40 SUPREME COURT REPORTS ANNOTATED

Philippine Airlines, Inc. vs. NLRC (2nd Division)

*

G.R. No. 114307. July 8, 1998.

PHILIPPINE AIRLINES, INC., petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION

(2nd Division), LABOR ARBITER JOSE DE VERA, and EDILBERTO CASTRO, respondents.

Labor Law; Preventive Suspension; Preventive suspension is a disciplinary measure for the protection of

the company’s property pending investigation of any alleged malfeasance or misfeasance committed by the
employee.—Preventive suspension is a disciplinary measure for the protection of the company’s property
pending investigation of any alleged malfeasance or misfeasance committed by the employee. The employer
may place the worker concerned under preventive suspension if his continued employment poses a serious
and imminent threat to the life or property of the employer or of his co-workers.

Same; Same; Preventive Suspension and Suspension as Penalty, Distinguished.—PAL faults the Labor

Arbiter and the NLRC for allegedly equating preventive suspension as remedial measure with suspension as
penalty for administrative offenses. The argument though cogent is, however, inaccurate. A distinction
between the two measures was clearly elucidated by the Court in the case of Beja, Sr. v. CA, thus: “Imposed
during the pendency of an administrative investigation, preventive suspension is not a penalty in itself. It is
merely a measure of precaution so that the employee who is

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* THIRD DIVISION.

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Philippine Airlines, Inc. vs. NLRC (2nd

Division)

charged may be separated, for obvious reasons, from the scene of his alleged misfeasance while the
same is being investigated. While the former may be imposed on a respondent during the investigation of the
charges against him, the latter is the penalty which may only be meted upon him at the termination of the
investigation or the final disposition of the case.”

Same;  Same;  An employee’s conformity to considering his prolonged preventive suspension as

constituting his penalty for the offense charged does not cure an employer’s blatant violation of the law, and
the same is null and void.—PAL contends that when respondent consented to the resolution that the entire
period of suspension shall constitute his penalty for the offense charged, the latter is thereby estopped to
question the validity of said suspension. We concur with the labor arbiter when he ruled that the ensuing
conformity by respondent does not cure petitioner’s blatant violation of the law, and the same is therefore
null and void. Thus, “to uphold the validity of the subsequent agreement between complainant and
respondent regarding the imposition of the suspension would be repulsive to the avowed policy of the State
enshrined not only in the Constitution but also in the Labor Code.”
 Same; Same; The exercise by an employer of its rights to regulate all aspects of employment must be in
keeping with good faith and not be used as a pretext for defeating the rights of employees under the laws and
applicable contracts.—In fine, we do not question the right of the petitioner to discipline its erring employees
and to impose reasonable penalties pursuant to law and company rules and regulations. “Having this right,
however, should not be confused with the manner in which that right must be exercised.” Thus, the exercise
by an employer of its rights to regulate all aspects of employment must be in keeping with good faith and
not be used as a pretext for defeating the rights of employees under the laws and applicable contracts.
Petitioner utterly failed in this respect.

SPECIAL CIVIL ACTION in the Supreme Court. Certiorari.

The facts are stated in the resolution of the Court.

     The PAL Legal Department for petitioner.
     Emmanuel Noel A. Cruz for private respondent.
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42 SUPREME COURT REPORTS ANNOTATED

Philippine Airlines, Inc. vs. NLRC (2nd Division)

RESOLUTION

ROMERO, J.:

The central issue in the case at bar is whether or not an employee who has been preventively
suspended beyond the maximum 30-day period is entitled to backwages and salary increases
granted under the Collective Bargaining Agreement (CBA) during his period of suspension.
Private respondent Edilberto Castro was hired as manifesting clerk by petitioner Philippine
Airlines, Inc. (PAL) on July 18, 1977. It appears that on March 12, 1984, respondent, together
with co-employee Arnaldo Olfindo, were apprehended by government authorities while about to
board a flight en route to Hongkong in possession of P39,850.00 and P6,000.00 1respectively, in
violation of Central Bank (CB) Circular 265, as amended by CB Circular 383,   in relation to
Section 34 of Republic Act 265, as amended.
When informed of the incident, PAL required
2 respondent “to explain within 24 hours why he
should not be charged administratively.”   Upon failure of the latter to submit his explanation
thereto, he was placed on preventive suspension effective March 27, 1984 for grave misconduct.

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1 4. Any person, firm, company or corporation, may import or export, and any incoming or outgoing traveller may bring
with him, Philippine notes and coins, and checks, money orders and other bills of exchange drawn in pesos against banks
operating in the Philippines in an amount not exceeding P500.00; Provided, That an amount in excess of P500.00 may be
imported into, exported from, or brought into or out of, the Philippines upon prior authorization of the Central Bank of the
Philippines; AND PROVIDED FURTHER THAT FOR THE DURATION OF THE DEMONETIZATION PERIOD
PRESCRIBED UNDER PRESIDENTIAL DECREE NO. 168 OF APRIL 12, 1973, PHILIPPINE NOTES MAY BE
BROUGHT INTO THE PHILIPPINES ONLY BY INCOMING PASSENGERS IN AMOUNTS NOT EXCEEDING P500.00
FOR EACH PASSENGER WITHOUT EXCEPTION.
2 Rollo, p. 26.

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Philippine Airlines, Inc. vs. NLRC (2nd Division)

On May 28, 1984, an investigation was conducted wherein respondent admitted ownership of the
confiscated sum of money but denying any knowledge of CB Circular 265. No further inquiry was
conducted. On August 13, 1985, respondent, through the Philippine Airlines Employees
Association (PALEA), sought not only the dismissal of his case but likewise prayed for his
reinstatement, to which appeal, PAL failed to make a reply thereto. He reiterated the same
appeal in his letter dated August 13, 1987.
On September 18, 1987 or three (3) years and six (6) months after his suspension, PAL issued
a resolution finding respondent guilty of the offense charged but nonetheless reinstated the latter
explaining that the period within which he was out of work shall serve as his penalty for
suspension. The said resolution likewise required respondent to affix his signature therein to
signify his full conformity to the action taken by PAL. Upon his reinstatement, respondent filed a
claim against PAL for backwages and salary increases granted under the collective bargaining
agreement (CBA) covering the period of his suspension which the latter, however, denied on
account that under the existing CBA, “an employee under suspension 3 is not entitled to the CBA
salary increases granted during the period covered by his penalty.”
On March 22, 1991, Labor Arbiter Jose G. de Vera rendered a decision, the decretal portion of
which reads as follows:
“WHEREFORE, all the foregoing premises being considered, judgment is hereby rendered limiting the
suspension imposed upon the complainant to one (1) month, and the respondent to pay complainant his
salaries, benefits, and other privileges from April 26, 1984 up to September 18, 1987 and to grant
complainant his salary increases accruing during the period aforesaid. Further, the respondent is hereby
ordered to pay complainant P50,000.00 in moral damages and P10,000.00 in exemplary damages.

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3 Petition, pp. 2-20.

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Philippine Airlines, Inc. vs. NLRC (2nd Division)
4

SO ORDERED.”

On appeal, this decision was affirmed by the National Labor Relations Commission (NLRC) in its
decision dated December 29, 1993 with the deletion of the award of moral and exemplary
damages. Hence, the instant petition.
We resolve to dismiss the petition.
Preventive suspension is a disciplinary measure for the protection of the company’s property
pending 5investigation of any alleged malfeasance or misfeasance committed by the
employee.   The employer may place the worker concerned under preventive suspension if his
continued employment poses6 a serious and imminent threat to the life or property of the
employer or of his co-workers.
Sections 3 and 4, Rule XIV of the Omnibus Rules Implementing the Labor Code provides:
“Sec. 3. Preventive suspension.—The employer can place the worker concerned under preventive suspension
if his continued employment poses a serious and imminent threat to the life or property of the employer or of
his co-workers.
Sec. 4.  Period of suspension.—No preventive suspension shall last longer than 30 days. The employer
shall thereafter reinstate the worker in his former or in a substantially equivalent position or the employer
may extend the period of suspension provided that during the period of extension, he pays the wages and
other benefits due to the workers. In such case, the worker shall not be bound to reimburse the amount paid
to him during the extension if the employer decides, after completion of the hearing, to dismiss the worker.”
(Italics supplied)

It is undisputed that the period of suspension of respondent lasted for three (3) years and six (6)
months. PAL, therefore,

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4 Ibid., p. 43.
5 Globe-Mackay Cable and Radio Communication v. NLRC, 206 SCRA 701 (1992).
6 Rural Bank of Baao, Inc. v. NLRC, 207 SCRA 444 (1992).

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Philippine Airlines, Inc. vs. NLRC (2nd Division)

committed a serious transgression when it manifestly delayed the determination of respondent’s

culpability in the offense charged. PAL stated lamely in its petition that “due to numerous
administrative cases pending at that time, the Committee inadvertently failed to submit its
recommendation to (the) management.”7  This is specious reasoning. The rules clearly provide
that a preventive suspension shall not exceed a maximum period of 30 days, after which period,
the employee must be reinstated to his former position. If the suspension is otherwise extended,
the employee shall be entitled to his salaries and other benefits that may accrue to him during
the period of such suspension. The provisions of the rules are explicit and direct; hence, there is
no reason to further elaborate on the same.
PAL faults the Labor Arbiter and the NLRC for allegedly equating preventive suspension as
remedial measure with suspension as penalty for administrative offenses. The argument though
cogent is, however, inaccurate. A distinction
8 between the two measures was clearly elucidated by
the Court in the case of Beja, Sr. v. CA,  thus:
“Imposed during the pendency of an administrative investigation, preventive suspension is not a penalty in
itself. It is merely a measure of precaution so that the employee who is charged may be separated, for
obvious reasons, from the scene of his alleged misfeasance while the same is being investigated. While the
former may be imposed on a respondent during the investigation of the charges against him, the latter is the
penalty which may only be meted upon him at the termination of the investigation or the final disposition of
the case.”

A cursory reading of the records reveals no reason to ascribe grave abuse of discretion against the
NLRC. Simply put, its decision was grounded upon petitioner’s manifest indifference to the plight
of its suspended employee and its conse-

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7 Rollo, p. 6.
8 207 SCRA 689 (1992).

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Philippine Airlines, Inc. vs. NLRC (2nd Division)

quent violation of the Implementing Rules of the Labor Code. As correctly ruled by the NLRC:
“In fact, the long period of complainant’s preventive suspension could even be considered constructive
dismissal because were it not his letter dated September 12, 1985 and followed by another on September 18,
1987 demanding his reinstatement, respondent by its inaction appears to have no plan to employ him back
to work. The manifest inaction of respondent over the pendency of the administrative charge is indeed
violative of complainant’s security of tenure because without
9 any justifiable cause and due process
complainant’s employment would have gone into oblivion.”  (Italics supplied)

PAL contends that when respondent consented to the resolution that the entire period of
suspension shall constitute his penalty for the offense charged, the latter is thereby estopped to
question the validity of said suspension. We concur with the labor arbiter when he ruled that the
ensuing conformity by respondent does not cure petitioner’s blatant violation of the law, and the
same is therefore null and void. Thus, “to uphold the validity of the subsequent agreement
between complainant and respondent regarding the imposition of the suspension would be
repulsive to the
10 avowed policy of the State enshrined not only in the Constitution but also in the
Labor Code.”
In fine, we do not question the right of the petitioner to discipline its erring employees and to
impose reasonable penalties pursuant to law and company rules and regulations. “Having this
right, however,
11 should not be confused with the manner in which that right must be
exercised.”  Thus, the exercise by an employer of its rights to regulate all aspects of employment
must be in keeping with good faith and not be used as a pretext for defeating the rights of
employees under

_______________
9 Rollo, p. 31.
10 Ibid.,p. 41.
11 Philippine Telegraph and Telephone Corporation v. Laplana, 199 SCRA 485 (1991).

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Philippine Airlines, Inc. vs. NLRC (2nd Division)
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the laws and applicable contracts.  Petitioner utterly failed in this respect.
WHEREFORE, premises considered, the petition is DISMISSED for lack of merit and the
assailed decision is AFFIRMED. No costs.
SO ORDERED.

     Narvasa (C.J., Chairman), Kapunan and Purisima, JJ., concur.

Petition dismissed, judgment affirmed.

Notes.—The purpose of re-assignments is no different from that of preventive

suspension,  i.e.,  to protect the employer’s property pending investigation of the alleged
malfeasance or misfeasance committed by the employee. (Samillano vs. National Labor Relations
Commission, 265 SCRA 788 [1996])
 Preventive suspension cannot last indefinitely. (Pepsi-Cola Distributors of the Philippines, Inc.
vs. National Labor Relations Commission, 272 SCRA 267 [1997])
It is a fundamental policy that agreements designed to permit an employer to arbitrarily
dismiss an employee cannot be sanctioned. (Sanyo Travel Corporation vs. National Labor
Relations Commission, 280 SCRA 129 [1997])

——o0o——