Labor Art. 1-6

UY v CENTRO

DECISION

VILLARAMA, JR., J.:

Before us is a petition for review on certiorari under Rule 45 assailing the Decision[1] dated April 21, 2006 and Resolution[2]dated September 7, 2006 of the Court of Appeals (CA) in CA-G.R. SP No. 88061. The CA annulled and set aside the Decision[3]dated July 29, 2004 rendered by the National Labor Relations Commission (NLRC) in NLRC NCR CA No. 035557-03 which reversed the Labor Arbiters ruling that petitioner was not illegally dismissed.

Factual Antecedents

Petitioner Jhorizaldy Uy was hired by respondent Centro Ceramica Corporation as full-time sales executive on March 21, 1999 under probationary employment for six months. He became a regular employee on May 1, 2000 with monthly salary ofP7,000.00 and P1,500.00 transportation allowance, plus commission.

On March 18, 2002, petitioner filed a complaint for illegal dismissal against the respondent company, its President Ramonita Y. Sy (Sy) and Vice-President Milagros Uy-Garcia (Garcia).

Petitioner alleged that his predicament began when former VP Garcia was rehired by respondent company in the last quarter of 2001. Certain incidents involving longtime clients led to a strained working relationship between him and Garcia. On February 19, 2002 after their weekly sales meeting, he was informed by his superior, Sales Supervisor Richard Agcaoili, that he (petitioner) was to assume a new position in the marketing department, to which he replied that he will think it over. His friends had warned him to be careful saying mainit ka kay Ms. Garcia. That same day, he was summoned by Sy and Garcia for a closed-door meeting during which Sy informed him of the termination of his services due to insubordination and advised him to turn over his samples and files immediately. Sy even commented that member ka pa naman ng [S]ingles for [C]hrist pero napakatigas naman ng ulo mo. On February 21, 2002, he was summoned again by Sy but prior to this he was already informed by Agcaoili that

the spouses Sy will give him all that is due to him plus goodwill money to settle everything. However, during his meeting with Sy, he asked for his termination paper and thereupon Sy told him that If thats what you want I will give it to you. She added that pag-isipan mo ang gagawin mo dahil kilala mo naman kami we are powerful.[4]

Petitioner further narrated that on February 22, 2002, he turned over company samples, accounts and receivables to Agcaoili.Thereafter, he did not report for work anymore. But on March 6, 2002, an employee of respondent company presented to him at his apartment the following memorandum:

MEMO OF NOTICE OF CHARGES

MEMORANDUM:

TO: JHORIZALDY B. UY

FROM: RAMONITA Y. SY

RE: FAILURE TO MEET QUOTA FOR SALES EXECUTIVE

DATE: February 21, 2002

Records show that you have failed to meet the quota for sales executives, set for the period from 1999 to 2001 in violation of your contract of employment.

In view of the foregoing, please explain in writing within twenty[-]four (24) hours from receipt hereof, why the company should not terminate your contract of employment.[5]

He did not receive said memo because it was not written on the company stationery and besides he had already been dismissed.As to his alleged low output, he was surprised considering that last January 2002, he was informed by Agcaoili that management was satisfied with his performance and he ranked second to the top performer, Edwin I. Hirang. By that time, all of the sales people of the company could not meet the P1.5 Million sales quota, so respondents are clearly zeroing in on him.

Finally, on March 13, 2002, respondents sent him another memo, which reads:

MEMO OF NOTICE OF CHARGES

INTER-OFFICE MEMORANDUM NO. 2:

TO: JHORIZALDY B. UY

THRU: RICHARD B. AGCAOILI

FROM: RAMONITA Y. SY

RE: NOTICE OF CHARGE OF ABSENCE WITHOUT LEAVE

DATE: March 13, 2002

Records show that since February 22, 2002, to date, you have failed to report for work, without informing your employer of the reason therefor and without securing proper leave in violation of your contract of employment and existing company rules and regulations.Further, you have refused to receive any of your monetary entitlements such as salary, commission and other amounts due to you despite notice that the same are available to you for payment.

Further, to this date, you have not submitted any explanation in writing in response to our Memo dated February 21, 2002, requiring you to explain your failure to meet your quota as Sales Executive.

In view of the foregoing, please explain in writing twenty four (24) hours from receipt hereof, why the company should not terminate your contract of employment for serious violations of your employment contract as indicated above.[6]

He referred the above letter to his counsel who sent the following letter-reply:

MS. RAMONITA Y. SY

Centro Ceramica Corporation

225 EDSA, East Greenhills

Mandaluyong City

We are writing you in behalf of Mr. Jhorizaldy B. Uy who used to be a Sales Executive of your firm.

On February 19, 2002, you informed him that from Sales Executive he was to assume a new position in the marketing department.He refused and when he later said that pag-iisipan ko pa you charged him with insubordination. Your Ms. Nita Garcia even lamented in this wise single (for Christ) ka pa naman. Right then you terminated his services and was directed to turn over everything that he had which was company owned and it was on February 22, 2002 that the turn over was made.

On or about March 6, 2002 an employee of your company saw him in his apartment giving him a memorandum to explain his alleged failure to meet the quota as Sales Executive. He admits with c[a]ndor that he did not receive the said memorandum because it was written not on the company stationary. Just the same the contents of the said letter has bec[o]me irrelevant because he has been already dismissed as of February 19, 2002 and as regards the low output he says that all of the sales people could not meet the quota and why zero in on him.

Then on Mach 13, 2002 you sent him a memorandum to explain in writing within twenty four (24) hours why he should not be dismissed for his alleged absence without leave.

You must have been advised by someone that your dismissal of Mr. Uy on February 19, 2002 is doubly illegal, i.e., for lack of due process and sufficient cause and the March 13, 2002 memorandum is to make up for such lapse so that if Mr. Uy files a case of illegal dismissal, you can conveniently say that he violated his contract of employment and that he was on absence without leave. Nice move, but it may not be nice later on.

x x x x[7]

For his illegal termination, petitioner asserted that he is entitled to his unpaid commission, tax refund, back wages and reinstatement.

On the other hand, respondents denied dismissing petitioner. They countered that petitioners poor sales performance did not improve even after he was regularized. On February 18, 2002, management met with the Sales Group on a per agent basis to discuss sales performance, possible salary realignment and revamp of the Sales Group. Agcaoili relayed to petitioner the poor assessment of his sales performance and the possibility that he will be transferred to another department although there was yet no official decision on the matter. Petitioner then told Agcaoili that he was aware of the problem and his possible termination, prompting the latter to convince the former to consider voluntarily resigning from the company rather than be terminated. The next day, February 19, 2002, petitioner talked anew to Agcaoili and informed the latter that he will just resign from the company and sought an appointment with Sy. When petitioner inquired how much he will get if he will resign, Sy advised him that he would get salaries and commissions to which he is legally entitled; hence, for items sold and already delivered, he will be receiving the commission in full, but for those sold but yet to be delivered, as per company policy, he will receive the commissions only upon delivery of the items. Upon hearing this, petitioner suddenly got mad and said that if that is the case, the company president should just terminate him and walked out. Petitioner was given a chance, through the two memos issued to him, to explain his failure to meet the prescribed sales quota and his failure to report for work without informing the company of the reason therefor. But he never submitted his explanations to his violations of the contract of employment, and abandoned his job which is another ground for terminating his employment. While it would appear that petitioner aimed to secure his alleged money claims from the respondents, this does not justify abandonment of his work as respondents never had the intention of terminating his services. Respondents maintained that petitioner voluntarily left his workplace and refused to report for work as in fact he indicated to his sales supervisor that he will just resign; however, he never submitted a letter of resignation.[8]

Respondents also denied the claims of petitioner regarding an alleged souring of his relations with Garcia, as in fact it was petitioner who clearly had a personal grudge against her and not the other way around. The

alleged incidents with client actually showed it was petitioner who was discourteous and abusive. There was likewise no reason for respondent Sy to say they were powerful because petitioner did not at all threaten to sue or do something to their prejudice. To refute petitioners unfounded allegations, respondents presented the affidavits of the following: (1) co-employee Rommel Azarraga who admitted he was the person who warned petitioner to be careful and told him mainit ka kay Mrs. Garcia and explained that he only made such statement in order to scare petitioner and convince him to change his attitude; the truth is that Mrs. Garcia had not spoken to him about harbouring any ill feelings towards petitioner and neither does he know of any incident or circumstance which may give rise to such ill feeling of Mrs. Garcia towards petitioner; (2) Richard Agcaoili who corroborated the respondents claims, denying that petitioner was terminated due to insubordination; he further denied having told petitioner that management was satisfied with his performance, the truth being that while petitioner may have ranked second to the top performer, there was actually only two remaining senior sales agents while the rest have more or less six months experience; considering the number of years of his service to the company, petitioner should have improved as against other agents most of whom were newly-hired and still under probation; and (3) Arnulfo Merecido, respondent companys employee (warehouse helper) who claimed that he had a fistfight with petitioner sometime in June 2000 which arose from the latters insulting remarks regarding his family.[9]

Labor Arbiters Ruling

In his decision[10] dated April 8, 2003, Labor Arbiter Elias H. Salinas dismissed petitioners complaint on the basis of his finding that it was petitioner who opted not to report for work since February 22, 2002, after offering to resign (as told to his supervisor) because he could not accept his possible transfer to another department.

NLRCs Ruling

Petitioner appealed to the NLRC which reversed the Labor Arbiters ruling. The NLRC found that the dismissal of petitioner was made under questionable circumstances, thus giving weight to petitioners

assertion that he was being singled out notwithstanding that all sales personnel similarly could not meet the P1.5 million monthly sales quota. Such finding is reinforced by the fact that no sanction was imposed on petitioner or any other employee for the supposed failure to meet the quota, thereby creating the impression that the situation was tolerated by the respondents. The NLRC thus decreed:

WHEREFORE, premises considered, the Decision dated April 8, 2003 is set aside and reversed. A new one is entered finding complainant to have been illegally dismissed and thus entitled to reinstatement with backwages. Respondent Centro Ceramica Corporation is hereby ordered to pay complainant his backwages reckoned from the date of his dismissal on February 19, 2002 up to the date of the promulgation of this decision. As reinstatement is no longer feasible, complainant should instead be paid separation pay equivalent to one half (1/2) month pay for every year of service. In addition, respondents company should pay complainant his unpaid commission in the amount of P16,581.00.

All other claims are dismissed for lack of merit.

SO ORDERED.[11]

Court of Appeals Ruling

Respondents elevated the case to the CA which reversed the NLRC and dismissed petitioners complaint. According to the CA, petitioner by his own account had admitted that it was he who asked for his dismissal when he narrated that during his meeting with Sy, he had asked for his termination paper and she threatened to do so if that was what he wanted. It also noted the affidavit of Agcaoili who attested that petitioner was merely informed of the decision to transfer him to another department, which is not denied by the petitioner; said witness also said that the turnover of company documents and files was voluntary on the part of petitioner who expressed desire to resign from the company. Another statement considered by the CA is that made by witness Azarraga who explained that he only mentioned the name of Ms. Garcia to petitioner when he warned the latter to be careful, simply because she is a member of the Couples for

Christ who may have an influence over petitioner who is a member of the Singles for Christ. As to the memos sent by the company to petitioners residence, this shows that it has not yet terminated the employment of petitioner. Thus, the CA held that the evidence on record supports the Labor Arbiters finding that petitioner informally severed the employment relationship as manifested by his voluntary transfer of his accountabilities to his supervisor and thereafter his act of not reporting for work anymore.

Petitioners motion for reconsideration having been denied, the present petition was filed in this Court.

Issue

The sole issue to be addressed is whether petitioner was dismissed by the respondents or voluntarily severed his employment by abandoning his job.

Arguments of the Parties

Petitioner assails the CAs misappreciation of the facts, completely relying on respondents allegations particularly on what transpired during the meeting with respondents Sy and Garcia, of which the appellate court made a twisted interpretation of their conversation. Hence, instead of decreeing petitioners illegal termination based on Sys verbal dismissal without just cause and due process, the CA proceeded to conclude that petitioner voluntarily and informally severed his relation with the company. As to the affidavit of Agcaoili, his statement that he merely informed petitioner of the decision to transfer him to another department is of no moment because what matters is the action of Sy who dismissed petitioner outright. Moreover, Agcaoili, being under the employ of respondents, would logically be biased and he would naturally tend to protect the company by his statements regarding petitioners case. On the other hand, Azarragas confusing and inconsistent statements only confirmed that Garcia indeed had a grudge against petitioner, as he could not give a rational explanation for warning petitioner to be careful with Garcia.

Petitioner further contends that his act of turning over his accountabilities to his supervisor cannot be considered voluntary on his part as it was done by him knowing that he was already terminated and upon the

specific instructions of Sy and Garcia. The CA therefore erred in relying on the unbelievable submission of respondents that such transfer of company documents and samples was indicative of petitioners desire to resign. It failed to see that petitioners reaction to his impending transfer to another department (pag-iisipan ko pa) was due to his not coming to terms with Garcia and aware of the warning earlier given by his friends. Under this scenario, the animosity between petitioner and Garcia was evident such that Garcia eventually prevailed upon Sy to terminate petitioners services. Unfortunately, it was on the very same day that petitioner was verbally terminated by Sy on the ground of insubordination and ordered to immediately turn over his files and samples. It was on February 21, 2002 that Agcaoili told petitioner that the company will give him all that is due him plus goodwill money, and in a meeting with Sy he had asked for his termination paper because he was in fact already terminated on February 19, 2002 but she responded by saying that if that was what he wanted she will give it to him and even threatened him to think because respondents are powerful.

In their Comment, respondents assert that the CA committed no reversible error in concluding that petitioner was not illegally terminated. They stress that the evidence clearly established that petitioner was not dismissed but required merely to explain why he failed to report for work after meeting the company president. As to petitioners act of turning over his accountabilities, respondents argue that this cannot be considered proof of his illegal dismissal because it was done voluntarily in line with his proposed resignation. Respondent company was about to conduct its investigation on petitioner who went AWOL since February 19, 2002 but then he refused to accept the memos sent to him, thus confirming categorically that respondents were investigating his failure to report for work and giving him all the opportunity to explain his absence.

The Courts Ruling

We grant the petition.

As a general rule, only questions of law may be allowed in a petition for review on certiorari.[12]Considering, however, that the Labor Arbiters findings were reversed by the NLRC, whose Decision was in turn overturned by the CA, reinstating the Labor Arbiters Decision, it

behooves the Court to reexamine the records and resolve the conflicting rulings.[13]

Scrutinizing the records, we find that the NLRCs finding of illegal dismissal is supported by the totality of evidence and more consistent with logic and ordinary human experience than the common finding of the CA and Labor Arbiter that petitioner informally severed his employment relationship with the company. It hardly convinces us that after declining his supposed transfer to another department as per the information relayed to him by his supervisor, petitioner would readily turn over his files and samples unless something critical indeed took place in his subsequent closed-door meeting with Sy and Garcia. As correctly pointed out by petitioner, it is irrelevant whether or not he had earlier inquired from his supervisor what he will receive if he offers instead to resign upon being told of his impending transfer, for what matters is the action of Sy on his employment status. If ever petitioner momentarily contemplated resignation and such was the impression he conveyed in his talk with his supervisor prior to the meeting with Sy, such is borne by circumstances indicating Garcias antagonism towards petitioner. In any event, whether such perception of a strained working relationship with Garcia was mistaken or not is beside the point. The crucial factor is the verbal order directly given by Sy, the company president, for petitioner to immediately turn over his accountabilities. Notably, Sy got irked when petitioner asked for his termination paper. Petitioner apparently wanted to ascertain whether such summary dismissal was official, and it was well within his right to demand that he be furnished with a written notice in order to apprise him of the real ground for his termination.

Contrary to respondents theory that petitioners act of turning over the company files and samples is proof of his voluntary informal resignation rather than of the summary dismissal effected by management, no other plausible explanation can be made of such immediate turn over except that petitioner directly confirmed from the company president herself that he was already being dismissed. The subsequent memos sent to petitioners residence after he did not anymore report for work only reinforce the conclusion that the belated written notice of the charge against him his alleged failure to meet the prescribed sales quota was an afterthought on the part of respondents who may have realized that they failed to observe due process in

terminating him. That respondents would still require a written explanation for petitioners poor sales performance after the latter already complied with Sys directive to turn over all his accountabilities is simply inconsistent with their claim that petitioner offered to resign and voluntarily relinquished possession of company files and samples when told of his impending transfer. In other words, petitioner was not given any opportunity to defend himself from whatever charges hurled by management against him, such as poor sales performance as relayed to him by his supervisor, when Sy unceremoniously terminated him which must have shocked him considering that his supervisor earlier advised that he would just be transferred to another department. Under this scenario, petitioners decision not to report for work anymore was perfectly understandable, as the sensible reaction of an employee fired by no less than the company president. It was indeed a classic case of dismissal without just cause and due process, which is proscribed under our labor laws.

As to the affidavits submitted by the respondents, these are at best self-serving having been executed by employees beholden to their employer and which evidence by themselves did not refute petitioners main cause of action -- the fact of his summary dismissal on February 19, 2002. Respondents effort to present the case as one of an erring employee about to be investigated for poor sales performance must likewise fail. The NLRC duly noted the discriminatory treatment accorded to petitioner when it declared that there is no evidence at all that other sales personnel who failed to meet the prescribed sales quota were similarly reprimanded or penalized. Incidentally, the question may be asked if petitioner whose performance was assessed by management as poor yet admittedly ranked second to the top sales agent of the company, why was it that no evidence was submitted by respondents to show the comparative sales performance of all sales agents? Given the strained working relationship with Garcia, or at least a perception of such gap on the part of petitioner, the latter could not have been properly informed of the actual ground for his dismissal. But more importantly, respondents terminated petitioner first and only belatedly sent him written notices of the charge against him. Fairness requires that dismissal, being the ultimate penalty that can be meted out to an employee, must have a clear basis. Any ambiguity in the ground for the termination of an employee should be

interpreted against the employer, who ordained such ground in the first place.[14]

Resignation is defined asthe voluntary act of employees who are compelled by personal reasons to disassociate themselves from their employment. It must be done with the intention of relinquishing an office, accompanied by the act of abandonment.[15] In this case, the evidence on record suggests that petitioner did not resign; he was orally dismissed by Sy. It is this lack of clear, valid and legal cause, not to mention due process, that made his dismissal illegal, warranting reinstatement and the award of backwages.[16] Moreover, the filing of a complaint for illegal dismissal just three weeks later is difficult to reconcile with voluntary resignation. Had petitioner intended to voluntarily relinquish his employment after being unceremoniously dismissed by no less than the company president, he would not have sought redress from the NLRC and vigorously pursued this case against the respondents.[17]

When there is no showing of a clear, valid and legal cause for the termination of employment, the law considers it a case of illegal dismissal. Furthermore, Article 4 of the Labor Code expresses the basic principle that all doubts in the interpretation and implementation of the Labor Code should be interpreted in favor of the workingman. This principle has been extended by jurisprudence to cover doubts in the evidence presented by the employer and the employee.[18] Thus we have held that if the evidence presented by the employer and the employee are in equipoise, the scales of justice must be tilted in favor of the latter.[19] Accordingly, the NLRCs finding of illegal dismissal must be upheld.

However, the award of back wages and separation pay in lieu of reinstatement should be modified. Under the doctrine of strained relations, the payment of separation pay has been considered an acceptable alternative to reinstatement when the latter option is no longer desirable or viable.[20] Under the facts established, petitioner is entitled to the payment of full back wages, inclusive of allowances, and other benefits or their monetary equivalent, computed from the date of his dismissal on February 19, 2002 up to the finality of this decision, and separation pay in lieu of reinstatement equivalent to one month salary for every year of service, computed from the time of his

engagement by respondents on March 21, 1999 up to the finality of this decision.[21]

WHEREFORE, the petition for review on certiorari is GRANTED. The Decision dated April 21, 2006 and Resolution dated September 7, 2006 of the Court of Appeals in CA-G.R. SP No. 88061 are SET ASIDE. The Decision dated July 29, 2004 of the National Labor Relations Commission in NLRC NCR CA No. 035557-03 is REINSTATED and AFFIRMED WITH MODIFICATIONS in that in addition to the unpaid commission of P16,581.00, respondent Centro Ceramica Corporation is hereby ordered to pay petitioner Jhorizaldy Uy his full back wages, inclusive of allowances, and other benefits or their monetary equivalent, computed from the date of his dismissal on February 19, 2002 up to the finality of this decision, and separation pay in lieu of reinstatement equivalent to one monthsalary for every year of service, computed from the time of his engagement by respondent corporation on March 21, 1999 up to the finality of this decision.

No pronouncement as to costs.

SO ORDERED

De castro v. Liberty Broadcasting

BRION, J.: The respondent, Liberty Broadcasting Network, Inc. (LBNI), filed the present Motion for Reconsideration with Motion to Suspend Proceedings, asking us, first, to set aside our Decision[1] and, second, to suspend the court proceedings in view of the Stay Order issued on August 19, 2005 by the Regional Trial Court (RTC) of Makati, Branch 138, in relation to the corporate rehabilitation proceedings that LBNI initiated. The dispositive part of our Decision reads: WHEREFORE, premises considered, we hereby GRANT the petition. Accordingly, we REVERSE and SET ASIDE the Decision and Resolution of the CA promulgated on May 25, 2004 and August 30, 2004, respectively, and REINSTATE in all respects the Resolution of the National Labor Relations Commission dated September 20, 2002. Costs against the respondents. SO ORDERED.[2]

  The facts, as recited in our Decision, are summarized below: The petitioner, Carlos C. de Castro, worked as a chief building administrator at LBNI. On May 31, 1996, LBNI dismissed de Castro on the grounds of serious misconduct, fraud, and willful breach of the trust reposed in him as a managerial employee.Allegedly, de Castro committed the following acts: 1.      Soliciting and/or receiving money for his own benefit from suppliers/dealers/traders [Cristino Samarita and Jose Aying], representing commissions for job contracts involving the repair, reconditioning and replacement of parts of the airconditioning units at the companys Antipolo Station, as well as the installation of fire exits at the [LBNIs] Technology Centre;2.      Diversion of company funds by soliciting and receiving on different occasions a total of P14,000.00 in commissions from Aying for a job contract in the companys Antipolo Station;3.      Theft of company property involving the unauthorized removal of one gallon of Delo oil from the company storage room;4.      Disrespect/discourtesy towards a co-employee, for using offensive language against [Vicente Niguidula, the companys supply manager];5.      Disorderly behavior, for challenging Niguidula to a fight during working hours within the company premises, thereby creating a disturbance that interrupted the normal flow of activities in the company;6.      Threat and coercion, for threatening to inflict bodily harm on the person of Niguidula and for coercing [Gil Balais], a subordinate, into soliciting money in [de Castros] behalf from suppliers/contractors;7.      Abuse of authority, for instructing Balais to collect commissions from Aying and Samarita, and for requiring Raul Pacaldo (Pacaldo) to exact 2% - 5% of the price of the contracts awarded to suppliers; and8.      Slander, for uttering libelous statements against Niguidula.[3]

 Aggrieved, de Castro filed a complaint for illegal dismissal against LBNI with the National Labor Relations Commission (NLRC) Arbitration Branch, National Capital Region, praying for reinstatement, payment of backwages, damages, and attorneys fees.[4] He maintained that he could not have solicited commissions from suppliers considering that he was new in the company.[5] Moreover, the accusations were belatedly filed as the imputed acts happened in 1995. He explained that the one gallon of Delo oil he

allegedly took was actually found in Gil Balais room.[6] He denied threatening Vicente Niguidula, whom he claimed verbally assaulted him and challenged him to a fight, an incident which he reported to respondent Edgardo Quiogue, LBNIs executive vice president, and to the Makati police.[7] De Castro alleged that prior to executing affidavits against him, Niguidula and Balais had serious clashes with him.[8]

 On April 30, 1999, the Labor Arbiter rendered a decision[9] in de Castros favor, holding LBNI liable for illegal dismissal.[10] The Labor Arbiter found the affidavits of LBNIs witnesses to be devoid of merit, noting that (1) witnesses Niguidula and Balais had altercations with de Castro prior to the execution of their respective affidavits; (2) the affidavit of Cristino Samarita, one of the suppliers from whom de Castro allegedly asked for commissions, stated that it was not de Castro, but Balais, who personally asked for money; and (3) Jose Aying, another supplier, recanted his earlier affidavit.[11]

 LBNI appealed the Labor Arbiters ruling to the NLRC. Initially, the NLRC reversed the Labor Arbiters decision but on de Castros motion for reconsideration, the NLRC reinstated the Labor Arbiters decision.[12] It ruled that the charges against de Castro were never really substantiated other than by bare allegations in the witnesses affidavits who were the companys employees and who had altercations with De Castro prior to the execution of their affidavits.[13]

 LBNI again appealed the NLRCs adverse decision to the Court of Appeals (CA). On May 25, 2004, the CA reversed the NLRCs decision and held that de Castros dismissal was based on valid grounds. It ruled too that the NLRC gravely abused its discretion when it disregarded the affidavits of all of LBNIs witnesses.[14]

 In our September 23, 2008 Decision, we found that de Castros dismissal was based on unsubstantiated charges. Aying, a contractor, earlier executed an affidavit stating that de Castro asked him for commission, but in his second affidavit, he recanted his statement and exonerated de Castro.[15] The other witnesses, Niguidula and Balais, were LBNI employees who resented de Castro.[16] We noted that de Castro had not stayed long in the company and had not even passed his probationary period when the acts charged allegedly took place. We found this situation contrary to common experience, since new employees have a natural motivation to make a positive first impression on the employer, if only to ensure that they are regularized.[17]

Thus, we ruled that the grounds that LBNI invoked for de Castros dismissal were, at best, doubtful, based on the evidence presented. These doubts should be interpreted in de Castros favor, pursuant to Article 4 of the Labor Code.[18] Between a laborer and his employer, doubts reasonably arising from the evidence or interpretation of agreements and writing should be resolved in the formers favor.[19]

 The Motion for Reconsideration LBNI now moves for a reconsideration of our September 23, 2008 Decision based on the following arguments: (1) LBNI had valid legal grounds to terminate de Castros employment for loss of trust and confidence;[20] (2) the affidavits of LBNIs witnesses should not have been totally disregarded;[21] and (3) LBNI is currently under rehabilitation, hence, the proceedings in this case must be suspended.[22] LBNI points out that it filed, with the RTC of Makati, a petition for Corporate Rehabilitation with Prayer for Suspension of Payments (docketed as S.P. Proc. Case No. M-6126), and on August 19, 2005, the RTC issued a Stay Order directing, among others, that the enforcement of all claims against Liberty Telecoms, Liberty Broadcasting and Skyphone, whether for money or otherwise and whether such enforcement is by Court action or otherwise x x x be forthwith stayed.[23]

 Comment on the Motion for Reconsideration In his comment, de Castro contends that LBNIs motion for reconsideration contains a rehash of LBNIs earlier arguments. He avers that despite the RTCs Stay Order, it is premature for this Court to suspend the proceedings. If a suspension of the proceedings is necessary, the proper venue to file the motion is with the Office of the Labor Arbiter. [24] De Castro further posits that LBNI should have informed this Court of the status of its Petition for Corporate Rehabilitation.[25]

THE COURTS RULING Except for the prayer to suspend the execution of our September 23, 2008 Decision, we do not find LBNIs Motion for Reconsideration meritorious. Although we reject, for lack of merit, LBNIs arguments regarding the legality of de Castros dismissal, we suspend the execution of our Decision in deference to the Stay Order issued by the rehabilitation court. The issue of illegal dismissal has already been resolved in the Courts September 23, 2008 Decision 

LBNIs motion for reconsideration merely reiterates its earlier arguments, which we have already addressed in our September 23, 2008 Decision. LBNI has failed to offer any substantive argument that would convince us to reverse our earlier ruling. LBNI argues that there is no logic for it to illegally dismiss de Castro because being on probationary employment a fact which this Court had stated in its decision all that the company had to do was not to re-hire him.[26] By this claim, LBNI has misread the import of our ruling. The September 23, 2008 Decision declared that de Castro had not stayed long in the company and had not even passed his probationary period when the acts charged allegedly took place.[27] Properly read, we found that the acts charged against de Castro took place when he was still under probationary employment a finding completely different from LBNIs claim that de Castro was dismissed during his probationary employment. On the contrary, de Castro was dismissed on the ninth month of his employment with LBNI, and by then, he was already a regular employee by operation of law. Article 281 of the Labor Code provides that [p]robationary employment shall not exceed six (6) months from the date the employee started working, x x x [a]n employee who is allowed to work after a probationary period shall be considered a regular employee. As a regular employee, de Castro was entitled to security of tenure and his illegal dismissal from LBNI justified the awards of separation pay, backwages, and damages. The pendency of the rehabilitation proceedings does not affect the Courts jurisdiction to resolve the case, but merely suspends the execution of the September 23, 2008 Decision On October 18, 2005, while de Castros petition was still pending before the Court, LBNI filed a motion to suspend the proceedings, citing the Stay Order, dated August 19, 2005, issued by the RTC of Makati, Branch 138 in S.P. Case No. M-6126.[28] The Stay Order read: FOR THE REASONS GIVEN and applying Section 6 of the Interim Rules of Procedure on Corporate Rehabilitation, x x x it is ordered that enforcement of all claims against [LBNI] whether for money or otherwise and whether such enforcement is by Court action or otherwise, its guarantors and sureties not solidarily liable with the petitioner, be forthwith stayed.x x x xSO ORDERED.[29]

 LBNIs motion was denied in our Resolution of December 12, 2005 for being premature, as de

Castro then had yet to file his reply to LBNIs comment on the petition.[30] Thereafter, nothing was heard from LBNI regarding the Stay Order or the rehabilitation proceedings it instituted before the RTC of Makati, Branch 138. Even the memorandum, dated May 4, 2006, that LBNI filed with the Court contained no reference to the rehabilitation proceedings.[31]

 The filing of a memorandum before the Court is not an empty requirement, devoid of legal significance. In A.M. No. 99-2-04-SC, the Court declared that issues raised in previous pleadings but not included in the memorandum shall be deemed waived or abandoned. Being a summation of the parties previous pleadings, the memoranda alone may be considered by the Court in deciding or resolving the petition. Thus, on account of LBNIs omission, only the issues raised in the parties memoranda principally, the validity of de Castros dismissal from LBNI were considered by the Court in resolving the case. The Court does not take judicial notice of proceedings in the various courts of justice in the Philippines.[32] At the time we decided the present case, we were thus not bound to take note of and consider the pendency of the rehabilitation proceedings, as the matter had not been properly brought to our attention. In Social Justice Society v. Atienza,[33] we said that:In resolving controversies, courts can only consider facts and issues pleaded by the parties. Courts, as well as magistrates presiding over them are not omniscient. They can only act on the facts and issues presented before them in appropriate pleadings. They may not even substitute their own personal knowledge for evidence. Nor may they take notice of matters except those expressly provided as subjects of mandatory judicial notice.x x x xThe party asking the court to take judicial notice is obligated to supply the court with the full text of the rules the party desires it to have notice of. Notably, LBNIs memorandum was filed on May 4, 2006, more than 180 days from the date of the initial hearing on October 5, 2005 (as set in the Stay Order of August 19, 2005). Under Section 11, Rule 4 of the Interim Rules of Procedure on Corporate Rehabilitation (Interim Rules), a petition for rehabilitation shall be dismissed if no rehabilitation plan is approved by the court upon the lapse of 180 days from the date of initial hearing. While the Interim Rules grant extension beyond the 180-day period, no such extension was alleged in this case; in fact, as we earlier pointed out, no mention at all was made in LBNIs memorandum of the rehabilitation proceedings. With the failure of LBNI to raise

rehabilitation proceedings in its memorandum, the Court had sufficient grounds to suppose that the rehabilitation petition had been dismissed by the time the case was submitted for decision.Given these circumstances, the existence of the Stay Order which would generally authorize the suspension of judicial proceedings, even those pending before the Court could not have affected the Courts action on the present case. At any rate, a stay order simply suspends all actions for claims against a corporation undergoing rehabilitation; it does not work to oust a court of its jurisdiction over a case properly filed before it.[34] Our ruling on the principal issue of the case that de Castro had been illegally dismissed from his employment with LBNI thus stands. Nevertheless, with LBNIs manifestation that it is still undergoing rehabilitation, the Court resolves to suspend the execution of our September 23, 2008 Decision. The suspension shall last up to the termination of the rehabilitation proceedings, as provided in Section 11, in relation to Section 27, Rule 4 of the Interim Rules Sec. 11. Period of the Stay Order. - The stay order shall be effective from the date of its issuance until the dismissal of the petition or the termination of the rehabilitation proceedings. The petition shall be dismissed if no rehabilitation plan is approved by the court upon the lapse of one hundred eighty (180) days from the date of the initial hearing. The court may grant an extension beyond this period only if it appears by convincing and compelling evidence that the debtor may successfully be rehabilitated. In no instance, however, shall the period for approving or disapproving a rehabilitation plan exceed eighteen (18) months from the date of filing of the petition. x x x x Sec. 27. Termination of Proceedings. In case of the failure of the debtor to submit the rehabilitation plan, or the disapproval thereof by the court, or the failure of the rehabilitation of the debtor because of failure to achieve the desired targets or goals as set forth therein, or the failure of the said debtor to perform its obligations under the said plan, or a determination that the rehabilitation plan may no longer be implemented in accordance with its terms, conditions, restrictions, or assumptions, the court shall upon motion, motu proprio, or upon the recommendation of the Rehabilitation Receiver, terminate the proceedings. The proceedings shall also terminate upon the successful implementation of the rehabilitation plan. 

 WHEREFORE, we DENY the Motion for Reconsideration; accordingly, our Decision dated September 23, 2008 is herebyAFFIRMED. The National Labor Relations Commission is, however, directed to SUSPEND the execution of our September 23, 2008 Decision until the Stay Order is lifted or the corporate rehabilitation proceedings are terminated. Respondent Liberty Broadcasting Network, Inc. is hereby directed to submit quarterly reports to the National Labor Relations Commission on the status of its rehabilitation, subject to the penalty of contempt in case of noncompliance. SO ORDERED.

Republic of the PhilippinesSupreme CourtBaguio City PENAFLOR v OUTDOOR  In our Decision of January 21, 2010, we granted petitioner Manolo Peaflors (Peaflor) petition for review on certiorari and reversed the Court of Appeals (CA) decision of December 29, 2006 and resolution of March 14, 2007. We found that Peaflor had been constructively dismissed from his employment with respondent Outdoor Clothing Manufacturing Corporation (Outdoor Clothing). Outdoor Clothing now seeks a reconsideration of this ruling.  FACTUAL BACKGROUND Peaflor was hired as probationary HRD Manager of Outdoor Clothing on September 2, 1999. On March 13, 2000, more than six months from the time he was hired, Peaflor learned that Outdoor Clothings President, Nathaniel Syfu (Syfu), appointed Edwin Buenaobra (Buenaobra) as the concurrent HRD and Accounting Manager. After enduring what he claimed as discriminatory treatment at work, Peaflor considered the appointment of Buenaobra to his position as the last straw, and thus filed his irrevocable resignation from Outdoor Clothing effective at the close of office hours on March 15, 2000. He thereafter filed an illegal dismissal complaint with the labor arbiter claiming that he had been constructively dismissed. The labor arbiter agreed with Peaflor and issued a decision in his favor on August 15, 2001. On appeal, the National Labor Relations Commission (NLRC) reversed the labor arbiters ruling in its September 24, 2002decision. When Peaflor questioned the NLRCs decision before the CA, the appellate court affirmed the NLRCs

decision. Hence, Peaflor filed a petition for review on certiorari with the Court. The Courts January 21, 2010 Decision Our January 21, 2010 decision focused on resolving the issue of whether Peaflors resignation from Outdoor Clothing was voluntary or a forced one, the latter making it a constructive dismissal equivalent to an illegal dismissal. We found it crucial to determine whether Peaflor filed his resignation letter before or after the appointment of Buenaobra as concurrent HRD and Accounting Manager. If the resignation was submitted before Syfus appointment of Buenaobra, little support would exist for Peaflors allegation of constructive dismissal, as the appointment would merely be intended to cover the vacancy created by Peaflors resignation. If however the resignation was made after the appointment of Buenaobra, then factual basis exists to consider Peaflor as constructively dismissed by Outdoor Clothing, as the resignation would be a response to the unacceptable appointment of another person to a position he still occupied. Peaflor claimed that he filed his undated resignation letter on the very same date he made his resignation effective March 15, 2000. On the other hand, Outdoor Clothing contended that the letter was submitted on March 1, 2000. In support of this allegation, Outdoor Clothing presented three memoranda:a.      the March 1, 2000 memorandum from Syfu to Buenaobra appointing the latter as the concurrent HRD and Accounting Manager;b.     the March 3, 2000 memorandum from Buenaobra to Syfu accepting the appointment; andc.     the March 10, 2000 office memorandum from Syfu informing all concerned of Buenaobras new appointment. Our analysis of the records led us to conclude that Peaflor submitted his resignation on March 15, 2000 as a response to the appointment of Buenaobra to his post. We considered suspicious Outdoor Clothings above memoranda because these were only presented to the NLRC on appeal, but not before the labor arbiter. They were not even mentioned in Outdoor Clothings position paper filed with the labor arbiter. The failure to present them and to justify this failure are significant considering that these are clinching pieces of evidence that allowed the NLRC to justify the reversal of the labor arbiters decision. 

The surrounding circumstances of the issuance of these memoranda also cast doubts on their authenticity. Although the memoranda directly concerned Peaflor, he was never informed of their contents nor given copies. While the March 10, 2000 memorandum bore signatures of its recipients, there were no marks on the March 1 and 3, 2000 memoranda indicating that their intended recipients actually received them on the date they were issued. It was likewise strange that Peaflors resignation and Buenaobras appointment would be kept under wraps from the supposed filing of Peaflors resignation letter on March 1, 2000 up to Syfus issuance of the March 10, 2000 office memorandum, since the turnover of responsibilities and work load alone to a successor in a small company such as Outdoor Clothing would have prevented the resignation from being kept a secret. We also considered the timeliness of Peaflors resignation. It was highly unlikely for Peaflor to resign on March 1, 2000, as claimed by Outdoor Corporation, considering that he would have become a regular employee by that time. It did not appear logical that an employee would tender his resignation on the very same day he was entitled by law to be considered a regular employee, especially when downsizing was taking place and he could have availed of its benefits if separated from the services as a regular employee. Considering the above circumstances, and applying basic labor law principles, the Court ruled that Peaflor was constructively dismissed from his employment with Outdoor Clothing. We thus reversed the CAs decision and resolution and reinstated the decision of the labor arbiter which found the respondents (Outdoor Clothing and its corporate officers) jointly and severally liable to pay Peaflor backwages, illegally deducted salaries, proportionate 13th month pay, attorneys fees, moral and exemplary damages. THE MOTION FOR RECONSIDERATION Outdoor Clothing now moves for the reconsideration of the Courts January 21, 2010 Decision. It alleges that the Court erred in declaring that Peaflor was constructively dismissed from his employment despite his submission of an irrevocable resignation letter. It also claims that the Court erred in holding all the respondents jointly and severally liable to pay Peaflor the salaries and damages awarded in his favor. Outdoor Clothing maintains that Peaflors resignation was voluntary; Peaflor resigned because he wanted to disassociate himself from a

company that was experiencing severe financial difficulty and to focus on his teaching job. Indeed, Peaflors own letter stating his decision to irrevocably resign from his employment with Outdoor Clothing was a clear indication that he was not forced to leave the company. Outdoor Clothing also relies heavily on the three memoranda it presented before the NLRC to support its claim of Peaflors voluntary resignation. Although belatedly filed, Outdoor Clothing claims there is nothing in the rules which disallows the filing of new documents before the NLRC. Submission of additional documents, albeit belatedly done, should always be looked upon with liberality especially when the same was important for any factual determination of the case.[1]

 Since it was Peaflor who filed the resignation letter, Outdoor Clothing posits that the burden of proving that the resignation was involuntary rests on Peaflor. The evidence presented by Peaflor simply failed to overcome this burden and thus, his resignation should be deemed voluntary and should absolve Outdoor Clothing of any liability for illegal dismissal. Additionally, Outdoor Clothing asserts that the Court erred in reinstating the labor arbiters decision which ordered all the respondents jointly and severally liable for the sums due to Peaflor. There was nothing in the decision of the Court or even those of the CA and the administrative bodies finding Outdoor Clothings corporate officers Syfu, Medylene Demogena (Demogena), and Paul Lee (Lee) to have personally acted in bad faith or with malice with respect to Peaflors resignation. Assuming Outdoor Clothing is indeed liable to Peaflor for illegal dismissal, it would be legally out of line to consider its corporate officers solidarily liable with the company without a finding of bad faith or malice on their part. THE COURTS RULING Other than the issue of solidary liability of the respondents in the present case, Outdoor Clothing raises no new matter that would merit a reconsideration of the Courts January 21, 2010 Decision. Peaflors resignation letter read: Mr. Nathaniel Y. SyfuChief Corporate OfficerOutdoor Clothing Manufacturing Corporation Sir: 

Please accept my irrevocable resignation effective at the close of office on March 15, 2000. Thank you. Very truly yours, Manolo A. Peaflor[2]

 While the letter states that Peaflors resignation was irrevocable, it does not necessarily signify that it was also voluntarily executed. Precisely because of the attendant hostile and discriminatory working environment, Peaflor decided to permanently sever his ties with Outdoor Clothing. This falls squarely within the concept of constructive dismissal that jurisprudence defines, among others, as involuntarily resignation due to the harsh, hostile, and unfavorable conditions set by the employer. It arises when a clear discrimination, insensibility, or disdain by an employer exists and has become unbearable to the employee.[3] The gauge for constructive dismissal is whether a reasonable person in the employees position would feel compelled to give up his employment under the prevailing circumstances.[4] With the appointment of Buenaobra to the position he then still occupied, Peaflor felt that he was being eased out and this perception made him decide to leave the company. The fact of filing a resignation letter alone does not shift the burden of proving that the employees dismissal was for a just and valid cause from the employer to the employee. In Mora v. Avesco,[5] we ruled that should the employer interpose the defense of resignation, it is still incumbent upon the employer to prove that the employee voluntarily resigned. To our mind, Outdoor Clothing did not discharge this burden by belatedly presenting the three memoranda it relied on. If these memoranda were authentic, they would have shown that Peaflors resignation preceded the appointment of Buenaobra. Thus, they would be evidence supporting the claim of voluntariness of Peaflors resignation and should have been presented early on in the case any lawyer or layman by simple logic can be expected to know this. Outdoor Clothing however raised them only before the NLRC when they had lost the case before the labor arbiter and now conveniently attributes the failure to do so to its former counsel.Outddor Clothings belated explanation as expressed in its motion for reconsideration, to our mind, is a submission we cannot accept for serious consideration. We find it significant that Peaflor attacked the belated presentation of these memoranda in his Answer to Outdoor Clothings Memoranda of Appeal with the NLRC,

but records do not show that Outdoor Clothing ever satisfactorily countered Peaflors arguments. It was not until we pointed out Outdoor Clothings failure to explain its belated presentation of the memoranda in our January 21, 2010 decision that Outdoor Clothing offered a justification. Whatever doubts that remain in our minds on the credibility of the parties evidence should, by the laws dictate, be settled in favor of the working man. Our ruling that Peaflor was constructively dismissed from his employment with Outdoor Clothing therefore stands. We modify, however, our ruling on the extent of liability of Outdoor Clothing and its co-respondents. A corporation, as a juridical entity, may act only through its directors, officers and employees. Obligations incurred as a result of the directors and officers acts as corporate agents, are not their personal liability but the direct responsibility of the corporation they represent. As a rule, they are only solidarily liable with the corporation for the illegal termination of services of employees if they acted with malice or bad faith. In the present case, malice or bad faith on the part of the Syfu, Demogena, and Lee, as corporate officers of Outdoor Clothing, was not sufficiently proven to justify a ruling holding them solidarily liable with Outdoor Clothing.[6]

 WHEREFORE, we PARTIALLY GRANT respondents motion for reconsideration and MODIFY our Decision datedJanuary 21, 2010. Respondent Outdoor Clothing is hereby ordered to pay petitioner the following: a.      backwages computed from the time of constructive dismissal up to the time of the finality of the Courts Resolution;b.     separation pay, due to the strained relations between the parties, equivalent to the petitioners one months salary;c.     illegally deducted salary for six days, as computed by the labor arbiter;d.     proportionate 13th month pay;e.      attorneys fees, moral and exemplary damages in the amount of P100,000.00; andf.       costs against the respondent corporation. SO ORDERED.

Norkis Union v Norkis Trading PANGANIBAN,  J.:  

Wage Order No. ROVII-06, issued by the Regional Tripartite Wages and Productivity Board (RTWPB), merely fixed a new minimum

wage rate for private sector employees in Region VII; hence, respondent cannot be compelled to grant an across-the-board increase to its employees who, at the time of the promulgation of the Wage Order, were already being paid more than the existing minimum wage.  The Case  Before us is a Petition for Review[1] under Rule 45 of the Rules of Court, seeking to set aside the July 30, 2002 Decision[2] and the January 16, 2003 Resolution[3] of the Court of Appeals (CA) in CA-GR SP No. 54611. The disposition of the assailed Decision reads as follows: ACCORDINGLY, We GRANT the instant petition for certiorari. The Decision of public respondent Voluntary Arbitrator in VA Case No. 374-VII-09-014-98E dated July 8, 1999, and Order dated August 13, 1999, denying petitioners Motion for Reconsideration, are hereby SET ASIDE. Petitioner is hereby declared to have lawfully complied with Wage Order No. ROVII-06. No pronouncement as to costs.[4]

 The Decision[5] of Voluntary Arbitrator Perfecto R. de los Reyes III,[6] reversed by the CA, disposed as follows: WHEREFORE, premises considered, this Office hereby decides in favor of Complainant. Respondent is hereby ordered to grant its employees the amount of increases granted under RTWPB Wage Order ROVII-06 in an across-the-board manner retroactive to the dates provided for under the said Wage Order.[7]

  The January 16, 2003 Resolution denied petitioners Motion for Reconsideration.  The Facts The CA summarized the undisputed factual antecedents as follows: The instant case arose as a result of the issuance of Wage Order No. ROVII-06 by the Regional Tripartite Wages and Productivity Board (RTWPB) increasing the minimum daily wage by P10.00, effective October 1, 1998. Prior to said issuance, herein parties entered into a Collective Bargaining Agreement (CBA) effective from August 1, 1994 to July 31, 1999. 

Sec. 1. Salary Increase. The Company shall grant a FIFTEEN (P15.00) PESOS per day increase to all its regular or permanent employees effective August 1, 1994. Sec. 2. Minimum Wage Law Amendment. In the event that a law is enacted increasing minimum wage, an across-the-board increase shall be granted by the company according to the provisions of the law. On January 27, 1998, a re-negotiation of the CBA was terminated and pursuant to which a Memorandum of Agreement was forged between the parties. It was therein stated that petitioner shall grant a salary increase to all regular and permanent employees as follows: Ten (10) pesos per day increase effective August 1, 1997; Ten (10) pesos per day increase effective August 1, 1998. Pursuant to said Memorandum of Agreement, the employees received wage increases of P10.00 per day effective August 1, 1997 and P10.00 per day effective August 1, 1998. As a result, the agreed P10.00 re-negotiated salary increase effectively raised the daily wage of the employees to P165.00 retroactive August 1, 1997; and another increase of P10.00, effective August 1, 1998, raising the employees[] daily wage to P175.00. On March 10, 1998, the Regional Tripartite Wage Productivity Board (RTWPB) of Region VII issued Wage Order ROVII-06 which established the minimum wage of P165.00, by mandating a wage increase of five (P5.00) pesos per day beginning April 1, 1998, thereby raising the daily minimum wage to P160.00 and another increase of five (P5.00) pesos per day beginning October 1, 1998, thereby raising the daily minimum wage to P165.00 per day. In accordance with the Wage Order and Section 2, Article XII of the CBA, [petitioner] demanded an across-the-board increase. [Respondent], however, refused to implement the Wage Order, insisting that since it has been paying its workers the new minimum wage of P165.00 even before the issuance of the Wage Order, it cannot be made to comply with said Wage Order. Thus, [respondent] argued that long before the passage of Wage Order ROVII-06 on March 10, 1998, and by virtue of the Memorandum of Agreement it entered with herein [petitioner], [respondent] was already paying its employees a daily wage of P165.00 per day retroactive on August 1, 1997, while the minimum wage at that time was still P155.00 per day. On August 1,

1998, [respondent] again granted an increase from P165.00 per day toP175.00, so that at the time of the effectivity of Wage Order No. 06 on October 1, 1998 prescribing the new minimum wage of P165.00 per day, [respondents] employees were already receiving P175.00 per day. For failure of the parties to settle this controversy, a preventive mediation complaint was filed by herein [petitioner] before the National Conciliation and Mediation Board, pursuant to which the parties selected public respondent Voluntary Arbitrator to decide said controversy. Submitted for arbitral resolution is the sole issue of whether or not [respondent] has complied with Wage Order No. ROVII-06, in relation to the CBA provision mandating an across-the-board increase in case of the issuance of a Wage Order. In his decision, public respondent arbitrator found herein [respondent] not to have complied with the wage order, through the following dispositions: The CBA provision in question (providing for an across-the-board increase in case of a wage order) is worded and couched in a vague and unclear manner. x x x In order to judge the intention of the contracting parties, their contemporaneous and subsequent acts shall be principally considered (Art. 1371, New Civil Code). Thus, this Office x x x required the parties to submit additional evidence in order to be able to know and interpret the parties working intent and application of Wage Order No. 06 issued by the Regional Tripartite Wages and Productivity Board, Regional Office VII in relation to Section 2, Article XII provided for in the parties[] existing CBA. x x x Viewed from the foregoing facts and evidence, the working intent and application of RTWPB Wage Order ROVII-06 in relation to Section 2, Article XII of the parties[] existing CBA is clearly established. The evidence submitted by the parties, all point to the fact that their true intention on how to implement existing wage orders is to grant such wage orders in an across-the-board manner in relation to the provisions of Section 2, Article XII of their existing CBA. Respondent in this case [has] failed to comply with its contractual obligation of implementing the increase under RTWPB Wage Order ROVII-06 in an across-the-board manner as provided in Section 2, Article XII of its CBA with [petitioner]. x x x x x x x x x[8]

  Respondent elevated the case to the CA via a Petition for Certiorari and Prohibition under Rule 65 of the Rules of Court. Ruling of the Court of Appeals The CA noted that the grant of an across-the-board increase, provided under Section 2 of Article XII of the CBA, was qualified by the phrase according to the provisions of the law. It thus stressed the necessity of determining the import of Wage Order No. ROVII-06, the law involved in the present controversy. Taking into consideration the opinion of the RTWPB, Region VII, the appellate court held that respondent had sufficiently complied with Wage Order No. ROVII-06. The Board had opined that since adjustments granted are only to raise the minimum wage or the floor wage as a matter of policy, x x x wages granted over the above amount set by this Board is deemed a compliance.The CA added that the policy and intent of the Wage Order was to cushion the impact of the regional economic crisis upon both the workers and the employers, not to enrich the employees at the expense of the employers. Further, it held that to compel respondent to grant an across-the-board wage increase, notwithstanding that it was already paying salaries to its employees above the minimum wage, would be to penalize generous employers and effectively make them wait for the passage of a new wage order before granting any increase. This would be counter-productive [insofar] as securing the interests of labor is concerned.[9]

 The appellate court said that the Wage Order exempted from compliance those enterprises already paying salaries equal to or more than the prescribed minimum wage; thus, the Order effectively made the previous voluntary increases given by respondent to its employees creditable against the law-mandated increase. Consequently, there was no need for the Collective Bargaining Agreement (CBA) to provide expressly for such creditability. Finally, the CA sustained respondents explanation that the across-the-board increases provided in the CBA was required only when a minimum wage law caused a distortion in the wage structure. Hence, this Petition.[10]

 IssuesIn its Memorandum, petitioner submits the following issues for our consideration: 

I. Whether or not the Honorable Court of Appeals gravely abused its discretion in setting aside the decision and resolution of the honorable voluntary arbitrator[.] II. Whether or not the Honorable Court of Appeals gravely abused its discretion in considering the Supplemental Memorandum of respondent and giving merit to evidence presented for the first time on appeal and filed after the lapse of the non[-]extendible period of time to file memorandum and despite an extension granted to respondent[.] III.              Whether or not the Honorable Court of Appeals gravely abused its discretion in disregarding established jurisprudence on statutory construction.[11]

 The main issue is whether respondent violated the CBA in its refusal to grant its employees an across-the-board increase as a result of the passage of Wage Order No. ROVII-06. Also raised is the procedural issue relating to the propriety of the admission by the CA of RTWPBs letter-opinion, which was attached to respondents Supplemental Memorandum submitted to that court on August 30, 2000, beyond the July 17, 2000 extended deadline.  The Courts RulingThe Petition lacks merit.  Main Issue:Effect of Wage Order No. ROVII-06on the Parties CBA  Petitioner insists that respondent should have granted to the employees the increase stated in Wage Order No. ROVII-06. In addition to the increases both parties had mutually agreed upon, the CBA supposedly imposed upon respondent the obligation to implement the increases mandated by law without any condition or qualification. To support its claim, petitioner repeatedly invokes Section 2 of Article XII of the CBA, which reads: SECTION 2. Minimum Wage Law Amendment. In the event that a law is enacted increasing minimum wage, an across-the-board increase shall be granted by the Company according to the provisions of the law.  Interestingly, petitioner disregards altogether in its argument the qualifying phrase according to the provisions of the law and merely focuses its attention on the across-the-board increase

clause. Given the entire sentence, it is clear that the above-quoted CBA provision does not support the unyielding view of petitioner that the issuance of Wage Order No. ROVII-06 entitles its members to an across-the-board increase, absolutely and without any condition. Stipulations in a contract must be read together,[12] not in isolation from one another. When the terms of its clauses are clear and leave no room for doubt as to the intention of the contracting parties, it would not be necessary to interpret those terms, whose literal meanings should prevail.[13]

The CA correctly observed that the import of Wage Order No. ROVII-06 should be considered in the implementation of the government-decreed increase. The present Petition makes no denial or refutation of this finding, but merely an averment of the silence of the CBA on the creditability of increases provided under the Agreement against those in the minimum wage under a wage order. It insists that the parties intended no such creditability; otherwise, they would have expressly stated such intent in the CBA. We hold that the issue here is not about creditability, but the applicability of Wage Order No. ROVII-06 to respondents employees. The Wage Order was intended to fix a new minimum wage only, not to grant across-the-board wage increases to all employees in Region VII. The intent of the Order is indicated in its title, Establishing New Minimum Wage Rates, as well as in its preamble: the purpose, reason or justification for its enactment was to adjust the minimum wage of workers to cushion the impact brought about by the latest economic crisis not only in the Philippines but also in the Asian region.

In Cagayan Sugar Milling Company v. Secretary of Labor and Employment [14] and Manila Mandarin Employees Union v. NLRC,[15] the Wage Orders that were the subjects of those cases were substantially and similarly worded as Wage Order No. ROVII-06. In those cases, this Court construed the Orders along the same line that it follows now: as providing for an increase in the prevailing statutory minimum wage rates of workers. No across-the-board increases were granted. Parenthetically, there are two methods of adjusting the minimum wage. In Employers Confederation of the Phils. v. National Wages and Productivity Commission,[16] these were identified as the floor wage and the salary-ceiling methods. The floor wage method involves the fixing of a determinate amount to be added to the

prevailing statutory minimum wage rates. On the other hand, in the salary-ceiling method, the wage adjustment was to be applied to employees receiving a certain denominated salary ceiling. In other words, workers already being paid more than the existing minimum wage (up to a certain amount stated in the Wage Order) are also to be given a wage increase. A cursory reading of the subject Wage Order convinces us that the intention of the Regional Board of Region VII was to prescribe a minimum or floor wage; not to determine a salary ceiling. Had the latter been its intention, the Board would have expressly provided accordingly. The text of Sections 2 and 3 of the Order states: Section 2. AMOUNT AND MANNER OF INCREASE. Upon the effectivity of this Order, the daily minimum wage rates for all the workers and employees in the private sector shall be increased by Ten Pesos (P10.00) per day to be given in the following manner: i.                    Five Pesos (P5.00) per day effective April 1, 1998, andii. Additional Five Pesos (P5.00) per day effective October 1, 1998. Section 3. UNIFORM WAGE RATE PER AREA CLASSIFICATION. To effect a uniform wage rate pursuant to Section 1 hereof, the prescribed minimum wage after full implementation of this Order for each area classification shall be as follows:Area Classification Non-Agriculture Sector Agriculture SectorClass A 165.00 150.00Class B 155.00 140.00Class C 145.00 130.00Class D 135.00 120.00  These provisions show that the prescribed minimum wage after full implementation of the P10 increase in the Wage Order is P165 for Class A private non-agriculture sectors. It would be reasonable and logical, therefore, to infer that those employers already paying their employees more than P165 at the time of the issuance of the Order are sufficiently complying with the Order. Further supporting this construction of Wage Order No. ROVII-06 is the opinion of its drafter, the RTWPB Region VII. In its letter-opinion[17] answering respondents queries, the Board gave a similar interpretation of the essence of the Wage Order: to fix a new floor wage or to upgrade the wages of the employees receiving lower than the minimum wage set by the Order. 

Notably, the RTWPB was interpreting only its own issuance, not a statutory provision. The best authority to construe a rule or an issuance is its very source,[18] in this case the RTWPB. Without a doubt, the Board, like any other executive agency, has the authority to interpret its own rules and issuances; any phrase contained in its interpretation becomes a part of those rules or issuances themselves.[19] Therefore, it was proper for the CA to consider the letter dated June 13, 2000, written by the RTWPB to explain the scope and import of the latters own Order, as such interpretation is deemed a part of the Order itself. That the letter was belatedly submitted to that Court is not fatal in the determination of this particular case. We cannot sustain petitioner, even if we assume that its contention is right and that the implementation of any government-decreed increase under the CBA is absolute. The CBA is no ordinary contract, but one impressed with public interest.[20] Therefore, it is subject to special orders on wages,[21] such as those issued by the RTWPB. Capitol Wireless v. Bate[22] is squarely in point. The union in that case claimed that all government-mandated increases in salaries should be granted to all employees across-the-board without any qualification whatsoever, pursuant to the CBA provision that any government-mandated wage increases should be over and above the benefits granted in the CBA. The Court denied such claim and held that the provisions of the Agreement should be read in harmony with the Wage Orders. Applying that ruling to the present case, we hold that the implementation of a wage increase for respondents employees should be controlled by the stipulations of Wage Order No. ROVII-06. At the risk of being repetitive, we stress that the employees are not entitled to the claimed salary increase, simply because they are not within the coverage of the Wage Order, as they were already receiving salaries greater than the minimum wage fixed by the Order. Concededly, there is an increase necessarily resulting from raising the minimum wage level, but not across-the-board. Indeed, a double burden cannot be imposed upon an employer except by clear provision of law.[23] It would be unjust, therefore, to interpret Wage Order No. ROVII-06 to mean that respondent should grant an across-the-board increase. Such interpretation of the Order is not sustained by its text.[24]

 In the resolution of labor cases, this Court has always been guided by the State policy enshrined in the Constitution: social justice[25] and the protection of the working class.[26] Social justice does not, however, mandate that every dispute

should be automatically decided in favor of labor. In every case, justice is to be granted to the deserving and dispensed in the light of the established facts and the applicable law and doctrine.[27]

 WHEREFORE, the Petition is DENIED, and the assailed Decision and Resolution AFFIRMED. Costs against petitioner. SO ORDERED.

G.R. No. 191740               February 11, 2013

SUSANA R. SY, Petitioner, vs.PHILIPPINE TRANSMARINE CARRIERS, INC., and/or SSC SHIP MANAGEMENT PTE., LTD., Respondents.

D E C I S I O N

PERALTA, J.:

Assailed in this petition for review on certiorari are the Decision1 dated September 17, 2009 and the Resolution2dated February 26, 2010 of the Court of Appeals issued in CA-G.R. SP No. 107379.

The antecedent facts are as follows:

On June 23, 2003, Alfonso N. Sy (Sy) was hired by respondent Philippine Transmarine Carriers Incorporated for and in behalf of its foreign principal, co-respondent SSC Ship Management Pte. Ltd. In their contract of employment Sy was assigned to work as Able Seaman (AB) on board the vessel M/V Chekiang for the duration of ten months, with a basic monthly salary of US$512.00. Considered incorporated in AB Sy's Philippine Overseas Employment Administration-Standard Employment Contract (POEA-SEC) is a set of standard provisions established and implemented by the POEA, called the Amended Standard Terms and Conditions Governing the Employment of Filipino Seafarers on Board Ocean-Going Vessels.

On October 1, 2005, while the vessel was at the Port of Jakarta, Indonesia, AB Sy went on shore leave and left the vessel at about 1300 hours. At 1925 hours, the vessel's agent from Jardine received an advice from the local police that one of the vessel's crew members died ashore. At 1935 hours, the agent advised the vessel's master, Capt. Norman C. Marquez, about the incident. At 2050 hrs., Capt. Marquez and his 3 crew members went to Cipto Mangunkusumo

Hospital where they confirmed the cadaver to be that of AB Sy.3

Based on the initial investigation conducted by the local police, AB Sy was riding on a motorcycle when he stopped the driver to urinate at the riverside of the road. Since AB Sy had not returned after a while, the motorcycle driver went to look for him at the riverside, but the former was nowhere to be found.4 At 1830 hrs., AB Sy's corpse was found.5 A forensic pathologist certified that AB Sy's death was an accident due to drowning, and that there was "alcohol 20mg%" in his urine.6

AB Sy's body was repatriated to the Philippines. On October 8, 2005, the Medico-Legal Officer of the National Bureau of Investigation (NBI) conducted a post-mortem examination on AB Sy's body and certified that the cause of death was Asphyxia by drowning.7

Petitioner Susana R. Sy, widow of AB Sy, demanded from respondents payment of her husband's death benefits and compensation. Respondents denied such claim, since AB Sy's death occurred while he was on a shore leave, hence, his death was not work-related and, therefore, not compensable. As her repeated demands were denied, petitioner filed, on March 1, 2006, a complaint against respondents for death benefits, burial assistance, moral and exemplary damages, and attorney's fees.

On August 28, 2007, the Labor Arbiter (LA) rendered a Decision,8 the dispositive portion of which reads:

WHEREFORE, premises considered, respondent is ordered to pay complainant the Philippine Currency equivalent to Fifty Thousand US Dollars (US$50,000.00) as death benefit and an additional amount of Philippine Currency equivalent to One Thousand U.S. Dollars (US$1,000.00) as burial expenses at the exchange rate prevailing at the time of payment.

SO ORDERED.9

The LA found that AB Sy was still under the respondents' employ at the time he drowned although he was on shore leave; that while on shore leave, he was still under the control and supervision of the master or captain of the vessel as it was provided under Section 13 of the Contract that the seafarer before taking a shore leave must secure the consent of the master of the vessel; and his leave was conditioned on "considerations of operations and safety" of the vessel; that another indication that a seafarer is

considered to be doing work-related functions even when on shore leave is found in subparagraph 4, paragraph B, Section 1 of the Contract where the duties of the seafarer are not limited to his stay while on board, but extend to his stay ashore.

The LA then ruled that since AB Sy was doing work-related functions during the term of his contract, only a finding that his death was selfinflicted or attributable to him would bar the payment of death benefits. It found that respondents’ evidence, which consisted of the Indonesia Police Autopsy Report, stating that the cause of death was drowning, did not establish the circumstance of death which would show that the death was the result of AB Sy's willful act on his own life; that there were traces of alcohol in his blood did not make him "intoxicated" as there was no proof that he was; and granting that he was intoxicated, such was accidental drowning and not an intentional taking of his own life.

Respondents filed their appeal with the National Labor Relations Commission (NLRC), reiterating that AB Sy's death was not work-related, hence, there was no basis for the LA's award. Petitioner also filed her appeal claiming that she was entitled to attorney's fees as well as moral and exemplary damages.

On October 17, 2008, the NLRC rendered its Resolution,10 the decretal portion of which reads:

WHEREFORE, premises considered, Respondent's appeal is DISMISSED for lack of merit, while Complainant's appeal is partly GRANTED. The Labor Arbiter's assailed decision in the above-entitled case is hereby MODIFIED.

In addition to the award of FIFTY THOUSAND U.S. DOLLARS (US$50,000.00) as death benefits and ONE THOUSAND U.S. DOLLARS (US$1,000.00) as burial expenses, Respondents are jointly and severally liable to Complainant for attorney's fees equivalent to ten percent (10% ) of her total monetary award, to be paid in Philippine Currency equivalent to the exchange rate prevailing during the time of payment.11

The NLRC affirmed the LA's finding that AB Sy's death was compensable, saying that if not for his employment with respondents, he would have been in some other place and would not have been enjoying any employment benefit of shore leave in Jakarta, Indonesia on that fateful day; that if not for said employment, he would not have gone to the riverside and urinate, and would not have accidentally fallen into the river and drowned. It found petitioner entitled to an award

of attorney's fees, since she was constrained to hire the services of a lawyer to protect her rights but found no basis for the grant of moral and exemplary damages.

Respondents filed their Motion for Reconsideration, which the NLRC denied in a Resolution12 dated December 8, 2008.

Respondents filed a petition for certiorari with the CA to which petitioner was required to file her Comment, but failed to do so.

In the meantime, petitioner moved for the execution of the NLRC Resolution. On March 5, 2009, petitioner executed an Affidavit13 stating that she had received from respondents the sum of two million six hundred ninety-one thousand one hundred seventy-three pesos and 10/100 (P2,691,173.10) as conditional payment of all her claims against respondents; and that the payment was made to prevent further execution proceedings she initiated with the NLRC and without prejudice to respondents' petition then pending with the CA.

On September 17, 2009, the CA rendered its assailed Decision, the dispositive portion of which reads:

WHEREFORE, the petition is hereby GRANTED. The NLRC's Decision dated October 17, 2008 and Resolution dated December 8, 2008 in NLRC LAC No. 10-000256-07 are hereby REVERSED.

Accordingly, the complaint in NLRC NCR OFW Case No. (M) 06- 03-00821-00 is hereby dismissed.

The application for issuance of a temporary restraining order and/or preliminary mandatory injunction is hereby declared moot and academic.

The private respondent, Susana R. Sy, is hereby ordered to return to the petitioners the full amount of Two Million Six Hundred Ninety-One Thousand One Hundred Seventy-Three pesos and 10/100 (P2,691,173.10) pursuant to her undertaking in the Conditional Satisfaction of Judgment with Urgent Motion to Cancel Appeal Bond dated March 5, 2009 and Affidavit executed by her also on March 5, 2009.14

In reversing the NLRC, the CA found AB Sy's death not work-related based on the following evidence, to wit: (1) AB Sy was on a shore leave at the time of the incident; (2) he was found dead by the police authorities in Indonesia and upon autopsy, the cause of death was established as

drowning; (3) he was intoxicated when he died due to traces of alcohol in his urine; and (4) the Philippine government authorities, namely, the Department of Foreign Affairs and the NBI, confirmed the cause of his death was drowning. The CA said that under Section 20 (A) of POEA Memorandum Circular No. 9, series of 2000, it was not sufficient to establish that AB Sy's death had occurred during the term of his contract, but there must be a causal connection between his death and the work for which he had been contracted. In this case, when AB Sy died, he was on a shore leave and left the vessel, and his death neither occurred at his workplace nor while performing an act within the scope of his employment.

Petitioner filed her Motion for Reconsideration, which the CA denied in a Resolution dated February 26, 2010.

Hence, this petition where the sole issue raised is:

WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION IN GRANTING RESPONDENTS' PETITION FOR CERTIORARI AND DENYING PETITIONER'S MOTION FOR RECONSIDERATION BY REVERSING AND SETTING ASIDE THE NATIONAL LABOR RELATIONS [COMMISSION'S] DECISION IN AWARDING DEATH BENEFITS UNDER THE POEA STANDARD CONTRACT 15

We find the petition devoid of merit.

The terms and conditions of a seafarer's employment is governed by the provisions of the contract he signs with the employer at the time of his hiring, and deemed integrated in his contract is a set of standard provisions set and implemented by the POEA, called the Standard Terms and Conditions Governing the Employment of Filipino Seafarers on Board Ocean-Going Vessels, which provisions are considered to be the minimum requirements acceptable to the government for the employment of Filipino seafarers on board foreign ocean-going vessels.16The issue raised of whether petitioner is entitled to death compensation benefits from respondents is best resolved by the provisions of their Employment Contract which incorporated the 2000 Standard Terms and Conditions Governing the Employment of Filipino Seafarers on Board Ocean-Going Vessels.17 Section 20 (A) of the Contract provides:

SECTION 20. COMPENSATION AND BENEFITS

A. COMPENSATION AND BENEFITS FOR DEATH

1. In the case of work-related death of the seafarer during the term of his contract, the employer shall pay his beneficiaries the Philippine Currency equivalent to the amount of Fifty Thousand US dollars (US$50,000) and an additional amount of Seven Thousand US dollars (US$7,000) to each child under the age of twenty-one (21) but not exceeding four (4) children, at the exchange rate prevailing during the time of payment.

x x x.

Clearly, to be entitled for death compensation benefits from the employer, the death of the seafarer (1) must be work-related; and (2) must happen during the term of the employment contract. Under the Amended POEA Contract, work-relatedness is now an important requirement. The qualification that death must be work-related has made it necessary to show a causal connection between a seafarer’s work and his death to be compensable.

Under the 2000 POEA Amended Employment Contract, work-related injury is defined as an injury(ies) resulting in disability or death arising out of and in the course of employment. Thus, there is a need to show that the injury resulting to disability or death must arise (1) out of employment, and (2) in the course of employment.

In Iloilo Dock & Engineering Co. v. Workmen's Compensation Commission,18 we explained the phrase "arising out of and in the course of employment" in this wise:

x x x The two components of the coverage formula — "arising out of" and "in the course of employment" — are said to be separate tests which must be independently satisfied; however, it should not be forgotten that the basic concept of compensation coverage is unitary, not dual, and is best expressed in the word, "work-connection," because an uncompromising insistence on an independent application of each of the two portions of the test can, in certain cases, exclude clearly work-connected injuries. The words "arising out of" refer to the origin or cause of the accident, and are descriptive of its character, while the words "in the course of" refer to the time, place and circumstances under which the accident takes place.

As a matter of general proposition, an injury or accident is said to arise "in the course of employment" when it takes place within the period of the employment, at a place where the employee reasonably may be, and while he is

fulfilling his duties or is engaged in doing something incidental thereto.19

AB Sy was hired as a seaman on board M/V Chekiang on June 23, 2005 and was found dead on October 1, 2005, with drowning as the cause of death. Notably, at the time of the accident, AB Sy was on shore leave and there was no showing that he was doing an act in relation to his duty as a seaman or engaged in the performance of any act incidental thereto. It was not also established that, at the time of the accident, he was doing work which was ordered by his superior ship officers to be done for the advancement of his employer's interest. On the contrary, it was established that he was on shore leave when he drowned and because of the 20% alcohol found in his urine upon autopsy of his body, it can be safely presumed that he just came from a personal social function which was not related at all to his job as a seaman. Consequently, his death could not be considered work-related to be compensable.1âwphi1

Petitioner argues that AB Sy's death happened in the course of employment, because if not for his employment he could be somewhere else and was not on shore leave; and that he would not be in the riverside of Jakarta, Indonesia and had not answered the call of nature and fell into the river and drowned.

We are not persuaded.

While AB Sy's employment relationship with respondents did not stop but continues to be in force even when he was on shore leave, their contract clearly provides that it is not enough that death occurred during the term of the employment contract, but must be work-related to be compensable. There is a need to show the connection of AB Sy's death with the performance of his duty as a seaman. As we found, AB Sy was not in the performance of his duty as a seaman, but was doing an act for his own personal benefit at the time of the accident. The cause of AB Sy’s death at the time he was on shore leave which was drowning, was not brought about by a risk which was only peculiar to his employment as a seaman. In fact, he was in no different circumstance with other people walking along the riverside who might also drown if no due care to one’s safety is exercised. Petitioner failed to establish by substantial evidence her right to the entitlement of the benefits provided by law.

Petitioner’s claim that AB Sy’s death was by accident, thus not willfully done which would negate compensability, has no relevance in this case based on our aforementioned disquisition.

While we commiserate with petitioner, we cannot grant her claim for death compensation benefits in the absence of substantial evidence to prove her entitlement thereto, since to do so will cause an injustice to the employer. Otherwise stated, while it is true that labor contracts are impressed with public interest and the provisions of the POEA-SEC must be construed logically and liberally in favor of Filipino seaman in the pursuit of their employment on board ocean-going vessels, still the rule is that justice is in every case for the deserving to be dispensed with in the light of established facts, the applicable law, and existing jurisprudence.20

WHERFORE, the petition is DENIED. The Decision dated September 17, 2009 and the Resolution dated February 26, 2010 of the Court of Appeals are hereby AFFIRMED.

SO ORDERED.

THIRD DIVISION

G.R. No. 211497, March 18, 2015

HOCHENG PHILIPPINES CORPORATION, Petitioner, v. ANTONIO M.

FARRALES, Respondent.

D E C I S I O N

REYES, J.:

Before this Court on Petition for Review on Certiorari1 is the Decision2 dated October 17, 2013 of the Court of Appeals (CA) in CA-G.R. SP No. 125103, which reversed the Decision3 dated February 29, 2012 and Resolution4 dated May 7, 2012 of the National Labor Relations Commission (NLRC) in NLRC LAC No. 08-002249-11, and reinstated with modifications the Decision5 dated April 29, 2011 of the Labor Arbiter (LA) in NLRC Case No. RAB-IV-03-00618-10-C, which found that respondent Antonio M. Farrales (Farrales) was illegally dismissed by Hocheng Philippines Corporation (HPC). The fallo of the appellate decision reads:chanRoblesvirtualLawlibraryWHEREFORE, premises considered, the Decision of the Labor Arbiter dated April 29, 2011 in NLRC Case No. RAB-IV-03-00618-10-C is reinstated with modifications. Private respondent Hocheng Philippines Corporation is liable to pay [Farrales] the following:chanRoblesvirtualLawlibrary

(1)

Full backwages from date of dismissal on February 15, 2010 until date of decision equivalent to P276,466.67;

(2 Separation pay of one (1) month salary per

) year of service for a period of twelve years equivalent to P228,800.00;

(3)

Appraisal year-end bonus in the sum of P11,000.00; and,

(4)

Attorney’s fees equivalent to 10% of the total award.

SO ORDERED.6

The Facts

Farrales was first employed by HPC on May 12, 1998 as Production Operator, followed by promotions as (1) Leadman in 2004, (2) Acting Assistant Unit Chief in 2007, and (3) Assistant Unit Chief of Production in 2008, a supervisory position with a monthly salary of ?17,600.00. He was a consistent recipient of citations for outstanding performance, as well as appraisal and year-end bonuses.7chanroblesvirtuallawlibrary

On December 2, 2009, a report reached HPC management that a motorcycle helmet of an employee, Reymar Solas (Reymar), was stolen at the parking lot within its premises on November 27, 2009. On December 3, 2009, Security Officer Francisco Paragas III confirmed a video sequence recorded on closed-circuit television (CCTV) around 3:00 p.m. on November 27, 2009 showing Farrales taking the missing helmet from a parked motorcycle, to wit:chanRoblesvirtualLawlibrary

a. At around 3:07:44, [Farrales] was seen walking towards the motorcycle parking lot;chanrobleslaw

b. At around 3:08:47, [Farrales] walked back towards the pedestrian gate of the company, passing by the motorcycle parking lot;chanrobleslaw

c. At around 3:08:51, [Farrales] walked back towards the motorcycle parking lot and returned to the pedestrian gate;chanrobleslaw

d. At around 3:09:10, [Farrales] called on the person of Andy Lopega and instructed him to get the helmet he was pointing at; [and]

e. At around 3:09:30, Andy gave the helmet to [Farrales].8

Later that day, HPC sent Farrales a notice to explain his involvement in the alleged theft. The investigation was supported by the employees’

union, ULO-Hocheng.9Below is Farrales’ explanation, as summarized by the CA:chanRoblesvirtualLawlibraryOn November 27, 2009, [Farrales] borrowed a helmet from his co-worker Eric Libutan (“Eric”) since they reside in the same barangay. They agreed that Eric could get it at the house of [Farrales] or the latter could return it the next time that they will see each other. Eric told him that his motorcycle was black in color. As there were many motorcycles with helmets, he asked another employee, Andy Lopega (“Andy”) who was in the parking area where he could find Eric’s helmet. Andy handed over to him the supposed helmet which he believed to be owned by Eric, then he went home.

On November 28, 2009, at around 6 o’clock in the morning, he saw Eric at theirbarangay and told him to get the helmet. But Eric was in a rush to go to work, he did not bother to get it.

In the morning of December 3, 2009, upon seeing Eric in the workplace, [Farrales] asked him why he did not get the helmet from his house. Eric told him that, “Hindi po sa akin yung nakuha nyong helmet.” [Farrales] was shocked and he immediately phoned the HPC’s guard to report the situation that he mistook the helmet which he thought belonged to Eric. After several employees were asked as to the ownership of the helmet, he finally found the owner thereof, which is Jun Reyes’s (“Jun”) nephew, Reymar, who was with him on November 27, 2009. [Farrales] promptly apologized to Jun and undertook to return the helmet the following day and explained that it was an honest mistake. These all happened in the morning of December 3, 2009; [Farrales] did not know yet that HPC will send a letter demanding him to explain.10

A hearing was held on December 10, 2009 at 1:00 p.m. Present were Farrales, Eric Libutan (Eric), Andy Lopega (Andy), Jun Reyes, Antonio Alinda, a witness, and Rolando Garciso, representing ULO-Hocheng. From Andy it was learned that at the time of the alleged incident, he was already seated on his motorcycle and about to leave the company compound when Farrales approached and asked him to hand to him a yellow helmet hanging from a motorcycle parked next to him. When Andy hesitated, Farrales explained that he owned it, and so Andy complied. But Eric had specifically told Farrales that his helmet was colored red and black and his motorcycle was a black Honda XRM-125 with plate number 8746-DI, parked near the perimeter fence away from the walkway to the pedestrian gate. The CCTV showed Farrales instructing Andy to fetch a yellow helmet from a blue Rossi 110 motorcycle with plate number 3653-DN parked in the middle of the parking lot, opposite the

location given by Eric. Farrales in his defense claimed he could no longer remember the details of what transpired that time, nor could he explain why he missed Eric’s specific directions.11chanroblesvirtuallawlibrary

On February 15, 2010, the HPC issued a Notice of Termination12 to Farrales dismissing him for violation of Article 69, Class A, Item No. 29 of the HPC Code of Discipline, which provides that “stealing from the company, its employees and officials, or from its contractors, visitors or clients,” is akin to serious misconduct and fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative, which are just causes for termination of employment under Article 282 of the Labor Code.

On March 25, 2010, Farrales filed a complaint for illegal dismissal, non-payment of appraisal and mid-year bonuses, service incentive leave pay and 13th month pay. He also prayed for reinstatement, or in lieu thereof, separation pay with full backwages, plus moral and exemplary damages and attorney’s fees. During the mandatory conference, HPC paid Farrales ?10,914.51, representing his 13th month pay for the period of January to February 2010 and vacation leave/sick leave conversion. Farrales agreed to waive his claim for incentive bonus.13chanroblesvirtuallawlibrary

On April 29, 2011, the LA ruled in favor of Farrales,14 the fallo of which is as follows:chanRoblesvirtualLawlibraryWHEREFORE, PREMISES CONSIDERED, all the respondents Hocheng Phils. Corporation, Inc. Sam Chen[g] and Judy Geregale are found guilty of illegal dismissal and ordered jointly and severally to pay complainant the following:chanRoblesvirtualLawlibrary

1.  Full backwages from date of dismissal on February 15, 2010 until date of decision equivalent to P276,466.67.

2.  Separation pay of one (1) month salary per year of service for a period of twelve years equivalent to P228,800.00.

3.  Appraisal year-end bonus in the sum of P11,000.00.

4.  Moral damages in the sum of P200,000.00.

5.  Exemplary damages in the sum of P100,000.00.

6.  10% of all sums owing as attorney’s fees or the amount of P81,626.67.

SO ORDERED.15

On appeal by HPC,16 the NLRC reversed the LA,17 and denied Farrales’ motion for reconsideration, finding substantial evidence of just cause to terminate Farrales.18chanroblesvirtuallawlibrary

On petition for certiorari to the CA,19 Farrales sought to refute the NLRC’s factual finding that he committed theft, as well as to question NLRC’s jurisdiction over HPC’s appeal for non-payment of appeal fees. But the CA found that HPC was able to perfect its appeal by posting a bond equivalent to the monetary award of ?897,893.37 and paying the appeal fees by postal money order in the amount of ?520.00.20chanroblesvirtuallawlibrary

Concerning the substantive issues, the appellate court agreed with the LA that Farrales’ act of taking Reymar’s helmet did not amount to theft, holding that HPC failed to prove that Farrales’ conduct was induced by a perverse and wrongful intent to gain, in light of the admission of Eric that he did let Farrales borrow one of his two helmets, only that Farrales mistook Reymar’s helmet as the one belonging to him.

Petition for Review to the Supreme Court

In this petition, HPC raises the following grounds for this Court’s review:chanRoblesvirtualLawlibrary

A. THE HONORABLE [CA] PLAINLY ERRED AND ACTED CONTRARY TO EXISTING LAW AND JURISPRUDENCE IN REVERSING THE DECISION OF THE [NLRC] AND DECLARING ILLEGAL THE DISMISSAL FOR [HPC’s] ALLEGED FAILURE TO PROVE THE EXISTENCE OF JUST CAUSE.

1. THERE IS SUBSTANTIAL EVIDENCE TO SHOW THAT [FARRALES] COMMITTED THEFT IN [HPC’s] PREMISES.

2. THEFT IS A JUST CAUSE FOR TERMINATION.

3. BY COMMITTING THEFT, [FARRALES], BEING A SUPERVISORIAL EMPLOYEE, FORFEITED THE TRUST REPOSED IN HIM BY [HPC], THUS RENDERING HIM

DISMISSIBLE FOR LOSS OF CONFIDENCE.

B. IN DECLARING ILLEGAL THE DISMISSAL OF [FARRALES], THE HONORABLE [CA] VIOLATED DOCTRINES LAID DOWN BY THE SUPREME COURT.

1. COURTS CANNOT SUBSTITUTE THEIR JUDGMENT FOR THAT OF THE MANAGEMENT.

2. COURTS MUST ACCORD DUE RESPECT TO THE FINDINGS OF ADMINISTRATIVE AGENCIES.21

Chiefly, HPC insists that since the complaint below involves an administrative case, only substantial evidence, not proof of guilt beyond reasonable doubt, is required to prove the guilt of Farrales;22 that what the CA has done is substitute its judgment for that of the NLRC, which is vested with statutory duty to make factual determinations based on the evidence on record.23chanroblesvirtuallawlibrary

Ruling of the Court

The Court resolves to deny the petition.

To validly dismiss an employee, the law requires the employer to prove the existence of any of the valid or authorized causes,24 which, as enumerated in Article 282 of the Labor Code, are: (a) serious misconduct or willful disobedience by the employee of the lawful orders of his employer or the latter’s representative in connection with his work; (b) gross and habitual neglect by the employee of his duties; (c) fraud or willful breach by the employee of the trust reposed in him by his employer or 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.25 As a supervisorial employee, Farrales is admittedly subject to stricter rules of trust and confidence, and thus pursuant to its management prerogative HPC enjoys a wider latitude of discretion to assess his continuing trustworthiness, than if he were an ordinary rank-and-file employee.26 HPC therefore insists that only substantial proof of Farrales’ guilt for theft is needed to establish the just causes to dismiss him, as the NLRC lengthily

asserted in its decision.

Article 4 of the Labor Code mandates that all doubts in the implementation and interpretation of the provisions thereof shall be resolved in favor of labor. Consistent with the State’s avowed policy to afford protection to labor, as Article 3 of the Labor Code and Section 3, Article XIII of the 1987 Constitution have enunciated, particularly in relation to the worker’s security of tenure, the Court held that “[t]o be lawful, the cause for termination must be a serious and grave malfeasance to justify the deprivation of a means of livelihood. This is merely in keeping with the spirit of our Constitution and laws which lean over backwards in favor of the working class, and mandate that every doubt must be resolved in their favor.”27 Moreover, the penalty imposed on the erring employee ought to be proportionate to the offense, taking into account its nature and surrounding circumstances.

The Court has always taken care, therefore, that the employer does not invoke any baseless justification, much less management prerogative, as a subterfuge by which to rid himself of an undesirable worker,28 and thus in exceptional cases the Court has never hesitated to delve into the NLRC’s factual conclusions where evidence was found insufficient to support them, or too much was deduced from the bare facts submitted by the parties, or the LA and the NLRC came up with conflicting positions, as is true in this case.29chanroblesvirtuallawlibrary

As aptly pointed out by the LA, while HPC has the onus probandi that the taking of Reymar’s helmet by Farrales was with intent to gain, it failed to discharge this burden, as shown by the following circumstances: Farrales sought and obtained the permission of Eric, his co-employee as well asbarangay co-resident, to borrow his helmet; at the parking lot, Farrales asked another employee, Andy, to fetch a yellow helmet from one of the parked motorcycles, mistakenly thinking it belonged to Eric (whom he knew owned two helmets); the following day, November 28, Farrales asked Eric why he had not dropped by his house to get his helmet, and Eric replied that Farrales got the wrong helmet because he still had his other helmet with him; Farrales immediately sought the help of the company guards to locate the owner of the yellow helmet, who turned out to be Reymar; Farrales apologized to Reymar for his mistake, and his apology was promptly accepted.30 All these circumstances belie HPC’s claim that Farrales took Reymar’s helmet with intent to gain, the LA said.

In ruling that Farrales’ dismissal by HPC was

attended with utmost malice and bad faith as to justify an award of moral and exemplary damages and attorney’s fees, the LA stated that “[i]t is succinctly clear that [the] respondents [therein] tried to blow out of proportions the indiscretion of [Farrales] for reasons known only to them,” and moreover, “[f]inding that the dismissal on the ground of theft is unavailing, [the] respondents [therein] immediately offered [Farrales] his former position when he filed [his] complaint. What does this act of [the] respondents [therein] speak [of]?”31chanroblesvirtuallawlibrary

On the other hand, the NLRC found that Farrales lied, first, when he told Andy, then already astride his motorbike at the parking area and about to leave the company premises, that the yellow helmet belonged to him,32 and second, when he claimed that Eric was his neighbor, although they were not. It ruled as doubtful Farrales’ hazy recollection about what happened that afternoon at the parking lot, since he could not even give a description of the motorcycle from which he took the yellow helmet. These circumstances, the NLRC determined, comprise substantial proof belying Farrales’ claim of good faith. As a supervisory employee, he held a position of high responsibility in the company making him accountable to stricter rules of trust and confidence than an ordinary employee, and under Article 282 of the Labor Code, he is guilty of a serious misconduct and a willful breach of trust. The NLRC went on to cite a settled policy that in trying to protect the rights of labor, the law does not authorize the oppression or self-destruction of the employer. Management also has its own rights, which as such, are entitled to respect and enforcement in the interest of simple fair play.33chanroblesvirtuallawlibrary

But the Court agrees with the CA that Farrales committed no serious or willful misconduct or disobedience to warrant his dismissal. It is not disputed that Farrales lost no time in returning the helmet to Reymar the moment he was apprised of his mistake by Eric, which proves, according to the CA, that he was not possessed of a depravity of conduct as would justify HPC’s claimed loss of trust in him. Farrales immediately admitted his error to the company guard and sought help to find the owner of the yellow helmet, and this, the appellate court said, only shows that Farrales did indeed mistakenly think that the helmet he took belonged to Eric.

It is not, then, difficult to surmise that when Farrales told Andy that the yellow helmet was his, his intent was not to put up a pretence of ownership over it and thus betray his intent to gain, as the NLRC held, but rather simply to

assuage Andy’s reluctance to heed his passing request to reach for the helmet for him; Andy, it will be recalled, was at that moment already seated in his motorbike and about to drive out when Farrales made his request. As to Farrales’ claim that he and Eric were neighbors, suffice it to say that as the CA noted, they resided in the same barangay, and thus, loosely, were neighbors.

The CA also pointed out that although the alleged theft occurred within its premises, HPC was not prejudiced in any way by Farrales’ conduct since the helmet did not belong to it but to Reymar. In light of Article 69, Class A, Item No. 29 of the HPC Code of Discipline, this observation may be irrelevant, although it may be that the LA regarded it as proving HPC’s bad faith.

Theft committed by an employee against a person other than his employer, if proven by substantial evidence, is a cause analogous to serious misconduct.34 Misconduct is improper or wrong conduct, it is the transgression of some established and definite rule of action, a forbidden act, a dereliction of duty, willful in character, and implies wrongful intent and not mere error in judgment. The misconduct to be serious must be of such grave and aggravated character and not merely trivial or unimportant. Such misconduct, however serious, must, nevertheless, be in connection with the employee’s work to constitute just cause for his separation.35chanroblesvirtuallawlibrary

But where there is no showing of a clear, valid and legal cause for termination of employment, the law considers the case a matter of illegal dismissal.36 If doubts exist between the evidence presented by the employer and that of the employee, the scales of justice must be tilted in favor of the latter. The employer must affirmatively show rationally adequate evidence that the dismissal was for a justifiable cause.37chanroblesvirtuallawlibrary

Nonetheless, the Court agrees with the CA’s dismissal of the award of moral and exemplary damages for lack of merit. There is no satisfactory proof that the concerned officers of HPC acted in bad faith or with malice in terminating Farrales. Notwithstanding the LA’s assertion to this effect, Farrales’ bare allegations of bad faith deserve no credence, and neither is the mere fact that he was illegally dismissed sufficient to prove bad faith on the part of HPC’s officers.38 But concerning the award of attorney’s fees, Farrales was dismissed for a flimsy charge, and he was compelled to litigate to secure what is due him which HPC unjustifiably withheld.

WHEREFORE, premises considered, the petition for review is DENIED.

SO ORDERED.