonment of work is inconsistent with the
filing of a complaint for illegal dismissal is not applicable in this case. Such rule
applies where the complainant seeks reinstatement as a relief. Corollarily, it has no
application where the complainant does not pray for reinstatement and just asks for
separation pay instead[13] as in the present case. It goes without saying that the
prayer for separation pay, being the alternative remedy to reinstatement,
[14]
 contradicts private respondent’s stance. That he was illegally dismissed is belied
by his own pleadings as well as contemporaneous conduct.

We are, therefore, constrained to agree with the findings of the Labor Arbiter that
private respondent left his job voluntarily for reasons not attributable to petitioners.
It was error and grave abuse of discretion for the NLRC to hold petitioners liable for
illegal dismissal of private respondent.

WHEREFORE, the petition is GRANTED. The assailed Decision and Resolution of

public respondent NLRC are reversed and set aside. The decision of the Labor
Arbiter dated June 15, 1993, is hereby reinstated. No costs.

SO ORDERED.

Bellosillo, (Chairman), Mendoza, Buena, and De Leon, Jr., JJ., concur.

[1]
 Penned by Commissioner Oscar M. Abella, and concurred by Presiding
Commissioner Musib M. Buat and Commissioner Leon G. Gonzaga Jr..

[2]
 Rollo, pp. 34-37.

[3]
 Id. at 60-61.

[4]
 Id. at 84.
[5]
 AFP Mutual Benefit Association Inc. v. NLRC, 267 SCRA 47, 56 (1997); North
Davao Mining Corp. v. NLRC, 254 SCRA 721, 731 (1996); Inter-Orient Maritime
Enterprises Inc. v. NLRC, 235 SCRA 268, 277 (1994); Loadstar Shipping Co. Inc. v.
Gallo, 229 SCRA 654, 660 (1994); Great Pacific Life Assurance Corp. v. NLRC, 187
SCRA 694, 699 (1990).

[6]
 Equitable Banking Corporation v. NLRC, 273 SCRA 352, 371 (1997); MAM Realty
Development Corporation v. NLRC, 244 SCRA 797, 800-801 (1995); Zanotte Shoes
v. NLRC, 241 SCRA 261, 265 (1995).

[7]
 Id. at 56-58.

[8]
 A’ Prime Security Services Inc. v. NLRC, 220 SCRA 142, 145 (1993); Dagupan
Bus Co. Inc. v. NLRC, 191 SCRA 328, 331 (1990).

[9]
 Tan v. NLRC, 271 SCRA 216, 221 (1997); Cañete v. NLRC, 250 SCRA 259, 267
(1995); Reno Foods Inc. v. NLRC, 249 SCRA 379, 386 (1995); Labor v. NLRC, 248
SCRA 183, 198 (1995); International School of Speech v. NLRC, 242 SCRA 382,
389 (1995); Santos v. NLRC, 166 SCRA 759, 764 (1988); Velasco v. Inciong, 164
SCRA 67, 74 (1988).

[10]
 Industrial Timber Corporation v. NLRC, 273 SCRA 200,209 (1997); Magcalas v.
NLRC, 269 SCRA 453, 463 (1997).

[11]
 Rollo, p. 61.

[12]
 Id. at 83.

[13]
 A’ Prime Security Services Inc. v. NLRC, supra, p. 145.

[14]
 Bombase v. NLRC, 245 SCRA 496, 500 (1995).

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395 Phil. 890

 SECOND DIVISION
[ G.R. No. 129315, October 02, 2000 ]
OSIAS I. CORPORAL, SR., PEDRO TOLENTINO, MANUEL
CAPARAS, ELPIDIO LACAP, SIMPLICIO PEDELOS, PATRICIA
NAS, AND TERESITA FLORES, PETITIONERS, VS. NATIONAL
LABOR RELATIONS COMMISSION, LAO ENTENG COMPANY,
INC. AND/OR TRINIDAD LAO ONG, RESPONDENTS.

DECISION

QUISUMBING, J.: 

This special civil action for certiorari seeks the review of the Resolution dated
October 17, 1996 of public respondent National Labor Relations Commission (First
Division),[1] in NLRC NCR Case No. 00-04-03163-95, and the Resolution dated
March 5, 1997 denying the motion for reconsideration. The aforecited October 17th
Resolution affirmed the Decision dated September 28, 1996 of Labor Arbiter
Potenciano S. Cañizares dismissing the petitioners' complaint for illegal dismissal
and declaring that petitioners are not regular employees of private respondent Lao
Enteng Company, Inc..

The records of the case show that the five male petitioners, namely, Osias I.
Corporal, Sr., Pedro Tolentino, Manuel Caparas, Elpidio Lacap, and Simplicio
Pedelos worked as barbers, while the two female petitioners, Teresita Flores and
Patricia Nas worked as manicurists in New Look Barber Shop located at 651 P.
Paterno Street, Quiapo, Manila owned by private respondent Lao Enteng Co. Inc..
Petitioner Nas alleged that she also worked as watcher and marketer of private
respondent.

Petitioners claim that at the start of their employment with the New
Look BarberShop, it was a single proprietorship owned and managed by Mr. Vicente
Lao. In or about January 1982, the children of Vicente Lao organized a corporation
which was registered with the Securities and Exchange Commission as Lao Enteng
Co. Inc. with Trinidad Ong as President of the said corporation. Upon its
incorporation, the respondent company took over the assets, equipment, and
properties of the New Look Barber Shop and continued the business. All the
petitioners were allowed to continue working with the new company until April 15,
1995 when respondent Trinidad Ong informed them that the building wherein the
New Look Barber Shop was located had been sold and that their services were no
longer needed.[2]

On April 28, 1995, petitioners filed with the Arbitration Branch of the NLRC, a
complaint for illegal dismissal, illegal deduction, separation pay, non-payment of
13th month pay, and salary differentials. Only petitioner Nas asked for payment of
salary differentials as she alleged that she was paid a daily wage of P25.00
throughout her period of employment. The petitioners also sought the refund of the
P1.00 that the respondent company collected from each of them daily as salary of
the sweeper of the barber shop.

Private respondent in its position paper averred that the petitioners were joint
venture partners and were receiving fifty percent commission of the amount
charged to customers.  Thus, there was no employer-employee relationship
between them and petitioners. And assuming arguendo, that there was
an employer-employeerelationship, still petitioners are not entitled to separation
pay because the cessation of operations of the barber shop was due to serious
business losses.

Respondent Trinidad Lao Ong, President of respondent Lao Enteng Co. Inc.,
specifically stated in her affidavit dated September 06, 1995 that Lao Enteng
Company, Inc. did not take over the management of the New Look Barber Shop,
that after the death Lao Enteng petitioner were verbally informed time and again
that the partnership may fold up anytime because nobody in the family had the
time to be at the barber shop to look after their interest; that New
Look Barber Shop had always been a joint venture partnership and the operation
and management of the barbershop was left entirely to petitioners; that her
father's contribution to the joint venture included the place of business, payment
for utilities including electricity, water, etc. while petitioners as industrial partners,
supplied the labor; and that the barber shop was allowed to remain open up to April
1995 by the children because they wanted to give the partners a chance at making
it work. Eventually, they were forced to close the barber shop because they
continued to lose money while petitioners earned from it. Trinidad also added that
private respondents had no control over petitioners who were free to come and go
as they wished. Admittedly too by petitioners they received fifty percent to sixty
percent of the gross paid by customers. Trinidad explained that some of the
petitioners were allowed to register with the Social Security System as employees
of Lao Enteng Company, Inc. only as an act of accommodation. All the SSS
contributions were made by petitioners. Moreover, Osias Corporal, Elpidio Lacap
and Teresita Flores were not among those registered with the Social Security
System. Lastly, Trinidad avers that without any employee-employer relationship
petitioners claim for 13th month pay and separation pay have no basis in fact and in
law.[3]

In a Decision dated September 28, 1995, Labor Arbiter Potenciano S. Cañizares, Jr.
ordered the dismissal of the complaint on the basis of his findings that the
complainants and the respondents were engaged in a joint venture and that there
existed no employer-employee relation between them. The Labor Arbiter also found
that the barber shop was closed due to serious business losses or financial reverses
and consequently declared that the law does not compel the establishment to pay
separation pay to whoever were its employees. [4]
On appeal, NLRC affirmed the said findings of the Labor Arbiter and dismissed the
complaint for want of merit, ratiocinating thus:
Indeed, complainants failed to show the existence of employer-
employeerelationship under the fourway test established by the Supreme Court. It
is a common practice in the Barber Shop industry that barbers supply their own
scissors and razors and they split their earnings with the owner of the barber shop.
The only capital of the owner is the place of work whereas the barbers provide the
skill and expertise in servicing customers. The only control exercised by the owner
of the barber shop is to ascertain the number of customers serviced by
the barber in order to determine the sharing of profits. The barbers maybe
characterized as independent contractors because they are under the control of
the barber shop owner only with respect to the result of the work, but not with
respect to the details or manner of performance. The barbers are engaged in an
independent calling requiring special skills available to the public at large. [5]
Its motion for reconsideration denied in the Resolution [6] dated March 5, 1997,
petitioners filed the instant petition assigning that the NLRC committed grave abuse
of discretion in:

I. ARBITRARILY DISREGARDING SUBSTANTIAL EVIDENCE PROVING

THAT PETITIONERS WERE EMPLOYEES OF RESPONDENT COMPANY IN
RULING THAT PETITIONERS WERE INDEPENDENT CONTRACTORS.

II. NOT HOLDING THAT PETITIONERS WERE ILLEGALLY DISMISSED AND

IN NOT AWARDING THEIR MONEY CLAIMS.[7]

Petitioners principally argue that public respondent NLRC gravely erred in declaring
that the petitioners were independent contractors. They contend that they were
employees of the respondent company and cannot be considered as independent
contractors because they did not carry on an independent business. They did not
cut hair, manicure, and do their work in their own manner and method. They insist
they were not free from the control and direction of private respondents in all
matters, and their services were engaged by the respondent company to attend to
its customers in its barber shop. Petitioners also stated that, individually or
collectively, they do not have substantial capital nor investments in tools,
equipments, work premises and other materials necessary in the conduct of
the barber shop. What the barbers owned were merely combs, scissors, and razors,
while the manicurists owned only nail cutters, nail polishes, nippers and cuticle
removers. By no standard can these be considered "substantial capital" necessary
to operate a barbers shop.

Finally, petitioners fault the NLRC for arbitrarily disregarding substantial evidence
on record showing that petitioners Pedro Tolentino, Manuel Caparas, Simplicio
Pedelos, and Patricia Nas were registered with the Social Security System as
regular employees of the respondent company. The SSS employment records in
common show that the employer's ID No. of Vicente Lao/Barber and Pawn Shop
was 03-0606200-1 and that of the respondent company was 03-8740074-7. All the
foregoing entries in the SSS employment records were painstakingly detailed by the
petitioners in their position paper and in their memorandum appeal but were
arbitrarily ignored first by the Labor Arbiter and then by the respondent NLRC which
did not even mention said employment records in its questioned decision.

We found petition is impressed with merit.

In our view, this case is an exception to the general rule that findings of facts of the
NLRC are to be accorded respect and finality on appeal. We have long settled that
this Court will not uphold erroneous conclusions unsupported by substantial
evidence.[8] We must also stress that where the findings of the NLRC contradict
those of the labor arbiter, the Court, in the exercise of its equity jurisdiction, may
look into the records of the case and reexamine the questioned findings. [9]

The issues raised by petitioners boil down to whether or not an employer-

employeerelationship existed between petitioners and private respondent Lao
Enteng Company, Inc. The Labor Arbiter has concluded that the petitioners and
respondent company were engaged in a joint venture. The NLRC concluded that the
petitioners were independent contractors.

The Labor Arbiter's findings that the parties were engaged in a joint venture is
unsupported by any documentary evidence. It should be noted that aside from the
self-serving affidavit of Trinidad Lao Ong, there were no other evidentiary
documents, nor written partnership agreements presented. We have ruled that
even the sharing of proceeds for every job of petitioners in the barber shop does
not mean they were not employees of the respondent company. [10]

Petitioner aver that NLRC was wrong when it concluded that petitioners were
independent contractors simply because they supplied their own working
implements, shared in the earnings of the barber shop with the owner and chose
the manner of performing their work. They stressed that as far as the result of their
work was concerned the barber shop owner controlled them.

An independent contractor is one who undertakes "job contracting", i.e., a person

who (a) carries on an independent business and undertakes the contract work on
his own account under his own responsibility according to his own manner and
method, free from the control and direction of his employer or principal in all
matters connected with the performance of the work except as to the results
thereof, and (b) has substantial capital or investment in the form of tools,
equipment, machineries, work premises, and other materials which are necessary
in the conduct of the business.[11]

Juxtaposing this provision vis-à-vis the facts of this case, we are convinced that
petitioners are not "independent contractors". They did not carry on an independent
business. Neither did they undertake cutting hair and manicuring nails, on their own
as their responsibility, and in their own manner and method. The services of the
petitioners were engaged by the respondent company to attend to the needs of its
customers in its barber shop. More importantly, the petitioners, individually or
collectively, did not have a substantial capital or investment in the form of tools,
equipment, work premises and other materials which are necessary in the conduct
of the business of the respondent company. What the petitioners owned were only
combs, scissors, razors, nail cutters, nail polishes, the nippers - nothing else. By no
standard can these be considered substantial capital necessary to operate
a barbershop. From the records, it can be gleaned that petitioners were not given
work assignments in any place other than at the work premises of the New
Look BarberShop owned by the respondent company. Also, petitioners were
required to observe rules and regulations of the respondent company pertaining,
among other things, observance of daily attendance, job performance, and
regularity of job output. The nature of work performed by were clearly directly
related to private respondent's business of operating barber shops. Respondent
company did not dispute that it owned and operated three (3) barber shops. Hence,
petitioners were not independent contractors.

Did an employee-employer relationship exist between petitioners and private

respondent? The following elements must be present for an employer-
employeerelationship to exist: (1) the selection and engagement of the workers;
(2) power of dismissal; (3) the payment of wages by whatever means; and (4) the
power to control the worker's conduct, with the latter assuming primacy in the
overall consideration. Records of the case show that the late Vicente Lao engaged
the services of the petitioners to work as barbers and manicurists in the New
Look BarberShop, then a single proprietorship owned by him; that in January 1982,
his children organized a corporation which they registered with the Securities and
Exchange Commission as Lao Enteng Company, Inc.; that upon its incorporation, it
took over the assets, equipment, and properties of the New Look Barber Shop and
continued the business; that the respondent company retained the services of all
the petitioners and continuously paid their wages. Clearly, all three elements exist
in petitioners' and private respondent's working arrangements.

Private respondent claims it had no control over petitioners. The power to control
refers to the existence of the power and not necessarily to the actual exercise
thereof, nor is it essential for the employer to actually supervise the performance of
duties of the employee. It is enough that the employer has the right to wield that
power.[12] As to the "control test", the following facts indubitably reveal that
respondent company wielded control over the work performance of petitioners, in
that: (1) they worked in the barber shop owned and operated by the respondents;
(2) they were required to report daily and observe definite hours of work; (3) they
were not free to accept other employment elsewhere but devoted their full time
working in the New Look Barber Shop for all the fifteen (15) years they have
worked until April 15, 1995; (4) that some have worked with respondents as early
as in the 1960's; (5) that petitioner Patricia Nas was instructed by the respondents
to watch the other six (6) petitioners in their daily task. Certainly, respondent
company was clothed with the power to dismiss any or all of them for just and valid
cause. Petitioners were unarguably performing work necessary and desirable in the
business of the respondent company.

While it is no longer true that membership to SSS is predicated on the existence of

an employee-employer relationship since the policy is now to encourage even the
self-employed dressmakers, manicurists and jeepney drivers to become SSS
members, we could not agree with private respondents that petitioners were
registered with the Social Security System as their employees only as an
accommodation. As we have earlier mentioned private respondent showed no proof
to their claim that petitioners were the ones who solely paid all SSS contributions.
It is unlikely that respondents would report certain persons as their workers, pay
their SSS premium as well as their wages if it were not true that they were indeed
their employees.[13]

Finally, we agree with the labor arbiter that there was sufficient evidence that
the barber shop was closed due to serious business losses and respondent company
closed its barber shop because the building where the barber shop was located was
sold. An employer may adopt policies or changes or adjustments in its operations to
insure profit to itself or protect investment of its stockholders. In the exercise of
such management prerogative, the employer may merge or consolidate its business
with another, or sell or dispose all or substantially all of its assets and properties
which may bring about the dismissal or termination of its employees in the process.
[14]

Prescinding from the above, we hold that the seven petitioners are employees of
the private respondent company; as such, they are to be accorded the benefits
provided under the Labor Code, specifically Article 283 which mandates the grant of
separation pay in case of closure or cessation of employer's business which is
equivalent to one (1) month pay for every year of service. [15] Likewise, they are
entitled to the protection of minimum wage statutes. Hence, the separation pay due
them may be computed on the basis of the minimum wage prevailing at the time
their services were terminated by the respondent company. The same is true with
respect to the 13th month pay. The Revised Guidelines on the Implementation of
the 13th Month Pay Law states that "all rank and file employees are now entitled to
a 13th month pay regardless of the amount of basic salary that they receive in a
month. Such employees are entitled to the benefit regardless of their designation or
employment status, and irrespective of the method by which their wages are paid,
provided that they have worked for at least one (1) month during a calendar year"
and so all the seven (7) petitioners who were not paid their 13th month pay must
be paid accordingly.[16]

Anent the other claims of the petitioners, such as the P10,000.00 as penalty for
non-compliance with procedural process; P10,000.00 as moral damages; refund of
P1.00 per day paid to the sweeper; salary differentials for petitioner Nas; attorney's
fees), we find them without basis.

IN VIEW WHEREOF, the petition is GRANTED. The public respondent's Decision

dated October 17, 1996 and Resolution dated March 05, 1997 are SET ASIDE.
Private respondents are hereby ordered to pay, severally and jointly, the seven (7)
petitioners their (1) 13th month pay and (2) separation pay equivalent to one month
pay for every year of service, to be computed at the then prevailing minimum wage
at the time of their actual termination which was April 15, 1995.

Costs against private respondents.

SO ORDERED.

Bellosillo, (Chairman), Mendoza, Buena, and De Leon, Jr., JJ., concur.

[1]
 Per Commissioner Alberto R. Quimpo and concurred in by Presiding
Commissioner Bartolome S. Carale and Commissioner Vicente S E. Veloso.

[2]
 Rollo, pp. 5-7.

[3]
 Rollo, pp. 115-119.

[4]
 Id. at 84-85.

[5]
 Id. at 122.

[6]
 Id. at 128-130.

[7]
 Id. at 11.

[8]
 Anino vs. NLRC, 290 SCRA 489, 499-500 (1998).

[9]
 Paz Martin Jo vs. NLRC, G.R. No. 121605, February 02, 2000, p. 7.

[10]
 Labor Congress of the Philippines vs. NLRC, 290 SCRA 509, 528 (1998); San
Miguel Jeepney Service vs. NLRC, 265 SCRA 35 (1998).

[11]
 Section 8, Rule VIII, Book III, of the Omnibus Rules Implementing the Labor
Code; Ponce vs. NLRC, 293 SCRA 366, 374-375 (1998).

[12]
 Paz Martin Jo and Cesar Jo vs. NLRC, G.R. No. 121605, February 02, 2000, p. 5.

[13]
 Nagusara vs. NLRC, 290 SCRA 245, 251 (1998).

[14]
 Associated Labor Unions-VIMCONTU vs. NLRC, 204 SCRA 913, 923 (1991).

[15]
 Phil. Tobacco Flue-Curing & Redrying Corp. vs. NLRC, 300 SCRA 37, 55 (1998)

[16]
 See Sec. 1, P.D. 851; Osias Academy vs. DOLE, 192 SCRA 612, 619
(1990); Dentech Mfg. Corp. vs. NLRC, 172 SCRA 588 (1989).

SECOND DIVISION
[ G.R. No. 225803, July 02, 2018 ]
 SHERYLL R. CABAÑAS, PETITIONER, VS. ABELARDO G.
LUZANO LAW OFFICE/ABELARDO G. LUZANO, RESPONDENTS.

DECISION

PERALTA, J.: 

This is a petition for review on certiorari of the Decision[1] of the Court of Appeals
dated April 21, 2016, annulling and setting aside the Decision [2] dated June 30,
2014 of the National Labor Relations Commission (NLRC), Sixth Division and
dismissing herein petitioner Sheryll R. Cabañas' complaint for illegal dismissal and
money claims.

The facts are as follows:

On October 1, 2013, petitioner Sheryll Cabañas filed before the NLRC a Complaint
for illegal dismissal and money claims against herein respondent Abelardo G.
Luzano Law Office and its manager, Mary Ann Z. Detera. Respondent Law Office is
a service provider for the Bank of the Philippine Islands, Banco de Oro, Rizal
Commercial Banking Corporation and Unionbank of the Philippines in the collection
of delinquent credit cards and personal loan accounts.

In her Position Paper,[3] complainant-herein petitioner Cabañas stated that she was

employed as an Administrative Secretary for respondent Abelardo G. Luzano Law
Office from June 27, 2012 to September 18, 2013. She was tasked to act as
receptionist/lawyer's staff, monitor petty cash disbursements and office employees,
make demand letters and do other clerical tasks. Her performance was satisfactory
as she was employed as a regular employee on [January 30, 2013] per her
employment contract.[4]

In June 2013, Cabañas received a final warning in a Memorandum [5] dated June 18,
2013. The memorandum notified her that her performance as Administrative
Secretary failed to meet the performance requirements of the position due to the
following: (1) erroneous entry of data for the liquidation of petty cash; (2)
erroneous computation of accounts for mailing; (3) erroneous breakdown of
expenses for cash payments; (4) instructions from colleagues are not being strictly
followed; and (5) not strict in releasing gas allowance for skiptracers. Cabañas was
warned that a similar violation in the future would mean termination of her
employment.

At this point, Cabañas said that the office manager, Mary Ann Detera, began
meddling with her office equipment. Detera would also lose her requests relating to
the demand letters that she (Cabañas) prepares. She was even asked to cover-up
irregularities.

Cabañas stated that as she was in charge of the petty cash disbursements, which
was used to defray the transport expenses of skiptracers or messengers, she would
ask for receipts for the disbursements of Jomari Delos Santos, a messenger
assigned to Detera. Detera wanted her to cover-up any irregularity which may have
been committed by her messenger and not report the same to Mrs. Ivy Theresa
Buenaventura, the General Manager, who was also the daughter of Atty. Abelardo
G. Luzano (Atty. Luzano).  Cabañas refused to do Detera's wishes. Thus, Detera's
angry actuation began toward Cabañas.

Cabañas alleged that Detera would fail to report Mr. Delos Santos' absences, which
placed Cabañas in a delicate situation as Mrs. Buenaventura would ask her
regarding Mr. Delos Santos' absences. Mr. Delos Santos would also ask Cabañas for
transportation expenses, but he would take three to four days to liquidate the said
expenses. Detera would also belatedly submit receipts for liquidating the petty cash
disbursements. It was Cabañas who bore the ire of her superiors for the delay.
Cabañas said that she endured this ordeal as she wanted to remain employed.

On September 1, 2013, Cabañas stated that she was summoned to the office of
Atty. Luzano. Atty. Luzano and his daughter and General Manager, Mrs.
Buenaventura, asked her to resign and execute a resignation letter, but she did not
do so.

On September 18, 2013, while Cabañas was on vacation leave, her officemate
Josephine Santos told her that Detera went through her (Cabañas') box containing
letters she had prepared.

On September 19, 2013, Cabañas received another Memorandum of even date with
the subject: "Notice of Termination," alleging her commission of the following
infractions: (1) erroneous computation of accounts for mailing; (2) erroneous
encoding of petty cash liquidation report; (3) erroneous breakdown of expenses for
cash payments; (4) instructions from superiors and collectors are not being strictly
followed; (5) careless releasing of gas allowance for skiptracers; (6) erroneous
filing of court orders to the wrong case folders; (7) erroneous photocopying of a
different legal document; (8) reproduction of excessive copies of documents for
case filing; (9) wastage of company resources such as paper and ink due to failure
to request for mailing expenses for demand letters printed in August 2013; and
(10) erroneous listing for mailing of a new batch of accounts, which were not
included in the actual count of the printed demand letters on September 18, 2013.

Cabañas was given up to the close of office hours of the next day, Friday,
September 20, 2013, to submit her explanation why her employment will not be
terminated due to gross incompetence and negligence.

According to Cabañas, she verbally explained her side to Atty. Luzano and informed
him that Detera was going through her work. Atty. Luzano advised her to prepare
an incident report.

At 6:00 p.m. of the same day, September 19, 2013, Cabañas stated that she was
summoned by Atty. Luzano. He asked her to execute a resignation letter, but
Cabañas refused to do so.

The next day, September 20, 2013, Cabañas submitted her explanation letter to
the charges against her contained in the Memorandum dated September 19, 2013.
She spoke with Atty. Luzano and inquired why she was no longer given any work
and she was not informed that she already had a replacement. Atty. Luzano
informed her that the same date was her last day of work and that her salary would
just be deposited in her account. However, on September, 30, 2013, no salary was
deposited in her ATM account.

On October 1, 2013, Cabañas filed a complaint for illegal dismissal and the payment
of her monetary claims against respondents.

During the mediation conferences, respondents offered a settlement, but this did
not push through. Hence, both parties were required to submit their respective
Position Paper and Reply.

Cabañas contended that it was undeniable that she was an employee of respondent
Law Office. On September 19, 2013, a memorandum was issued asking her to
explain her side, but when she submitted her explanation the following day,
September 20, 2013, she was there and then dismissed, which was tantamount to
illegal dismissal. Moreover, her salary was not given on September 30, 2013 as
promised. She prayed that a judgment be rendered that she was illegally dismissed
and entitled to the following money claims: nonpayment of service incentive leave,
13th month pay, backwages and separation pay.

On the other hand, respondents contended in their Position Paper [6] that Cabañas
was not terminated from her employment, but she abandoned her work.

Respondents stated that in the early part of 2013, Cabañas' job performance
deteriorated; thus, she was repeatedly admonished to be careful and avoid
repetition of her errors in the liquidation of petty cash, computation of accounts for
mailing, and in the breakdown of cash payments. She was admonished for
repeatedly failing to follow the instructions of her superiors, doing things
incorrectly, and being very lax and incorrectly releasing amounts for gas allowances
of the company's motorized skiptracers as well as the unintelligible filing of papers
and folders of accounts assigned to her.

Cabañas' job performance did not improve despite repeated warnings; thus,
Cabañas was given a final warning in a Memorandum[7] dated June 18, 2013 that a
similar violation in the future would mean termination of her employment. Since the
final warning did not work, a Memorandum[8] dated September 19, 2013 was
issued, requiring Cabañas to explain why her employment will not be terminated
due to gross incompetence and negligence.

On September 20, 2013, a Friday, Cabañas submitted her written explanation on

the charges contained in the Memorandum dated September 19, 2013. The
following Monday, September 23, 2013, she stopped reporting for work. Since she
abandoned her work and went on absence without leave, respondents' decision
whether to terminate her or not became moot and academic.

Respondents prayed for the dismissal of the complaint.

Cabañas filed her Reply,[9] maintaining that she did not abandon her work. She
averred that other than the fact that she was asked to execute a resignation letter,
which she refused to do, she was also asked on September 20, 2013 to turn over
all the files assigned to her to respondents' Head Administrative Assistant
Antoinette Castro. She asserted that she was not absent without
leave (AWOL), because respondents terminated her employment; hence, she is
entitled to her monetary claims.

In their Reply[10] to complainant-herein petitioner Cabañas' Position Paper,

respondents reiterated that they did not force complainant to resign, and that
complainant was not dismissed, but she abandoned her work.

In a Decision[11] dated March 27, 2014, Labor Arbiter Marcial Galahad T. Makasiar

held that Cabañas was illegally dismissed and ordered respondents to pay her
backwages, separation pay, service incentive leave pay and 13th month pay.

The Labor Arbiter held that in termination cases, the employer has the onus

probandito prove, by substantial evidence, that the dismissal of an employee is due
to a just cause. Failure to discharge this burden would be tantamount to an
unjustified and illegal dismissal. He cited Kams International, Inc., et al. v. NLRC,
et al.,[12] which held that abandonment of work does not per se sever the employer-
employee relationship. It is merely a form of neglect of duty, which is in turn a just
cause for termination of employment.[13] The operative act that will ultimately put
an end to this relationship is the dismissal of the employee after complying with the
procedure prescribed by law.[14] In this case, Cabañas was served a memorandum-
notice regarding her performance. However, in regard to the ground
of abandonment, neither notice to explain nor notice of termination was issued.
Moreover, Cabañas' commencement of an action for illegal dismissal was proof of
her desire to return to work, negating abandonment of her work.

The dispositive portion of the Decision of the Labor Arbiter reads:

The dispositive portion of the Decision of the Labor Arbiter reads:

xxxx

FALLO

ACCORDINGLY, the termination of complainant's employment is declared illegal.

Respondent Atty. Abelardo G. Luzano is ordered to pay complainant:

a. SEPARATION PAY of PhP23,712.00

b. BACKWAGES of PhP169,540.80;
 c. SERVICE INCENTIVE LEAVE PAY of PhP2,798.70;
d. 13th MONTH PAY of PhP14,553.24;

The foregoing awards shall be subject to 5% withholding tax upon

payment/execution only where the same is applicable.

Respondents's claim of damages is DENIED for lack of merit.

SO ORDERED.[15]

Respondents appealed the Decision of the Labor Arbiter to the NLRC.

In a Decision[16] dated June 30, 2014, the NLRC affirmed the Decision of

the LaborArbiter and dismissed the appeal.

The NLRC considered the Memorandum dated September 19, 2013, with the
subject: "Notice of Termination," as a termination letter. It held that Cabañas was
terminated on the basis of her poor and unsatisfactory performance particularly in
her quality of work and job knowledge. However, the NLRC found that the acts
alleged in the memorandum to have been committed by Cabañas have not been
proven nor substantiated by respondents for these reasons: (1) respondents have
not shown any company policy which provides that the commission of any of the
alleged acts shall be dealt with the penalty of dismissal from employment to bolster
their claim against Cabañas; and (2) other than respondents' self-serving
statements that Cabañas showed gross incompetence and negligence in the
performance of her tasks, no convincing proof was offered to substantiate Cabañas'
alleged negligence or incompetence.

The NLRC noted that Cabañas was employed by respondents since June  27, 2012
until her dismissal on September 19, 2013, or more than a year and three (3)
months. Had Cabañas exhibited gross incompetence and negligence in her work,
respondents should not have extended her employment upon completion of her
probationary contract of employment.

Moreover, the NLRC stated that while respondents argued that in the early part of
2013, they repeatedly admonished and verbally warned Cabañas of her poor
performance, there was no single evidence presented to show the particular errors
allegedly committed by her.

Further, the NLRC did not agree with respondents' contention that Cabañas was not
dismissed from employment, but she voluntarily severed her employment
through abandonment. It held, thus:

Abandonment is a form of neglect of duty, one of the just causes for an employer to
terminate an employee. It is a hornbook precept that in illegal dismissal cases, the
employer bears the burden of proof. For a valid termination of employment on the
ground of abandonment, the employer must prove, by substantial evidence, the
concurrence of the employee's failure to report for work for no valid reason and his
categorical intention to discontinue employment. In the present case, there is no
substantial evidence that will prove complainant's categorical intention to
discontinue employment. The story of abandonment is simply doubtful as
complainant even refused to execute a resignation letter when she was asked to
resign by respondents. In the case of Garcia v. NLRC,  the Supreme Court
emphasized that there must be concurrence of the intention to abandon and some
overt acts from which an employee may be deduced as having no more intention to
work. Moreover, as correctly observed by the LaborArbiter, neither notice to explain
nor notice of termination was issued to complainant on the ground
of abandonment.

There being no just cause for the termination of complainant's employment, the
compelling conclusion is that she was illegally dismissed from employment. x x x. [17]

The dispositive portion of the Decision of the NLRC reads:

WHEREFORE, the appeal filed by the respondents is hereby DISMISSED for lack of
merit. Accordingly, the Decision dated March 27, 2014 is AFFIRMED. [18]

Respondents' motion for reconsideration was denied for lack of merit by the NLRC
in a Resolution[19] dated July 31, 2014.

On October 3, 2014, respondents filed a petition for certiorari  with the Court of

Appeals, questioning whether the NLRC committed grave abuse of discretion
amounting to lack or excess of jurisdiction in finding that petitioner Cabañas was
illegally dismissed and, therefore, entitled to her monetary claims.

On April 21, 2016, the Court of Appeals rendered a Decision in favor of herein
respondents, the dispositive portion of which reads:

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

GRANTED. The assailed Decision dated June 30, 2014 of the
National Labor Relations Commission, Sixth Division, in NLRC LAC No. 04-001071-
14 is ANNULLED and SET ASIDE.

Private respondents Sheryll Cabañas' complaint for illegal dismissal and money
claims is hereby DISMISSED for lack of merit.[20]

The Court of Appeals held that Cabañas was not illegally dismissed, but she
abandoned her job. The appellate court stated that to constitute abandonment, two
elements must be present: (1) the employee must have failed to report for work or
must have been absent without valid or justifiable reason; and (2) there must have
been a clear intention on the part of the employee to sever the employer-employee
relationship manifested by some overt act. [21] It found the presence of the elements
of abandonment in this case.

The Court of Appeals stated that although the subject of the Memorandum dated
September 19, 2013 was "Notice of Termination," the memorandum merely asked
Cabañas to explain why she should not be dismissed from employment. The next
day, September 20, 2013, Cabañas submitted a handwritten letter in response to
the memorandum and she also made a handwritten document wherein she turned
over the office files in her custody in favor of Antoinette Castro. Thereafter, she
failed to report for work as evidenced by her payslip for the month of September.
Based on the foregoing, the Court of Appeals concluded that Cabañas failed to
report for work without valid or justifiable reason. It stressed that respondents did
not ask Cabañas to leave or prevent her from working in the law firm. Although
Cabañas alleged that Atty. Luzano and Mrs. Buenaventura asked her to resign, such
allegation ran counter to her statement in her handwritten letter dated September
20, 2013, wherein she thanked the former for treating her well. If indeed she was
asked to resign, she should have stated the same in her letter or at the very least,
she should not have thanked them.

Anent the second element of abandonment, the Court of Appeals held that Cabañas
showed her clear intent to sever the employer-employee relationship when she
voluntarily and personally turned over the files in her custody in favor of Antoinette
Castro, which is an overt act manifesting her intent to leave her post in the law
firm.

The Court of Appeals cited the case of Jo v. National Labor Relations

Commission[22]to support its ruling that although Cabañas instituted an illegal
dismissal case immediately after her alleged termination, she, nonetheless, belies
her claim of illegal dismissal when she prayed for separation pay, not
reinstatement.

Hence, this petition for review on certiorari raising these issues:

I.
WHETHER THE COURT OF APPEALS GRAVELY ERRED IN RULING THAT [Cabañas]
ABANDONED HER EMPLOYMENT.

II.
WHETHER THE COURT OF APPEALS GRAVELY ERRED IN RULING THAT [Cabañas]
WAS NOT ILLEGALLY DISMISSED.[23]

Petitioner maintains that she did not abandon her work as ruled by the Court of
Appeals, but she was illegally dismissed from employment.

She reiterated that when she went to work on September 20, 2013, she was
surprised to learn that she had already been replaced. She was no longer given any
work and ordered to turn over all the files assigned to her. The said files were
received by Antoinette Castro as shown in the turnover that she executed. She
inquired from respondent Atty. Luzano the reason therefor, and she was told that it
was her last day of work and her unpaid salary would be deposited in her account.

Moreover, petitioner averred that her actuations before she allegedly abandoned
her job negate any intention to sever her employment with respondents. On two
separate occasions, respondent Atty. Luzano urged her to resign, but she refused to
give in to his prodding. She would not have likewise gone to great lengths to
prepare and submit her written explanation to the Memorandum dated September
19, 2013 had she intended to relinquish her employment. She wanted to continue
to be in their employ, considering that it was her means of providing for herself and
her family.

Further, petitioner stated that thanking the respondents for treating her well does
not necessarily counter respondents' act of asking her to resign. She was merely
being thankful for being treated well during her employ. She pointed out that
respondents neither exerted any effort to question her alleged failure to report for
work since September 23, 2013 nor required her to return to work, which could
have enabled them to ascertain whether she had intention to resume her
employment.

Petitioner maintains that the respondents terminated her employment without just
or valid cause and without observing the requirements of due process in violation of
her right to security of tenure guaranteed by the Constitution and the Labor Code.
Hence, she is entitled to reinstatement and backwages, and her other money
claims. However, since reinstatement is no longer feasible due to strained relations
considering her unjust termination from employment, she prayed for the payment
of separation pay in lieu thereof and her other money claims. She likewise prayed
for the payment of attorney's fees as she was compelled to litigate. Although she is
represented by the Public Attorney's Office (PAO), this should not deter the award
of attorney's fees, which is sanctioned by Section 6 of Republic Act (R.A.) No. 9406.
[24]

The Ruling of the Court

The petition is meritorious.

As a rule, the Court does not review questions of fact, but only questions of law in
an appeal by certiorari  under Rule 45 of the Rules of Court.[25] The rule, however, is
not absolute as the Court may review the facts in labor cases where the findings of
the Court of Appeals and of the labor tribunals are contradictory.[26]

In this case, the factual findings of the Labor Arbiter and the NLRC differ from those
of the Court of Appeals. Hence, the Court shall review and evaluate the evidence on
record.

The main issue is whether or not the Court of Appeals correctly held that petitioner
was not illegally dismissed, but petitioner abandoned her job.

In illegal dismissal cases, the general rule is that the employer has the burden of
proving that the dismissal was legal. To discharge this burden, the employee must
first prove, by substantial evidence, that he/she had been dismissed from
employment.[27]

Petitioner contends that she was terminated by respondents since she was not only
asked to resign by respondent Atty. Luzano, which she refused to do, but on
September 20, 2013, she was asked to turn over all the files assigned to her, and
when she asked Atty. Luzano why she was not given any work, she was told that it
was her last day of work and that her unpaid salary would just be deposited in her
ATM account.

The records show the document[28] dated September 20, 2013 evidencing

petitioner's turnover of all the files assigned to her to respondents' Head
Administrative Assistant Antoinette L. Castro, who acknowledged receipt of the
turnover by affixing her signature on the document. In employment parlance, the
turnover of work by an employee signifies severance of employment. [29] In addition,
petitioner narrated that when she asked respondent Atty. Luzano, the owner of
respondent Law Office, why she was not given any work, Atty. Luzano told her that
it was her last day of work and that her unpaid salary would just be deposited in
her ATM, which is an overt act of dismissal by petitioner's employer who had the
authority to dismiss petitioner.[30] In effect, petitioner was terminated on that day,
September 20, 2013, a Friday. This would explain why petitioner no longer reported
to work the next working day, September 23, 2013, a Monday, and she filed a
complaint for illegal dismissal on October 1, 2013.

As petitioner Cabañas has proven that she was dismissed, the burden to prove that
such dismissal was not done illegally is now shifted to her employer, respondents
herein. It is incumbent upon the employer to show by substantial evidence that the
dismissal of the employee was validly made and failure to discharge that duty
would mean that the dismissal is not justified and therefore illegal.[31]

Respondents contended that petitioner was not dismissed from work, but she
stopped reporting for work the following Monday, September 23, 2013, after
submitting her written explanation to the charges against her on September 20,
2013; hence, petitioner abandoned her work.

For abandonment of work to fall under Article 282 (b) of the Labor Code as gross

and habitual neglect of duties, which is a just cause for termination of employment,
there must be concurrence of two elements. [32] First, there should be a failure of the
employee to report for work without a valid or justifiable reason; and, second, there
should be a showing that the employee intended to sever the employer-employee
relationship, the second element being the more determinative factor as manifested
by overt acts.[33]

The Court of Appeals held that petitioner abandoned her work and the intent to do
so was manifested by petitioner's overt act of voluntarily turning over the files in
her custody to Antoinette L. Castro, respondents' Head Administrative Assistant.

Thus, petitioner's act of turning over all the files assigned to her to respondents'
Head Administrative Assistant is contended to be an overt act of dismissal by
petitioner, while it is held to be an overt act of abandonment by the Court of
Appeals.

The Court has carefully reviewed the records and we have discussed earlier that
petitioner's turnover of all the files in her custody was an overt act of dismissal.
Thus, the Court does not agree with the ruling of the Court of Appeals that
petitioner abandoned her job and the intent to do so was manifested by her overt
act of voluntarily turning over the files in her custody to Antoinette L. Castro for
these reasons:

First, the records show that it was petitioner who first  stated in her Reply[34] to
respondents' Position Paper that she was illegally terminated because on
September 20, 2013, when she submitted her letter of explanation to the charges
against her, she was asked to turn over all the files assigned to her to respondents'
Head Administrative Assistant Antoinette L. Castro.[35] In her Position Paper,
[36]
 petitioner also stated that when she submitted her explanation letter on
September 20, 2013, she inquired from Atty. Luzano why she was no longer given
any work nor was she informed that she already had a replacement, and Atty.
Luzano informed her that it was her last day of work and her salary would just be
deposited in her ATM account.[37]

Second, respondents did not mention the fact that it was the petitioner who
voluntarily turned over the files assigned to her in their Position Paper, or in their
Reply to Complainant's Position Paper, or in their appeal[38] from the Labor Arbiter's
Decision before the NLRC, but only mentioned it for the first time in their Reply
Memorandum[39] to Complainant's Comment/Opposition before the NLRC. Such an
important fact constituting the overt act of abandonment as defense could not have
been taken for granted to not be alleged at the first instance by respondents in
their Position Paper if it were true that it was petitioner who voluntarily turned over
all the files assigned to her to respondents' representative. Hence, the belated
allegation before the NLRC was merely an afterthought on the part of respondents.

Third, if petitioner wanted to abandon her job, she could just have left without
turning over all the files assigned to her.

Fourth, the filing of an illegal dismissal case is inconsistent with abandonment of

work.

Moreover, the termination of an employee must be effected in accordance with law.

Therefore, the employer must furnish the worker or employee sought to be
dismissed with two (2) written notices, i.e.,  (a) notice which apprises the employee
of the particular acts or omissions for which his/her dismissal is sought; and (b)
subsequent notice which informs the employee of the employer's decision to
dismiss him/her.[40]In this case, as observed by the Labor Arbiter and the NLRC,
respondents did not issue a notice to apprise/explain and a notice of termination on
the ground of abandonment; hence, respondents failed to comply with procedural
due process.

Further, the Court of Appeals ruled that petitioner's prayer for separation pay, not
reinstatement, belies her claim of illegal dismissal on the basis of Jo v.
National LaborRelations Commission.[41]

The Court finds that the facts and the finding of the Court in Jo v.
National LaborRelations Commission is different from this case; hence, the said
ruling therein does not apply in this case.

The Court of Appeals summarized Jo v. National Labor Relations Commission, thus:

x x x [P]rivate respondent Mejila was hired as a barber and caretaker of a

barbershop. When the barbershop was sold to petitioners Jo, Mejila retained his job
as a barber-caretaker. He, however, had an altercation with his co-barber which
prompted him to institute a labor case against the latter and petitioners. Pending
the resolution thereof, petitioners assured him that he was not being driven out
as barber-caretake[r]. Hence, Mejila continued reporting for work at the
barbershop. But, on January 2, 1993, he turned over the duplicate keys of the shop
to the cashier and took away all his belongings therefrom. On January 8, 1993, he
began working as a regular barber at the newly-opened Goldilocks Barbershop also
in Iligan City. Four (4) days after, Mejila instituted a complaint for illegal dismissal
against petitioners Jo. x x x.[42]

In Jo v. National  Labor  Relations Commission, the Court found that therein private
respondent Mejila's intention to sever his ties with his employers or petitioners
therein were manifested by the following circumstances: (1) private respondent
bragged to his co-workers his plan to quit his job at Cesar's Palace Barbershop and
Massage Clinic as borne out by the affidavit executed by his former co-workers; (2)
he surrendered the shop's keys and took away all his things from the shop; (3) he
did not report anymore to the shop without giving any valid and justifiable reason
for his absence; (4) he immediately sought a regular employment in another
barbershop, despite previous assurance that he could remain in petitioners' employ;
and (5) he filed a complaint for illegal dismissal without praying for reinstatement.
[43]

We find that the ruling in Jo v. National  Labor  Relations Commission that the
employee's prayer for separation pay, not reinstatement, belied his claim of illegal
dismissal was made in consideration of all the circumstances that showed the
employee's intention to sever his ties with his employers, including the employee's
contemporaneous conduct, and not only because of his prayer for separation pay.
Hence, it does not apply in this case.

An employee's prayer for separation pay is an indication of the strained relations

between the parties. 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.[44] The doctrine of strained relations
should not be used recklessly or applied loosely nor be based on impression alone.
[45]
 Thus, it is the task of labor tribunals and the appellate courts to resolve whether
the employee be reinstated or granted separation pay.

In this case, the Labor Arbiter noted that complainant-herein petitioner Cabañas

prayed for separation pay in her Complaint, and the Labor Arbiter was convinced
that it is more fitting to grant separation pay to complainant in lieu of
reinstatement.[46]The NLRC affirmed the decision of the Labor Arbiter. The Court
accords respect to the decision of the labor tribunals considering the facts of this
case.

Further, petitioner, whose legal counsel is a Public Attorney of the PAO, prayed for
the award of attorney's fees in her Position Paper and now seeks the award of
attorney's fees as she was compelled to litigate in order to seek redress. She
contends that R.A. No. 9406 allows the PAO to receive attorney's fees, thus:

SEC. 6. New sections are hereby inserted in Chapter 5, Title III, Book IV of
Executive Order No 292 to read as follows:

xxxx

"SEC. 16-D. Exemption from Fees and Costs of the Suit.  - The clients of the PAO
shall be exempt from payment of docket and other fees incidental to instituting an
action in court and other quasi-judicial bodies, as an original proceeding or on
appeal.

The costs of the suit, attorney's fees and contingent fees imposed upon the
adversary of the PAO clients after a successful litigation shall be deposited
in the National Treasury as trust fund and shall be disbursed for special
allowances of authorized officials and lawyers of the PAO." [47]

Indeed, petitioner is entitled to the award of attorney's fees equivalent to ten

percent (10%) of the total monetary award.[48] R.A. No. 9406 sanctions the receipt
by the PAO of attorney's fees, and provides that such fees shall constitute a trust
fund to be used for the special allowances of their officials and lawyers. [49] The
matter of entitlement to attorney's fees by a claimant who was represented by the
PAO has already been settled in Our Haus Realty Development Corporation v.
Parian.[50] The Court ruled therein that the employees are entitled to attorney's
fees, notwithstanding their availment of free legal services offered by the PAO and
the amount of attorney's fees shall be awarded to the PAO as a token recompense
to them for their provision of free legal services to litigants who have no means of
hiring a private lawyer.[51]

In fine, petitioner Cabañas was dismissed by respondents without just cause and
without procedural due process.

WHEREFORE, the petition for review on certiorari is GRANTED. The assailed

Decision dated April 21, 2016 and Resolution dated June 30, 2016 of the Court of
Appeals in CA-G.R. SP No. 137447 are hereby REVERSED and SET ASIDE, and
the Decision dated June 30, 2014 and Resolution dated July 31, 2014 of the
National Labor Relations Commission, Sixth Division in NLRC LAC No. 04-001071-14
are hereby REINSTATED and UPHELD but MODIFIED to the effect that, in
addition to the award of separation pay of P23,712.00; backwages of P169,540.80;
service incentive leave pay of P2,798.70 and 13th month pay of P14,553.24,
petitioner Sheryll R. Cabañas is also entitled to the award of attorney's fees
equivalent to ten percent (10%) of the total monetary award.

SO ORDERED.

Carpio, (Chairperson), Perlas-Bernabe, Caguioa, and Reyes, Jr., JJ., concur.

[1]
 Penned by Associate Justice Stephen C. Cruz, with Associate Justices Jose C.
Reyes, Jr. and Ramon Paul L. Hernando concurring; rollo, pp. 39-49

[2]
 In NLRC LAC No. 04-001071-14; id.  at 73-81.

[3]
 Rollo, pp. 86-97.

[4]
 Id. at 124-126.

[5]
 Id. at 160.

[6]
 Id. at 104-107.

[7]
 Id. at 160.

[8]
 Id. at 112.

[9]
 Records, pp. 76-79.

[10]
 Id. at 81.

[11]
 Rollo, pp. 131-135.

[12]
 373 Phil. 950, 959 (1999).

[13]
 Id.

[14]
 Id.
[15]
 Rollo, p. 135.

[16]
 Id. at 73-81.

[17]
 Id. at 79-80.

[18]
 Id. at 80.

[19]
 Id. at 82-83.

[20]
 Id. at 48.

[21]
 Id. at 44, citing W.M. Manufacturing, Inc. v. Dalag, et al., 774 Phil. 353, 383
(2015).

[22]
 381 Phil. 428, 438 (2000).

[23]
 Rollo, p. 21.

[24]
 R.A. No. 9406 is entitled, "AN ACT REORGANIZING AND STRENGTHENING THE
PUBLIC ATTORNEY'S OFFICE (PAO), AMENDING FOR THE PURPOSE PERTINENT
PROVISIONS OF EXECUTIVE ORDER NO. 292, OTHERWISE KNOWN AS THE
"ADMINISTRATIVE CODE OF 1987", AS AMENDED, GRANTING SPECIAL
ALLOWANCE TO PAO OFFICIALS AND LAWYERS, AND PROVIDING FUNDS
THEREFOR." (Approved on March 23, 2007.)

[25]
 Alaska Milk Corp. v. Ponce, G.R. Nos. 228412 & 228439, July 26, 2017.

[26]
 Id.

[27]
 Spectrum Security Services, Inc. v. Grave, G.R. No. 196650, June 7, 2017.

[28]
 Records, p. 80.
[29]
 See Reyes v. Global Beer Below Zero, Inc., G.R. No. 222816, October 4, 2017.

[30]
 Id.

[31]
 People's Security, Inc. v. Flores, G.R. No. 211312, December 5, 2016, 812 SCRA
260, 270.

[32]
 Id.

[33]
 Id.

[34]
 Records, pp. 76-79.

[35]
 Id. at 77.
[36]
 Complainant's Position Paper, rollo, pp. 86-95.

[37]
 Id. at 91.

[38]
 Memorandum of Appeal; id. at 138-152.

[39]
 Records, p. 378.

[40]
 Kams International, Inc., et al. v. NLRC, et al., supra note 11.

[41]
 Supra note 21.

[42]
 Rollo, p. 46.

[43]
 Jo v. NLRC, supra note 22, at 437-438.

[44]
 Symex Security Services, Inc. v. Rivera, Jr., G.R. No. 202613, November 8,
2017.

[45]
 Id.

[46]
 Rollo, p. 133.

[47]
 Emphasis supplied.

[48]
 Prudential Guarantee and Assurance Employee  Labor  Union v.
National LaborRelations Commission, 687 Phil. 351, 375 (2012).

[49]
 Alva v. High Capacity Security Force, Inc., G.R. No. 203328, November 8, 2017.

[50]
 740 Phil. 699, 720 (2014).

[51]
 Alva v. High Capacity Security Force, Inc., supra note 49.

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