SECOND DIVISION G.R. No. 152166 October 20, 2010ST. LUKE'S MEDICAL CENTER, INC. and ROBERT KUAN, Chairman,

Petitioners, vs.

ESTRELITO NOTARIO, Respondent.PERALTA, J.:

Facts:Before the Court is a petition for review on certiorari seeking to

set aside the Decision dated September 21, 2001 and Resolution dated February 12, 2002 of the Court of Appeals (CA), Second Division, which affirmed the Resolutions dated January 19, 2000 and March 20, 2000 of the National Labor Relations Commission (NLRC), Third Division. The NLRC Resolution dated January 19, 2000 reversed and set aside the Decision dated November 11, 1998 of the Labor Arbiter dismissing respondent’s complaint for illegal dismissal against petitioners, St. Luke's Medical Center, Inc. and its Chairman, Robert Kuan, and ordered them to reinstate respondent to his former position, without loss of seniority rights and other benefits and full backwages from the date of dismissal until actual reinstatement, and should reinstatement be no longer feasible, to further pay him separation pay equivalent to one (1) month’s pay for every year of service.

On June 23, 1995, St. Luke’s Medical Center, Inc., employed respondent as In-House Security Guard. In August 1996, Nimaya Electro Corporation installed a closed-circuit television (CCTV) system in the premises of petitioner hospital to enhance its security measures and conducted an orientation seminar for the in-house security personnel on the proper way of monitoring video cameras, subject to certain guidelines. On December 30, 1996, respondent was on duty from 6:00 p.m. to 6:00 a.m. of the following day, December 31, 1996. His work consisted mainly of monitoring the video cameras. In the evening of December 30, 1996, Justin Tibon, a foreigner, then attending to his 3-year-old daughter, Andanie De Brum, who was admitted since December 20, 1996 at room 257, cardiovascular unit of petitioner hospital, reported to the management of petitioner hospital about the loss of his mint green traveling bag, which was placed inside the cabinet, containing, among others, two (2) Continental Airlines tickets, two (2) passports, and some clothes. Acting on the complaint of Tibon, the Security Department of petitioner hospital conducted an investigation. When the tapes of video camera recorder (VCR) no. 3 covering the subject period were reviewed, it was shown that the VCR was focused on camera no. 2 (Old Maternity Unit), from 2103H to 2215H [or 9:03 p.m. to 10:15 p.m.] of December 30, 1996, and camera no. 1 (New Maternity Unit), from 0025H to 0600H [or 12:25 a.m. to 6:00 a.m.] of December 31, 1996. The cameras failed to record any incident of theft at room 257.

On January 6, 1997, petitioner hospital issued a Memorandum to respondent, the CCTV monitoring staff on duty, directing him to explain in writing, within 24 hours upon receipt thereof, why no disciplinary action should be taken against him for violating the normal rotation/sequencing process of the VCR and, consequently, failed to capture the theft of Tibon's traveling bag at room 257. In his letter dated January 6, 1997, respondent explained that on the subject dates, he was the only personnel on duty as nobody wanted to assist him. Because of this, he decided to focus the cameras on the Old and New Maternity Units, as these two units have high incidence of crime. Finding the written explanation of respondent to be unsatisfactory, petitioner hospital, served on respondent a copy of the Notice of Termination, dated January 24, 1997, dismissing him on the ground of gross negligence/inefficiency under Section 1, Rule VII of its Code of Discipline. Thus, on March 19, 1997, respondent filed a Complaint for illegal dismissal against petitioner hospital and its Chairman, Robert Kuan, seeking reinstatement with payment of full backwages from the time of his dismissal up to actual reinstatement, without of loss of seniority rights and other benefits. Petitioners countered that they validly dismissed respondent for gross negligence and observed due process before terminating his employment.

On November 11, 1998, the Labor Arbiter dismissed respondent’s complaint for illegal dismissal against petitioners. He concluded that during respondent’s duty from December 30 to 31, 1996, he was negligent in focusing the cameras at the Old and New Maternity Units only and, consequently, the theft committed at room 257 was not recorded. He said that respondent’s infraction exposed petitioners to the possibility of a damage suit that may be filed against them arising from the theft. On appeal by the respondent, the NLRC issued a Resolution dated January 19, 2000,

reversing the Decision of the Labor Arbiter. It observed that respondent was not negligent when he focused the cameras on the Old and New Maternity Units, as they were located near the stairways and elevators, which were frequented by many visitors and, thus, there is the likelihood that untoward incidents may arise. If at all, it treated the matter as a single or isolated act of simple negligence which did not constitute a just cause for the dismissal of an employee. On September 21, 2001, the CA dismissed petitioners' petition for certiorari, affirming the NLRC’s finding that while respondent may appear to be negligent in monitoring the cameras on the subject dates, the same would not constitute sufficient ground to terminate his employment. Even assuming that respondent’s act would constitute gross negligence, it ruled that the ultimate penalty of dismissal was not proper as it was not habitual, and that there was no proof of pecuniary injury upon petitioner hospital. Moreover, it declared that petitioners failed to comply with the twin notice rule and hearing as what they did was to require respondent to submit a written explanation, within 24 hours and, thereafter, he was ordered dismissed, without affording him an opportunity to be heard. Hence, this petition.

Issue: Whether or not the dismissal of respondent is valid.

Held:NO. Respondent was illegally dismissed without just cause and compliance with the notice requirement. Article 282 (b) of the Labor Code provides that an employer may terminate an employment for gross and habitual neglect by the employee of his duties. Corollarily, regarding termination of employment, Section 2(a) and (d), Rule 1, Book VI of the Omnibus Rules Implementing the Labor Code, as amended, provides that:

Section 2. Security of Tenure. (a) In cases of regular employment, the employer shall not terminate the services of an employee except for just or authorized causes as provided by law, and subject to the requirements of due process. x x x x (d) In all cases of termination of employment, the following standards of due process shall be substantially observed:

For termination of employment based on just causes as defined in Article 282 of the Labor Code: (i) A written notice served on the employee specifying the ground or grounds for termination, and giving said employee reasonable opportunity within which to explain his side. (ii) A hearing or conference during which the employee concerned, with the assistance of counsel if he so desires is given opportunity to respond to the charge, present his evidence, or rebut the evidence presented against him. (iii) A written notice of termination served on the employee, indicating that upon due consideration of all the circumstances, grounds have been established to justify his termination.

x x x x To effectuate a valid dismissal from employment by

the employer, the Labor Code has set twin requirements, namely: (1) the dismissal must be for any of the causes provided in Article 282 of the Labor Code; and (2) the employee must be given an opportunity to be heard and defend himself. This first requisite is referred to as the substantive aspect, while the second is deemed as the procedural aspect.

An employer can terminate the services of an employee only for valid and just causes which must be supported by clear and convincing evidence. The employer has the burden of proving that the dismissal was indeed for a valid and just cause.

A perusal of petitioner hospital’s CCTV Monitoring Guidelines, disseminated to all in-house security personnel, reveals that that there is no categorical provision requiring an in-house security personnel to observe a rotation sequence procedure in focusing the cameras so that the security monitoring would cover as many areas as possible. Under Article 282 (b) of the Labor Code, an employer may terminate an employee for gross and habitual neglect of duties. Neglect of duty, to be a ground for dismissal, must be both gross and habitual. Gross negligence connotes want of care in the performance of one’s duties. Habitual neglect implies repeated failure to perform one’s duties for a period of time, depending upon the circumstances. A single or isolated act of negligence does not constitute a just cause for the dismissal of the employee. Under the prevailing circumstances, respondent exercised his best judgment in monitoring the

1

CCTV cameras so as to ensure the security within the hospital premises. Verily, assuming arguendo that respondent was negligent, although this Court finds otherwise, the lapse or inaction could only be regarded as a single or isolated act of negligence that cannot be categorized as habitual and, hence, not a just cause for his dismissal.

The employee must be furnished two written notices: the first notice apprises the employee of the particular acts or omissions for which his dismissal is sought, and the second is a subsequent notice, which informs the employee of the employer's decision to dismiss him. The CA found that petitioner hospital failed to comply with the rule on twin notice and hearing as it merely required respondent to give his written explanation within 24 hours and, thereafter, ordered his dismissal.

Where the dismissal was without just cause and there was no due process, Article 279 of the Labor Code, as amended, mandates that the employee is entitled to reinstatement without loss of seniority rights and other privileges and full backwages, inclusive of allowances and other benefits, or their monetary equivalent computed from the time the compensation was not paid up to the time of actual reinstatement. Petitioners’ lack of just cause and non-compliance with the procedural requisites in terminating respondent’s employment renders them guilty of illegal dismissal. Consequently, respondent is entitled to reinstatement to his former position without loss of seniority rights and payment of backwages. However, if such reinstatement proves impracticable, and hardly in the best interest of the parties, perhaps due to the lapse of time since his dismissal, or if he decides not to be reinstated, respondent should be awarded separation pay in lieu of reinstatement. Prescinding from the foregoing, the Court deems that since reinstatement is no longer feasible due to the long passage of time, petitioners are required to pay respondent his separation pay equivalent to one (1) month’s pay for every year of service. Petitioners are thus ordered to pay respondent his backwages of P250,229.97 and separation pay of P31,365.00, or a total amount of P281,594.97.

Labor Relations ART 227 # 2G.R. No. 185829ARMANDO ALILING vs. WORLD EXPRESS CORPORATION,

Ponente: VELASCO, JR., J.: FACTS: This Petition for Review on Certiorari under Rule 45.Wide Wide World Express Corporation (WWWEC) offered to employ petitioner Armando Aliling (Aliling) as “Account Executive (Seafreight Sales),” The offer came with a six (6)-month probation period condition with this express caveat: “Performance during probationary period shall be made as basis for confirmation to Regular or Permanent Status.” Aliling and WWWEC inked an Employment Contract 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.

WWWEC Sales and Marketing Director, emailed Aliling to express dissatisfaction with the latter’s performance. Thereafter, Human Resources Manager of WWWEC, asked Aliling to report to the Human Resources Department to explain his absence taken without leave. Aliling denied being absent on the days in question, attaching to his reply-letter a copy of his timesheet. Aliling’s explanation came with a query regarding the withholding of his salary he then 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 to management that San Mateo had forced him to resign. HRM’s response-letter informed Aliling that his case was still in the process of being evaluated and again sent a letter on a later period 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. Earlier, however, Aliling filed a Complaint for illegal dismissal due to forced resignation, nonpayment of salaries as well as damages with the NLRC against WWWEC. Appended to the complaint was Aliling’s Affidavit 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 Aliling’s 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 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.

The Labor Arbiter issued a Decision declaring Aliling’s termination as unjustified. The labor arbiter gave credence to Aliling’s allegation about not receiving and, therefore, not bound by, San Mateo’s purported September 20, 2004 memo. The memo, 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. The CA anchored its assailed action on the strength of the following premises: (a) respondents failed to prove that Aliling’s 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. (note di pa satisfied sa favorable ruling yung petitioner ha gusto pa nya yung following relief sa issue hence…) ISSUE: WON the court should award Aliling reinstatement, Backwages and moral and exemplary damages? (But Relations issue is WON petitioner was Illegally Dismissed) HELD: The petition is partly meritorious. Petitioner is a regular employee “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 “. 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.

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. 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

2

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. WWWEC had failed to discharge its twin burden in the instant case. In fine, an employee’s 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, management’s 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 Aliling’s illegal dismissal. Aliling’s right to procedural due process was violated

(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 termination indicating 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. Here, the first and second notice requirements have not been properly observed, thus tainting petitioner’s dismissal with illegality. WWWEC did not adduce proof to show that a copy of the letter was duly served upon Aliling. 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 Complainant’s Reply Affidavit, Aliling goes on to tag such letter/memorandum as fabrication. Clearly enough, WWWEC did not comply with the first notice requirement and the record is devoid of any showing of a hearing or conference having been conducted Aliling is entitled to backwages and separation pay in lieu of reinstatement on the ground of strained relationship.(Doctrine of Strained Relations) “To reinstate petitioner 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

Labor Relations ART 227 # 3G.R. No. 152048 FELIX B. PEREZ vs. PHILIPPINE TELEGRAPH ANDTELEPHONE COMPANY

Ponente: CORONA, J.: En Banc FACTS: Petitioners Felix B. Perez and Amante G. Doria were employed by respondent Philippine Telegraph and Telephone Company (PT&T) as shipping clerk and supervisor, respectively, in PT&T’s Shipping Section, Materials Management Group.It was discovered that the Shipping Section jacked up the value of the freight costs for goods shipped and that the duplicates of the shipping documents allegedly showed traces of tampering, alteration and superimposition.Petitioners were placed on preventive suspension for 30 days for their alleged involvement in the anomaly. Their suspension was extended for 15 days twice: first on October 3, 1993[2] and second on October 18, 1993.[3] On October 29, 1993, a memorandum with the following tenor was issued by respondents: In line with the recommendation of the AVP-Audit as presented in his report of October 15, 1993 (copy attached) and the subsequent filing of criminal charges against the parties mentioned therein, [Mr. Felix Perez and Mr. Amante Doria are] hereby dismissed from the service for having falsified company documents.[4] (emphasis supplied) On November 9, 1993, petitioners filed a complaint for illegal suspension and illegal dismissal. They alleged that they were dismissed on November 8, 1993, the date they received the above-mentioned memorandum. The labor arbiter found that the 30-day extension of petitioners’ suspension and their subsequent dismissal were both illegal. He ordered respondents to pay petitioners their salaries during their 30-day illegal suspension, as well as to reinstate them with backwages and 13th month pay.NLRC reversed the decision of the labor arbiter. It ruled that petitioners were dismissed for just cause, that they were accorded due process and that they were illegally suspended for only 15 days without stating the reason for the reduction of the period of petitioners’ illegal suspension. CA affirmed the NLRC decision insofar as petitioners’ illegal suspension for 15 days and dismissal for just cause were concerned. However, it found that petitioners were dismissed without due process. Petitioners now seek a reversal of the CA decision. They contend that there was no just cause for their dismissal, that they were not accorded due process and that they were illegally suspended for 30 days.

ISSUE: WON respondents failed to prove just cause and to observe due process?

HELD: Yes, The petition has merit. SC find respondents’ evidence insufficient to clearly and convincingly establish the facts from which the loss of confidence resulted. Willful breach by the employee of the trust reposed in him by his employer or duly authorized representative is a just cause for termination. However loss of confidence should not be simulated. It should not be used as a subterfuge for causes which are improper, illegal or unjustified. Loss of confidence may not be arbitrarily asserted in the face of overwhelming evidence to the contrary. It must be genuine, not a mere afterthought to justify an earlier action taken in bad faith. The burden of proof rests on the employer to establish that the dismissal is for cause in view of the security of tenure that employees enjoy under the Constitution and the Labor Code. The employer’s evidence must clearly and convincingly show the facts on which the loss of confidence in the employee may be fairly made to rest. It must be adequately proven by substantial evidence. Respondents failed to discharge this burden.

3

Respondents’ illegal act of dismissing petitioners was aggravated by their failure to observe due process. To meet the requirements of due process in the dismissal of an employee, an employer must furnish the worker with two written notices: (1) a written notice specifying the grounds for termination and giving to said employee a reasonable opportunity to explain his side and (2) another written notice indicating that, upon due consideration of all circumstances, grounds have been established to justify the employer's decision to dismiss the employee. Petitioners were neither apprised of the charges against them nor given a chance to defend themselves. They were simply and arbitrarily separated from work and served notices of termination in total disregard of their rights to due process and security of tenure. The labor arbiter and the CA correctly found that respondents failed to comply with the two-notice requirement for terminating employees. As to petitioners contention that due process was not observed in the absence of a hearing in which they could have explained their side and refuted the evidence against them. There is no need for a hearing or conference. We note a marked difference in the standards of due process to be followed as prescribed in the Labor Code and its implementing rules. The Labor Code, on one hand, provides that an employer must provide the employee ample opportunity to be heard and to defend himself with the assistance of his representative if he so desires. The omnibus rules implementing the Labor Code, on the other hand, require a hearing and conference during which the employee concerned is given the opportunity to respond to the charge, present his evidence or rebut the evidence presented against him. In case of conflict, the law prevails over the administrative regulations implementing it. The authority to promulgate implementing rules proceeds from the law itself. To be valid, a rule or regulation must conform to and be consistent with the provisions of the enabling statute. As such, it cannot amend the law either by abridging or expanding its scope. The “ample opportunity to be heard” standard is neither synonymous nor similar to a formal hearing. To confine the employee’s right to be heard to a solitary form narrows down that right. It deprives him of other equally effective forms of adducing evidence in his defense. Certainly, such an exclusivist and absolutist interpretation is overly restrictive. The “very nature of due process negates any concept of inflexible procedures universally applicable to every imaginable situation.” The standard for the hearing requirement, ample opportunity, is couched in general language revealing the legislative intent to give some degree of flexibility or adaptability to meet the peculiarities of a given situation. To confine it to a single rigid proceeding such as a formal hearing will defeat its spirit.Significantly, Section 2(d), Rule I of the Implementing Rules of Book VI of the Labor Code itself provides that the so-called standards of due process outlined therein shall be observed “substantially,” not strictly. This is a recognition that while a formal hearing or conference is ideal, it is not an absolute, mandatory or exclusive avenue of due process. An employee’s right to be heard in termination cases under Article 277(b) as implemented by Section 2(d), Rule I of the Implementing Rules of Book VI of the Labor Code should be interpreted in broad strokes. It is satisfied not only by a formal face to face confrontation but by any meaningful opportunity to controvert the charges against him and to submit evidence in support thereof. A hearing means that a party should be given a chance to adduce his evidence to support his side of the case and that the evidence should be taken into account in the adjudication of the controversy. “To be heard” does not mean verbal argumentation alone inasmuch as one may be heard just as effectively through written explanations, submissions or pleadings. Therefore, while the phrase “ample opportunity to be heard” may in fact include an actual hearing, it is not limited to a formal hearing only. In other words, the existence of an actual, formal “trial-type” hearing, although

preferred, is not absolutely necessary to satisfy the employee’s right to be heard. In sum, the following are the guiding principles in connection with the hearing requirement in dismissal cases:(a) “ample opportunity to be heard” means any meaningful opportunity (verbal or written) given to the employee to answer the charges against him and submit evidence in support of his defense, whether in a hearing, conference or some other fair, just and reasonable way.(b) a formal hearing or conference becomes mandatory only when requested by the employee in writing or substantial evidentiary disputes exist or a company rule or practice requires it, or when similar circumstances justify it.(c) the “ample opportunity to be heard” standard in the Labor Code prevails over the “hearing or conference” requirement in the implementing rules and regulations.

PETITIONERS WERE ILLEGALLY SUSPENDED FOR 30 DAYS An employee may be validly suspended by the employer for just cause provided by law. Such suspension shall only be for a period of 30 days, after which the employee shall either be reinstated or paid his wages during the extended period.[30] In this case, petitioners contended that they were not paid during the two 15-day extensions, or a total of 30 days, of their preventive suspension. Respondents failed to adduce evidence to the contrary.

Where the dismissal was without just or authorized cause and there was no due process, Article 279 of the Labor Code, as amended, mandates that the employee is entitled to reinstatement without loss of seniority rights and other privileges and full backwages, inclusive of allowances, and other benefits or their monetary equivalent computed from the time the compensation was not paid up to the time of actual reinstatement. In this case, however, reinstatement is no longer possible because of the length of time that has passed from the date of the incident to final resolution. Fourteen years have transpired from the time petitioners were wrongfully dismissed. To order reinstatement at this juncture will no longer serve any prudent or practical purpose.

G.R. No. 166208KING OF KINGS TRANSPORT INC. vs. SANTIAGO O. MAMAC,June 29, 2007

This is a review under Rule 45 of the September 16, 2004 Decision of the Court of Appeals (CA) in CA-GR SP No. 81961. Said judgment affirmed the dismissal of bus conductor Santiago O. Mamac from petitioner King of Kings Transport, Inc. (KKTI), but ordered the bus company to pay full backwages for violation of the twin-notice requirement and 13th-month pay.Petitioner KKTI is a corporation engaged in public transportation and managed by Claire Dela Fuente and Melissa Lim. Respondent Mamac was hired as bus conductor of Don Mariano Transit Corporation (DMTC). Many DMTC employees were subsequently transferred to KKTI. The KKTI employees later organized the Kaisahan ng mga Kawani sa King of Kings (KKKK) which was registered with DOLE. Respondent was elected KKKK president.Respondent was required to accomplish a “Conductor’s Trip Report” and submit it to the company after each trip. Thereafter, the said report submitted by respondent contained irregularities and so he was asked by petitioner to explain the discrepancies. In his answer, respondent said that such irregularities were unintentionalOn November 26, 2001, respondent received a letter terminating his employment effective November 29, 2001. The dismissal letter alleged that the October 28, 2001 irregularity was an act of fraud against the company. On December 11, 2001, respondent filed a Complaint for illegal dismissal, illegal deductions, nonpayment of 13th-month pay, service incentive leave, and separation pay. He denied committing any infraction and alleged that his dismissal was intended to bust union activities.

4

Moreover, he claimed that his dismissal was effected without due process.In its April 3, 2002 Position Paper, KKTI contended that respondent was legally dismissed after his commission of a series of misconducts and misdeeds. It claimed that respondent had violated the trust and confidence reposed upon him by KKTI. Also, it averred that it had observed due process in dismissing respondent and maintained that respondent was not entitled to his money claims such as service incentive leave and 13th-month pay because he was paid on commission or percentage basis.LA dismissed respondent’s complaint for lack of merit. NLRC and CA affirmed LA’s decision but with modification with regard to the award of money.Issue: Whether or not petitioner KKTI complied with the due process requirements in terminating respondent’s employment.

Held: No. The Supreme court ruled in the negative. Due process under the Labor Code involves two aspects: first, substantive––the valid and authorized causes of termination of employment under the Labor Code; and second, procedural––the manner of dismissal.[12] In the present case, the CA affirmed the findings of the labor arbiter and the NLRC that the termination of employment of respondent was based on a “just cause.” This ruling is not at issue in this case. The question to be determined is whether the procedural requirements were complied with.Art. 277 of the Labor Code provides the manner of termination of employment, thus:

Art. 277. Miscellaneous Provisions.––x x x(b) Subject to the constitutional right of workers to security of tenure and their right to be protected against dismissal except for a just and authorized cause without prejudice to the requirement of notice under Article 283 of this Code, the employer shall furnish the worker whose employment is sought to be terminated a written notice containing a statement of the causes for termination and shall afford the latter ample opportunity to be heard and to defend himself with the assistance of his representative if he so desires in accordance with company rules and regulations promulgated pursuant to guidelines set by the Department of Labor and Employment. Any decision taken by the employer shall be without prejudice to the right of the worker to contest the validity or legality of his dismissal by filing a complaint with the regional branch of the National Labor Relations Commission. The burden of proving that the termination was for a valid or authorized cause shall rest on the employer.

In the instant case, KKTI admits that it had failed to provide

respondent with a “charge sheet.” However, it maintains that it had

substantially complied with the rules, claiming that “respondent would not

have issued a written explanation had he not been informed of the charges

against him.”[

First, respondent was not issued a written notice charging him of

committing an infraction. The law is clear on the matter. A verbal appraisal

of the charges against an employee does not comply with the first notice

requirement. In Pepsi Cola Bottling Co. v. NLRC,[18] the Court held that

consultations or conferences are not a substitute for the actual observance

of notice and hearing. Also, in Loadstar Shipping Co., Inc. v. Mesano,[19] the

Court, sanctioning the employer for disregarding the due process

requirements, held that the employee’s written explanation did not excuse

the fact that there was a complete absence of the first notice.

Second, even assuming that petitioner KKTI was able to furnish

respondent an Irregularity Report notifying him of his offense, such would

not comply with the requirements of the law. We observe from the

irregularity reports against respondent for his other offenses that such

contained merely a general description of the charges against him. The

reports did not even state a company rule or policy that the employee had

allegedly violated. Likewise, there is no mention of any of the grounds for

termination of employment under Art. 282 of the Labor Code. Thus, KKTI’s

“standard” charge sheet is not sufficient notice to the employee.

Third, no hearing was conducted. Regardless of respondent’s

written explanation, a hearing was still necessary in order for him to clarify

and present evidence in support of his defense. Moreover, respondent made

the letter merely to explain the circumstances relating to the irregularity in

his October 28, 2001 Conductor’s Trip Report. He was unaware that a

dismissal proceeding was already being effected. Thus, he was surprised to

receive the November 26, 2001 termination letter indicating as grounds, not

only his October 28, 2001 infraction, but also his previous infractions.

Agabon v NLRC 2004

Facts:

Private respondent Riviera Home Improvements, Inc. is engaged

in the business of selling and installing ornamental and construction

materials. It employed petitioners Virgilio Agabon and Jenny Agabon as

gypsum board and cornice installe. Later on they were dismissed for

abandonment of work.

Petitioners then filed a complaint for illegal dismissal and

payment of money claims and on December 28, 1999, the Labor Arbiter

rendered a decision declaring the dismissals illegal and ordered private

respondent to pay the monetary claims.

On appeal, the NLRC reversed the Labor Arbiter because it found

that the petitioners had abandoned their work, and were not entitled to

backwages and separation pay. The other money claims awarded by the

Labor Arbiter were also denied for lack of evidence.

Upon denial of their motion for reconsideration, petitioners filed a

petition for certiorari with the Court of Appeals.

The Court of Appeals in turn ruled that the dismissal of the

petitioners was not illegal because they had abandoned their employment

but ordered the payment of money claims.

5

Petitioners assert that they were dismissed because the private

respondent refused to give them assignments unless they agreed to work on

a “pakyaw” basis

They did not agree on this arrangement because it would mean

losing benefits as Social Security System (SSS) members. Petitioners also

claim that private respondent did not comply with the twin requirements of

notice and hearing.

Issue: whether petitioners were illegally dismissed? NO!

Held: To dismiss an employee, the law requires not only the existence of a just and valid cause but also enjoins the employer to give the employee the opportunity to be heard and to defend himself.Article 282 of the Labor Code enumerates the just causes for termination by the employer: (a) serious misconduct or willful disobedience by the employee of the lawful orders of his employer or the latter’s representative in connection with the employee’s 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 his 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 representative; and (e) other causes analogous to the foregoing.

Abandonment is the deliberate and unjustified refusal of an employee to resume his employment. It is a form of neglect of duty, hence, a just cause for termination of employment by the employer. For a valid finding of abandonment, these two factors should be present: (1) the failure to report for work or absence without valid or justifiable reason; and (2) a clear intention to sever employer-employee relationship, with the second as the more determinative factor which is manifested by overt acts from which it may be deduced that the employees has no more intention to work. The intent to discontinue the employment must be shown by clear proof that it was deliberate and unjustified.

In February 1999, petitioners were frequently absent having subcontracted for an installation work for another company. Subcontracting for another company clearly showed the intention to sever the employer-employee relationship with private respondent. This was not the first time they did this. In January 1996, they did not report for work because they were working for another company. Private respondent at that time warned petitioners that they would be dismissed if this happened again. Petitioners disregarded the warning and exhibited a clear intention to sever their employer-employee relationship. The record of an employee is a relevant consideration in determining the penalty that should be meted out to him.

After establishing that the terminations were for a just and valid cause, we

now determine if the procedures for dismissal were observed.

The procedure for terminating an employee is found in Book VI,

Rule I, Section 2(d) of the Omnibus Rules Implementing the Labor Code: Standards of due process: requirements of

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

I. For termination of employment

based on just causes as defined in Article 282 of the Code:

(a) A written notice served on the employee specifying the ground or grounds for termination, and giving 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 circumstances, grounds have been established to justify his termination. In case of termination, the foregoing notices shall be served on the employee’s last known address.

From the foregoing rules four possible situations may be derived: (1) the dismissal is for a just cause under Article 282 of the Labor Code, for an authorized cause under Article 283, or for health reasons under Article 284, and due process was observed; (2) the dismissal is without just or authorized cause but due process was observed; (3) the dismissal is without just or authorized cause and there was no due process; and (4) the dismissal is for just or authorized cause but due process was not observed.

The present case squarely falls under the fourth situation. The dismissal should be upheld because it was established that the petitioners abandoned their jobs to work for another company. Private respondent, however, did not follow the notice requirements

Now the question is Whether or not dismissal or termination is illegal if the employee was not given any notice. NO!

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.

This means that the termination is illegal only if it is not for any

of the justified or authorized causes provided by law. Payment of

backwages and other benefits, including reinstatement, is justified only if

the employee was unjustly dismissed.

The unfairness of declaring illegal or ineffectual dismissals for valid or

authorized causes but not complying with statutory due process may have

far-reaching consequences.

This would encourage frivolous suits, where even the most notorious

violators of company policy are rewarded by invoking due process. This also

creates absurd situations where there is a just or authorized cause for

dismissal but a procedural infirmity invalidates the termination. Let us take

for example a case where the employee is caught stealing or threatens the

lives of his co-employees or has become a criminal, who has fled and cannot 6

be found, or where serious business losses demand that operations be

ceased in less than a month. Invalidating the dismissal would not serve

public interest. It could also discourage investments that can generate

employment in the local economy. Where the dismissal is for a just cause, as in the instant case, the lack of statutory due process should not nullify the dismissal, or render it illegal, or ineffectual. However, the employer should indemnify the employee for the violation of his statutory rights, as ruled in Reta v. National Labor Relations Commission.

Under the Civil Code, nominal damages is adjudicated in order that a right of the plaintiff, which has been violated or invaded by the defendant, may be vindicated or recognized, and not for the purpose of indemnifying the plaintiff for any loss suffered by him

As enunciated by this Court in Viernes v. National Labor Relations Commissions, an employer is liable to pay indemnity in the form of nominal damages to an employee who has been dismissed if, in effecting such dismissal, the employer fails to comply with the requirements of due process.

JAKA FOOD PROCESSING CORPORATION, petitioner, vs. DARWIN PACOT, ROBERT PAROHINOG, DAVID BISNAR, MARLON DOMINGO, RHOEL LESCANO and JONATHAN CAGABCAB, respondents.

G.R. No. 151378. March 28, 2005

Facts:Respondents Darwin Pacot, Robert Parohinog, David Bisnar, Marlon

Domingo, Rhoel Lescano and Jonathan Cagabcab were earlier hired by petitioner JAKA Foods Processing Corporation (JAKA, for short) until the latter terminated their employment on August 29, 1997 because the corporation was “in dire financial straits”. It is not disputed, however, that the termination was effected without JAKA complying with the requirement under Article 283 of the Labor Code regarding the service of a written notice upon the employees and the Department of Labor and Employment at least one (1) month before the intended date of termination. After due proceedings, the Labor Arbiter rendered a decision declaring the termination illegal and ordering JAKA and its HRD Manager to reinstate respondents with full backwages, and separation pay if reinstatement is not possible. NLRC modified LA’s decision by reversing and setting aside the awards of backwages, service incentive leave pay. CA reversed NLRC decision and ordered JAKA to pay respondents their separation pay equivalent to one (1) month salary, the proportionate 13th month pay and, in addition, full backwages from the time their employment was terminated on August 29, 1997 up to the time the Decision herein becomes final.

Issue: What are the legal implications of a situation where an employee is dismissed for cause but such dismissal was effected without the employer’s compliance with the notice requirement under the Labor Code? (or W/N the respondents are entitled to full backwages and separation pay?)

Held:A dismissal for just cause under Article 282 implies that the

employee concerned has committed, or is guilty of, some violation against the employer, i.e. the employee has committed some serious misconduct, is guilty of some fraud against the employer, or, as in Agabon, he has neglected his duties. Thus, it can be said that the employee himself initiated the dismissal process.

On another breath, a dismissal for an authorized cause under Article 283 does not necessarily imply delinquency or culpability on the part of the employee. Instead, the dismissal process is initiated by the employer’s exercise of his management prerogative, i.e. when the employer opts to install labor saving devices, when he decides to cease business operations or when, as in this case, he undertakes to implement a retrenchment program.

The clear-cut distinction between a dismissal for just cause under Article 282 and a dismissal for authorized cause under Article 283 is further reinforced by the fact that in the first, payment of separation pay, as a rule, is

not required, while in the second, the law requires payment of separation pay.For these reasons, there ought to be a difference in treatment when the ground for dismissal is one of the just causes under Article 282, and when based on one of the authorized causes under Article 283.

Accordingly, it is wise to hold that: (1) if the dismissal is based on a just cause under Article 282 but the employer failed to comply with the notice requirement, the sanction to be imposed upon him should be tempered because the dismissal process was, in effect, initiated by an act imputable to the employee; and (2) if the dismissal is based on an authorized cause under Article 283 but the employer failed to comply with the notice requirement, the sanction should be stiffer because the dismissal process was initiated by the employer’s exercise of his management prerogative.

The records before us reveal that, indeed, JAKA was suffering from serious business losses at the time it terminated respondents’ employment.

We likewise find the Court of Appeals to have been in error when it ordered JAKA to pay respondents separation pay equivalent to one (1) month salary for every year of service. The rule is that in all cases of business closure or cessation of operation or undertaking of the employer, the affected employee is entitled to separation pay. This is consistent with the state policy of treating labor as a primary social economic force, affording full protection to its rights as well as its welfare. The exception is when the closure of business or cessation of operations is due to serious business losses or financial reverses; duly proved, in which case, the right of affected employees to separation pay is lost for obvious reasons.

**Classmates, walang discussion about Art. 279 directly. Except, backwages and separation pay lang. =)

NELSON A. CULILI, Petitioner, vs.EASTERN TELECOMMUNICATIONS PHILIPPINES, INC., SALVADOR HIZON (President and Chief Executive Officer), EMILIANO JURADO (Chairman of the Board), VIRGILIO GARCIA (Vice President) and STELLA GARCIA (Assistant Vice President), Respondents.

FACTS:

Respondent (ETPI) is a telecommunications company engaged mainly in the business of establishing commercial telecommunications systems and leasing of international data lines or circuits that pass through the international gateway facility (IGF).7 The other respondents are ETPI’s officers: Salvador Hizon, President and Chief Executive Officer; Emiliano Jurado, Chairman of the Board; Virgilio Garcia, Vice President; and Stella Garcia, Assistant Vice President.

Petitioner (Culili) was employed by ETPI as a Technician in its Field Operations Department. Culili was promoted to Senior Technician.

ETPI was required, under Republic Act. No. 7925 and Executive Order No. 109, to establish landlines in Metro Manila and certain provinces. However, due to interconnection problems with the Philippine Long Distance Telephone Company (PLDT), poor subscription and cancellation of subscriptions, and other business difficulties, ETPI was forced to halt its roll out of one hundred twenty-nine thousand (129,000) landlines already allocated to a number of its employees.

Due to business troubles and losses, ETPI was compelled to implement a Right-Sizing Program which consisted of two phases: the first phase involved the reduction of ETPI’s workforce to only those employees that were necessary and which ETPI could sustain; the second phase entailed a company-wide reorganization which would result in the transfer, merger, absorption or abolition of certain departments of ETPI.

7

ETPI, through its Assistant Vice President Stella Garcia, informed Culili of his termination from employment effective April 8, 1999.

CULILI’s Contention:

Culili alleged that neither he nor the Department of Labor and Employment (DOLE) were formally notified of his termination. Culili believed that ETPI had already decided to dismiss him even prior to the March 8, 1999 letter as evidenced by the December 7, 1998 version of that letter. Moreover, Culili asserted that ETPI had contracted out the services he used to perform to a labor-only contractor which not only proved that his functions had not become unnecessary, but which also violated their Collective Bargaining Agreement (CBA) and the Labor Code. Aside from these, Culili also alleged that he was discriminated against when ETPI offered some of his co-employees an additional benefit in the form of motorcycles to induce them to avail of the Special Retirement Program, while he was not.22

On February 8, 2000, Culili filed a complaint against ETPI and its officers for illegal dismissal, unfair labor practice, and money claims before the Labor Arbiter.

LA: ETPI guilty of illegal dismissal and unfair labor practice

NLRC: affirmed

CA: The Court of Appeals found that Culili’s position was validly abolished due to redundancy. The Court of Appeals also held that ETPI cannot be held guilty of unfair labor practice as mere contracting out of services being performed by union members does not per se amount to unfair labor practice unless it interferes with the employees’ right to self-organization.

Issues:

A. CONTRARY TO THE FINDINGS OF THE COURT OF APPEALS, RESPONDENTS’ CHARACTERIZATION OF PETITIONER’S POSITION AS REDUNDANT WAS TAINTED BY BAD FAITH.

B. THERE WAS NO ADEQUATE JUSTIFICATION TO DECLARE PETITIONER’S POSITION AS REDUNDANT.

Ruling:

Main Issue: Legality of Dismissal

Under our laws, an employee may be terminated for reasons involving measures taken by the employer due to business necessities. Article 283 of the Labor Code provides:

Art. 283. Closure of establishment and reduction of personnel. - The employer may also terminate the employment of any employee due to the installation of labor saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the workers and the Department of Labor and Employment at least one (1) month before the intended date thereof. In case of termination due to the installation of labor-saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of closures or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered one (1) whole year.

There is redundancy when the service capability of the workforce is greater than what is reasonably required to meet the demands of the business enterprise. A position becomes redundant when it is rendered superfluous by any number of factors such as over-hiring of workers, decrease in volume of business, or dropping a particular product line or service activity previously manufactured or undertaken by the enterprise.36

In the case at bar, ETPI was upfront with its employees about its plan to implement a Right-Sizing Program. Even in the face of initial opposition from and rejection of the said program by ETEU, ETPI patiently negotiated with ETEU’s officers to make them understand ETPI’s business dilemma and its need to reduce its workforce and streamline its organization. This evidently rules out bad faith on the part of ETPI.

In deciding which positions to retain and which to abolish, ETPI chose on the basis of efficiency, economy, versatility and flexibility. It needed to reduce its workforce to a sustainable level while maintaining functions necessary to keep it operating. The records show that ETPI had sufficiently established not only its need to reduce its workforce and streamline its organization, but also the existence of redundancy in the position of a Senior Technician. ETPI explained how it failed to meet its business targets and the factors that caused this, and how this necessitated it to reduce its workforce and streamline its organization. ETPI also submitted its old and new tables of organization and sufficiently described how limited the functions of the abolished position of a Senior Technician were and how it decided on whom to absorb these functions.

Unfair Labor Practice

Culili also alleged that ETPI is guilty of unfair labor practice for violating Article 248(c) and (e) of the Labor Code, to wit:

In the past, we have ruled that "unfair labor practice refers to ‘acts that violate the workers' right to organize.’ The prohibited acts are related to the workers' right to self-organization and to the observance of a CBA."45 We have likewise declared that "there should be no dispute that all the prohibited acts constituting unfair labor practice in essence relate to the workers' right to self-organization."46 Thus, an employer may only be held liable for unfair labor practice if it can be shown that his acts affect in whatever manner the right of his employees to self-organize.47

There is no showing that ETPI, in implementing its Right-Sizing Program, was motivated by ill will, bad faith or malice, or that it was aimed at interfering with its employees’ right to self-organize. In fact, ETPI negotiated and consulted with ETEU before implementing its Right-Sizing Program.

Observance of Procedural Due Process

Although the Court finds Culili’s dismissal was for a lawful cause and not an act of unfair labor practice, ETPI, however, was remiss in its duty to observe procedural due process in effecting the termination of Culili.

We have previously held that "there are two aspects which characterize the concept of due process under the Labor Code: one is substantive — whether the termination of employment was based on the provision of the Labor Code or in accordance with the prevailing jurisprudence; the other is procedural — the manner in which the dismissal was effected."49

Section 2(d), Rule I, Book VI of the Rules Implementing the Labor Code provides:

(d) In all cases of termination of employment, the following standards of due process shall be substantially observed:

x x x x

8

Hence, since it has been established that Culili’s termination was due to an authorized cause and cannot be considered unfair labor practice on the part of ETPI, his dismissal is valid. However, in view of ETPI’s failure to comply with the notice requirements under the Labor Code, Culili is entitled to nominal damages in addition to his separation pay.1avvphi1

SERRANO V. MARITIME GALLANTGR 167614; MARCH 24, 2009En banc

ART.279-SECURITY OF TENUREFACTS: Petitioner Antonio Serrano was hired by respondents Gallant Maritime Services, Inc. and Marlow Navigation Co., Inc., under a POEA-approved contract of employment for 12 months, as Chief Officer, with the basic monthly salary of US$1,400, plus $700/month overtime pay, and 7 days paid vacation leave per month. On March 19, 1998, the date of his departure, Serrano was constrained to accept a downgraded employment contract for the position of Second Officer with a monthly salary of US$1,000 upon the assurance and representation of respondents that he would be Chief Officer by the end of April 1998. Respondents did not deliver on their promise to make Serrano Chief Officer. Hence, Serrano refused to stay on as second Officer and was repatriated to the Philippines on May 26, 1998, serving only two (2) months and seven (7) days of his contract, leaving an unexpired portion of nine (9) months and twenty-three (23) days.Serrano filed with the Labor Arbiter (LA) a Complaint against respondents for constructive dismissal and for payment of his money claims as well as moral and exemplary damages. The LA declared the petitioner’s dismissal illegal and awarded him US$8,770, representing his salaray for three (3) months of the unexpired portion of the aforesaid contract of employment, plus $45 for salary differential and for attorney’s fees equivalent to 10% of the total amount; however, no compensation for damages as prayed was awarded. On appeal, the NLRC modified the LA decision and awarded Serrano $4669.50, representing three (3) months salary at $1400/month, plus 445 salary differential and 10% for attorney’s fees. This decision was based on the provision of RA 8042, which was made into law on July 15, 1995.Serrano filed a Motion for Partial Reconsideration, but this time he questioned the constitutionality of the last clause in the 5th paragraph of Section 10 of RA 8042, which reads:

Sec. 10. Money Claims. – x x x In case of termination of overseas employment without just, valid or authorized cause as defined by law or contract, the workers shall be entitled to the full reimbursement of his placement fee with interest of twelve percent (12%) per annum, plus his salaries for the unexpired portion of his employment contract or for three (3) months for every year of the unexpired term, whichever is less.

The NLRC denied the Motion; hence, Serrano filed a Petition for Certiorari with the Court of Appeals (CA), reiterating the constitutional challenge against the subject clause. The CA affirmed the NLRC ruling on the reduction of the applicable salary rate, but skirted the constitutional issue raised by herein petitioner Serrano. mpugning the constitutionality of the subject clause, petitioner contends that, in addition to the US$4,200.00 awarded by the NLRC and the CA, he is entitled to US$21,182.23 more or a total of US$25,382.23, equivalent to his salaries for the entire nine months and 23 days left of his employment contract, computed at the monthly rate of US$2,590.00

Issues:1.) Is petitioner entitled to his monetary claim which is the lump-sum

salary for the entire unexpired portion of his 12-month employment contract, and not just for a period of three months?

2.) Should petitioner’s overtime and leave pay form part of the salary basis in the computation of his monetary award, because these are fixed benefits that have been stipulated into his contract?

Held:1.) Yes. Petitioner is awarded his salaries for the entire unexpired portion of his employment contract consisting of nine months and 23 days computed at the rate of US$1,400.00 per month. The subject clause “or for three months for every year of the unexpired term, whichever is less” in the 5th paragraph of Section 10 of Republic Act No. 8042 is declared unconstitutional.

In sum, prior to R.A. No. 8042, OFWs and local workers with fixed-term employment who were illegally discharged were treated alike in terms of the computation of their money claims: they were uniformly entitled to their salaries for the entire unexpired portions of

their contracts. But with the enactment of R.A. No. 8042, specifically the adoption of the subject clause, illegally dismissed OFWs with an unexpired portion of one year or more in their employment contract have since been differently treated in that their money claims are subject to a 3-month cap, whereas no such limitation is imposed on local workers with fixed-term employment.

The Court concludes that the subject clause contains a suspect classification in that, in the computation of the monetary benefits of fixed-term employees who are illegally discharged, it imposes a 3-month cap on the claim of OFWs with an unexpired portion of one year or more in their contracts, but none on the claims of other OFWs or local workers with fixed-term employment. The subject clause singles out one classification of OFWs and burdens it with a peculiar disadvantage.

The Court further holds that the subject clause violates petitioner's right to substantive due process, for it deprives him of property, consisting of monetary benefits, without any existing valid governmental purpose. The subject clause being unconstitutional, petitioner is entitled to his salaries for the entire unexpired period of nine months and 23 days of his employment contract, pursuant to law and jurisprudence prior to the enactment of R.A. No. 8042.

2.) No. The word salaries in Section 10(5) does not include overtime and leave pay. For seafarers like petitioner, DOLE Department Order No. 33, series 1996, provides a Standard Employment Contract of Seafarers, in which salary is understood as the basic wage, exclusive of overtime, leave pay and other bonuses; whereas overtime pay is compensation for all work “performed” in excess of the regular eight hours, and holiday pay is compensation for any work “performed” on designated rest days and holidays.

By the foregoing definition alone, there is no basis for the automatic inclusion of overtime and holiday pay in the computation of petitioner's monetary award; unless there is evidence that he performed work during those periods.

YAP vs. THENAMARIS SHIP’S MANAGEMENT and INTERMARE MARITIME AGENCIES, INC.,G.R. No. 179532 May 30, 2011 NACHURA, J.:

FACTS:Petitioner Claudio S. Yap was employed as electrician of the vessel, M/T SEASCOUT on 14 August 2001 by Intermare Maritime Agencies, Inc. in behalf of its principal, Vulture Shipping Limited. The contract of employment entered into by Yap and Capt. Francisco B. Adviento, the General Manager of Intermare, was for a duration of 12 months. On 23 August 2001, Yap boarded M/T SEASCOUT and commenced his job as electrician. However, on or about 08 November 2001, the vessel was sold. The Philippine Overseas Employment Administration (POEA) was informed about the sale on 06 December 2001 in a letter signed by Capt. Adviento. Yap, along with the other crewmembers, was informed by the Master of their vessel that the same was sold and will be scrapped. Yap received his seniority bonus, vacation bonus, extra bonus along with the scrapping bonus. However, with respect to the payment of his wage, he refused to accept the payment of one-month basic wage. He insisted that he was entitled to the payment of the unexpired portion of his contract since he was illegally dismissed from employment. He alleged that he opted for immediate transfer but none was made.[Respondents], for their part, contended that Yap was not illegally dismissed. They alleged that following the sale of the M/T SEASCOUT, Yap signed off from the vessel on 10 November 2001 and was paid his wages corresponding to the months he worked or until 10 November 2001 plus his seniority bonus, vacation bonus and extra bonus. They further alleged that Yap’s employment contract was validly terminated due to the sale of the vessel and no arrangement was made for Yap’s transfer to Thenamaris’ other vessels. Thus, petitioner filed a complaint for Illegal Dismissal with Damages and Attorney’s Fees before the Labor Arbiter.

LA’s decision: in favor of petitioner, finding the latter to have been constructively and illegally dismissed by respondents. Moreover, the LA found that respondents acted in bad faith when they assured petitioner of re-embarkation and required him to produce an electrician certificate during the period of his contract, but actually he was not able to board one despite of respondents’ numerous vessels. LA opined that since the unexpired portion of petitioner’s contract was less than one year, petitioner was

9

entitled to his salaries for the unexpired portion of his contract for a period of nine months.

NLRC: Affirmed LA’s decision.

CA: Affirmed the LA and NLRC’s ruling of illegal dismissal. However, NLRC erred in sustaining the LA’s interpretation of Section 10 of R.A. No. 8042. In this regard, the CA relied on the clause “ or for three months for every year of the unexpired term, whichever is less ” provided in the 5 th paragraph of Section 10 of R.A. No. 8042 and held: In the present case, the employment contract concerned has a term of one year or 12 months which commenced on August 14, 2001. However, it was preterminated without a valid cause. [Petitioner] was paid his wages for the corresponding months he worked until the 10th of November. Pursuant to the provisions of Sec. 10, [R.A. No.] 8042, therefore, the option of “three months for every year of the unexpired term” is applicable.

On appeal, petitioner claims that the 5th paragraph of Section 10, R.A. No. 8042, is violative of Section 1,1[22] Article III and Section 3,2[23] Article XIII of the Constitution to the extent that it gives an erring employer the option to pay an illegally dismissed migrant worker only three months for every year of the unexpired term of his contract. On the other hand, respondents, aware of our ruling in Serrano, aver that our pronouncement of unconstitutionality of the 5th paragraph of Section 10 of R.A. No. 8042 in Serrano should not apply in this case because Section 10 of R.A. No. 8042 is a substantive law that deals with the rights and obligations of the parties in case of Illegal Dismissal of a migrant worker and is not merely procedural in character. Thus, pursuant to the Civil Code, there should be no retroactive application of the law in this case.

ISSUES:1. Whether or not the 5th paragraph of Section 10 of R.A. No. 8042 is

constitutional.2. Whether or not the ruling in Serrano is not applicable in the case.

HELD: 1. NO. Verily, we have already declared in Serrano that the clause

“or for three months for every year of the unexpired term, whichever is less” provided in the 5th paragraph of Section 10 of R.A. No. 8042 is unconstitutional for being violative of the rights of Overseas Filipino Workers (OFWs) to equal protection of the laws. In an exhaustive discussion of the intricacies and ramifications of the said clause, this Court, in Serrano, pertinently held: The Court concludes that the subject clause contains a suspect classification in that, in the computation of the monetary benefits of fixed-term employees who are illegally discharged, it imposes a 3-month cap on the claim of OFWs with an unexpired portion of one year or more in their contracts, but none on the claims of other OFWs or local workers with fixed-term employment. The subject clause singles out one classification of OFWs and burdens it with a peculiar disadvantage.

Moreover, this Court held therein that the subject clause does not state or imply any definitive governmental purpose; hence, the same violates not just therein petitioner’s right to equal protection, but also his right to substantive due process under Section 1, Article III of the Constitution. Consequently, petitioner therein was accorded his salaries for the entire unexpired period of nine months and 23 days of his employment contract, pursuant to law and jurisprudence prior to the enactment of R.A. No. 8042.

2. No. As a general rule, an unconstitutional act is not a law; it confers no rights; it imposes no duties; it affords no protection; it creates no office; it is inoperative as if it has not been passed at all. The general rule is supported by Article 7 of the Civil Code, which provides: Laws are repealed only by subsequent ones, and

12

their violation or non-observance shall not be excused by disuse or custom or practice to the contrary.

The doctrine of operative fact serves as an exception to the aforementioned general rule. In Planters Products, Inc. v. Fertiphil Corporation,3[29] we held: The doctrine of operative fact, as an exception to the general rule, only applies as a matter of equity and fair play. It nullifies the effects of an unconstitutional law by recognizing that the existence of a statute prior to a determination of unconstitutionality is an operative fact and may have consequences which cannot always be ignored. The past cannot always be erased by a new judicial declaration.

Following Serrano, we hold that this case should not be included in the aforementioned exception. After all, it was not the fault of petitioner that he lost his job due to an act of illegal dismissal committed by respondents. To rule otherwise would be iniquitous to petitioner and other OFWs, and would, in effect, send a wrong signal that principals/employers and recruitment/manning agencies may violate an OFW’s security of tenure which an employment contract embodies and actually profit from such violation based on an unconstitutional provision of law.

#6 of 279 BANK OF LUBAO, INC., Petitioner, vs ROMMEL J. MANABAT and the NATIONAL LABOR RELATIONS COMMISSION,Respondents.

G.R. No. 188722 February 1, 2012 REYES, J.:

* 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. *

FACTS: This is a petition for review on certiorari. Sometime in 2001, Rommel J. Manabat (respondent) was hired by petitioner Bank of Lubao, a rural bank, as a Market Collector. At its Sta. Cruz extension office, the respondent served as an encoder. As an encoder, the respondent’s primary duty is to encode the clients’ deposits on the bank’s computer after the same are received by Lingad. In November 2004, an initial audit on the Bank of Lubao’s Sta. Cruz Extension Office conducted by the petitioner revealed that there was a misappropriation of funds in the amount of P3,000,000.00, more or less. On November 17, 2004, the respondent, through a memorandum sent by the petitioner, was asked to explain in writing the discrepancies that were discovered during the audit. On November 19, 2004, the respondent submitted to the petitioner his letter-explanation which, in essence, asserted that there were times when Lingad used the bank’s computer while he was out on errands. On December 11, 2004, an administrative hearing was conducted by the bank’s investigating committee where the respondent was further made to explain his side. Subsequently, the investigating committee concluded that the respondent conspired with Lingad in making fraudulent entries disguised as error corrections in the bank’s computer.

August 9, 2005,he was dismissed from the service for serious misconduct tantamount to willful breach of trust. On September 26, 2005, Manabat filed a complaint for illegal dismissal, and asked for separation pay, backwages,13th month, moral and exemplary damages.

The Labor Arbiter, National Labor Relations Commission: Ruled that respondent was illegally dismissed. And that, the petitioner failed to establish by substantial evidence that there was indeed a valid ground for the respondent’s dismissal.

Pending appeal : The petitioner sent respondent a letter dated April 30, 2007 requiring him to report for work on May 4, 2007 pursuant to the reinstatement order of the LA. The letter was served to the respondent on

310

May 3, 2007 but he refused to receive the same. The respondent opted not to report for work

Court of Appeals: The assailed Decision and Resolution of the NLRC are AFFIRMED with the MODIFICATION that private respondent is entitled to separation pay equivalent to one month salary for every year of service in lieu of reinstatement and backwages to be computed from the time of his illegal dismissal until the finality of this Decision.

ISSUES : (1) whether the CA erred in ordering the petitioner to pay the respondent separation pay in lieu of reinstatement; and (2) whether the respondent is entitled to payment of backwages.

HELD: (1) NO. The order of payment of separation pay in lieu of reinstatement is correct. In view of the conflicting findings of the NLRC and the CA, this Court is constrained to pass upon the propriety of the application of the doctrine of strained relations to justify the award of separation pay to the respondent in lieu of reinstatement. The law on reinstatement is provided for under Article 279 of the Labor Code of the Philippines: “Article 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.”

An illegally dismissed employee is entitled to reinstatement as a matter of right. However, if reinstatement would only exacerbate the tension and strained relations between the parties, or where the relationship between the employer and the employee has been unduly strained by reason of their irreconcilable differences, particularly where the illegally dismissed employee held a managerial or key position in the company, it would be more prudent to order payment of separation pay instead of reinstatement. 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.

In such cases, it should be proved that the employee concerned occupies a position where he enjoys the trust and confidence of his employer; and that it is likely that if reinstated, an atmosphere of antipathy and antagonism may be generated as to adversely affect the efficiency and productivity of the employee concerned.

Held(2). YES, however, the petitioner should only pay the respondent backwages from September 1, 2005, the date when the respondent was illegally dismissed, until May 4, 2007, the date when the petitioner required the former to report to work.

ST. MARYS V. PALACIO GR 164913; SEPTEMBER 08, 2010FIRST DIVISION- C.J. CORONA

ART.279-SECURITY OF TENUREFacts: On different dates in the late 1990’s, petitioner hired respondents Calibod, Laquio, Santander, Saile and Montederamos, as classroom teachers, and respondent Palacio, as guidance counselor. In separate letters dated March 31, 2000,however, petitioner informed them that their re-application for school year 2000-2001 could not be accepted because they failed to pass the Licensure Examination for Teachers (LET). According to petitioner, as non-board passers, respondents could not continue practicing their teaching profession pursuant to the Department of Education, Culture

and Sports (DECS) Memorandum which requires incumbent teachers to register as professional teachers pursuant to the Philippine Teachers Professionalization Act of 1994. Together with four other classroom teachers who were similarly dismissed by petitioner on the same ground, respondents filed a complaint contesting their termination as highly irregular and premature. They admitted that they are indeed non-board passers, however, they also argued that their security of tenure could not simply be trampled upon for their failure to register with the Professional Regulation Commission (PRC) or to pass the LET prior to the deadline set by RA 7836. Further, as the aforesaid law provides for exceptions to the taking of examination, they opined that their outright dismissal was illegal because some of them possessed civil service eligibilities and special permits to teach. Furthermore, petitioner’s retention and acceptance of other teachers who do not also possess the required eligibility showed evident bad faith in terminating respondents. Petitioner, on the other hand, maintained that it had repeatedly informed respondents of their obligation to comply with the mandate of the memorandum. While the DECS Memorandum fixed the deadline for teachers to register on September 19, 2000, petitioner claimed that it decided to terminate their services as early as March 31, 2000 because it would be prejudicial to the school if their services will be terminated in the middle of the school year.

Issue: WON THE DISMISSAL WAS PREMATURE BECAUSE IT WAS EFFECTED PRIOR TO THE DEADLINE SET BY THE PRC FOR TEACHERS TO ACQUIRE THEIR LICENSE.Held: YES. As Article III, Section 10 of the 1987 Constitution provides that “The State shall promote social justice in all phases of national development.” Moreover, “Under the policy of social justice, the law bends over backward to accommodate the interests of the working class on the humane justification that those with less privilege in life should have more in law.” It is thus an incumbent upon this Court to afford full protection to labor by taking cognizance of the employer’s right in the protection of greater interest and to be exercised in a manner which does not infringe on the workers’ right to security of tenure. The Supreme Court held that their dismissal was illegal and premature. The law has provided a specific time frame within which the teachers could comply with the requirement of passing the LET hence, the school cannot deny them this privilege, which the law has accorded to them, without violating their right to security of tenure.

To reiterate, this Court will not hesitate to defend respondents’ right to security of tenure. The premature dismissal from the service of respondents Palacio, Calibod, Laquio, Santander and Montederamos is unwarranted. However, we take exception to the case of respondent Saile who, as alleged by petitioner, was not qualified to take the LET as she only had three out of the minimum 10 required educational units to be admitted to take the LET pursuant to Section 15 of RA 7836, which fact respondent Saile did not refute. Not being qualified to take the examination to become a duly licensed professional teacher, petitioner cannot be compelled to retain her services as she cannot possibly obtain the needed prerequisite to allow her to continue practicing the teaching profession. Thus, her termination just and legal.

Petitioner’s intention and desire not to put the students’ education and school operation in jeopardy is neither a decisive consideration for respondents’ termination prior to the deadline set by law. Again, by setting a deadline for registration as professional teachers, the law has allowed incumbent teachers to practice their teaching profession until September 19, 2000, despite being unregistered and unlicensed. The prejudice that respondents’ retention would cause to the school’s operation is only trivial if not speculative as compared to the consequences of respondents’ unemployment. Because of petitioner’s predicament, it should have adopted measures to protect the interest of its teachers as regular employees. As correctly observed by the CA, petitioner should have earlier drawn a contingency plan in the event there is need to terminate respondents’ services in the middle of the school year. Incidentally, petitioner did not dispute that it hired and retained other teachers who do not likewise possess the qualification and eligibility and even allowed them to teach during the school year 2000-2001. This indicates petitioner’s ulterior motive in hastily dismissing respondents.

BRISTOL MYERS SQUIBB (PHILS.), INC. vs. RICHARD NIXON A. BABAN

G.R. No. 167449 December 17, 2008

REYES, R.T., J.:

11

FACTS: In 1992, petitioner Bristol Myers Squibb Philippines, Inc. hired respondent Richard Nixon A. Baban as district manager of the company. He was assigned to handle the company's clients in Cagayan de Oro-Northern Mindanao area and its immediate vicinities. His duties included the promotion of nutritional products of petitioner to medical practitioners, sale to drug outlets and the supervision of territory managers detailed in his district.

On June 22, 1998, while conducting a field audit in Mindanao, petitioner's auditor, Sheela Torreja, found twenty (20) packs of "Mamacare" samples in the baggage compartment of a company car with an accompanying note with political overtones. A note stapled on the package reads:

"Maskin perdido, muchos gracias por el suporta. Con ustedes ta despidi 36 anos de servicio public. Ay continua ayuda para bien del pueblo Zambo.

Atty. Ricardo S. Baban, Jr."

The English translation of the above notation is as follows:

"Even if I've lost (sic) thank you so much for the support. Bidding you farewell for 36 years of public service. Will continue to help for the good of the city of Zamboanga.

Atty. Ricardo S. Baban, Jr."

Atty. Ricardo S. Baban, Jr., referred to in the note, is respondent's father who had served as councilor in Zamboanga City for thirty-six (36) years but lost in his bid for the vice-mayoralty post in the May 11, 1998 elections. Apparently, respondent's father was thanking supporters through distribution of company sample products.

On July 2, 1998, the auditor reported the incident, prompting the company's Medical Sales Director, Ferdinand Sarfati, to issue a Memorandum requiring respondent to explain in writing within seventy-two (72) hours from notice why he should not be terminated for the infraction.

On July 10, 1998, respondent admitted that he had caused the attachment of the notes to the product samples. He argued that there was no unauthorized distribution of the samples since he intended to give them only to doctors who requested them. To support his claim, he asserted that the samples found by Ms. Torreja were actually to be given to Dr. Kibtiya Gustahan and to Rosita Jacoba, a registered midwife of Sta. Catalina Health Center, Zamboanga City, for distribution to the center.

Furthermore, respondent admitted that he committed an honest mistake, an irresponsible act to have succumbed to the suggestion of Dr. Gustahan. He pleaded for consideration for the lapse, insisting that he has not caused any damage nor injury to the image of the company as the samples were not, in fact, distributed and that no gain was derived by him or his family.

Questioning the validity of his dismissal, respondent filed a complaint for illegal dismissal with a claim for moral and exemplary damages plus attorney's fees with the Regional Arbitration Branch No. 10 of the National Labor Relations Commission (NLRC) against petitioner.

ISSUE: May the CA order the reinstatement, with full backwages and damages, of a confidential employee whom it had found to be guilty of breach of trust?

HELD: It is clear that Article 282(c) of the Labor Code allows an employer to terminate the services of an employee for loss of trust and confidence. The

right of employers to dismiss employees by reason of loss of trust and confidence is well established in jurisprudence.

The first requisite for dismissal on the ground of loss of trust and confidence is that the employee concerned must be one holding a position of trust and confidence. Verily, We must first determine if respondent holds such a position.

There are two (2) classes of positions of trust.The first class consists of managerial employees. They are defined as those vested with the powers or prerogatives to lay down management policies and to hire, transfer suspend, lay-off, recall, discharge, assign or discipline employees or effectively recommend such managerial actions. The second class consists of cashiers, auditors, property custodians, etc. They are defined as those who in the normal and routine exercise of their functions, regularly handle significant amounts of money or property.

In this case, respondent was employed as district manager for Cagayan de Oro-North Mindanao and its immediate vicinities. It is not the job title but the actual work that the employee performs. He was employed to handle pharmaceutical products for distribution to medical practitioners and sale to drug outlets. As a result of his handling of large amounts of petitioner's samples, respondent is, by law, an employee with a position of trust, falling under the second class.

The second requisite is that there must be an act that would justify the loss of trust and confidence.1 Loss of trust and confidence to be a valid cause for dismissal must be based on a willful breach of trust and founded on clearly established facts. The basis for the dismissal must be clearly and convincingly established but proof beyond reasonable doubt is not necessary.

Respondent's act of stapling a thank you note from his father warrants the loss of petitioner's trust and confidence. As the supervisor of fellow medical representatives, he had the duty to set a good example to his colleagues. A higher standard of confidence was reposed in him.

There is no doubt that respondent willfully breached the trust and confidence reposed in him by not asking for permission before using company property for his own or another's benefit, as required in the Company Standards of Business Conduct. Moreover, when respondent failed to turn over the samples left in his care and stapled the political "thank you" note with the intention of distributing them to his father's supporters, he had, in effect appropriated company property for personal gain and benefit.

Respondent anchors his plea of mercy on filial loyalty to his father and the fact that the samples were still going to the proper parties. His father's loss is of no moment since petitioner has a right not to associate their product with winning or losing politicians. It has every right to ensure that the distribution of medical samples is done in the manner exactly prescribed. Moreover, his claim that the samples would have still gone to the proper parties is wrong. These products were supposed to have been returned to petitioner or one of its agents.

However, while We find that the dismissal is valid, We are not deaf to respondent's plea for mercy. In a line of cases We have held that separation pay may be awarded as some equitable relief in consideration of the past services rendered. Since respondent was validly dismissed for a cause other than serious misconduct or those that negatively reflect on his moral character, the award of separation pay is justifiable. This award is merely to coat the bitter termination experienced by respondent with a little social justice. Separation pay at the rate of one month salary for every year of service is proper.

12

PFIZER, INC. AND/OR REY GERARDO BACARRO, AND/OR FERDINAND CORTES, AND/OR ALFRED MAGALLON, AND/OR ARISTOTLE ARCE vs. GERALDINE VELASCO

G.R. No. 177467 March 9, 2011

LEONARDO-DE CASTRO, J.:

FACTS: Private respondent Geraldine L. Velasco was employed with petitioner PFIZER, INC. as Professional Health Care Representative since 1 August 1992. Sometime in April 2003, Velasco had a medical work up for her high-risk pregnancy and was subsequently advised bed rest which resulted in her extending her leave of absence.

While Velasco was still on leave, PFIZER through its Area Sales Manager, herein petitioner Ferdinand Cortez, personally served Velasco a "Show-cause Notice" dated 25 June 2003. Aside from mentioning about an investigation on her possible violations of company work rules regarding "unauthorized deals and/or discounts in money or samples and unauthorized withdrawal and/or pull-out of stocks" and instructing her to submit her explanation on the matter within 48 hours from receipt of the same, the notice also advised her that she was being placed under "preventive suspension" for 30 days or from that day to 6 August 2003 and consequently ordered to surrender the following "accountabilities;" 1) Company Car, 2) Samples and Promats, 3) CRF/ER/VEHICLE/SOA/POSAP/MPOA and other related Company Forms, 4) Cash Card, 5) Caltex Card, and 6) MPOA/TPOA Revolving Travel Fund.

Velasco filed a complaint for illegal suspension with money claims before the Regional Arbitration Branch.

On 5 December 2003, the Labor Arbiter rendered its decision declaring the dismissal of Velasco illegal, ordering her reinstatement with backwages and further awarding moral and exemplary damages with attorney’s fees. On appeal, the NLRC affirmed the same but deleted the award of moral and exemplary damages

ISSUE: Whether or not the Pfizer made a deemed faithful compliance with the reinstatement order HELD: No. At the outset, we note that PFIZER’s previous payment to respondent of the amount of P1,963,855.00 (representing her wages from December 5, 2003, or the date of the Labor Arbiter decision, until May 5, 2005) that was successfully garnished under the Labor Arbiter’s Writ of Execution dated May 26, 2005 cannot be considered in its favor. Not only was this sum legally due to respondent under prevailing jurisprudence but also this circumstance highlighted PFIZER’s unreasonable delay in complying with the reinstatement order of the Labor Arbiter. A perusal of the records, including PFIZER’s own submissions, confirmed that it only required respondent to report for work on July 1, 2005, as shown by its Letter dated June 27, 2005, which is almost two years from the time the order of reinstatement was handed down in the Labor Arbiter’s Decision dated December 5, 2003.

Under Article 223 of the Labor Code, an employee entitled to reinstatement "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."

It is established in jurisprudence that reinstatement means restoration to a state or condition from which one had been removed or separated. The person reinstated assumes the position he had occupied prior to his dismissal. Reinstatement presupposes that the previous position from which one had been removed still exists, or that there is an unfilled position which is substantially equivalent or of similar nature as the one previously occupied by the employee.

Applying the foregoing principle to the case before us, it cannot be said that with PFIZER’s June 27, 2005 Letter, in belated fulfillment of the Labor Arbiter’s reinstatement order, it had shown a clear intent to reinstate respondent to her former position under the same terms and conditions nor to a substantially equivalent position. To begin with, the return-to-work order PFIZER sent respondent is silent with regard to the position or the exact nature of employment that it wanted respondent to take up as of July 1, 2005. Even if we assume that the job awaiting respondent in the new location is of the same designation and pay category as what she had before, it is plain from the text of PFIZER’s June 27, 2005 letter that such reinstatement was not "under the same terms and conditions" as her previous employment, considering that PFIZER ordered respondent to report to its main office in Makati City while knowing fully well that respondent’s previous job had her stationed in Baguio City (respondent’s place of residence) and it was still necessary for respondent to be briefed regarding her work assignments and responsibilities, including her relocation benefits.

The Court is cognizant of the prerogative of management to transfer an employee from one office to another within the business establishment, provided that there is no demotion in rank or diminution of his salary, benefits and other privileges and the action is not motivated by discrimination, made in bad faith, or effected as a form of punishment or demotion without sufficient cause.26 Likewise, the management prerogative to transfer personnel must be exercised without grave abuse of discretion and putting to mind the basic elements of justice and fair play. There must be no showing that it is unnecessary, inconvenient and prejudicial to the displaced employee.

The June 27, 2005 return-to-work directive implying that respondent was being relocated to PFIZER’s Makati main office would necessarily cause hardship to respondent, a married woman with a family to support residing in Baguio City. However, PFIZER, as the employer, offered no reason or justification for the relocation such as the filling up of respondent’s former position and the unavailability of substantially equivalent position in Baguio City. A transfer of work assignment without any justification therefor, even if respondent would be presumably doing the same job with the same pay, cannot be deemed faithful compliance with the reinstatement order. In other words, in this instance, there was no real, bona fide reinstatement to speak of prior to the reversal by the Court of Appeals of the finding of illegal dismissal.

It is well-settled that when a person is illegally dismissed, he is entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages. In the event, however, that reinstatement is no longer feasible, or if the employee decides not be reinstated, the employer shall pay him separation pay in lieu of reinstatement. Such a rule is likewise observed in the case of a strained employer-employee relationship or when the work or position formerly held by the dismissed employee no longer exists. In sum, an illegally dismissed employee is entitled to: (1) either reinstatement if viable or separation pay if reinstatement is no longer viable, and (2) backwages.

The Court reaffirms the prevailing principle that even if the order of reinstatement of the Labor Arbiter is reversed on appeal, it is obligatory on the part of the employer to reinstate and pay the wages of the dismissed employee during the period of appeal until reversal by the higher court. x x x.

In sum, the Court reiterates the principle that reinstatement pending appeal necessitates that it must be immediately self-executory without need for a writ of execution during the pendency of the appeal, if the law is to serve its noble purpose, and any attempt on the part of the employer to evade or delay its execution should not be allowed. Furthermore, we likewise restate our ruling that an order for reinstatement entitles an employee to receive his accrued backwages from the moment the reinstatement order was issued up to the date when the same was reversed by a higher court without fear of refunding what he had received. It cannot be denied that, under our statutory and jurisprudential framework, respondent is entitled to payment of her wages for the period after December 5, 2003 until the Court of

13

Appeals Decision dated November 23, 2005, notwithstanding the finding therein that her dismissal was legal and for just cause. Thus, the payment of such wages cannot be deemed as unjust enrichment on respondent’s part.

GOLDEN ACE BUILDERS and ARNOLD U. AZUL vs. JOSE A. TALDE

G.R. No. 187200 May 5, 2010

CARPIO MORALES, J.:

FACTS: Jose A. Talde (respondent) was hired in 1990 as a carpenter by petitioner Golden Ace Builders of which its co-petitioner Arnold Azul (Azul) is the owner-manager. In February 1999, Azul, alleging the unavailability of construction projects, stopped giving work assignments to respondent, prompting the latter to file a complaint for illegal dismissal.

By Decision of January 10, 2001, the Labor Arbiter ruled in favor of respondent and ordered his immediate reinstatement without loss of seniority rights and other privileges, and with payment of full backwages, which at that time was computed at P144,382.23, and the amount of P3,236.37 representing premium pay for rest days, service incentive leave pay and 13th month pay.

Pending their appeal to the National Labor Relations Commission (NLRC) and in compliance with the Labor Arbiter’s Decision, petitioners, through counsel, advised respondent to report for work in the construction site within 10 days from receipt thereof. Respondent submitted, however, on May 16, 2001 a manifestation to the Labor Arbiter that actual animosities existed between him and petitioners and there had been threats to his life and his family’s safety, hence, he opted for the payment of separation pay. Petitioners denied the existence of any such animosity.

Petitioners assail the appellate court’s award of separation pay. They assailed too as contrary to prevailing jurisprudence the computation of backwages from the time of dismissal up to actual reinstatement. They contend that, in effect, the appellate court modified an already final and executory decision.

ISSUE: Whether or not respondent is entitled to backwages and separation pay.

HELD: 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.

[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. (emphasis, italics and underscoring supplied)

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.

Clearly then, respondent is entitled to backwages and separation pay as his reinstatement has been rendered impossible due to strained relations. As correctly held by the appellate court, the backwages due respondent must be computed from the time he was unjustly dismissed until his actual reinstatement, or from February 1999 until June 30, 2005 when his reinstatement was rendered impossible without fault on his part.

The Court, however, does not find the appellate court’s computation of separation pay in order. The appellate court considered respondent to have served petitioner company for only eight years. Petitioner was hired in 1990, however, and he must be considered to have been in the service not only until 1999, when he was unjustly dismissed, but until June 30, 2005, the day he is deemed to have been actually separated (his reinstatement having been rendered impossible) from petitioner company or for a total of 15 years.

14