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IBAÑEZ, Celina Z.Re: Termination of Services; Reorganization

Decision of RTC Directing Payment ofSeparation Pay of Employees who Optedto Retire; Request for Opinion

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

RESOLUTION NO. 02-0435

Celina Z. Ibañez, Information Officer III, City Government of Cadiz,requests a ruling on whether there is a legal impediment to her reappointmentas Information Officer III in the City Government (as directed by theCommission in Civil Service Commission Resolution No. 01-1203 dated July16, 2001) in view of the decision by the Regional Trial Court dated June 20,2001 directing instead the payment of separation pay and other benefits to

those employees who opted to retire during the reorganization. The instantrequest was made because Ibañez previously applied for the payment of hertermination leave pay as a result of the reorganization but subsequentlyquestioned the validity thereof before the Commission and thereafter she wasone of the employees ordered by this Commission to be reappointed.

In her request, Ibañez represented, as follows:

http://history.back%281%29/




"Since Mayor Varela was defeated in the last Local election, MayorSalvador Escalante, the newly elected city mayor, was ordered by theCommission through CSC Resolution No. 011203 to execute and implementthe order by reinstating or re-appointing us to the next similar or comparable

position in the new staffing pattern.

"Subsequently I and my group were re-appointed to the nextsimilar/comparable position last July 1, 2001 in compliance with the writ ofexecution ordered by the honorable commission. I was appointed asInformation Officer III next or lower to my former position, Information OfficerIV xxx.

"Recently, the civil case filed by some of terminated employees in theRegional Trial Court of Cadiz City, won and declared the following: thereorganization is null and void, 166 terminated employees were ordered to be

reinstated with full back wages. However, item no. 3 of the said order barredthe reinstatement of employees who opted to retire and had claimedseparation benefit. Xxx

"There are 49 employees who had claimed terminal, separation andretirement benefits. Some of them were already 60 years and above, old ageand physically unfit. Few of us had filed our complaint or appeal to the CivilService Commission questioning the validity of our termination.

"To those of us who obtained retirement and separation benefits but

was ordered by the Civil Service Commission to be reinstated or re-appointedare in a dilemma as to the status of our reinstatement.

"The City Mayor had issued an Executive Order implementing theDecision of Court, Section 4 of Civil Case No. 547-C xxx suspending thereinstatement of those who obtained retirement benefits which takes effect on

August 10, 2001 to which our services is also terminated. Our reinstatementwas held in abeyance until it is settled by the proper authorities.

"In this connection, I am again requesting the honorable commission to

give us their opinion on the following query:

`1. Does obtaining retirement and separation benefits prevent me from re-instatement or re-appointment despite of the reinstatement/re-appointmentorder of the commission?



`2. Does the Supreme Court Ruling on Yulo vs. the CSC case (219 SCRA470-479) where the appellants had also received separation and terminalbenefits but still ordered by the supreme court to reinstate with full backwages less the amount of what they received, also applicable to our case?

`3. If reinstatement is ordered, are we entitled for back wages?

`4. If we cannot be reinstated and desired to re-apply in the same position, arewe entitled to be appointed to the same position or grade level?’

"We are hoping that the honorable commission will give us theirimmediate attention and have their opinion in an earliest possible time. Weare also praying for our reinstatement and the amount we received will also bededucted in the back wages for the continuity of our services."

Submitted together with the request are the copies of the Writ ofExecution in Civil Case No. 574-C in the case of Daisy Revalez, et al. versusHonorable Mayor Eduardo C. Varela, Mayor of Cadiz City as the plaintiff anddefendant, respectively, issued by Christy E. Uriarte, Clerk of Court VI and Ex-Officio Sheriff of Regional Trial Court of Negros Occidental and ExecutiveOrder No. 10-SGE-2001 (An Order Directing the Implementation of theDecision of in Civil Case No. 547-C, For the Plaintiffs Entitled toReinstatement to Assume Their Office on August 10, 2001 and For OtherPurposes) issued by incumbent Mayor Salvador Escalante.

It may be recalled that Celina Z. Ibañez, Lilia C. Bayot, Jocelyn S.Buenafe, Susan A. Ascura, Romeo C. Gonzales, Jesusa B. Castillano,Percival V. Balela, Lilia F. Paragsa, Fernando E. Olaira and MarianoE.Edullan, all employees of the City Government of Cadiz, jointly filed theirappeal before the Commission questioning the validity of their separation fromthe service as a result of the reorganization undertaken by said city. Thereorganization was authorized through Resolution No. 98-112, Series of 1998enacted by the Sangguniang Panlungsod of said City.

In CSC Resolution No. 00-1132 dated May 4, 2000, the Commission

declared not in order Ibañez, et al.’s separation from the service. In saidresolution, the Commission directed Mayor Varela to reappoint said affectedemployees to positions equivalent or comparable to the positions previouslyheld by them. A motion for reconsideration was interposed by the Mayorassailing the resolution. Pending the decision of said motion, Ibañez, etal. filed a Motion to Resolve Pending Incident. Apparently, the motion praysthat the decision be executed pending reconsideration of the Mayor.



On February 8, 2001, the Commission denied Mayor Varela’s motionfor reconsideration in CSC Resolution No. 01-0399. Henceforth, the recordsdo not show that a relief was taken by the Mayor from said decision eitherbefore the Commission a quo or courts of law.

Thereafter Ibañez, et al. moved for the execution of CSC ResolutionNo. 00-1132. The Commission granted the same in CSC Resolution No. 01-0730 dated April 2, 2001. Without the Commission being furnished a copy ofthe pertinent pleading, Mayor Varela filed a Petition for Review to CSCResolution 01-0730 before the Court of Appeals and is now pendingconsideration thereat.

Records further show that Mayor Varela ran for a reelection on May 14,2001 but lost to Salvador Escalante. Upon the assumption of the latter as theCity Mayor, the Commission, in CSC Resolution No. 01-1203, directed him to

implement the reinstatement of the employees of the city who were unlawfullyterminated by former Mayor under different decisions by the Commission, asfollows: CSC Resolution Nos. 00-1165 (Bedayos, Mary Grace, et al.), 00-1132(Ibañez, Celina, et al.) and 99-2624 (Revalez, Daisy). In compliance to theorder of implementation, incumbent Mayor Escalante re-appointed all of saidemployees into the new staffing pattern on January 1, 2001. Ibañez was re-appointed as Information Officer III considering that the position of InformationOfficer IV which she formerly held has been abolished.

On the basis of the documents submitted in this request, it appears thatcertain reorganized out employees filed simultaneously (with the appeal fromtheir separation from the service before the Commission) a civil case beforethe Regional Trial Court (RTC) of Negros Occidental seeking the nullificationof Sangguniang Panglunsod Resolution No. 98-112. The filing and thependency of said case was not disclosed to the Commission.

On June 20, 2001, the RTC rendered a favorable judgment. A copy ofsaid decision was not, however, furnished the Commission. In the Writ ofExecution, it declared SP Resolution No. 98-112 null and void and ordered thereinstatement in the service all the plaintiffs with payment of backwagescommencing from January 1, 1999. Likewise directed is the payment ofseparation and other benefits for the plaintiffs who opted to retire or can nolonger be reinstated in the service. For emphasis, the pertinent portions ofWrit of Execution dated August 31, 2001 read, as follows:

"1. Declaring Resolution No. 98-112, series of 1998, of the SangguniangPanlungsod of Cadiz City, NULL and VOID;



"2. Ordering the immediate reinstatement of all plaintiffs to their employmentin the City Government of Cadiz with payment of back wages from January 1,1999 until fully reinstated to their former positions or their equivalent withoutloss of seniority rights and benefits, under existing laws;

"3. Ordering the payment of separation and other benefits for plaintiffs whoopted to retire or cannot be reinstated;

"4. Ordering the defendant to pay each of the plaintiffs P10,000.00 as moraldamages;

"5. Ordering defendant to pay plaintiffs attorney’s fees of P200,000.00,litigation expenses of P20,000.00 and court appearance fees at rate ofP3,000.00 per hearing.

"The counterclaim of defendant is dismissed for lack of merit.

" WHEREAS, on Motion for Execution Pending the Appeal, this Courtissued an Order dated July 25, 2001, which reads:

"This is to resolve plaintiff’s Motion for Exec ution Pending Appeal. TheCourt heard the parties on July 11, 2001.

"Plaintiffs argue that many of plaintiffs are beyond the threshold ofmiddle age and further delay in the implementation of reinstatement to their

former position would only exacerbate the precarious economic condition theyare now in. Most of them are financially distressed and living on the charity ofrelatives and friends. Their children have lost two years of their quest foreducation and better life. Not a few are facing foreclosures on mortgages theyhave unwillingly entered into have the money to tide them over. A few havedied, and many have gotten sick. Any delay would drive deeper the knife ofinjustice, which had inflicted untold injury and misery.

"As provided for in Section 2(a) of Rule 39, of the 1997 Rules of CivilProcedure, let a Writ of Execution Pending Appeal issues.

"The Clerk of Court is directed to issue the corresponding Writ ofExecution.

"SO ORDERED.

"Cadiz City, July 25, 2001."



In compliance with the Writ, incumbent Mayor Escalante issuedExecutive Order No. 10-SGE-2001 dated August 9, 2001. Under Section 4thereof, the reinstatement of those employees who opted to retire were held inabeyance by the Mayor. Their reinstatement was conditioned on the fullsettlement by the proper authorities of the issue of whether or not reinstated

employees pursuant to CSC Resolutions and who previously applied forpayment of terminal leave pay will no longer be reinstated but be paid insteadtheir retirement benefits. Based on the records of the Commission, Ibañezwas among those employees who applied for the payment of terminal leavepay but who nonetheless questioned their separation from the service.However, it is unclear whether she was among those plaintiffs ordered by theRTC to receive instead payment of separation and other benefits. Pertinently,the Section reads, as follows:

"Section 4. Suspension of Reinstatement of Plaintiffs who ObtainedRetirement Benefits. – The reinstatement of those plaintiffs who opted to retireunder any retirement law shall, in the meantime, be held in abeyance until theissue on their entitlement to reinstatement shall have been fully settled by the

proper authorities. The City Legal Officer is hereby directed to settle this issuenot later than August 20, 2001."

Subsequently, records show that the City Government informed theCommission of the reinstatement of the separated employees in the serviceand the appropriation and funding of their salaries in compliance toaforementioned writ of execution issued by the court. This information wascontained in a letter dated September 25, 2001 sent by Atty. Michael S.Borromeo, City Legal Officer. Accordingly, excluded from the reinstatement inthe service are those who have reached the compulsory retirement age.

Taking into account the fact that the Commission in CSC Resolution 00-1132 allowed Ibañez to question her termination notwithstanding herapplication for retirement benefits following the decision of the Supreme Courtin Yulo vs. CSC (219 SCRA 470) and had in fact ordered her reinstatement inCSC Resolution Nos. 01-0730 and 01-1203 vis-a-vis the ruling of the RTCordering the payment of retirement benefits to those plaintiffs who opted toretire, Ibañez is inquiring if there is a legal impediment to her re-appointmentconsidering her application for retirement and collection of terminal leave pay.

The issue is squarely settled in the case of Yulo vs. CSC wherein theSupreme Court unequivocally declared that employees who opted to retire asa result of reorganization and thereafter received their separation benefits are



not precluded from assailing their termination and claim for reinstatement.Pertinently, said ruling reads, as follows:

"Neither can we sustain petitioner’s claim that the overt acts ofMamplata, et al. in filing their separation clearances and accepting terminal

leave benefits estop them from further claiming reinstatement. xxx In anyevent, receipt by private respondents of their separation benefits does not

preclude them from assailing the termination of their services and praying fortheir reinstatements."

The fact that the employees illegally dismissed received their terminalleave pay cannot be considered as waiver of their right to question thetermination of their services (Urgelio vs. Osmena, Jr., 10 SCRA 253). This isreiterated in CSC Resolution No. 99-1068 (Mary Grace Bedayos, et al.dated May 21, 1999), to wit:

"x x x the fact that the appellants applied for the payment of theirterminal leave. Said act cannot be construed as acquiescence to thetermination and will not estop them from questioning the legality of theirseparation from the service."

The Commission takes notice of Ibañez financial condition at the timeshe was informed of her separation from the service. Low salaried, as she is,without stable and fixed source of income other than those coming from heremployment in government, naturally, she will succumb to the monetization of

her leave credit, it being the immediate source of financial relief. She cannot,therefore, be faulted to have applied for and collected the benefit in order tofeed her family.

Relative to question of whether the ruling of the Supreme Court in theaforementioned, Yulo case wherein it directed for the reinstatement of theseparated employees and payment of backwages deducting therefrom theamount received by said employees representing the separation and terminalbenefits finds application to her and other employees similarly reiterated, theanswer is in the affirmative. The Supreme Court is unequivocal in the matter.

In the dispositive portion, it ruled that the amount received by the affectedemployees as their separation and terminal benefits shall be deducted fromthe backwages awarded to them. For clarity, the dispositive portion of thepertinent case is reproduced hereunder en toto:

" WHEREFORE, the petition is DISMISSED for lack of merit. Accordingly, the Municipality of Calamba, Laguna is hereby ordered to



REINSTATE the twenty (20) personnel named in CSC Resolution No. 90-472and pay their backwages equivalent to five (5) years (Cristobal v. Melchor, 78SCRA 175 [1997]; Ginzon v. Municipality of Murcia, 158 SCRA 1 [1988]) lessthe amount of terminal pay received, it appearing from private respondentsmanifestation dated January 11, 1993 that they are still jobless from the time

of their removal from the service up to the present."

As regards the payment of backwages in case reinstatement is ordered,the answer is also in the affirmative. It should be stressed that when agovernment employee is declared to have been illegally dismissed andreinstatement was later on ordered, for all intents and purposes he isconsidered as not to have left his office. Thus, he is entitled to all the right andprivileges and emoluments that accrue to him by virtue of his office (Tañalavs. Legaspi, 13 SCRA 567 cited in CSC Resolution No. 94-5306 Orogo,Manuel T.). In Ibañez’ case, her separation from the service was declared notin order, consequently, she is entitled to receive backsalaries.

Finally, on the issue of her reappointment. The Commission sees nolegal impediment to her reappointment. Section 4 of Republic Act No. 6656(An Act to Protect the Security of Tenure of Civil Service Officers andEmployees in the Implementation of GovernmentReorganization) explicitly provides that officers and employees holdingpermanent appointments enjoy preferential right of reappointment to theirformer position or in case there are not enough comparable positions, topositions next lower in rank. Thus, one’s entitlement to be reappointed in aposition in the new staffing pattern is guided by the rule of preference .Needless to say, the employee should possess the qualifications required ofthe position (Section 6, supra).

Considering that Ibañez was already issued a re-appointment asInformation Officer III on January 1, 2001 and presumably assumed the dutiesof the office, such appointment can no longer be withdrawn much lesswithheld pursuant to the order of RTC. Section 1, Rule IV of MC No. 40, s.1998 provides:

"SEC. 1. An appointment issued in accordance with pertinent laws andrules shall take effect immediately upon its issuance by the appointingauthority, and if the appointee has assumed the duties of the position, he shallbe entitled to receive his salary at once without awaiting the approval of hisappointment by the Commission. The appointment shall remain effective untildisapproved by the Commission. In no case shall an appointment take effectearlier than the date of its issuance."



Thus, an appointment proposed as permanent and approved as suchby the Commission cannot unilaterally be withdrawn or held in abeyance. Thisis so because upon its issuance and the appointee’s assumption, the latteracquired a vested right not merely equitable right such that she can only beremoved for cause.

At this juncture, it bears to stress that the jurisdiction over casesinvolving reorganization in national as well as local government is vested bylaw to the Commission. Section 8 of Republic Act No. 6656 expressly bestowsupon the Commission the authority to decide appeals filed by employeesaggrieved by appointments or non-appointments resulting fromreorganization. Section 8 reads, as follows:

"SECTION 8. An officer or employee who is still not satisfied with thedecision of the appointing authority may further appeal within ten (10) days

from receipt thereof to the Civil Service Commission which shall render adecision within thirty (30) days from filing thereof."

Thus, the Commission shall render a decision within thirty (30) daysfrom the filing of the appeal. Its decision shall be final and executory (Section19 (3), Rules on Government Reorganization) unless a seasonal relief istaken therefrom before the Court of Appeals via a petition for review underRule 43 of the Rules of Court. Therefore, in the absence of anydeclaration/pronouncement from the Court of Appeals or Supreme Courtreversing or modifying the final decision of this Commission, the order of theRegional Trial Court cannot operate to bar or hold in abeyance, muchlessqualify this Commission’s order of reinstatement/reappointment.

WHEREFORE, the Civil Service Commission rules that there is no legalimpediment to the reappointment of Celina Z. Ibañez to the position ofInformation Officer III. Accordingly, the Decision of the Regional Trial Courtdated June 20, 2001 directing for the payment of separation pay to employeeswho opted to retire shall not operate to bar or hold in abeyance theimplementation of Civil Service Commission Resolution No. 01-1230 datedJune 16, 2001 directing for her reinstatement in the service in consonance tothe ruling of Supreme Court in the of Yulo vs. CSC (219 SCRA 470).

The Commission further rules that employees ordered by theCommission to be reappointed in the new staffing pattern pursuant to theResolution is entitled to receive backsalaries computed from the time theywere unlawfully dismissed until actual reinstatement. From the amount of the



backwages awarded, there shall be deducted any amounts received asterminal pay.

Finally, employees who cannot be reinstated in the new staffing patternpursuant to the provision of Republic Act No. 6656 are entitled to separation

and retirement benefits in accordance with Section 21 of the Rules inGovernment Reorganization.

Quezon City, March 20, 2002.

(Signed)JOSE F. ERESTAIN, JR.

Commissioner

(Signed)KARINA CONSTANTINO-DAVID

Chairman

(Signed)J. WALDEMAR V. VALMORES

Commissioner

Attested by:

(Signed)ARIEL G. RONQUILLO

Director III

CPS.AGR.pvp.cm09-2002

FPG/JTS/RTM/X1/X8/jca171

NDC-99-0858

20010828-027 /ibañez’r

Republic of the Philippines

Supreme Court

Manila



EN BANC

REPUBLIC OF THE

PHILIPPINES, represented bythe CIVIL SERVICE

COMMISSION, Petitioner,

- versus -

MINERVA M.P. PACHEO, Respondent.

G.R. No. 178021

Present:

CORONA, C.J., CARPIO, VELASCO, JR., LEONARDO-DE CASTRO, BRION, PERALTA, BERSAMIN,

DEL CASTILLO, ABAD, VILLARAMA, JR., PEREZ, MENDOZA,SERENO,

REYES, and PERLAS-BERNABE, JJ .

Promulgated:

January 25, 2012

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

D E C I S I O N

MENDOZA .:

Before this Court is a petition for review on certiorari under Rule 45 of the

Rules of Court filed by petitioner Republic of the Philippines, represented by the

Office of the Solicitor General (OSG), which assails the February 22, 2007

Decision[1] and the May 15, 2007 Resolution[2] of the Court of Appeals (CA) in

http://sc.judiciary.gov.ph/jurisprudence/2012/january2012/178021.htm#_ftn1










Due to the then inaction of the BIR, Pacheo filed a

complaint[5] dated May 30, 2002, before the CSC- National Capital Region (CSC-

NCR), praying for the nullification of RTAO No. 25-2002. In its July 22, 2002

Order ,

[6]

the CSC- NCR treated Pacheo’s Complaint as an appeal and dismissed thesame, without prejudice, for failure to comply with Sections 73 and 74 of Rule

V(b) of the Uniform Rules on Administrative Cases in the Civil Service.[7]

In its Letter-reply[8] dated September 13, 2002, the BIR, through its

Deputy Commissioner for Legal and Inspection Group, Edmundo P.

Guevara (Guevara), denied Pacheo’s protest for lack of merit. It contended that her

reassignment could not be considered constructive dismissal as she maintained her

position as Revenue Attorney IV and was designated as Assistant Chief of Legal

Division. It emphasized that her appointment to the position of Revenue Attorney

IV was without a specific station. Consequently, she could properly be reassigned

from one organizational unit to another within the BIR. Lastly, she could not

validly claim a vested right to any specific station, or a violation of her right to

security of tenure.

Not in conformity with the ruling of the BIR, Pacheo appealed her case

before the CSC.

On November 21, 2005, the CSC issued Resolution No. 051697[9] granting

Pacheo’s appeal, the dispositive portion of which reads:

WHEREFORE, the instant appeal of Minerva M.P. Pacheo ishereby GRANTED. The Bureau of Internal Revenue Revenue Travel

Assignment Order No. 25-2002 datedMay 7, 2002, on the reassignment ofPacheo to the Legal Division Revenue Region No. 4 San Fernanado,Pampanga, is hereby declared NOT VALID. ACCORDINGLY, Pacheoshould now be recalled to her original station. This Commission, howeverrules and so holds that the withholding by the BIR of Pacheo‘s salary forthe period she did not report to work is justified.





















The CSCRO No. III is directed to monitor the implementation ofthis Resolution.

In granting Pacheo’s appeal, the CSC explained:

On the second issue, this Commission finds merit in appellant‘scontention that her reassignment in not valid.

Of pertinent application thereto is Rule III, Section 6 of CSC

Memorandum Circular No. 40, series of 1998, dated December 14,

1998, which provides:

Section 6. Other Personnel Movements. The followingpersonnel movements which will not require issuance of an

appointment shall nevertheless require an office order byduly authorized official.

a. Reassignment – Movement of an employeefrom one organizational unit to another in the samedepartment or agency which does not involve reduction inrank, status or salary. If reassignment is done withoutconsent of the employee being reassigned it shall be allowedfor a maximum period of one year. Reassignment ispresumed to be regular and made in the interest of publicservice unless proven otherwise or it constitutes constructivedismissal.

No assignment shall be undertaken if doneindiscriminately or whimsically because the law is notintended as a convenient shield for the appointing/disciplining authority to harass or oppress a subordinate onthe pretext of advancing and promoting public interest.

Reassignment of small salaried employee is notpermissible if it causes significant financial dislocation.‘

Although reassignment is a management prerogative, the same

must be done in the exigency of the service without diminution in rank,status and salary on the part of the officer or employee being temporarilyreassigned. Reassignment of ‗small salaried ‘ employees, however is notallowed if it will cause significant financial dislocation to the employeereassigned. Otherwise the Commission will have to intervene.

The primary purpose of emphasizing ‗small salaried employees‘ inthe foregoing rule is to protect the ‗rank and file‘ employees from possible



abuse by the management in the guise of transfer/reassignment. TheSupreme Court in Alzate v. Mabutas, (51 O.G. 2452) ruled:

‗ x x x [T]he protection against invalid transfer isespecially needed by lower ranking employees. The Court

emphasized this need when it ruled that officials in theunclassified service, presidential appointees, men in thegovernment set up occupy positions in the higher echelonshould be entitled to security of tenure, unquestionable alesser sol[ci]itude cannot be meant for the little men, thatgreat mass of Common underprivileged employees-thousand there are of them in the lower bracket, whogenerally are without connections and who pin their hopesof advancement on the merit system instituted by our civilservice law.’

In other words, in order to be embraced in the term ‗small-salariedemployees‘, the latter must belong to the ‗rank and file‘; and, his/hersalary would be significantly reduced by virtue of thetransfer/reassignment. ‗ Rank and file‘ was categorized as those occupyingthe position of Division Chief and below, pursuant to CSC Resolution No.

1, series of 1991, dated January 28, 1991.

The facts established on record show that Pacheo belongs to therank and file receiving an average monthly salary of Twenty ThousandPesos (₱20,000.00) under the salary standardization law and a monthlytake home pay of Fourteen Thousand Pesos (₱14,000.00). She has tospend around Four Thousand Pesos (₱4,000.00) a month for her

transportation expenses as a consequence of her reassignment, roughlytwenty eight percent (28%) of her monthly take home pay. Clearly,Pacheo‘s salary shall be significantly reduced as a result of herreassignment.

In ANORE, Ma. Theresa F., this Commission ruled:

‘Anore, a lowly salaried employee, was reassigned toan isolated island 15 kilometers away from her original place of assignment. She has to travel by boat with only onetrip a day to report to her new place of assignment in anoffice without any facilities, except its bare structure. Worst,the municipality did not provide her with transportationallowance. She was forced to be separated from her family,



look for a boarding house where she can stay while in theisland and spend for her board and lodging. Thecircumstances surrounding Anore’s reassignment is exactlythe kind of reassignment that is being frowned upon bylaw.’

This Commission, however, rules and so holds that the withholding by the BIR of her salaries is justified as she is not entitled thereto since sheis deemed not to have performed any actual work in the government onthe principle of no work no pay.

Accordingly, Pacheo should now be reinstated to her originalstation without any right to claim back salary as she did not report to workeither at her new place of assignment or at her original

station.[10]

[Emphases in the original]

Still not satisfied, Pacheo moved for reconsideration. She argued that the

CSC erred in not finding that she was constructively dismissed and, therefore,

entitled to back salary.

On March 7, 2006, the CSC issued Resolution No. 060397[11] denying

Pacheo’s motion for reconsideration.

Undaunted, Pacheo sought recourse before the CA via a petition for review.

In its February 22, 2007 Decision, the CA reversed the CSC Resolution and

ruled in favor of Pacheo, the fallo of which states:

WHEREFORE, the petition is GRANTED. Resolution nos.051697 and 060397 dated November 21, 2005 and March 7, 2006,respectively, of the Civil Service Commission are REVERSED and SET

ASIDE. A new judgment is hereby entered finding petitioner to have been

constructively dismissed and ordering her immediate reinstatement withfull backwages and benefits.

SO ORDERED.[12]

In setting aside CSC Resolution Nos. 051697 and 060397, the CA held that:














While this Court agrees that petitioner‘s reassignment was not validconsidering that a diminution in salary is enough to invalidate suchreassignment, We cannot agree that the latter has not been constructivelydismissed as a result thereof.

It is well to remember that constructive dismissal does not alwaysinvolve forthright dismissal or diminution in rank, compensation, benefitsand privileges. For an act of clear discrimination, insensibility, or disdain by an employer may become so unbearable on the part of the employeethat it could foreclose any choice by him except to forgo his continuedemployment.

The management prerogative to transfer personnel must beexercised without grave abuse of discretion and putting to mind the basicelements of justice and fair play. The employer must be able to show that

the transfer is not unreasonable, inconvenient, or prejudicial to theemployee.

In this case, petitioner‘s reassignment will result in the reduction ofher salary, not to mention the physical burden that she would suffer in waking up early in the morning to travel daily from Quezon City to SanFernando, Pampanga and in coming home late at night.

Clearly, the insensibility of the employer is deducible from theforegoing circumstances and petitioner may have no other choice but toforego her continued employment.

Moreover, it would be inconsistent to hold that the reassignment was not valid due to the significant reduction in petitioner‘s salary andthen rule that there is no constructive dismissal just because saidreduction in salary will not render petitioner penniless if she will report toher new place of assignment. It must be noted that there is constructivedismissal when the reassignment of an employee involves a diminution inpay.

Having determined that petitioner has been constructivelydismissed as a result of her reassignment, We shall resolve whether or notshe is entitled to backwages.

In denying petitioner‘s claim for backwages, the CSC held:

This Commission, however, rules and so holds that the withholding by the BIR of her salaries is justified as she isnot entitled thereto since she is deemed not to have



performed any actual work in the government on theprinciple of no work no pay.

Accordingly, Pacheo should now be reinstated to heroriginal station without any right to claim back salary as she

did not report for work either at her new place of assignmentor at her original station.‖

Pacheo, while belonging to the rank-and-fileemployees, is holding a responsible position as an AssistantDivision Chief, who could not just abandon her duties merely because she protested her re-assignment and filed an appealafterwards.

We do not agree.

If there is no work performed by the employee there can be no wageor pay, unless of course the laborer was able, willing and ready to work but was illegally locked out,dismissed or suspended. The ―No work, no pay‖principle contemplates a ―no work‖ situation where the employees voluntarily absent themselves.

In this case, petitioner was forced to forego her continuedemployment and did not just abandon her duties. In fact, she lost no timein protesting her reassignment as a form of constructive dismissal. It issettled that the filing of a complaint for illegal dismissal is inconsistent with a charge of abandonment. The filing of the complaint is proof enough

of his desire to return to work, thus negating any suggestion ofabandonment.

Neither do we agree with the OSG when it opined that:

No one in the Civil Service should be allowed to decideon whether she is going to accept or not any work dictatedupon by the exigency of the service. One should considerthat public office is a public trust and that the act ofrespondent CIR enjoys the presumption of regularity. Touphold the failure of respondent to heed the RTAO would

result in chaos. Every employee would put his or her vestedinterest or personal opinion over and above the smoothfunctioning of the bureaucracy.

Security of tenure is a right of paramount value as recognized andguaranteed under Sec. 3, Art. XIII of the 1987 Constitution.



The State shall afford full protection to labor, xxx and

promote full employment and equality of employmentopportunities for all . It shall guarantee the rightsof all workers to xxx security of tenure xxx

Such constitutional right should not be denied on mere speculationof any similar unclear and nebulous basis.

In Garcia, et al. v. Lejano, et al ., the Supreme Court rejected theOSG‘s opinion that when the transfer is motivated solely by the interest ofthe service of such act cannot be considered violative of the Constitution,thus:

―We do not agree to this view. While temporarytransfers or assignments may be made of the personnel of a bureau or department without first obtaining the consent ofthe employee concerned within the scope of Section 79 (D) ofthe Administrative Code which party provides that ‗TheDepartment Head also may, from time to time, in theinterest of the service, change the distribution among theseveral Bureaus and offices of his Department of theemployees or subordinates authorized by law,‘ such cannot be undertaken when the transfer of the employee is with a view to his removal. Such cannot be done without theconsent of the employee. And if the transfer is resorted to asa scheme to lure the employee away from his permanent

position, such attitude is improper as it would in effect resultin a circumvention of the prohibition which safeguards thetenure of office of those who are in the civil service. It is not without reason that this Court made the followingobservation:

To permit circumvention of the constitutional prohibition inquestion by allowing removal from office without lawfulcause, in the form or guise of transfers from one office toanother, or from one province to another, without theconsent of the transferee, would blast the hopes of these

young civil service officials and career men and women,destroy their security and tenure of office and make for asubservient, discontented and inefficient civil service forcethat sways with every political wind that blows and plays upto whatever political party is in the saddle. That would be farfrom what the framers of our Constitution contemplated anddesired. Neither would that be our concept of a free and



efficient Government force, possessed of self-respect andreasonable ambition.‖

Clearly, the principle of ―no work, no pay‖ does not apply in thiscase. As held in Neeland v. Villanueva, Jr:

―We also cannot deny back salaries and othereconomic benefits on the ground that respondent Clerk ofCourt did not work. For the principle of ―no work, no pay‖does not apply when the employee himself was forced out of job. Xxx Indeed, it is not always true that back salaries arepaid only when work is done. Xxx For another, the pooremployee could offer no work since he was forced out of work. Thus, to always require complete exoneration orperformance of work would ultimately leave the dismissaluncompensated no matter how grossly disproportionate the

penalty was. Clearly, it does not serve justice to simplyrestore the dismissed employee to his position and deny himhis claim for back salaries and other economic benefits onthese grounds. We would otherwise be serving justice inhalves.‖

An illegally dismissed government employee who is later orderedreinstated is entitled to back wages and other monetary benefits from thetime of his illegal dismissal up to his reinstatement. This is only fair andsensible because an employee who is reinstated after having been illegallydismissed is considered as not having left his office and should be given a

comparable compensation at the time of his reinstatement.

When a government official or employee in the classified civilservice had been illegally dismissed, and his reinstatement had later beenordered, for all legal purposes he is considered as not having left his office,so that he is entitled to all the rights and privileges that accrue to him by

virtue of the office that he held.[13]

The CSC moved for reconsideration but its motion was denied by the CA in its May 15,

2007 Resolution.

Hence, this petition.







THE ISSUES

WHETHER OR NOT THE ASSAILED DECISION IS LEGALLY

CORRECT IN DECLARING THAT RESPONDENT WAS

CONSTRUCTIVELY DISMISED AND ENTITLED TO BACK WAGES,

NOTWITHSTANDING RESPONDENT’S REFUSAL TO COMPLY WITH

BIR RTAO No. 25-2002 WHICH IS IMMEDIATELY EXECUTORY

PURSUANT TO SECTION 24 (F) OF P.D. 807.

WHETHER OR NOT RESPONDENT SUFFERED A DIMINUTION IN

HER SALARY IN RELATION TO SECTION 6, RULE III OF CSC

MEMORANDUM CIRCULAR No. 40, SERIES OF 1998, DATED

DECEMBER 14, 1998, AS A RESULT OF THE ISSUANCE [OF] BIR

RTAO No. 25-2002 ORDERING HER REASSIGNMENT FROM BIR RR

No. 7 IN QUEZON CITY TO BIR RR No. 4 IN SAN FERNANDO,

PAMPANGA.[14]

In her Memorandum,[15] Pacheo asserts that RTAO No. 25-2002, on the

pretense of the exigencies of the revenue service, was solely meant to harass her

and force her to resign. As a result of her invalid reassignment, she was

constructively dismissed and, therefore, entitled to her back salaries and monetary

benefits from the time of her illegal dismissal up to her reinstatement.

In its own Memorandum,[16] the CSC, through the OSG, argues that

constructive dismissal is not applicable in this case because it was Pacheo herself

who adamantly refused to report for work either in her original station or new

place of assignment in clear violation of Section 24 (f) of Presidential

Decree (PD) No. 807.[17] Citing jurisprudence,[18] the CSC avers that the RTAO is

immediately executory, unless otherwise ordered by the CSC. Therefore, Pacheo

should have first reported to her new place of assignment and then appealed her























case to the CSC if she indeed believed that there was no justification for her

reassignment. Since Pacheo did not report for work at all, she is not entitled to

backwages following the principle of ―no work, no pay.‖

THE COURT’S RULING

The petition fails to persuade.

It appears undisputed that the reassignment of Pacheo was not valid. In its

memorandum, the OSG initially argues for the validity of RTAO No. 25-2002

authorizing Pacheo’s reassignment from Quezon City to San Fernando, Pampanga.Later, however, it specifically prays for the reinstatement of CSC Resolution Nos.

051697 and 060397, which categorically declared RTAO No. 25-2002 as not valid.

In seeking such relief, the OSG has effectively accepted the finding of the CSC, as

affirmed by the CA, that Pacheo’s reassignment was indeed invalid. Since the issue

of Pacheo’s reassignment is already settled, the Court finds it futile to pass upon

the same at this point.

The question that remains to be resolved is whether or not Pacheo’sassignment constitutes constructive dismissal and, thus, entitling her to

reinstatement and backwages. Was Pacheo constructively dismissed by reason of

her reassignment?

The Court agrees with the CA on this point.

While a temporary transfer or assignment of personnel is permissible evenwithout the employee's prior consent, it cannot be done when the transfer is a

preliminary step toward his removal, or a scheme to lure him away from his

permanent position, or when it is designed to indirectly terminate his service, or

force his resignation. Such a transfer would in effect circumvent the provision

which safeguards the tenure of office of those who are in the Civil Service.[19]







Significantly, Section 6, Rule III of CSC Memorandum Circular No. 40,

series of 1998, defines constructive dismissal as a situation when an employee

quits his work because of the agency head’s unreasonable, humiliating, or

demeaning actuations which render continued work impossible. Hence, the

employee is deemed to have been illegally dismissed. This may occur although

there is no diminution or reduction of salary of the employee. It may be a transfer

from one position of dignity to a more servile or menial job.

The CSC, through the OSG, contends that the deliberate refusal of Pacheo to

report for work either in her original station in Quezon City or her new place of

assignment in San Fernando, Pampanga negates her claim of constructive dismissal

in the present case being in violation of Section 24 (f) of P.D. 807 [now Executive

Order (EO) 292, Book V, Title 1, Subtitle A, Chapter 5, Section 26 (6)].[20] It

further argues that the subject RTAO was immediately executory, unless otherwise

ordered by the CSC. It was, therefore, incumbent on Pacheo to have reported to her

new place of assignment and then appealed her case to the CSC if she indeed

believed that there was no justification for her reassignment.

Anent the first argument of CSC, the Court cannot sustain the proposition. It

was legally impossible for Pacheo to report to her original place of assignment

in Quezon Cityconsidering that the subject RTAO No. 25-2002 also reassigned

Amado Rey B. Pagarigan (Pagarigan) as Assistant Chief, Legal Division, from

RR4, San Fernando, Pampanga to RR7, Quezon City, the very same position

Pacheo formerly held. The reassignment of Pagarigan to the same position

palpably created an impediment to Pacheo’s return to her original station.

The Court finds Itself unable to agree to CSC’s argument that the subject

RTAO was immediately executory. The Court deems it necessary to distinguish

between a detail and reassignment, as they are governed by different rules.







A detail is defined and governed by Executive Order 292, Book V, Title 1,

Subtitle A, Chapter 5, Section 26 (6), thus:

(6) Detail . A detail is the movement of an employee from one agency toanother without the issuance of an appointment and shall be allowed, only

for a limited period in the case of employees occupying professional,technical and scientific positions. If the employee believes that there is no justification for the detail, he may appeal his case to the Commission.Pending appeal, the decision to detail the employee shall be executoryunless otherwise ordered by the Commission. [Underscoring supplied]

On the other hand, a reassignment is defined and governed by E.O. 292,

Book V, Title 1, Subtitle A, Chapter 5, Section 26 (7), thus:

(7) Reassignment .— An employee may be reassigned from one

organizational unit to another in the same agency; Provided , That suchreassignment shall not involve a reduction in rank, status or salaries.[Underscoring supplied]

The principal distinctions between a detail and reassignment lie in the place

where the employee is to be moved and in its effectivity pending appeal with the

CSC. Based on the definition, a detail requires a movement from one agency to

another while a reassignment requires a movement within the same agency.

Moreover, pending appeal with the CSC, an order to detail is immediately

executory, whereas a reassignment order does not become immediately effective.

In the case at bench, the lateral movement of Pacheo as Assistant Chief,

Legal Division from Quezon City to San Fernando, Pampanga within the same

agency is undeniably a reassignment. The OSG posits that she should have firstreported to her new place of assignment and then subsequently question her

reassignment. It is clear, however, fromE.O. 292, Book V, Title 1, Subtitle A,

Chapter 5, Section 26 (7) that there is no such duty to first report to the new place

of assignment prior to questioning an alleged invalid reassignment imposed upon



an employee. Pacheo was well within her right not to report immediately to

RR4, San Fernando, Pampanga, and to question her reassignment.

Reassignments involving a reduction in rank, status or salary violate anemployee’s security of tenure, which is assured by the Constitution, the

Administrative Code of 1987, and the Omnibus Civil Service Rules and

Regulations. Security of tenure covers not only employees removed without cause,

but also cases of unconsented transfers and reassignments, which are tantamount to

illegal/constructive removal.[21]

The Court is not unaware that the BIR is authorized to assign or reassign

internal revenue officers and employees as the exigencies of service may require.This authority of the BIR, however, should be prudently exercised in accordance

with existing civil service rules.

Having ruled that Pacheo was constructively dismissed, is she entitled to

reinstatement and back wages? The Court agrees with the CA that she is entitled to

reinstatement, but finds Itself unable to sustain the ruling that she is entitled to full

back wages and benefits. It is a settled jurisprudence[22] that an illegally dismissed

civil service employee is entitled to back salaries but limited only to a maximum

period of five (5) years, and not full back salaries from his illegal dismissal up to

his reinstatement.

WHEREFORE, the petition is DENIED. The assailed February 22,

2007 Decision and May 15, 2007 Resolution of the Court of Appeals, in CA-G.R.

SP No. 93781, are hereby AFFIRMED with MODIFICATION that respondent

Minerva M.P. Pacheo is hereby ordered reinstated without loss of seniority rights

but is only entitled to the payment of back salaries corresponding to five (5) years

from the date of her invalid reassignment on May 7, 2002.

SO ORDERED.










JOSE CATRAL MENDOZA Associate Justice

WE CONCUR:

RENATO C. CORONA Chief Justice

ANTONIO T. CARPIO PRESBITERO J. VELASCO, JR.

Associate Justice Associate Justice

TERESITA J. LEONARDO-DE CASTRO ARTURO D. BRION




DIOSDADO M. PERALTA LUCAS P. BERSAMIN


(On Leave)

MARIANO C. DEL CASTILLO ROBERTO A. ABAD


MARTIN S. VILLARAMA, JR. JOSE PORTUGAL PEREZ




(On Leave) MARIA LOURDES P. A. SERENO BIENVENIDO L. REYES


ESTELA M. PERLAS-BERNABE Associate Justice

C E R T I F I C A T I O N

Pursuant to Section 13, Article VIII of the Constitution, I hereby certify thatthe conclusions in the above Decision had been reached in consultation before the

case was assigned to the writer of the opinion of the Court.

RENATO C. CORONA Chief Justice

[1] Rollo, pp. 59-70. Penned by Associate Justice Magdangal M. De Leon with Associate Justice Rebecca De Guia-

Salvador and Associate Justice Ricardo R. Rosario, concurring. [2] Id. at 72-73.

[3] Id. at 118. [4] Id. at 119-121. [5] Id. at 122. [6] Id. at 123-124. [7] Section 73. Requirement of Filing . – The appellant shall furnish a copy of his appeal to the head of department or

agency concerned who shall submit his comment, together with the records, to the Commission within ten (10) days

from receipt thereof. Proof of service of the appeal on the head of department or agency shall be submitted with the

Commission.

http://sc.judiciary.gov.ph/jurisprudence/2012/january2012/178021.htm#_ftnref1























Section 74. Grounds for Dismissal . – An appeal involving non-disciplinary cases shall be dismissed on any of the

following grounds: a. The appeal is filed beyond the reglementary period; b. The filing fee of Three Hundred (₱300.00) has not been paid, or c. The appeal does not contain a certification on non-forum shopping.

[8] Rollo, pp. 125. [9] Id. at 148-155. [10] Id. at 79-81. [11] Id. at 82-85. [12] Id. at 69. [13] Citations omitted, id. at 64-69. [14] Id. at 45-46. [15] Id. at 279-283. [16] Id. at 254-273. [17] Section 24. Personnel Actions.

xxx (f) Detail. A detail is the movement on an employee from one agency to another without the issuance of an

appointment and shall be allowed, only for a limited period in the case of employees occupying professional,

technical and scientific positions. If the employee believes that there is no justification for the detail, he may appeal

his case to the Commission. Pending appeal, the decision to detail the employee shall be executory unless otherwise

ordered by the Commission.(Underscoring supplied) [18] Teotico v. Agda, 274 Phil. 960 (1991). [19] Bentain v. Court of Appeals, G.R. No. 89452, June 9, 1992, 209 SCRA 644, 648. [20] Section 26. Personnel Actions.

xxx (6) Detail. A detail is the movement on an employee from one agency to another without the issuance of an

appointment and shall be allowed, only for a limited period in the case of employees occupying professional,

technical and scientific positions. If the employee believes that there is no justification for the detail, he may appeal

his case to the Commission. Pending appeal, the decision to detail the employee shall be executory unless otherwise

ordered by the Commission. (Underscoring supplied) [21] Yenko v. Gungon, G.R. No. 165450, August 13, 2009, 595 SCRA 562, 576-577. [22] Id. at 580, citing Adiong v. Court of Appeals, 422 Phil. 713, 721 (2001); Marohombsar v. Court of Appeals, 382

Phil. 825, 836 (2000); San Luis v. Court of Appeals, Tan, Jr. v. Office of the President, G.R. No. 110936, February

4, 1994, 229 SCRA 677, 679; Salcedo v. Court of Appeals, 171 Phil. 368, 375 (1978); Balquidra v. CFI of Capiz, Branch II, 170 Phil. 208,221 (1977); Cristobal v. Melchor , 168 Phil. 328, 341 (1977).

Republic of the Philippines Supreme Court

Manila

EN BANC

THE CIVIL SERVICE G.R. No. 187858

COMMISSION,

Petitioner, Present:

CORONA, C.J.,
















































CARPIO,

VELASCO, JR.,LEONARDO-DE CASTRO,

BRION,

PERALTA,- versus - BERSAMIN,

DEL CASTILLO,* ABAD,**

VILLARAMA, JR.,PEREZ,

MENDOZA,** and

SERENO , JJ .

Promulgated:

RICHARD G. CRUZ,Respondent. AUGUST 9, 2011

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

D E C I S I O N

BRION, J .:

This petition for review on certiorari assails the decision[1] and the

resolution[2] of the Court of Appeals (CA) in CA-G.R. SP No. 105410. These

assailed CA rulings reversed and set aside the ruling of the Civil Service

Commission (CSC ) in Resolution No. 080305[3] that denied respondent Richard G.

Cruz’s prayer for the award of back salaries as a result of his reinstatement to his

former position.

THE FACTS

The respondent, Storekeeper A of the City of Malolos Water District

(CMWD), was charged with grave misconduct and dishonesty by CMWD General

Manager (GM ) Nicasio Reyes. He allegedly uttered a false, malicious and

damaging statement ( Masasamang tao ang mga BOD at General Manager ) against

http://sc.judiciary.gov.ph/jurisprudence/2011/august2011/187858.htm#_ftn1



















GM Reyes and the rest of the CMWD Board of Directors ( Board ); four of the

respondent’s subordinates allegedly witnessed the utterance. The dishonesty

charge, in turn, stemmed from the respondent’s act of claiming overtime pay

despite his failure to log in and out in the computerized daily time record for threeworking days.

The respondent denied the charges against him. On the charge of grave

misconduct, he stressed that three of the four witnesses already retracted their

statements against him. On the charge of dishonesty, he asserted that he never

failed to log in and log out. He reasoned that the lack of record was caused by

technical computer problems. The respondent submitted documents showing that

he rendered overtime work on the three days that the CMWD questioned.

GM Reyes preventively suspended the respondent for 15 days. Before the

expiration of his preventive suspension, however, GM Reyes, with the approval of

the CMWD Board, found the respondent guilty of grave misconduct and

dishonesty, and dismissed him from the service.[4]







CSC RULING

The respondent elevated the findings of the CMWD and his dismissal to the

CSC, which absolved him of the two charges and ordered his reinstatement. InCSC Resolution No. 080305, the CSC found no factual basis to support the charges

of grave misconduct and dishonesty.

In ruling that the respondent was not liable for grave misconduct, the CSC

held:

Cruz was adjudged guilty of grave misconduct for his alleged utterance of such

maligning statements, ― MASASAMANG TAO ANG MGA BOD AT GENERAL MANAGER‖. However, such utterance, even if it were true, does not constitute aflagrant disregard of rule or was actuated by corrupt motive. To the mind of the

Commission, it was a mere expression of disgust over the management style of

the GM and the Board of Directors, especially when due notice is taken of the factthat the latter officials were charged with the Ombudsman for various anomalous

transactions.[5]

In ruling that the charge of dishonesty had no factual basis, the CSC

declared:

Based on the records of the case, the Commission is not swayed that the

failure of Cruz to record his attendance on April 21 and 22, 2007 and May 5,2007, while claiming overtime pay therefor, amounts to dishonesty. Cruz duly

submitted evidence showing his actual rendition of work on those days. The

residents of the place where he worked attested to his presence thereat on the daysin question.

[6]

The CSC, however, found the respondent liable for violation of reasonable

office rules for his failure to log in and log out. It imposed on him the penalty of

reprimand but did not order the payment of back salaries.

The CMWD and the respondent separately filed motions for reconsideration

against the CSC ruling. CMWD questioned the CSC’s findings and the











respondent’s reinstatement. The respondent, for his part, claimed that he is entitled

to back salaries in light of his exoneration from the charges of grave misconduct

and dishonesty. The CSC denied both motions.

Both the CMWD and the respondent elevated the CSC ruling to the

CA via separate petitions for review under Rule 43 of the Rules of Court. The CA

dismissed the CMWD’s petition and this ruling has lapsed to finality.[7] Hence, the

issue of reinstatement is now a settled matter. As outlined below, the CA ruled in

the respondent’s favor on the issue of back salaries. This ruling is the subject of the

present petition with us.

CA RULING

Applying the ruling in Bangalisan v. Hon. CA,[8] the CA found merit in the

respondent’s appeal and awarded him back salaries from the time he was dismissed

up to his actual reinstatement. The CA reasoned out that CSC Resolution No.

080305 totally exonerated the respondent from the charges laid against him. The

CA considered the charge of dishonesty successfully refuted as the respondent

showed that he performed overtime service. The CA thereby rejected the CSC’s

contention that the charge of dishonesty had been merely downgraded to a lesser

offense; the CA saw the finding in CSC Resolution No. 080305 to be for an

offense (failing to properly record his attendance) entirely different from the

dishonesty charge because their factual bases are different. Thus, to the CA, CSC

Resolution No. 080305 did not wholly restore the respondent’s rights as an

exonerated employee as it failed to order the payment of his back salaries. The CA

denied the CSC’s motion for reconsideration.

ISSUE

WHETHER OR NOT [THE] RESPONDENT IS ENTITLED TO BACKSALARIES AFTER THE CSC ORDERED HIS REINSTATEMENT TO HIS

FORMER POSITION, CONSONANT WITH THE CSC RULING THAT HE











WAS GUILTY ONLY OF VIOLATION OF REASONABLE OFFICE

RULES AND REGULATIONS.[9]

CSC’s position

The CSC submits that the CA erred in applying the ruling in Bangalisan,

requiring as a condition for entitlement to back salaries that the government

employee be found innocent of the charge and that the suspension be unjustified.

CSC Resolution No. 080305 did not fully exculpate the respondent but found him

liable for a lesser offense. Likewise, the respondent’s preventive suspension

pending appeal was justified because he was not exonerated.

The CSC also submits that the factual considerations in Bangalisan are

entirely different from the circumstances of the present case. In Bangalisan, the

employee, Rodolfo Mariano, a public school teacher, was charged with grave

misconduct for allegedly participating, together with his fellow teachers, in an

illegal mass action. He was ordered exonerated from the misconduct charge

because of proof that he did not actually participate in the mass action, but was

absent from work for another reason. Although the employee was found liable for

violation of office rules and regulations, he was considered totally exonerated

because his infraction stemmed from an act entirely different (his failure to file a

leave of absence) from the act that was the basis of the grave misconduct charge

(the unjustified abandonment of classes to the prejudice of the students).

The CSC argues that in the present case, the charge of dishonesty and the

infraction committed by the respondent stemmed from a single act – his failure to properly record his attendance. Thus, the respondent cannot be considered totally

exonerated; the charge of dishonesty was merely downgraded to a violation of

reasonable office rules and regulations.







Accordingly, the CSC posits that the case should have been decided

according to our rulings in Jacinto v. CA[10] and De la Cruz v. CA[11] where we held

the award of back salaries to be inappropriate because the teachers involved were

not fully exonerated from the charges laid against them.

The respondent’s position

The respondent maintains that he is entitled to reinstatement and back

salaries because CSC Resolution No. 080305 exonerated him from the charges laid

against him; for the purpose of entitlement to back salaries, what should control is

his exoneration from the charges leveled against him by the CMWD. That the

respondent was found liable for a violation different from that originally charged is

immaterial for purposes of the back salary issue.

The respondent also asserts that the Bangalisan ruling squarely applies since

the CSC formally admitted in its Comment to CMWD’s petition for review before

t

he CA that the penalty of reprimand is not a reduced penalty for the penalty of

dismissal imposable for grave misconduct and dishonesty.[12]

THE COURT’S RULING

We deny the petition for lack of merit.

The issue of entitlement to back salaries, for the period of suspension

pending appeal,[13]

of a government employee who had been dismissed but wassubsequently exonerated is settled in our jurisdiction. The Court’s starting point for

this outcome is the ―no work -no pay‖ principle – public officials are only entitled

to compensation if they render service. We have excepted from this general

principle and awarded back salaries even for unworked days to illegally dismissed

















or unjustly suspended employees based on the constitutional provision that ―no

officer or employee in the civil service shall be removed or suspended except for

cause provided by law‖;[14] to deny these employees their back salaries amounts to

unwarranted punishment after they have been exonerated from the charge that ledto their dismissal or suspension.[15]

The present legal basis for an award of back salaries is Section 47, Book V

of the Administrative Code of 1987.

Section 47. Disciplinary Jurisdiction. – x x x.

(4) An appeal shall not stop the decision from being executory, and in case the

penalty is suspension or removal, the respondent shall be considered as havingbeen under preventive suspension during the pendency of the appeal in the event

he wins an appeal. (italics ours)

This provision, however, on its face, does not support a claim for back salaries

since it does not expressly provide for back salaries during this period; our

established rulings hold that back salaries may not be awarded for the period

of preventive suspension[16] as the law itself authorizes its imposition so that its

legality is beyond question.

To resolve the seeming conflict, the Court crafted two conditions before an

employee may be entitled to back salaries: a) the employee must be found innocent

of the charges and b) his suspension must be unjustified.[17] The reasoning behind

these conditions runs this way: although an employee is considered under

preventive suspension during the pendency of a successful appeal, the law itself

only authorizes preventive suspension for a fixed period; hence, his suspension

beyond this fixed period is unjustified and must be compensated.


















The CSC’s rigid and mechanical application of these two conditions may

have resulted from a misreading of our rulings on the matter; hence, a look at our

jurisprudence appears in order.

Basis for award of back salar ies

The Court had the occasion to rule on the issue of entitlement to back

salaries as early as 1941,[18] when Section 260 of the Revised Administrative Code

of 1917 ( RAC )[19] was the governing law. The Court held that a government

employee, who was suspended from work pending final action on his

administrative case, is not entitled to back salaries where he was ultimatelyremoved due to the valid appointment of his successor. No exoneration or

reinstatement, of course, was directly involved in this case; thus, the question of

back salaries after exoneration and reinstatement did not directly arise. The Court,

however, made the general statement that:

As a general proposition, a public official is not entitled to any compensation

if he has not rendered any service, and the justification for the payment of

salary during the period of suspension is that the suspension was

unjustified or that the official was innocent. Hence, the requirement that, toentitle to payment of salary during suspension, there must be either reinstatement

of the suspended person or exoneration if death should render reinstatement

impossible.[20]

(emphasis and underscoring ours)

In Austria v. Auditor General ,[21] a high school principal, who was penalized

with demotion, claimed payment of back salaries from the time of his suspension

until his appointment to the lower position to which he was demoted. He argued

that his later appointment even if only to a lower position of classroom teacher

amounted to a reinstatement under Section 260 of the RAC. The Court denied his

claim, explaining that the reinstatement under Section 260 of the RAC refers to the

same position from which the subordinate officer or employee was suspended and,



















therefore, does not include demotional appointments. The word ―reinstatement‖

was apparently equated to exoneration.

In the 1961 case of Gonzales v. Hon. Hernandez, etc. and

Foja s[22] interpreting the same provision, the Court first laid down the requisites forentitlement to back salaries. Said the Court:

A perusal of the decisions of this Cour t[23]

x x x show[s] that back salaries are

ordered paid to an officer or an employee only if he is exonerated of the

charge against him and his suspension or dismissal is found and declared to

be illegal. In the case at bar, [the employee] was not completely exonerated,

because although the decision of the Commissioner of Civil Service [ordering

separation from service] was modified and [the employee] was allowed to be

reinstated, the decision [imposed upon the employee the penalty of two monthssuspension without pay]. [emphasis and underscoring ours]

Obviously, no exoneration actually resulted and no back salary was due; the

liability for the offense charged remained, but a lesser penalty was imposed.

In Villamor, et al. v. Hon. Lacson, et al. ,[24]

the City Mayor ordered the

dismissal from the service of city employees after finding them guilty as charged.

On appeal, however, the decision was modified by considering ―the suspension ofover one year x x x, already suffered x x x [to be] sufficient punishment‖[25] and by

ordering their immediate reinstatement to the service. The employees thereupon

claimed that under Section 695 of the RAC, the punishment of suspension without

pay cannot exceed two (2) months. Since the period they were not allowed to work

until their reinstatement exceeded two months, they should be entitled to back

salaries corresponding to the period in excess of two months. In denying the

employees’ claim for back salaries, the Court held:

The fallacy of [the employees’] argument springs from their assumption that the

modified decision had converted the penalty to that of suspension. The modified

decision connotes that although dismissal or resignation would be the proper

penalty, the separation from work for the period until their reinstatement, would be deemed sufficient. Said decision did not, in the least, insinuate that suspension

should have been the penalty.


















x x x [T]he modified decision did not exonerate the petitioners. x x x

And even if we consider the punishment as suspension, before a public official oremployee is entitled to payment of salaries withheld, it should be shown that the

suspension was unjustified or that the employee was innocent of the charges

proffered against him.

[26]

On the whole, these rulings left the application of the conditions for the

award of back salaries far from clear. Jurisprudence did not strictly observe the

requirements earlier enunciated in Gonzales as under subsequent rulings, the

innocence of the employee alone served as basis for the award of back salaries.

The innocence of the employee as sole basis foran award of back salar ies

In Tan v. Gimenez, etc., and Aguilar, etc. ,[27] we ruled that the payment of

back salary to a government employee, who was illegally removed from office

because of his eventual exoneration on appeal, is merely incidental to the ordered

reinstatement.

Tan was subsequently reiterated in Tañala v. Legaspi, et al. ,[28] a case

involving an employee who was administratively dismissed from the service

following his conviction in the criminal case arising from the same facts as in the

administrative case. On appeal, however, he was acquitted of the criminal charge

and was ultimately ordered reinstated by the Office of the President. Failing to

secure his actual reinstatement, he filed a mandamus petition to compel his

superiors to reinstate him and to pay his back salaries from the date of his

suspension to the date of his actual reinstatement. We found merit in his plea and

held:

[The employee] had been acquitted of the criminal charges x x x, and the

President had reversed the decision x x x in the administrative case which ordered

his separation from the service, and the President had ordered his reinstatement to















his position, it results that the suspension and the separation from the service of

the [employee] were thereby considered illegal. x x x.

x x x [In this case,] by virtue of [the President’s order of reinstatement],

[the employee’s] suspension and separation from the service x x x was thereby

declared illegal, so that for all intents and purposes he must be considered as nothaving been separated from his office. The lower court has correctly held that the[employee] is entitled to back salaries.

[29]

The Tañala ruling was reiterated in Cristobal v. Melchor ,[30] Tan, Jr. v.

Office of the President ,[31]

De Guzman v. CSC [32] and Del Castillo v. CSC [33] - cases

involving government employees who were dismissed after being found

administratively liable, but who were subsequently exonerated on appeal.

In Garcia v. Chairman Commission on Audit ,[34] the Court held that – where

the employee, who was dismissed after being found administratively liable for

dishonesty, was acquitted on a finding of innocence in the criminal case (for

qualified theft) based on the same acts for which he was dismissed – the executive

pardon granted him in the administrative case (in light of his prior acquittal)

entitled him to back salaries from the time of his illegal dismissal up to his actual

reinstatement.

The above situation should be distinguished from the case of an employee

who was dismissed from the service after conviction of a crime and who was

ordered reinstated after being granted pardon. We held that he was not entitled to

back salaries since he was not illegally dismissed nor acquitted of the charge

against him.[35]

Incidentally, under the Anti-Graft and Corrupt Practices Act,[36] if the publicofficial or employee is acquitted of the criminal charge/s specified in the law, he is

entitled to reinstatement and the back salaries withheld during his

suspension, unless in the meantime administrative proceedings have been filed

against him.

































In Tan, Jr. v. Office of the President ,[37] the Court clarified that the silence of

Section 42 (Lifting of Preventive Suspension Pending Administrative

Investigation) of the Civil Service Decree[38] on the payment of back salaries,

unlike its predecessor ,

[39]

is no reason to deny back salaries to a dismissed civilservant who was ultimately exonerated.

Section 42 of P.D. No. 807, however, is really not in point x x x [as] it

does not cover dismissed civil servants who are ultimately exonerated and ordered

reinstated to their former or equivalent positions. The rule in the latter instance,

just as we have said starting with the case of Cristobal vs. Melchor is that when "agovernment official or employee in the classified civil service had been illegally

dismissed, and his reinstatement had later been ordered, for all legal purposes he

is considered as not having left his office, so that he is entitled to all the rights and

privileges that accrue to him by virtue of the office that he held."[40]

These cited cases illustrate that a black and white observance of the

requisites in Gonzales is not required at all times. The common thread in these

cases is either the employee’s complete exoneration of the administrative charge

against him (i.e., the employee is not found guilty of any other offense), or the

employee’s acquittal of the criminal charge based on his innocence. If the case

presented falls on either of these instances, the conditions laid downin Gonzales become the two sides of the same coin; the requirement that the

suspension must be unjustified is automatically subsumed in the other requirement

of exoneration.

I ll egal suspension as sole basis for an award of

back salar ies

By requiring the concurrence of the two conditions, Gonzales apparently

made a distinction between exoneration and unjustified suspension/dismissal. This

distinction runs counter to the notion that if an employee is exonerated, the

exoneration automatically makes an employee’s suspension unjustified. However,

in Abellera v. City of Baguio, et al.,[41] the Court had the occasion to illustrate the






















independent character of these two conditions so that the mere illegality of an

employee’s suspension could serve as basis for an award of back salaries.

Abellera, a cashier in the Baguio City Treasurer’s Office, was ordereddismissed from the service after being found guilty of dishonesty and gross

negligence. Even before the period to appeal expired , the City of Baguio dismissed

him from the service. On appeal, however, the penalty imposed on him was

reduced ―to two months suspension, without pay‖ although the appealed decision

was affirmed ―in all other respects.‖

When the issue of Abellera’s entitlement to back salaries reached the Court,

we considered the illegality of Abeller a’s suspension - i.e., from the time he was

dismissed up to the time of his actual reinstatement – to be a sufficient ground to

award him back salaries.

The rule on payment of back salaries during the period of suspension of a

member of the civil service who is subsequently ordered reinstated, is alreadysettled in this jurisdiction. Such payment of salaries corresponding to the period

when an employee is not allowed to work may be decreed not only if he is found

innocent of the charges which caused his suspension (Sec. 35, RA 2260), but also

whenthe suspension is unjustified.

In the present case, upon receipt of the [Civil Service Commissioner’s]

decision x x x finding [Abellera] guilty, but even before the period to appeal hadexpired, [the Baguio City officials] dismissed [Abellera] from the service and

another one was appointed to replace him. [Abellera’s] separation x x x before

the decision of the Civil Service Commissioner had become final was

evidently premature. [The Baguio City officials] should have realized that

[Abellera] still had the right to appeal the Commissioner's decision to the Civil

Service Board of Appeals within a specified period, and the possibility of that

decision being reversed or modified.[42]

As it did happen on such appeal x x x the

penalty imposed by the Commissioner was reduced x x x to only 2 monthssuspension. And yet, by [theBaguio City officials’] action, [Abellera] was

deprived of work for more than 2 years. Clearly, Abellera’s second suspension

from office [i.e., from the time he was dismissed up to his actualreinstatement] was unjustified, and the payment of the salaries corresponding

to said period is, consequently, proper.[43]

(emphases and underscoring ours)











The import of the Abellera ruling was explained by the Court in the

subsequent case of Yarcia v. City of Baguio[44] that involved substantially similar

facts. The Court clarified that the award of back salaries in Abellera was based on

the premature execution of the decision (ordering the employee’s dismissal fromthe service), resulting in the employee’s unjustified ―second suspension.‖ Under

the then Civil Service Rules, the Commissioner of Civil Service had the discretion

to order the immediate execution of his decision in administrative cases ―in the

interest of public service.‖ Unlike in Abellera, this discretion was exercised

in Yarcia; consequently, the employee’s separation from the service pending his

appeal ―remained valid and effective until it was set aside and modified with the

imposition of the lesser penalty.‖[45]

The unjustified ―second suspension‖ mentioned in Abellera actually refers to

the period when the employee was dismissed from the service up to the time of his

actual reinstatement. Under our present legal landscape, this period refers to

―suspension pending appeal.‖[46]

In Miranda v. Commission on Audit ,[47] the Court again had the occasion to

consider the illegality of the suspension of the employee as a separate ground toaward back salaries. Following the filing of several administrative charges against

him, Engr. Lamberto Miranda was ―preventively‖ suspended from June 2,

1978 to May 7, 1986. He was reinstated on May 22, 1986. On October 7, 1986, the

administrative case against him was finally dismissed ―for lack of evidence.‖When his claim for back salaries (from the time he was ―preventively‖ suspended

up to his actual reinstatement) was denied by the Commission on Audit, he broughta certiorari petition with this Court.

In granting the petition, the Court ruled that since the law[48] limits the

duration of preventive suspension to a fixed period, Engr. Miranda’s suspensionfor almost eight (8) years is ―unreasonable and unjustified.‖ Additionally, the

Court observed that the dropping of the administrative case against Engr. Mirandafor lack of evidence ―is even an eloquent manifestation that the suspension is

unjustified.‖[49] The Court held:






















This being so, Engineer Miranda is entitled to backwages during the period of his

suspension as it is already settled in this jurisdiction that a government official or

employee is entitled to backwages not onlyif he is exonerated in the

administrative case but also when the suspension is unjustified.[50]

(emphases

and underscoring ours)

Jur isprudential defi niti on of exoneration

The mere reduction of the penalty on appeal does not entitle a government

employee to back salaries if he was not exonerated of the charge against him. This

is the Court’s teaching in City Mayor of Zamboanga v. CA.[51] In this case, the

employee was initially found guilty of disgraceful and immoral conduct and was

given the penalty of dismissal by the City Mayor of Zamboanga. On appeal,

however, the CA limited the employee’s guilt to improper conduct and

correspondingly reduced the penalty to ―six-months suspension without pay with a

stern warning that repetition of the same or similar offense will be dealt with more

severely."[52] The CA also awarded him ―full backwages.‖[53]

We held that the CA erred in awarding back salaries by reiterating the

principle that back salaries may be ordered paid to an officer or employee only ifhe is exonerated of the charge against him and his suspension or dismissal is found

and declared to be illegal.[54]

The Court had the occasion to explain what constitutes ―exoneration‖

in Bangalisan v. Hon. CA ,[55] the respondent’s cited case. In this case, the

Secretary of Education found the public school teachers guilty as charged and

imposed on them the penalty of dismissal. On appeal, the CSC affirmed the

Secretary’s ruling but reduced the penalty imposed to suspension without pay.

However, the CSC found one of the teachers (Mariano) guilty only of violation of

reasonable office rules and regulations, and only penalized her with reprimand.

None of the petitioning public school teachers were awarded back salaries.

























On appeal to this Court, we awarded back salaries to Mariano. We explained

that since the factual premise of the administrative charges against him - i.e., his

alleged participation in the illegal mass actions, and his suspension - was amply

rebutted, then Mariano was in effect exonerated of the charges against him andwas, thus, entitled to back salaries for the period of his suspension pending

appeal.

With respect to petitioner Rodolfo Mariano, payment of his back wages isin order. A reading of the resolution of the [CSC] will show that he was

exonerated of the charges which formed the basis for his suspension. The

Secretary of the DECS charged him with and he was later found guilty of grave

misconduct x x x [and] conduct prejudicial to the best interest of the service x x xfor his participation in the mass actions x x x. It was his alleged participation in

the mass actions that was the basis of his preventive suspension and, later, his

dismissal from the service.

However, the [CSC], in the questioned resolution, made [the] finding that

Mariano was not involved in the "mass actions" but was absent because he was in

Ilocos Sur to attend the wake and interment of his grandmother. Although theCSC imposed upon him the penalty of reprimand, the same was for his violation

of reasonable office rules and regulations because he failed to inform the school

or his intended absence and neither did he file an application for leave covering

such absences.

x x x x

However, with regard to the other petitioners, the payment of their back

wages must be denied. Although the penalty imposed on them was only

suspension, they were not completely exonerated of the charges against them. TheCSC made specific findings that, unlike petitioner Mariano, they indeed

participated in the mass actions. It will be noted that it was their participation in

the mass actions that was the very basis of the charges against them and their

subsequent suspension.[56]

Bangalisan clearly laid down the principle that if the exoneration of the

employee is relative (as distinguished from complete exoneration), an inquiry into

the factual premise of the offense charged and of the offense committed must be

made. If the administrative offense found to have been actually committed is of

lesser gravity than the offense charged, the employee cannot be considered







exonerated if the factual premise for the imposition of the lesser penalty remains

the same. The employee found guilty of a lesser offense may only be entitled to

back salaries when the offense actually committed does not carry the penalty of

more than one month suspension or dismissal.

[57]

Bangalisan reiterated that the payment of back salaries, during the period of

suspension of a member of the civil service who is subsequently ordered reinstated,

may be decreed only if the employee is found innocent of the charges which

caused the suspension and when the suspension is unjustified. This

pronouncement was re-echoed in Jacinto v. CA ,[58] De la Cruz v. CA ,[59] and Hon.

Gloria v. CA.[60] Taking off from Bangalisan, the Court in De la Cruz categorically

stated:

The issue of whether back wages may be awarded to teachers ordered

reinstated to the service after the dismissal orders x x x were commuted by the

CSC to six (6) months suspension is already settled.

In Bangalisan v. Court of Appeals, we resolved the issue in the negative

on the ground that the teachers were neither exonerated nor unjustifiably

suspended, two (2) circumstances necessary for the grant of back wages inadministrative disciplinary cases.

[61]

In Hon. Gloria, involving the same factual situation as Bangalisan, the CA

awarded the public school teachers back salaries - for the period beyond the

allowable period of preventive suspension - since they were ultimately exonerated.

In affirming the CA, the Court

distinguished preventive suspension from suspension pending appeal for the

purpose of determining the extent of an employee’s entitlement to back salaries.

The Court ruled that under Executive Order ( E.O.) No. 292, there are two kinds of

preventive suspension of civil service employees who are charged with offenses

punishable by removal or suspension: (i) preventive suspension pending

investigation[62] and (ii) preventive suspension pending appeal;[63] compensation is

due only for the period of preventive suspension pending appeal should the






























employee be ultimately exonerated.[64] Citing Floyd R. Mechem's A Treatise on the

Law of Public Offices and Officers,[65] Hon. Gloria ruled:

Thus, it is not enough that an employee is exonerated of the charges

against him. In addition, his suspension must be unjustified. The caseof Bangalisan v. Court of Appeals itself similarly states that "payment of salaries

corresponding to the period [1] when an employee is not allowed to work may bedecreed if he is found innocent of the charges which caused his

suspension and [2] when the suspension is unjustified.‖[66]

(emphases and

underscoring ours)

A careful reading of these cases would reveal that a strict observance of the

second condition for an award of back salaries becomes important only if the

employee is not totally innocent of any administrative infraction. As previously

discussed, where the employee is completely exonerated of the

administrative charge or acquitted in the criminal case arising from the same facts

based on a finding of innocence, the second requirement becomes subsumed in the

first. Otherwise, a determination of the act/s and offense/s actually committed and

of the corresponding penalty imposed has to be made.

Unjustif ied suspension

On the suspension/dismissal aspect, this second condition is met upon a

showing that the separation from office is not warranted under the circumstances

because the government employee gave no cause for suspension or dismissal. This

squarely applies in cases where the government employee did not commit the

offense charged, punishable by suspension or dismissal (total exoneration); or the

government employee is found guilty of another offense for an act different from

that for which he was charged.

Bangali san, Jacin to and De la Cruz ill ustrate

the appli cation of the two conditi ons














Both the CA and the respondent applied Bangalisan to justify the award of

back salaries. The CSC argues against this position with the claim that the rulings

in Jacinto and De la Cruz , not Bangalisan, should apply. After due consideration,

we see no reason why the cited rulings and their application should be pitted

against one another; they essentially espouse the same conclusions after applying

the two conditions for the payment of back salaries.

Bangalisan, Jacinto and De la Cruz all stemmed from the illegal mass

actions of public school teachers in Metro Manila in 1990. The teachers were

charged with grave misconduct, gross neglect of duty, and gross violation of civil

service law, rules and regulations, among others. The then Secretary of Education

found them guilty and dismissed them from the service. The CSC, on appeal,

ordered the teachers reinstated, but withheld the grant of their back salaries. The

CSC found the teachers liable for conduct prejudicial to the best interest of the

service and imposed on them the penalty of suspension. The CSC reasoned that

since the teachers were not totally exculpated from the charge (but were found

guilty of a lesser offense), they could not be awarded back salaries.

When these cases reached the Court, the issue of the teachers’ entitlement to

back salaries was raised. The teachers claimed that they were entitled to back

salaries from the time of their dismissal or suspension until their reinstatement,

arguing that they were totally exonerated from the charges since they were found

guilty only of conduct prejudicial to the best interest of the service.

Under this factual backdrop, we applied the two conditions anddistinguished between the teachers who were absent from their respective classes

because they participated in the illegal mass action, on one hand, and the teachers

who were absent for some other reason, on the other hand.



With respect to the teachers who participated in the illegal mass actions, we

ruled that they were not entitled to back salaries since they were not exonerated.

We explained that liability for a lesser offense, carrying a penalty less than

dismissal, is not equivalent to exoneration. On the second condition, we ruled thattheir suspension is not unjustified since they have given a ground for their

suspension – i.e., the unjustified abandonment of their classes to the prejudice of

their students, the very factual premise of the administrative charges against them –

for which they were suspended.

With respect to the teachers who were away from their classes but did not

participate in the illegal strike, the Court awarded them back salaries, considering

that: first , they did not commit the act for which they were dismissed and

suspended; and second , they were found guilty of another offense, i.e., violation of

reasonable office rules and regulations which is not penalized with suspension or

dismissal. The Court ruled that these teachers were totally exonerated of the

charge, and found their dismissal and suspension likewise unjustified since the

offense they were found to have committed only merited the imposition of the

penalty of reprimand.

These cases show the Court’s consistent stand in determining the propriety

of the award of back salaries. The government employees must not only be found

innocent of the charges; their suspension must likewise be shown to be unjustified.

The Present Case

We find that the CA was correct in awarding the respondent his back salariesduring the period he was suspended from work, following his dismissal until his

reinstatement to his former position. The records show that the charges of grave

misconduct and dishonesty against him were not substantiated. As the CSC found,

there was no corrupt motive showing malice on the part of the respondent in



making the complained utterance. Likewise, the CSC found that the charge of

dishonesty was well refuted by the respondent’s evidence showing that he rendered

overtime work on the days in question.

We fully respect the factual findings of the CSC especially since the CA

affirmed these factual findings. However, on the legal issue of the respondent’s

entitlement to back salaries, we are fully in accord with the CA’s conclusion that

the two conditions to justify the award of back salaries exist in the present case.

The first condition was met since the offense which the respondent was

found guilty of (violation of reasonable rules and regulations) stemmed from an act

(failure to log in and log out) different from the act of dishonesty

(claiming overtime pay despite his failure to render overtime work) that he was

charged with.

The second condition was met as the respondent’s committed offense merits

neither dismissal from the service nor suspension (for more than one month), but

only reprimand.

In sum, the respondent is entitled to back salaries from the time he was

dismissed by the CMWD until his reinstatement to his former position - i.e., for the

period of his preventive suspension pending appeal. For the period of his

preventive suspension pending investigation, the respondent is not entitled to any

back salaries per our ruling in Hon. Gloria.[67]

WHEREFORE, the petition is hereby DENIED. Costs against the petitioner.

SO ORDERED.







ARTURO D. BRION

Associate Justice

WE CONCUR:

RENATO C. CORONA

Chief Justice

ANTONIO T. CARPIO

Associate Justice

PRESBITERO J. VELASCO, JR. Associate Justice

TERESITA J. LEONARDO-DE CASTRO

Associate Justice

DIOSDADO M. PERALTA

Associate Justice

LUCAS P. BERSAMIN

Associate Justice

(no part) MARIANO C. DEL CASTILLO

Associate Justice

(on leave)

ROBERTO A. ABAD

Associate Justice

MARTIN S. VILLARAMA, JR. Associate Justice

JOSE PORTUGAL PEREZ

Associate Justice

(on leave)

JOSE CATRAL MENDOZA

Associate Justice



MARIA LOURDES P. A. SERENO

Associate Justice

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, it is hereby certifiedthat the conclusions in the above Decision had been reached in consultation before the

case was assigned to the writer of the opinion of the Court.

RENATO C. CORONA

Chief Justice

* No part.** On official leave.[1] Penned by Associate Justice (now Supreme Court Associate Justice) Mariano C. del Castillo, and

concurred in by Associate Justices Monina Arevalo-Zenarosa (ret.) and Apolinario D. Bruselas, Jr.; dated February

20, 2009. Rollo, pp. 32-43.[2] Dated May 8, 2009; id . at 44-45.[3]

Penned by Commissioner Mary Ann Z. Fernandez-Mendoza; id . at 250-258.[4] CMWD Memorandum No. 31-07 dated June 6, 2007; id . at 60. [5] Id . at 72-73.[6] Id . at 73.[7] Docketed as CA-G.R. SP No. 104704, entitled ―The City of Malolos Water District v. Civil Service

Commission and Richard G. Cruz .‖ The CA Decision promulgated on June 25, 2010 became final and executory on

July 29, 2010, per Entry of Judgment dated January 10, 2011.[8] 342 Phil. 586 (1997).[9] Rollo, p. 21.[10] 346 Phil. 656 (1997).[11] 364 Phil. 786 (1999).[12] Rollo, p. 282.[13] Hon. Gloria v. CA, 365 Phil. 744 (1999).[14] This provision uniformly exists in the 1935, 1973 and 1987 Constitutions.[15] Tan v. Gimenez, etc., and Aguilar, etc., 107 Phil. 17 (1960).[16] Hon. Gloria v. CA, supra note 13.[17] Bangalisan v. CA, supra note 8.[18] Reyes v. Hernandez , 71 Phil. 397 (1941).[19] Section 260 of the RAC reads:

Payment of salary accruing pending suspension. – When the chief of a Bureau or Office

suspends a subordinate officer or employee from duty, the person suspended shall not receive pay

during suspension unless the Department Head shall so order; but upon subsequent reinstatement

of the suspended person or upon his exoneration, if death should render reinstatement impossible,

http://sc.judiciary.gov.ph/jurisprudence/2011/august2011/187858.htm#_ftnref1

































































any salary so withheld shall be paid, but without prejudice to the application of the disciplinary

provisions of section six hundred and ninety-five hereof. [20] Reyes v. Hernandez , supra note 18, at 398.[21] No. L-21918, January 24, 1967, 19 SCRA 79.[22] 112 Phil. 160, 166 (1961). [23] Gonzales v. Hernandez , ibid., did not specify the cases it relied upon for its pronouncement. A survey of

prior jurisprudence, however, reveals the following as bases: Reyes v. Hernandez , supra note 18; Batungbakal v.

National Development Company, 93 Phil. 182 (1953); National Rice and Corn Corp. v. NARIC Workers’ Union, 98

Phil. 563 (1956); Tabora v. Montelibano, et al., 98 Phil. 800 (1956); and Tan v. Gimenez, etc., and Aguilar, etc.,

supra note 15. [24] 120 Phil. 1213 (1964).[25] Id . at 1215.[26] Id . at 1218-1219.[27] Supra note 15.[28] 121 Phil. 541 (1965). [29] Id. at 551-553.[30] 189 Phil. 658 (1980).[31] G.R. No. 110936, February 4, 1994, 229 SCRA 677.[32] G.R. No. 101105, March 11, 1994, 231 SCRA 169. The illegality of the dismissal in this case resulted

from the invalidity of the reorganization that authorized the employee’s dismissal. [33] 343 Phil. 734 (1997). [34] G.R. No. 75025, September 14, 1993, 226 SCRA 356, 362-363.[35] Sabello v. Department of Education, Culture and Sports, 259 Phil. 1109, 1114 (1989).[36] Section 13 of Republic Act (R.A.) No. 3019 reads:

Suspension and loss of benefits. — Any incumbent public officer against whom any

criminal prosecution under a valid information under this Act or under Title 7, Book II of the

Revised Penal Code or for any offense involving fraud upon government or public funds or

property whether as a simple or as a complex offense and in whatever stage of execution and

mode of participation, is pending in court, shall be suspended from office. Should he be convicted

by final judgment, he shall lose all retirement or gratuity benefits under any law, but if he is

acquitted, he shall be entitled to reinstatement and to the salaries and benefits which he failed to

receive during suspension, unless in the meantime administrative proceedings have been filed

against him. [37]

Supra note 31.[38] Section 42 of Presidential Decree (P.D.) No. 807 reads: Lifting of Preventive Suspension Pending Administrative Investigation. When the

administrative case against the officer of employee under preventive suspension is not finally

decided by the disciplining authority within the period of ninety (90) days after the date of

suspension of the respondent who is not a presidential appointee, the respondent shall be

automatically reinstated in the service: Provided, That when the delay in the disposition of the case

is due to the fault, negligence or petition of the respondent, the period of delay shall not be

counted in computing the period of suspension herein provided.[39] R.A. No. 2260 or Civil Service Act of 1959. Section 35 of R.A. No. 2260 reads:

Lifting of Preventive Suspension Pending Administrative Investigation. When the

administrative case against the officer or employee under preventive suspension is not finally

decided by the Commissioner of Civil Service within the period of sixty (60) days after the date of

suspension of the respondent, the respondent shall be reinstated in the service. If the respondentofficer or employee is exonerated, he shall be restored to his position with full pay for the period

of suspension. (italics ours) [40] Tan, Jr. v. Office of the President , supra note 31, at 679.[41] No. L-23957, March 18, 1967, 19 SCRA 600.[42] Under Section 28 of the Civil Service Rules implementing R.A. No. 2260 (Civil Service Act of 1959), the

Commissioner of Civil Service has the discretion to order the immediate execution of his decision in administrative

cases (J. Barredo’s Dissent in Yarcia v. City of Baguio, etc., 144 Phil. 351 [1970]). [43] See Neeland v. Villanueva, Jr., A.M. No. P-99-1316, August 31, 2001, 364 SCRA 204, 217, where the

Court awarded back salaries to a Clerk of Court and Ex-officio Provincial Sheriff, whom the Court ordered











































































dismissed from the service for gross misconduct. The resolution of dismissal was immediately implemented. On

reconsideration, however, the Court found him guilty of simple neglect of duty and imposed on him only the penalty

of fine. In granting his subsequent request for back salaries from the time of his dismissal until his reinstatement, the

Court considered, among others, the prematurity of the immediate execution of the resolution of dismissal as basis

for the award.[44] Supra note 42. [45] Citing Villamor, et al. v. Hon. Lacson, et al., supra note 24, which was also cited in Sales v. Mathay, Sr.,

etc., et al., 214 Phil. 153 (1984). [46] See Bautista v. Peralta, No. L-21967, September 29, 1966, 18 SCRA 223, where the Court considered

the ―second suspension‖ mentioned in Abellera v. City of Baguio, et al., supra note 41 , as a ―preventive suspension.‖

At the time, R.A. No. 2260 allows the payment of back salaries for the entire period of suspension in the event of

exoneration. At present, there is a clear legal distinction between preventive suspension ( i.e., suspension pending

investigation) and suspension pending appeal.[47] G.R. No. 84613, August 16, 1991, 200 SCRA 657.[48] Section 35 of R.A. No. 2260 and Section 42 of P.D. No. 807. [49] Miranda v. Commission on Audit, supra note 47, at 662.[50] Ibid. [51] G.R. No. 80270, February 27, 1990, 182 SCRA 785. [52] Id . at 788.[53] Ibid. [54] The Court also relied on Section 78 of Batas Pambansa Bilang 337 which required that an employeemust be exonerated of the charges in order that he may be paid his back salaries. See also Yarcia v. City of

Baguio, supra note 42, where the Court held that the mere reduction, on appeal, of the penalty imposed (from

dismissal to a fine of six months pay), without however exonerating the employee from the charge (of dishonesty)

against him, does not entitle him to back salaries.[55] Supra note 8.[56] Id . at 598-599.[57] If the proper penalty imposable for the offense actually committed does not exceed one month, then there

would have been no occasion for a suspension pending appeal since a decision imposing the penalty of suspension

for not more than thirty days or fine in an amount not exceeding thirty days salary is final and not subject to appeal.

(See Book V, Section 47, par. 2 of Executive Order No. 292; Section 7, Rule III of Administrative Order No.

7, Rules of Procedure of the Office of the Ombudsman, dated April 10, 1990, as amended by Administrative Order

No. 17 dated September 15, 2003 which took effect on November 19, 2003.) [58]

Supra note 10. [59] Supra note 11.[60] Supra note 13.[61] De la Cruz v. CA, supra note 11, at 797.[62] Book V, Title I, Subtitle A, Section 51 of E.O. No. 292.[63] Book V, Title I, Subtitle A, Section 47(4) of E.O. No. 292.[64] The Court ruled that the absence of a provision in P.D. No. 807 and later in E.O. No. 292 allowing the

payment of back salaries during the period of preventive suspension, unlike in Act No. 2711 and R.A. No. 2260,

evidences a legislative intent to disallow payment of back salaries for the period of preventive suspension regardless

of the employee’s exoneration. But the payment of back salaries per se, that is, without regard to the duration of the

payment, has been consistently recognized.[65] §864. Officer not entitled to Salary during Suspension from Office. - An officer who has been lawfully

suspended from his office is not entitled to compensation for the period during which he was so suspended, even

though it be subsequently determined that the cause for which he was suspended was insufficient . The reason givenis "that salary and perquisites are the reward of express or implied services, and therefore cannot belong to one who

could not lawfully perform such services. [66] Hon. Gloria v. CA, supra note 13, at 762.[67] The preventive suspension pending the investigation of the charges is not imposed as a penalty but only

to enable the disciplining authority to conduct an unhampered investigation; the preventive suspension in this regard

is a necessary sacrifice, which holding a public office requires.











































































Today is Sunday, June 01, 2014

Republic of the PhilippinesSUPREME COURT

Manila

SECOND DIVISION

No. 81390 August 29, 1989

HANIEL OLACAO, ALBERTO AGUILON, AMADO AGUILON, LIBERATO AGUILON, VENANCIO AGUILON, CENONLON, CESAR ALCANTARA, FRANCISCO ALERIA, FRUCTUOUSO ALERIA, PEDRO ALERIA, IGNACIO ALMAQU

NCISCO AMONGAN, MARCELINO AREGLON, HONORIO ARANDIA, TEODORO ASOQUE, SERGIO BAGUIO, TIRSUIO, SENANDO BAJA, VELLAJUADO BALENIA, SIMPLICIO BANOC, FELIPE BAROLA, PEDRO BAROLA, EDILBON, PATROCINIO BARON, CONRADO BASTIDA, MACASAWANG BAUTE, CRESENCIO BONGCAHIG, LEONORATAMANTE, PABLO BUSTAMANTE, CELEDONIO BUTULAN, LEOPOLDO CAGUTOM, IGMIDIO CAINGLET, GAUDELLOTES, LEONARDO CAMELLOTES, FORTUNATO CAPILITAN, FRANCISCO CAPILITAN, RAFAEL CARAMAT,NCISCO CARTEGENA, NAPOLEON CASTRO, FERMIN CASTILLO, ROBERTO CATIPAY, BERNARDO CEBUCO,ONIO CELOSIA, CIRILO CERO, MACARIO CERO, FERNANDO COBALES, GABRIEL COBALES, SERGIO CONCH

ELIO CONGRESO, FLORENTINO CONSIGNA, EXU-PERIO CUBERO, ROGELIO CUBERO, TIMOTEO DAPLIN, ANINGO, EBODIO DONGIS, DELFIN ECO, RICARDO ENDRIGA, BIENVENIDO ESPINOSA, PAULINO ESTALANE, BE

REMOS, JUAN ESTREMERA, SAMUEL FALAR, HILARIO FEJI, JR., HENRY FONTILLAS, DOMINGO GIDA, RODOLRRA, CESAR IBANEZ, JULIAN IBANEZ, JOVENCIO INOCEDA, HONORATO IROY, DOROTEO JOVITA, ESTELITONILLO, ALMA LABANDIA, CIPRIANO LABRADOR, FELIX LAGANG, RODRIGO LARODA, LEOPOLDO LAURENTEUNDINO LIMBAGA, CRISPIN LIPARANON, NONITO LIPARANON, ROGELIO LOPEZ, WILLIAM LUZARAN, CIPRIALAY, GUILLERMO MADJOS, CRISPIN MADULARA, CIPRIANO MAGLANA, LEOPOLDO MAGLANA, MARCOSLANA, FLO-RENCIO MAGNO, HONESTO MAGNO, HERMINIO MAGNO, SEVERINO MAGONCIA, TRANQUILINOLING, TRANQUILINO MALAZA, ROGELIO MALINAO, AGUSTIN MANDAWE, ARNULFO MANLIMOS, FLAVIANO

ANO, EUNILO MANTE, PEDRO MAPANO JR., VICTORIANO MARSADA, PEDRO MARAGANAS, GERONIMO MARNARDO MARQUEDA, NICOMEDES MARQUEDA, JOSE MICABALO, TEODORICO MORATA, FLORENTINO MORELO MULAY, FEDERICO MULLET, DIOSDADO MURILLO, MEQUIAS MUSA, FELICIDARIO MUYALDE, SERGIO NAARDO OBANE, NAPOLEON OLACAO, CONSTANCIO PALCONE, PATERNO PALCONE, ALEJANDRO PAYOR, ROCANE, CASIMIRO PEREGRINO, FLORO POL, EUTIQUIO POMALOY, WILLIAM POMALOY, ZOSIMO PORLAS,STANTINO RAMISES, CARLITO REAMBONANCA, ARCADIO REDUCTO, LORENZO REYES, HERMOGENES RULTOR RULIDA, BENITO SALOVERES, FLORENTINO SANICO, GREGORIO DELOS SANTOS, CATALINO SELIM,GENIES SARVIDA, FRANCISCO SENDO, CATALINO SERNA, CELSO SOLANTE, ROBERTO SOLOMON, MARIAMITH, MEMORITO TAER, SIMEON TAGBILARAN, GREGORIO TELEN, PASCUAL TELEN, JAIME TIBALLA, CARLINADOR TIO, JAMBO TIO, SAMSON TIO, MARTIN TIO, CANDIDO TORREJOS, JOSE TORREON, CORCOPIO TORITO TUMALA, PETRONILO TUMALA, VECIO AGUILON, LEOPOLDO CEBUCO, CRISANTO LABRADOR, DIONISFAN, TEODORO LORETO, VICENTE TIO, BERNARDO MALUBAY, REMO CUIZON, PETRONILO LOR, EDGARDOINGO, TOMAS LINGO, ARMANDO ALTRES AND DANILA SABINO, petitioners



NATIONAL LABOR RELATIONS COMMISSION, EASTCOAST DEVELOPMENT ENTERPRISES, SPOUSESSTANCIO and LEODEGARIA MAGLANA, ANTONIO FLORENDO, MIRIAM MAGLANA SANTAMARIA, MAGLANA AS MANAGEMENT CORPORATION, EASTCOAST DEVELOPMENT ENTERPRISES, INCORPORATED, AND GEORGY, respondents.

e Lina A. Fuentes for petitioners.

o S. Castillo for Eastcoast Dev't. Enterprises, Inc.

sto M. Nombrado for respondents.

ENCIO-HERRERA, J .:

ng grave abuse of discretion, amounting to lack of jurisdiction, petitioners numbering 170 in all, assail the Decision of thnal Labor Relations Commission (NLRC) in NLRC Case No. 402-LR- XI-81 LRD Case No. STF-314-78) entitled "Natha

o, et als., vs. Eastcoast Development Enterprises, et al.," promulgated on 18 September 1987, setting aside the Decisior Arbiter Jose O. Libron awarding separation pay to petitioners, and sustaining, instead, private respondents' appeal on td of res judicata or, bar by prior judgment (Annex "A", Petition).

ollowing background facts, arranged chronologically, will put the controversy in proper perspective:

titioners were the former workers of private respondent Eastcoast Development Enterprises, then a single proprietorshid, operated and managed by respondents Spouses Constancio and Leodegaria Maglana, Antonio Florendo and Miriamana Santamaria ("Eastcoast," for brevity). It operated a logging concession at Kinablangan Baganga, Davao Oriental (p.).lâwphî1.ñèt

28 November 1977, petitioners filed with the then Ministry of Labor, Region XI, a complaint for non-payment of wages

gency living allowance (LRD Case No. ROXIMC 857-77) entitled Olacao and 189 others vs. Eastcoast Developmentprises, Inc." The Complaint was later certified to the Labor Arbitration Branch of the NLRC and docketed as NLRC Case

MC-XI-78 (hereinafter, the "Unpaid Wages Case").

December, 1977, "Eastcoast" decided to totally and permanently close its business. Thus, on 5 December 1977, Antonindo, the Executive Vice-president and General Manager, filed an application with the Regional Director of the then Minisr to formally close its business on account of business reverses (Annex "C-2," Petition, p. 167, Rollo). This application wably acted upon on 15 December 1977 by the Regional Director of the Ministry of Labor, Regional Office No. XI, Davao tion that "Eastcoast" should pay all unpaid wages and separation pay of all its employees (Annex "C-3," ibid. p. 168, Ro

5 January 1978 the owners of "Eastcoast" sold all their shareholdings to private respondent, George Q. Choy, and theany was thereafter known as Eastcoast Development Enterprises, Inc. ("Eastcoast, Inc.," for short).

21 January 1978, "Eastcoast, Inc.," under a new management, paid its 381 employees including petitioners herein, all d wages living allowances, overtime pay and all other benefits due them and termination pay , computed up to 30 NovemUpon receiving said payments, petitioners signed sworn individual documents entitled "Receipt and Release" whereby

absolutely and forever release and discharge the Eastcoast Development Enterprises, its successors assigns, of any and all claims and liabilities whatsoever insofar as my past salaries/wages,terminationovertime pay and other privileges accorded me by law and/or any other claims are concerned. (AnnexPetition, p. 169, Rollo).



30 May 1980, Labor Arbiter Porfirio T. Reyes dismissed the "Unpaid Wages Case" (NLRC Case No. 897-MC- XI-78) foand for being moot and academic in view of the "Receipt and Release" documents executed by the complainant- worke

30 September 1982, the appeal interposed by petitioners to the NLRC was dismissed by its First Division, stating in par

After a careful review of the entire record, we find no justification for disturbing the Labor Arbiter's find

conclusions. In our own view, the payment of the amounts stated in the deeds above referred to has rto (sic) this case academic because the receipt by the complainants of the said amounts is an establisand there is no showing that their execution of the said documents was tainted by anything that vitiateconsent. Indeed, it is difficult to believe that more than 300 people could at the same time be forced toexecute the same against their will. (p. 2, Decision, p. 240, Rollo)

he meantime, on 27 November 1978, petitioners filed another Complaint against "Eastcoast, Inc." this time for Illegalissal LRD Case No. STF-314-78) with the Regional Office No. XI, Davao City, of the then Ministry of Labor. They prayedtatement . . . with full backwages from the date of the illegal dismissal." The Complaint was later on certified to the Arbit

ch and docketed as NLRC Case No. 402-LR-XI-81 (the "Illegal Dismissal" Case).

ts Answer (Annex "C", Petition), "Eastcoast, Inc.," denied that it had dismissed petitioners illegally inasmuch as the tota

establishment was with prior clearance of the Regional Director of Labor, Region XI, Davao City, and that pursuant to ths Order of 15 December 1977, its employees including complainants, were fully compensated "all unpaid wages earnedation pay equivalent to 15 days for every year of service." As proof thereof, attached to the Answer was the "Receipt an

ase" sworn to by petitioner Nathaniel Olacao (Annex "C- 4").

21 April 1980 "Eastcoast, Inc." filed a Manifestation in the "Illegal Dismissal Case" to the effect that the "Unpaid Wagestill pending, and that "Eastcoast Development Enterprises" and Eastcoast Development Enterprises, Inc., are two differ

es (p. 3, Manifestation, p. 196 Rollo).

that point in time, it appears that the "Unpaid Wages Case" was still on appeal with the NLRC.

30 July 1981, petitioners filed an Amended Complaint in the "Illegal Dismissal Case," impleading as additional respond

ses Constancio and Leodegaria Maglana, Antonio Florendo, Miriam Maglana Santamaria, Maglana and Sons Managemoration, Eastcoast Development Enterprises, Inc., and George Q. Choy (Annex "L", p. 203, Rollo). The Amended Comped that the impleaded respondents connived with one another in entering into a fictitious contract of transferring the owncoast" to George Q. Choy to effect the illegal dismissal of petitioners. Thus, all of them should be considered jointly andally liable for the acts complained of.

e newly impleaded private respondents all denied liability. In its own Answer, filed on 19 August 1981, "Eastcoast, Inc." onnivance with them in the dismissal of complainants (Annex "O", p. 215, Rollo). lâwphî1.ñèt

he interim, the timber license of Eastcoast, Inc., was cancelled and since then up to the present it has completely ceasetions (Memorandum for Private Respondent, pp. 4 and 8).

20 May 1986, the NLRC Regional Arbitration Branch, Branch XI, through Labor Arbiter Jose Q. Libron, rendered a Declegal Dismissal Case," dismissing the charge of illegal dismissal for lack of merit and awarding separation pay. Thus:

CONFORMABLY WITH THE FOREGOING, judgment is hereby rendered:

(1) Dismissing the charge of illegal dismissal for lack of merit, thus denying the prayerreinstatement and backwages;

(2) Ordering respondents Eastcoast Development Enterprises, spouses Constancio M



and Leodegaria Maglana Antonio Florendo, Miriam Maglana Santamaria, Maglana anManagement Corporation, Eastcoast Development Enterprises, Inc., and George Q. Cpay jointly and severally the 170 complainants their separation pay equivalent to one mpay per year of service.

SO ORDERED. (Annex "Q", pp. 228-229, Rollo) (emphasis supplied)

2 July 1986, private respondents received copy of Labor Arbiter Libron's Decision.

14 July 1986, private respondents filed their Notice of Appeal and Appeal Memorandum in the "Illegal Dismissal Case"hing thereto, admittedly for the first time: (1) Labor Arbiter Reyes' Decision in the "Unpaid Wages Case" LRD Case No. ated 30 May 1980, dismissing the case because payments of wages had already been made; and (2) the NLRC Decisio

al (NLRC Case No. 897-MC-XI-78), promulgated on 30 September 1982, affirming Labor Arbiter Reyes' Decision.

18 September 1987, respondent NLRC reversed Labor Arbiter Libron's Decision in the "Illegal Dismissal Case," with theing findings:

. . . that sometime in November 1977, the present complainants filed a money claim against responde

before the Labor Arbitration Branch of Regional Office No. XI, Davao City, which was docketed as NLCase No. 897-MC-XI-78 LRD Case No. MC 85777); that one of the issues involved in said case was wthe documents signed by complainants and denominated as Receipts and Release were legally valid binding; that the said documents show that herein complainants received the specified amounts fromrespondents representing full and final payment of their salaries, wages, allowances, overtime pay ancompensation legally due them; together with termination pay and they forever release and dischargerespondents, its sucessors and assigns of any claims and liabilities whatsoever; that on May 30, 1980Labor Arbiter rendered a decision dismissing the case for lack of merit and being moot and academic;complanants in the above-entitled case appealed the said decision of the Labor Arbiter to the NationaLaborRElations Commsission which affirmed the decision of the Labor Arbiter, . . . .

Ordinarily, this Commission (NLRC) does not consider evidence and other pertinent documents not suduring the proceedings before the Arbitration level and submitted for the first time on appeal.

However, we are constrained to consider the evidence, ANNEXES 'A' and 'B' of the appeal which are decision of the Labor Arbiter dated May 30, 1980 and the decision of the First Division of this Commispromulgated on September 30, 1982 affirming the appealed decision of the Srbiter below.

It appears from the aforesaid decision of Labor Arbiter Porfirio Reyes dated May 30, 1980 which was by the First Division of the Commisssion that complainants in the case at bar were already paid their smaoney claims including termination pay .

We find therefore that this issue of termination pay in the cases under consideration was already resopassed upon in the said Decisions. This is clear case of res judicata or barred (sic) by prior judgemen(Annex "A", Petition, pp. 151-152, Rollo) (Emphasis supplied).

titioners' Motion for Reonsideration having been denied, they availed of the present Petition for Cetiorari, filed on 23 Jan

3 January 1989, we resolved to give due course and required the submittal of memoranda, the last of which was filed on

ivotal issue for resolution is whether or not the NLRC gravely abused its discretion amounting to lack of jurisdiction in re



r Arbiter Libron's Decision on the principal ground of res judicata.

oners, joined by the SOlicitor General, fault the NLRC with grave abuse of discretion. The NLRC and private respondenherhand, negate the charge.

phold the NLRC.

ual fact, the pendency of the "Unpaid Wages Case" (NLRC Case No. 897-MC-XI-78) was not raised for the first time whal Dismissal Case" was appealed to the NLRC. For, on 21 April 1980, before the Decision was rendered in the "Unpaid ", "Eastcoast" had filed a Manifestation in the "Illegal Dismissal Case," calling attention to the pendency of the "Unpaid W" "filled sometime in the last quarter of 1977" and verified by one of the petitioners herein Nathaniel Olaca (Annex "J", Psel for the complainants therein was the same counsel in the present case (ibid ). Too, in "Eastcoast's" Answer (Annex ""Illegal Dismissal Case," it maaade specific reference to the "Receipt and Release" individually executed by petitioners

d have been no surprise to complainants, therefore, when that matter was invoked on appeal before the NLRC. BesidesC is empowered to take judicial notice of its own pronouncements.

over, at the time said Manifestation was made on 21 April 1980, the Decision in the "Unpaid Wages Case" had not yet bred having been promulgated only on 30 May 1980, which Decision was affrimed by the NLRC, First Divisionn, only on

ember 1982. When "Eastcoast, Inc." appealed the "Illegal Dismissal Case" on 14 July 1986 therefore, it was only then thrightfully invoke the Decision in the "Unpaid Wages Case" and the affirmance thereof by the First Division of the NLRC

s in no position to raise the same in its Answer, dated 19 August 1981, to the Amended Complaint. But even then, it hadnaces and other benefits granted by the New Labor Code of the Philippines and other applicable Presidential Decrees."

no grave abuse of discretion can be attributed to the NLRC for concluding that from the said Decisions, the issue of termad already been passed upon and resolved ; in other words, a clear case of 'res judicata' or bar by former judgement. T

C found that complainants had already been paid (p. 4, NLRC Resolution, September 19, 1987). lâwphî1.ñètParties ought not to betted to ligitate an issue more than once (Eternal Gardens Memorial Parks Corp. vs. Court of Appelas, G.R. No. 73794,

ember 1988). The Decisions in the separatiion pay of peitioners.

etitioners claim that the causes of action in the two cases were different — in the "Unpaid Wages Case," money claims ed; in the "Illegal Dismissal Case," petitioners challenged their termination from employment. The difference, however,

oon the surface. In essence, because petitioners claimed that they had been illegally dismissed, they prayed for "full bacthe date of illegal dismissal." In fact, it was separation pay that was awarded to them in Labor Arbiter Libron's Decision ial Dismissal Case," who found that "complainants' termination was effected on a valid ground authorized by law, but conermination and closure was effected without prior clearance . . . complainants should be granted separation pay" (p. 7 Dharge of illegal dismissal was dismissed for lack of merit and complainant's prayer for reinstatement and bacckwages wd (p. 12, ibid ).

ners further contend that their acceptance of separation pay does not operate as a waiver of their claims in the "Illegalssal Case." Indeed, jurisprudence exists to the effect that a deed of release or quitclaim cannot bar an employee fromnding benefits to which he is legally entitled (Fuentes vs. NLRC, G.R. No. 76835, November 24, 1988); that quitclaims alete releases executed by the employees do not stop them from pursuing theri claim arising from the unfair labor practic

oyer (Garcia vs. NLRC, G.R. No. 67825, September 4, 1987, 153 SCRA 639); and that employees who received their re

dismissal and that the acceptance of those benefits would not amount to estoppel (Mercury Drug Co, Inc. vs. Court of Inons, G.R. No. 23357, April 30, 1974, 56 SCRA 694); De Leon vs. NLRC, G.R. No. 52056, October 30, 1980, 100 SCRA

ng difference from the cited cases, however, is the fact that the issue of the validity of the releases, executed by petitionr oath, was squarely raised and resolved in Labor Arbiter Reyes' Decision in the "Unpaid Wages Case," which foundorically that:

The document relieved absolutely and forever released and discharged the Eastcoast DevelopmentEnterprises, Inc., its sucessors and assigns, of any and all calims and liabilities whatsoever insofar as



pastt salaries, termination pay , overtime pay and other privileges accorded them by law" (Emphasis s

he Decision was renderd on 30 May 1980 and was affirmed by the NLRC, First Division, on 30 September 1982, which stification for disturbing those findings, with this additional observation:

More than the above, the record shows that the complainants received, by virtue of the release docum

amounts which exceeded by leaps and bounds their original claims for unpaid wages and allowances

foresaid Decisions in the "Unpaid Wages Case" had become final and executory.

y be that private respondents' appeal was filed oin the 12th day contrary too Article 223 of the Labor Code prescribing tedar days as the reglemntary period of appeal. Private respondents claim that the tenth day fell on a Saturday when officLRC were allegedly clsed sa that their last day to appeal was Monday, July 14th. That is nort correct. Saturday is stilldered a business day and if the last day to appeal falls on a Saturday, the act is still due on that day (SM Agri and Gen.ineries vs. NLRC, etal., G.R. No. 74806, January 9, 1989). lâwphî1.ñèt

theless, as the NLRC had pointed out in its Comment:

True, the appeal to it was filed on the 12th day but public respondent wanted to avoid ruling on the saissue of separation pay for that matter had been judicially settled in the other case. It merely exercisedprerogative in relaxing its rule regarding the ten (10) calendar day period for filing appeals (Sec. 1, Ruthe Revised Rules of the NLRC) from decisions of its Labor Arbiterss, as it haaad done so in similar c(p. 6, Comment, p. 333, Rollo)

d, the perfection of an appeal wihtin the reglementary period is considered juridictional. Hoever, ther was legal jusitifcatLRC to have given due course to the appeal, namely, to obviate a miscarriage of justice. In this proceeding, the issue oation pay had been judicially settled, with finality, in another case, also by the NLRC. The NLRC, therefore, had no alter

pt to forestall the grant of separation pay twice. The principle agasint unjust enrichment must be held applicable to labor ell.

REFORE, the challenged Decision of the National Labor Relations Commission in NLRC Case No. 402-LR-XI-81 is herRMED in toto.

REDERED.

s, Padilla, Sarmiento and Regalado, JJ., concur.

awphil Project - Arellano Law Foundation








Manila

SECOND DIVISION

No.170904 November 13, 2013

RURAL BANK INC. ENOC THEATER I AND II and/or RAFAEL DE GUZMAN, Petitioners,

ESA DE GUZMAN, EDGAR C. TAN and TERESA G. TAN, Respondents.

D E C I S I O N

N, J.:

ass upon the petition for review on certiorar i1 under Rule 45 of the Rules of Court filed by petitioners Bani Rural Bank, InC Theater I and II, and Rafael de Guzman. They assail the decision 2 dated September 1, 2005 and the resolution3 datedmber 14, 2005 of the Court of Appeals CA) in CA-G.R. SP No. 70085. The assailed CA rulings, in turn, affirmed theutation of the backwages due respondents Teresa de Guzman and Edgar C. Tan4 made by the National Labor Relation

mission (NLRC).

The Facts

espondents were employees of Bani Rural Bank, Inc. and ENOC Theatre I and II who filed a complaint for illegal dismisst the petitioners. The complaint was initially dismissed by Labor Arbiter Roque B. de Guzman on March 15, 1994. On aational Labor Relations Commission (NLRC) reversed Labor Arbiter De Guzman's findings, and ruled that the respondeillegally dismissed. In a resolution5 dated March 17, 1995 the NLRC ordered the petitioners to:

einstate the two complainants to their former positions, without loss o seniority rights and other benefits and privileges, wwages from the time o their dismissal (constructive) until their actual reinstatement, less earnings elsewhere.6

arties did not file any motion for reconsideration or appeal. The March 17, 1995 resolution of the NLRC became final anutory and the computation of the awards was remanded to the labor arbiter for execution purposes.

rst computation of he monetary award under the March ,17 1995 resolution of the NLRC

omputation of the respondents' backwages, under the terms of the March 17 1995 NLRC resolution was remanded to Lr Rolando D. Gambito. First, Labor Arbiter Gambito deducted the earnings derived by the respondents either from BaniInc. or ENOC Theatre I and II. Second, Labor Arbiter Gambito fixed the period of backwages from the respondents' ille

ssal until August 25 1995 or the date when the respondents allegedly manifested that they no longer wanted to be reins

espondents appealed Labor Arbiter Gambito's computation with the NLRC. In a

ion8 dated July 31, 1998, the NLRC modified the terms of the March 17, 1995 resolution insofar as it clarified the phrasengs elsewhere. The NLRC additionally awarded the payment of separation pay, in lieu of reinstatement, under the follow:

ecision of this Commission is hereby MODIFIED to the extent that: (1) the phrase earnings elsewhere in its dispositive

http://www.lawphil.net/judjuris/juri2013/nov2013/gr_170904_2013.html#fnt1



























exclude the complainants' salaries from the Rural Bank of Mangantarem; and (2) in lieu of reinstatement, the respondeny ordered to pay the complainants separation pay equivalent to one month salary for every year of service computed fro

of their employment up to the date of the finality of the decision .9

NLRC justified the award of separation pay on account of the strained relations between the parties. In doing so, the NL

ar as the second issue is concerned, it should be noted: (1) that in his report dated November 8, 1995, the NLRC Sheriffn October 5, 1995, he went to the Sub-Arbitration Branch to serve the writ of execution upon the complainants; that they

ar, but instead, sent a representative named Samuel de la Cruz who informed him that they were interested, not on beinated, but only in the monetary award; (2) that in a letter dated October 9, 1995, the complainants authorized one Samueto get a copy of the writ of execution; and (3) that during the pre-execution conference, the respondents' counsel manifehe respondents were requiring the complainants to report for work on Monday and, in turn, the complainants' counselested that the complainants were asking to be reinstated. The proceedings already protracted as it is-would be delayedcase were to be remanded to the Labor Arbiter for a hearing to ascertain the correctness of the above-mentioned sheri

t. Besides, if both parties were really interested in the complainants being reinstated, as their counsels stated during theution conference, the said reinstatement should already have been effected. Since neither party has actually done anythment the complainants' reinstatement, it would appear that the relations between them have been strained to such an eke the resumption of the employer-employee relationship unpalatable to both of them. Under the circumstances, separa

be awarded in lieu of reinstatement.10

espondents filed a motion for reconsideration on whether the award of backwages was still included in the judgment. Thssed the motion for having been filed out of time.

anuary 29, 1999, the July 31, 1998 decision of the NLRC lapsed to finality and became executory.

econd computation of the monetary awards under the July 31, 998 decision of the NLRC

ecomputation of the monetary awards of the respondents' backwages and separation pay, according to the decision dat998 and the modified terms of the March 17, 1995 resolution of the NLRC, was referred to Labor Arbiter Gambito. In the

recomputation, the petitioners filed before Labor Arbiter Gambito a Motion to Quash Writ of

ution and Suspend Further Execution they reiterated their position that the respondents backwages should be computedgust 25, 1995, citing the alleged manifestation made by the respondents, through Samuel de la Cruz, as their basis.

order 11 dated July 12, 2000, Labor Arbiter Gambito computed the respondents backwages only up to August 25, 1995.

The NLRC’s Ruling

espondents appealed the July 12, 2000 order of Labor Arbiter Gambito to the NLRC, which reversed Labor Arbiter Gam. In its decision12 dated September 28, 2001, the NLRC ruled that the computation of the respondents backwages shouldanuary 29 1999 which was the date when the July 31, 1998 decision attained finality:

REFORE, the Order of Labor Arbiter Rolando D. Gambito dated July 12, 2000 is SET ASIDE. In lieu thereof, judgment iy rendered by ordering respondents to p y complainants backwages up to January 29, 1999 as above discussed.13

NLRC emphasized that the issue relating to the computation of the respondents backwages had been settled in its July on. In a resolution dated January 23, 2002, the NLRC denied the motion for reconsideration filed by the petitioners.

etitioners disagreed with the NLRC s ruling and filed a petition for certiorari with the CA, raising the following issues:






















(A) THE COMMISSION ACTED WITHOUT JURISDICTION AND WITH GRAVE . ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION WHEN IT REVERSED AND SET ASIDE THE ORDER OF LABO ARBITER ROLANDO D. GAMBITO DATED JULY 12, 2000 AND ORDERED THE COMPUTATION OF PRIVRESPONDENTS BACKWAGES TO COVER THE PERIOD AFTER AUGUST 25, 1995, OR UNTIL JANUARY1999, THE DATE OF FINALITY OF THE SECOND RESOLUTION OF THE COMMISSION.

(B) THE COMMISSION ACTED WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OFJURISDICTION FOR DENYING PETITIONERS MOTION FOR RECONSIDERA TION.14

The CA Rulings

CA found the petition to be without merit. It held that certiorari was not the proper remedy since no error of jurisdiction wad or no grave abuse of discretion was committed by the NLRC. The CA stated that:

xtraordinary remedy of certiorari is proper if the tribunal, board or officer exercising judicial or quasi-judicial functions acut or in grave abuse of discretion amounting to lack or excess of jurisdiction and there is no appeal or any plain, speedyuate remedy in law. When a court, tribunal or officer has jurisdiction over the person and the subject matter of dispute, thon on all other questions arising in the case is an exercise of that jurisdiction. Consequently, all errors committed in the

ise of said jurisdiction are merely errors of judgment. Under prevailing procedural rules and jurisprudence, errors of judgot proper subjects of a special civil action for certiorari.15

the CA echoed the NLRC’s conclusions:

plained in the assailed Decision, what is controlling for purposes of the backwages is the NLRC s Resolution dated 17 Mwhich decreed that private respondents are entitled to backwages from the time of their dismissal (constructive) until thel reinstatement; and considering that the award of reinstatement was set aside by the NLRC in its final and executory D3 July 1998 which ordered the payment of separation pay in lieu of reinstatement to be computed up to the finality on 2

ary 1999 of said Decision dated 3 July 1998, then the computation of the backwages should also end on said date, whicary 1999.16

the case of Chronicle Securities Corp. v. NLRC,17

the CA held that backwages are granted to an employee or worker willegally dismissed from employment. If reinstatement is no longer possible, the backwages shall be computed from the egal termination up to the finality of the decision.

Present Petition

etitioners argue that the following reversible errors were committed by the CA, namely:

(1) In ruling that no grave abuse of discretion was committed by the NLRC when it issued the September 28, decision, the January 23, 2002 resolution and the July 31, 1998 decision, which modified the final and executresolution dated March 17, 1995 of the NLRC computing the backwages only until the reinstatement of therespondents;

(2) When it manifestly overlooked or misappreciated relevant facts, i.e. Labor Arbiter Gambito s computation dconform to the NLRC s March 17, 1995 resolution considering the manifestation of Samuel that the respondenlonger wanted to be reinstated, in response to the order of execution dated August 25, 1995; and

(3) When it declared that only errors o judgment, and not jurisdiction, were committed by the NLRC.

ir Comment,18 the respondents contend that the computation of the backwages until January 29, 1999 was consistent wof the decision dated July 31, 1998 and the modified March 17, 1995 resolution of the NLRC.























the petitioners filed their Reply,19 the Court resolved to give due course to the petition; in compliance with our directive, ts submitted their respective memoranda repeating the arguments in the pleadings earlier filed.20

The Issue

esented, the issue boils down to whether the respondents’ backwages had been correctly computed under the decision

ember 28, 2001 of the NLRC, as confirmed by the CA, in light of the circumstance that there were two final NLRC decisioing the computation of the backwages.

The Court s Ruling

nd the petition unmeritorious.

Preliminary considerations

ssion Delights Ice Cream and Fast Foods v. Court of Appeals (Sixth Division),21 we held that a decision in an illegal dismconsists essentially of two components:

rst is that part of the decision that cannot now be disputed because it has been confirmed with finality. This is the findingity of the dismissal and the awards of separation pay in lieu of reinstatement, backwages.

econd part is the computation of the awards made.22

rst part of the decision stems from the March 17, 1995 NLRC resolution finding an illegal dismissal and defining the legaequences of this dismissal. The second part involves the computation of the monetary award of backwages and thendents' reinstatement. Under the terms of the March 17, 1995 resolution, the respondents' backwages were to be compthe time of the illegal dismissal up to their reinstatement.

first computation of the backwages, Labor Arbiter Gambito confronted the following circumstances and the Sheriffs ReNovember 8, 1995:23 first, how to interpret the phrase less earnings elsewhere as stated in the dispositive portion of the

995 resolution of the NLRC; second, the effect of the alleged manifestation (dated October 9, 1995) of Samuel that thendents were only interested in the monetary award, not in their reinstatement; and third, the effect of the respondents' c

ment during the pre-execution proceedings that the respondents simply wanted to be reinstated.

ecords indicate that the respondents denied Samuel's statement and asked for reinstatement through their counsel.rtheless, Labor Arbiter Gambito relied on Samuel's statement and fixed the computation date of the respondents' backwto and until August 25, 1995 or the date the order of execution was issued for the NLRC's March 17, 1995 decision. AsJuly 12, 2000 order ,24 Labor Arbiter Gambito found it fair and just that in the execution of the NLRC's decision, the comprespondents' backwages should "stop at that time when it was put on record by them [respondents] that they had no de to work."25

NLRC disregarded Labor Arbiter Gambito's first computation. In the dispositive portion of its July 31, 1998 decision, the N

ied the final March 17, 1995 resolution. The first part of this decision -the original ruling of illegal dismissal -was left untothe second part of the decision -the monetary award and its computation -was altered to conform with the strained relat

een the parties that became manifest during the execution phase of the March 17, 1995 resolution.

ffect of the modification of the March 17, 1995 resolution of the NLRC was two-fold: £, the reinstatement aspect of the M95 resolution was expressly substituted by an order of payment of separation pay; and two the July 31, 1998 decision ofC now provided for two monetary awards (backwages and separation pay). The July 31, 1998 decision of the NLRC becasince neither parties appealed.

































this standard in mind, we find no reversible error committed by the CA when it found no grave abuse of discretion in the . We find the computation of backwages and separation pay in the September 28, 2001 decision of the NLRC consistenrovisions of law and jurisprudence. The computation conforms to the terms of the March 17, 1995 resolution (on illegal dayment of backwages) and the July 31, 1998 decision (on the computation of the backwages and the payment of separ

e 279 of the Labor Code, as amended,34 provides backwages and reinstatement as basic awards and consequences of ssal:

e 279. Security of Tenure. -x x x An employee who is unjustly dismissed from work shall be entitled to reinstatement withniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their moalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement.

risprudence derived from this provision, separation pay may [also] be awarded to an illegally dismissed employee in lieuatement."35 Section 4(b), Rule I of the Rules Implementing Book VI of the Labor Code provides the following instances wd of separation pay, in lieu of reinstatement to an illegally dismissed employee, is proper: (a) when reinstatement is no loble, in cases where the dismissed employee s position is no longer available; (b) the continued relationship between theoyer and the employee is no longer viable due to the strained relations between them; and (c) when the dismissed emp

not to be reinstated, or the payment of se aration benefits would be for the best interest of the parties involved.36

In thesnces, separation pay is the alternative remedy to reinstatement in addition to the award of backwages.37 The payment ofation pay and reinstatement are exclusive remedies. The payment of separation pay replaces the legal consequences oatement to an employee who was illegally dismissed.38

arity, the bases for computing separation pay and backwages are different. Our ruling in Macasero v. Southern Industrias Philippines39 provides us with the manner these awards should be computed:

er Article 279 of the Labor Code and as held in a catena of cases, an employee who is dismissed without just cause andut due process is entitled to backwages and reinstatement or payment of separation pay in lieu thereof:

an illegally dismissed employee is entitled to two reliefs: backwages and reinstatement. The two reliefs provided are seistinct. In instances where reinstatement is no longer feasible because of strained relations between the employee and

oyer, separation pay is granted. In effect, an illegally dismissed employee is entitled to either reinstatement, if viable, oration pay if reinstatement is no longer viable, and backwages.

ormal consequences of respondents illegal dismissal, then, are reinstatement without loss of seniority rights, and paymewages computed from the time compensation was withheld up to the date of actual reinstatement. Where reinstatementr viable as an option, separation pay equivalent to one (1) month salary for every year of service should be awarded asative. The payment of separation pay is in addition to payment of backwages.40

omputation of separation pay is based on the length of the employee s service; and the computation of backwages is bactual period when the employee was unlawfully prevented from working.41

The basis of computation of backwages

omputation of backwages depends on the final awards adjudged as a consequence of illegal dismissal, in that:

when reinstatement is ordered, the general concept under Article 279 of the Labor Code, as amended, computes thewages from the time of dismissal until the employee’s reinstatement. The computation of backwages (and similar benefitdered part of the backwages) can even continue beyond the decision of the labor arbiter or NLRC and ends only when toyee is actually reinstated.42






































nd, when separation pay is ordered in lieu of reinstatement (in the event that this aspect of the case is disputed) oratement is waived by the employee (in the event that the payment of separation pay, in lieu, is not disputed), backwageuted from the time of dismissal until the finality of the decision ordering separation pay.

when separation pay is ordered after the finality of the decision ordering the reinstatement by reason of a supervening makes the award of reinstatement no longer possible (as in the case), backwages is computed from the time of dismissa

nality of the decision ordering separation pay.

bove computation of backwages, when separation pay is ordered, has been the Court s consistent ruling. In Session Dream and Fast Foods v. Court Appeals Sixth Division, we explained that the finality of the decision becomes the reckonuse in allowing separation pay, the final decision effectively declares that the employment relationship ended so that sepnd backwages are to be computed up to that point.43

may also view the proper computation of backwages (whether based on reinstatement or an order of separation pay) in tee of the employment relationship itself.1âwphi1

n reinstatement is ordered, the employment relationship continues. Once the illegally dismissed employee is reinstated, ensation and benefits thereafter received stem from the employee s continued employment. In this instance, backwage

uted only up until the reinstatement of the employee since after the reinstatement, the employee begins to receiveensation from his resumed employment.

n there is an order of separation pay (in lieu of reinstatement or when the reinstatement aspect is waived or subsequented in light of a supervening event making the award of reinstatement no longer possible), the employment relationship isnated only upon the finality of the decision ordering the separation pay. The finality of the decision cuts-off the employmeonship and represents the final settlement of the rights and obligations of the parties against each other. Hence, backwar accumulate upon the finality of the decision ordering the payment of separation pay since the employee is no longer eompensation from the employer by reason of the severance of his employment.

omputation of the respondents backwages

e records show, the contending parties did not dispute the NLRC s order of separation pay that replaced the award ofatement on the ground of the supervening event arising from the newly-discovered strained relations between the parties allowed the NLRC s July 31, 1998 decision to lapse into finality and recognized, by their active participation in the secutation of the awards, the validity and binding effect on them of the terms of the July 31, 1998 decision.

r these circumstances, while there was no express modification on the period for computing backwages stated in the disn of the July 31, 1998 decision of the NLRC, it is nevertheless clear that the award of reinstatement under the March 17

ution (to which the respondents backwages was initially supposed to have been computed) was substituted by an awardation pay. As earlier stated, the awards of reinstatement and separation pay are exclusive remedies; the change of awareinstatement to separation pay) under the NLRC s July 31, 1998 not only modified the awards granted, but also changer the respondents backwages is to be computed. The respondents’ backwages can no longer be computed up to the patement as there is no longer any award of reinstatement to speak of.

so emphasize that the payment of backwages and separation pay cannot be computed from the time the respondents assed their wish to be paid separation pay. In the first place, the records show that the alleged manifestation by the respgh Samuel, was actually a mere expression of interest.44 More importantly, the alleged manifestation was disregarded inC's July 31, 1998 decision where the NLRC declared that the award of separation pay was due to the supervening eventhe strained relations (not a waiver of reinstatement) that justified the modification of the NLRC's final March 17, 1995 ree award of reinstatement. Simply put, insofar as the computation of the respondents' backwages, we are guided by the aied to separation pay, under the NLRC's July 31, 1998 decision.

the computation of the respondents' backwages must be from the time of the illegal dismissal from employment until th











decision ordering the payment of separation pay. It is only when the NLRC rendered its July 31, 1998 decision orderingent of separation pay (which both parties no longer questioned and which thereafter became final) that the issue of thendents' employment with the petitioners was decided with finality, effectively terminating it. The respondents' backwagefore, must be computed from the time of their illegal dismissal until January 29, 1999, the date of finality of the NLRC's JDecision. As a final point, the CA s ruling must be modified to include legal interest commencing from the finality of the

31, 1998 decision. The CA failed to consider that the NLRC's July 31, 1998 decision, once final, becomes a judgment fo

which another consequence flows -the payment of interest in case of delay .45

Under the circumstances, the payment of lest of six percent (6) upon the finality of the judgment is proper. It is not barred by the principle of immutability of judgme

mpensatory interest arising from the final judgment.46

REFORE, premises considered, we DENY the petition and thus effectively AFFIRM with MODIFICATION the decision dember 1 2005 and the resolution dated December 14, 2005 of the Court of Appeals in CA-G.R. SP No. 70085. The petitiRural Bank, Inc., Enoc Theatre I and II and/or Rafael de Guzman, are ORDERED to PAY respondents Teresa de Guzmr C. Tan and Teresa G. Tan the following:

(a) Backwages computed from the date the petitioners illegally dismissed the respondents up to January 29, the date of the finality of the decision dated July 31, 1998 of the National Labor Relations Commission in NLRSUB-RAB-01-07- 7-0136-93 CA No. L-001403 and NLRC CN. SUB-RAB-01-07-7-0137-93 CA No. L-001405;

(b) Separation pay computed from respondents' first day of employment up to January 29, 1999 at the rate of month pay per year of service; and

(c) Legal interest of six percent (6) per annum of the total monetary awards computed from January 29, 1999their full satisfaction.

abor arbiter is hereby ORDERED to make another recomputation according to the above directives.

RDERED.

URO D. BRION

ciate Justice

CONCUR:

ANTONIO T. CARPIO Associate Justice

Chairperson

MARIANO C. DEL CASTILLO Associate Justice

JOSE PORTUGAL PEREZ Associate Justice

ESTELA M. PERLAS-BERNABE

Associate Justice

A T T E S T A T I O N

st that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writon of the Court’s Division.

ONIO T. CARPIO ciate Justice










person


ant to Section 13, Article VIII of the Constitution, and the Division Chairperson s Attestation, it is hereby certified that theusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion

’s Division.

A LOURDES P. A. SERENO Justice

notes

1 Rollo, pp. 9-30.

2 Id. at 36-46; penned by Associate Justice Celia C. Librea-Leagogo, and concurred in by Associate Justices A

B. Reyes, Jr. and Lucas P. Bersamin.

3 Id. at 33-34.

4 In the consolidated cases of Teresa de Guzman Tan v Bani Rural Bank Inc. And/or Rafael de Guzman dockeNLRC CN. SUB-RAB-01-07-7-0136-93 CA No. L-001403, and Edgar C Tan and Teresa G Tan v. ENOC Theand II and/or Rafael de Guzman docketed as NLRC CN. SUB-RAB-01-07-7-0137-93 CA No. L-001405.

5 Rollo, pp. 71-87; penned by Commissioner Ireneo Bernardo, and concurred in by Presiding Commissioner LC. Javier and Commissioner Joaquin A. Tanodra.

6 Id. at 87.

7 Id. at 88-98; order dated December 16, 1997.

8 Id. at 101-112; penned by Presiding Commissioner Lourdes Javier.

9 Id. at 111.

10 Id. at 109-110; emphasis ours, citations omitted.

11 Id. at 119-122.

12

Id. at 123-131

13 Id. at 130.

14 Id. at 57.

15 Id. at 44; italics supplied.

16 Id. at 43.

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17 486 Phil. 560, 569-570 (2004).

18 Rollo, pp. 150-157.

19 Id., at 168-174.

20 Id. at 176-177; Court Resolution dated November 22, 2006.

21 G.R. No. 172149, February 8, 2010, 612 SCRA 10.

22 Id. at 21; italics supplied.

23 Rollo, p. 109.

24 Id. at 119-122.

25 Id. at 120.

26 Session Delights Ice Cream and Fast Foods v. Court of Appeals (Sixth Division), supra note 21, at 19-20; comitted, italics supplied.

27 Natalia Realty, Inc. v. Court of Appeals, 440 Phil. 1, 23 (2002).

28 Ibid.

29 Rollo, p. 129.

30 G.R. No. 183329, August 27, 2009, 597 SCRA 334, 342-343; emphases supplied, citations omitted.

31

G.R. No. 179146, July 23, 2013.

32 Don Orestes Romualdez Electric Coop., Inc. v. NLRC, 377 Phil. 268, 273 (1999).

33 Ibid.

34 Republic Act No. 6715 or An Act to Extend Protection to Labor, Strengthen the Constitutional Rights of WorSelf-Organization, Collective Bargaining and Peaceful Concerted Activities, Foster Industrial Peace and HarmPromote the Preferential Use of Voluntary Modes of Settling Labor Disputes, and Reorganize the National LaRelations Commission, Amending for These Purposes Certain Provisions of Presidential Decree No. 442, asamended, Otherwise Known as the Labor Code of the Philippines, Appropriating Funds Therefore and For OtPurposes.

35 Session Delights Ice Cream and Fast Foods v. Court Appeals (Sixth Division), supra note 21 at 25 citing MtCollege v. Resuena, G.R. No. 173076, October 10 2007, 533 SCRA 518, 541.

36 Ibid.

37 Bombase v. NLRC, 315 Phil. 551, 556 (1995).

38 Nissan North EDSA, Balintawak, Quezon City v. Serrano, Jr., G.R. No. 162538, June 4, 2009, 588 SCRA 23





































































39 G.R. No. 178524, January 30, 2009, 577 SCRA 500.

40 Id. at 506-507; emphases, italics and underscores ours.

41 Lim v. National Labor Relations Commission, 253 Phil. 318, 328 (1989).

42 Javellana, Jr. v. Belen, G.R. No. 181913, March 5, 2010, 614 SCRA 342, 350-351.

43 Supra note 21 at 26.

44 Rollo, p. 109.

45 Session Delights Ice Cream and Fast Foods v. Court Appeals (Sixth Division), supra note 21, at 23, 26.

46 Gonzales v. Solid Cement Corporation, G.R. No. 198423, October 20, 2012, 684 SCRA 344. See BSP Circu799, Series of 2013.

awphil Project - Arellano Law Foundation



Manila

SECOND DIVISION

No. 117195 February 20, 1996

NY T. RASONABLE, petitioner,

ONAL LABOR RELATIONS COMMISSION, JOEY GUEVARRA AND VICTORY LINER, INC., respondents.

D E C I S I O N

O, J .:






























arch 19, 1993, petitioner DANNY T. RASONABLE filed a complaint for illegal dismissal with the Regional Arbitration Braan Fernando, Pampanga, against private respondents VICTORY LINER, INC. and JOEY GUEVARRA, praying foratement, payment of backwages and other benefits, damages and attorney's fees.1

Decision,2 dated November 8, 1993, Labor Arbiter Ariel C. Santos found private respondents guilty of illegal dismissal. Tordered to pay petitioner the total sum of P84,957.47, representing the latter's backwages from March 1, 1993 (when p

legally dismissed) up to November 8, 1993 (the date of the Labor Arbiter's Decision), 13th month pay, separation payalent to one-half month salary for every year of service and ten percent (10%) of the total award as attorney's fees.

tisfied, both parties appealed to the National Labor Relations Commission (NLRC). In his appeal ,3 petitioner prayed thar Arbiter's Decision be modified by awarding him instead full backwages, separation pay equivalent to one (1) month payyear of service, and other benefits which he would have received had he not been illegally dismissed.

the other hand, private respondents claimed that the Labor Arbiter decided their case when it was not as yet submittedon as the parties were then in the verge of striking an amicable settlement. They prayed that the case be remanded to

r Arbiter for settlement and/or reception of further evidence of both parties.4

Decision,5 dated March 30, 1994, the NLRC modified the Decision of the Labor Arbiter by increasing the award of separa

one-half (1/2) month pay to one (1) month pay for every year of service and by deleting the award of attorney's fees. Bots moved for reconsideration. Both motions were denied.6

filed separate petitions for certiorari to this Court. Private respondents' petition, entitled "Victory Liner, Inc. v. NLRC, et aNo. 116848) was filed on September 8, 1994 and they reiterated their position before the NLRC. The THIRD DIVISION, in a Minute Resolution, dated September 21, 1994, denied due course to private respondents' petition. Their motion fosideration was denied with finality on November 16, 1994.7

the other hand, petitioner filed the petition at bar against private respondents and the NLRC on October 6, 1994. His pegiven due course and the parties were directed to file their respective Memorandum.

petition, petitioner charges that public respondent NLRC committed grave abuse of discretion: (a) in deleting the award

ey's fees, and; (b) in failing to award other benefits, like holiday pay, service incentive leave pay, 13th month pay, backweparation pay accruing from November 8, 1993 (the date of the labor arbiter's Decision) up to the finality thereof.

e outset, it bears emphasis that when the Third Division of this Court denied due course to private respondents' petition 16848), the Court in effect wrote finis to the issue of illegal dismissal. It is thus settled that petitioner was illegally dismisservice. Similarly a non-issue is the labor arbiter's award of separation pay in lieu of reinstatement which was not challeoner in his appeal to the NLRC. What then remains is the determination of the monetary awards to be adjudged to petitioeriod covered thereby.

old that public respondent NLRC committed grave abuse of discretion when it ruled that there is no basis for the award oey's fees in favor of petitioner. It is settled that in actions for recovery of wages or where an employee was forced to litigexpenses to protect his rights and interests, he is entitled to an award of attorney's fees.8

ome now to the other monetary benefits being claimed by petitioner. Public respondent denied petitioner's claim for servtive pay and holiday pay on the ground that petitioner failed to present substantial evidence to support his claim. In the lear showing by petitioner of grave abuse of discretion on the part of the public respondent, its factual finding binds this

petitioner contends that as a result of his illegal dismissal, he is entitled to an award of separation pay, backwages and h pay not only from the time the complaint was filed up to the November 8, 1993 Decision of the Labor Arbiter but also frhe arbiter's decision was rendered up to the finality of said decision. He faults the ruling of the public respondent that unf the Labor Code, as amended by Section 34 of R.A. 6715, an illegally dismissed employee shall be entitled to reinstate

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o his full backwages and other benefits computed from the time his compensation was withheld from him up to the time l reinstatement. In the case at bar, instead of ordering petitioner's reinstatement, the Labor Arbiter awarded to petitionerration pay. It computed the separation pay on the basis of petitioner's length of service, i .e. from the time of his employm time of dismissal. Petitioner is thus deemed separated from service as of the date of the arbiter's decision awarding him

ration pay. Hence, public respondent held that petitioner is no longer entitled to an award of 13th month pay and backwathe date of the decision of the labor arbiter granting petitioner separation pay, the employer-employee relationship havin

ed.

nd merit in petitioner's contention.

k back on our law and jurisprudence on illegal dismissal is in order. Originally, an illegally dismissed employee is entitledent of backwages from the date of dismissal to the date of reinstatement less the amount he may have earned elsewheg said period. Should the laborer decide not to return to work, the deduction should be made up to the time the judgmenmes final.9 Hence, under the old law, payment of backwages is computed from the time of dismissal up to finality of decthe laborer is not reinstated. To prevent double compensation, the earnings derived by a dismissed employee in other jog the period his case is pending is deducted from the grant of backwages to be awarded to him. Likewise, the award ofwages would carry with it payment of the benefits to which an employee would have been entitled if he were not dismiss

eafter, in the case of Mercury Drug Co. v . Court of Industrial Relations,

10

the Court simplified the computation of backwa was unduly delaying the speedy termination of illegal dismissal cases by limiting its payment to three (3) years withoutication or deduction. Under the Mercury Drug rule, the worker is to be paid his backwages fixed as of the time of his disut deduction for their earnings elsewhere during their lay-off and without qualification of their wages as thus fixed, i .e.,alified by any increases or other benefits that may have been received by their co-workers who were not dismissed. 11 Sd is understood to be inclusive of leave benefits: in making the award, the court necessarily takes into consideration holiion leaves; all working days are paid for regardless of whether or not the same fall on holidays or employee's leave dayar allowances that the employee had been receiving should however be included in the salary base.12

Mercury Drug rule was changed by Article 279 of the Labor Code, as amended by Section 34 of R.A. 6715.13It provides:

Art. 279. Security of Tenure. In cases of regular employment, the employer shall not terminate the services oemployee except for a just cause or when authorized by this Title. An employee who is unjustly dismissed fro

shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwagesinclusive of allowances, and to his other benefits or their monetary equivalent computed from the time hiscompensation was withheld from him up to the time of his actual reinstatement . (emphasis supplied).

e law stands now, an employee who has been illegally dismissed after the effectivity of R.A. 6715 shall be entitled toatement, full backwages and other benefits for the entire period that he was out of work and until actual reinstatement.

ever, in lieu of reinstatement, petitioner may instead be awarded separation pay. Separation pay is the amount that an eves at the time of his severance from the service and is designed to provide the employee with the wherewithal during thd that he is looking for another employment.14 The grant of separation pay does not preclude an award for backwages forepresents the amount of earnings lost by reason of the unjustified dismissal. Additionally, a dismissed employee is ent

month pay.15

c respondent holds that award of separation pay implies termination of employment as of the date of the decision. Hencate of the decision of the labor arbiter granting separation pay, an illegally dismissed employee is no longer entitled to ackwages and 13th month pay, the employer-employee relationship having been severed.

re not persuaded. In a number of cases,16 we ruled that there is no inconsistency in the grant of both backwages and seo an illegally dismissed employee. In Lim v . NLRC , supra, the Court elucidated the propriety of awarding both separatioackwages in this wise:

We have ordered the payment of both (separation pay and backwages) . . . as otherwise, the employee might



































deprived of benefits justly due him. Thus, if an employee who has worked only one year is sustained by the lacourt after three years from his unjust dismissal, granting him separation pay only would entitle him to only onsalary. There is no reason why he should not also be paid three years backwages corresponding to the periohe could not return to his work or could not find employment elsewhere.

re order for reinstatement issued by the labor arbiter is totally different from actual restoration of an employee to his pre

on. It is for this reason that Article 279, as amended by R.A. 6715, provides for payment of full backwages and other bethe time of dismissal up to the time of actual reinstatement . Thus, in case reinstatement is adjudged, the award of backwther benefits continues beyond the date of the labor arbiter's decision ordering reinstatement and extends up to the timeof reinstatement is actually carried out. Correlatively, an award of separation pay, in lieu of reinstatement, and other be

o the employee, without actual payment thereof, does not have the effect of terminating the employment of an illegallyssed employee. The award of the labor arbiter could still be overturned or modified and, in most cases, its execution cou

asonably delayed.17 Thus, until actual receipt of the award of separation pay, the employer-employee relationship subsisng the illegally dismissed employee to an award of backwages, 13th month pay and other benefits from the time of his dinality of the decision of the labor arbiter.

the enactment of R.A. 6715, we now go back to the policy adopted by this Court prior to the Mercury Drug rule, i .e., payackwages shall be made from the date of dismissal up to finality of the judgment should reinstatement be not decreed, lent which the dismissed employee may have earned during said period, taking into consideration the increases and othe

fits, including the 13th month pay, received by his co-employees who were not dismissed. Payment of separation pay shuted from the date of the dismissed employee's service until finality of our decision.18

EW WHEREOF, the petition is hereby GRANTED. The Decision of public respondent NLRC is MODIFIED. The labor ard of attorney's fees is reinstated. Payment of backwages, less earnings elsewhere, and qualified by increases and otherding the 13th month pay) shall be computed from the date of his dismissal until the finality of our decision. Payment of tration pay, on the other hand, shall be computed from the date of petitioner's employment until finality of our decision. N

RDERED.

lado, Romero and Mendoza, JJ., concur.

notes

1 Petitioner's Position Paper, Original Records, at 19.

2 Rollo, pp. 28-35.

3 Complainant's Memorandum of Appeal, Original Records, at p. 115.

4 Appeal, Original Records, pp. 200-206.

5 Penned by Commissioner Joaquin A. Tanodra and concurred in by Presiding Commissioner Lourdes C. JavCommissioner Ireneo B. Bernardo; Rollo, pp. 16-23.

6 Resolution, dated July 6, 1994, Rollo, pp. 25-27.

7 See Resolution, Rollo, p. 106.

8 Article 2208 (7), New Civil Code; Sebuguero v. National Labor Relations Commission, G.R. No. 115394, Se







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27, 1995; Article 2208 (2), New Civil Code; Gaco v. National Labor Relations Commission, G.R. No. 104690,February 23, 1994, 230 SCRA 260, 266.

9 Itogon-Suyoc Mines, Inc. v. Sangilo-Itogon Workers Union, G.R. No. L-24189, August 30, 1968, 24 SCRA 8

10 No. L-23357, April 30, 1974, 56 SCRA 694; known as the Mercury Drug Rule.

11 Durabuilt Recapping Plant & Co., et al. v. National Labor Relations Commission, G.R. No. 76748, July 27, 1

12 Insular Life Assurance Co. Ltd., et al. v. NLRC, G.R. No. 741911, December 21, 1987; Soriano v. NLRC,G75510, October 27, 1987; Santos v. NLRC, G.R. No. 76721, September 21, 1987.

13 Took effect on March 21, 1989.

14 Guatson International Travel and Tours, Inc. v. NLRC, G.R. No. 100322, March 9, 1994, 230 SCRA 815.

15 Paragraph 6, Revised Guidelines on the Implementation of the 13th Month Pay Law (P.D. 851, asamended); Paramount v. NLRC, G.R. No. 81200, October 17, 1990, 190 SCRA 525.

16 E .g .: Gaco v. NLRC, G.R. No. 104690, February 23, 1994, 230 SCRA 260; Lim v. NLRC, G.R. No. 79907, 16, 1989; 171 SCRA 328; City Trust Finance Corporation v. NLRC, No. L-75740, January 15, 1988, 157 SCR

17 In the case at bar, not a single centavo of the monetary award adjudged to petitioner has been paid by privarespondents despite the earlier dismissal of private respondent's petition before this Court; See Memorandumat p. 242.

18 Ledesma v. NLRC, G.R. No. 110930, July 13, 1995, citing Gaco v. NLRC, G.R. No. 104690, February 23, 1230 SCRA 260; Durabuilt Recapping Plant & Co., et al., v. NLRC, supra.

Lawphil Project - Arellano Law Foundation


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http://www.lawphil.net/judjuris/juri1988/jan1988/gr_75740_1988.html








































SECOND DIVISION

TIMOTEO H. SARONA,

Petitioner,

- versus -

NATIONAL LABOR RELATIONS

COMMISSION, ROYALE SECURITY

AGENCY (FORMERLY SCEPTRE

SECURITY AGENCY) and

CESAR S. TAN,

Respondents.

G.R. No. 185280

Present:

CARPIO, J.,

Chairperson,

PEREZ,

SERENO,

REYES, and

BERNABE, JJ.

Promulgated:

anuary 18, 2012

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

http://sc.judiciary.gov.ph/jurisprudence/2012/january2012/185280.html#sdfootnote1sym








On June 20, 2003, the petitioner, who was hired by Sceptre as a security guard

sometime in April 1976, was asked by Karen Therese Tan (Karen), Sceptre’s

Operation Manager, to submit a resignation letter as the same was supposedlyrequired for applying for a position at Royale. The petitioner was also asked to fill up

Royale’s employment application form, which was handed to him by Royale’s

General Manager, respondent Cesar Antonio Tan II (Cesar).3

After several weeks of being in floating status, Royale’s Security Officer,

Martin Gono (Martin), assigned the petitioner at Highlight Metal Craft, Inc.

(Highlight Metal) from July 29, 2003 to August 8, 2003. Thereafter, the petitioner wastransferred and assigned to Wide Wide World Express, Inc. (WWWE, Inc.). During

his assignment at Highlight Metal, the petitioner used the patches and agency cloths of

Sceptre and it was only

when he was posted at WWWE, Inc. that he started using those of Royale.4

On September 17, 2003, the petitioner was informed that his assignment at

WWWE, Inc. had been withdrawn because Royale had allegedly been replaced byanother security agency. The petitioner, however, shortly discovered thereafter that

Royale was never replaced as WWWE, Inc.’s security agency. When he placed a call

at WWWE, Inc., he learned that his fellow security guard was not relieved from his

post.5

On September 21, 2003, the petitioner was once again assigned at Highlight

Metal, albeit for a short period from September 22, 2003 to September 30, 2003.Subsequently, when the petitioner reported at Royale’s office on October 1, 2003,

Martin informed him that he would no longer be given any assignment per the

instructions of Aida Sabalones-Tan (Aida), general manager of Sceptre. This

prompted him to file a complaint for illegal dismissal on October 4, 2003.6



















In his May 11, 2005 Decision, Labor Arbiter Jose Gutierrez (LA Gutierrez)

ruled in the petitioner’s favor and found him illegally dismissed. For being

unsubstantiated, LA Gutierrez denied credence to the respondents’ claim that thetermination of the petitioner’s employment relationship with Royale was on his

accord following his alleged employment in another company. That the petitioner was

no longer interested in being an employee of Royale cannot be presumed from his

request for a certificate of employment, a claim which, to begin with, he vehemently

denies. Allegation of the petitioner’s abandonment is negated by his filing of a

complaint for illegal dismissal three (3) days after he was informed that he would no

longer be given any assignments. LA Gutierrez ruled:

In short, respondent wanted to impress before us that complainant

abandoned his employment. We are not however, convinced.

There is abandonment when there is a clear proof showing that one has

no more interest to return to work. In this instant case, the record has no

proof to such effect. In a long line of decisions, the Supreme Court ruled:

―Abandonment of position is a matter of intention

expressed in clearl y certain and unequivocal acts,

however, an inter im employment does not mean

abandonment.” (Jardine Davis, Inc. vs. NLRC, 225 SCRA

757).

―I n abandonment, there must be a concurrence of

the intention to abandon and some overt acts from which

an employee may be declared as having no more interest

to work.” (C. Alcontin & Sons, Inc. vs. NLRC, 229 SCRA

109).



―I t is clear, deli berate and unjustif ied refusal to

severe employment and not mere absence that i s required

to constitute abandonment.” x x x” (De Ysasi III vs.

NLRC, 231 SCRA 173).

Aside from lack of proof showing that complainant has

abandoned his employment, the record would show that immediate

action was taken in order to protest his dismissal from employment. He

filed a complaint [for] illegal dismissal on October 4, 2004 or three (3)

days after he was dismissed. This act, as declared by the Supreme Court

is inconsistent with abandonment, as held in the case of Pampanga Sugar

Development Co., Inc. vs. NLRC, 272 SCRA 737 where the SupremeCourt ruled:

―The immediate fi li ng of a complain t for [ i] ll egal

[d]ismissal by an employee is inconsistent with

abandonment.” 7

The respondents were ordered to pay the petitioner backwages, which LA

Gutierrez computed from the day he was dismissed, or on October 1, 2003, up to the

promulgation of his Decision on May 11, 2005. In lieu of reinstatement, the

respondents were ordered to pay the petitioner separation pay equivalent to his one (1)

month salary in consideration of his tenure with Royale, which lasted for only one (1)

month and three (3) days. In this

regard, LA Gutierrez refused to pierce Royale’s corporate veil for purposes offactoring the petitioner’s length of service with Sceptr e in the computation of his

separation pay. LA Gutierrez ruled that Royale’s corporate personality, which is

separate and distinct from that of Sceptre, a sole proprietorship owned by the late

Roso Sabalones (Roso) and later, Aida, cannot be pierced absent clear and convincing

evidence that Sceptre and Royale share the same stockholders and incorporators and






that Sceptre has complete control and dominion over the finances and business affairs

of Royale. Specifically:

To support its prayer of piercing the veil of corporate entity of

respondent Royale, complainant avers that respondent Royal (sic) was

using the very same office of SCEPTRE in C. Padilla St., Cebu City. In

addition, all officers and staff of SCEPTRE are now the same officers

and staff of ROYALE, that all [the] properties of SCEPTRE are now

being owned by ROYALE and that ROYALE is now occupying the

property of SCEPTRE. We are not however, persuaded.

It should be pointed out at this juncture that SCEPTRE, is a single

proprietorship. Being so, it has no distinct and separate personality. It is

owned by the late Roso T. Sabalones. After the death of the owner, the

property is supposed to be divided by the heirs and any claim against the

sole proprietorship is a claim against Roso T. Sabalones. After his death,

the claims should be instituted against the estate of Roso T. Sabalones.

In short, the estate of the late Roso T. Sabalones should have been

impleaded as respondent of this case.

Complainant wanted to impress upon us that Sceptre was organized into

another entity now called Royale Security Agency. There is however, no

proof to this assertion. Likewise, there is no proof that Roso T.

Sabalones, organized his single proprietorship business into a

corporation, Royale Security Agency. On the contrary, the name of Roso

T. Sabalones does not appear in the Articles of Incorporation. The names

therein as incorporators are:

Bruno M. Kuizon – [P]150,000.00

Wilfredo K. Tan – 100,000.00

Karen Therese S. Tan – 100,000.00



Cesar Antonio S. Tan – 100,000.00

Gabeth Maria K. Tan – 50,000.00

Complainant claims that two (2) of the incorporators are the

granddaughters of Roso T. Sabalones. This fact even give (sic) us further

reason to conclude that respondent Royal (sic) Security Agency is not an

alter ego or conduit of SCEPTRE. It is obvious that respondent Royal

(sic) Security Agency is not owned by the owner of ―SCEPTRE‖.

It may be true that the place where respondent Royale hold (sic)

office is the same office formerly used by ―SCEPTRE.‖ Likewise, it may be true that the same officers and staff now employed by respondent

Royale Security Agency were the same officers and staff employed by

―SCEPTRE.‖ We find, however, that these facts are not sufficient to

justify to require respondent Royale to answer for the liability of Sceptre,

which was owned solely by the late Roso T. Sabalones. As we have

stated above, the remedy is to address the claim on the estate of Roso T.

Sabalones.8

The respondents appealed LA Gutierrez’s May 11, 2005 Decision to the

NLRC, claiming that the finding of illegal dismissal was attended with grave abuse of

discretion. This appeal was, however, dismissed by the NLRC in its November 30,

2005 Decision,9 the dispositive portion of which states:

WHEREFORE, premises considered, the Decision of the Labor

Arbiter declaring the illegal dismissal of complainant is

hereby AFFIRMED.











However[,] We modify the monetary award by limiting the grant

of backwages to only three (3) months in view of complainant’s very

limited service which lasted only for one month and three days.

1. Backwages - [P]15,600.00

2. Separation Pay - 5,200.00

3. 13th Month Pay - 583.34

[P]21,383.34 Attorney’s Fees- 2,138.33

Total [P]23,521.67

The appeal of respondent Royal (sic) Security Agency is

hereby DISMISSED for lack of merit.

SO ORDERED.10

The NLRC partially affirmed LA Gutierrez’s May 11, 2005 Decision. It

concurred with the latter’s finding that the petitioner was illegally dismissed and the

manner by which his separation pay was computed, but modified the monetary award

in the petitioner’s favor by reducing the amount of his backwages from P95,600.00

to P15,600.00. The NLRC determined the petitioner’s backwages as limited to three

(3) months of his last monthly salary, considering that his employment with Royale

was only for a period for one (1) month and three (3) days, thus:11

On the other hand, while complainant is entitled to backwages, We are

aware that his stint with respondent Royal (sic) lasted only for one (1)











month and three (3) days such that it is Our considered view that his

backwages should be limited to only three (3) months.

Backwages:

[P]5,200.00 x 3 months = [P]15,600.0012

The petitioner, on the other hand, did not appeal LA Gutierrez’s May 11, 2005Decision but opted to raise the validity of LA Gutierrez’s adverse findings with

respect to piercing Royale’s corporate personality and computation of his separation

pay in his Reply to the respondents’ Memorandum of Appeal. As the filing of an

appeal is the prescribed remedy and no aspect of the decision can be overturned by a

mere reply, the NLRC dismissed the petitioner’s efforts to reverse LA Gutierrez’s

disposition of these issues. Effectively, the petitioner had already waived his right to

question LA Gutierrez’s Decision when he failed to file an appeal within the

reglementary period. The NLRC held:

On the other hand, in complainant’s Reply to Respondent’s Appeal

Memorandum he prayed that the doctrine of piercing the veil of

corporate fiction of respondent be applied so that his services with

Sceptre since 1976 [will not] be deleted. If complainant assails this

particular finding in the Labor Arbiter’s Decision, complainant should

have filed an appeal and not seek a relief by merely filing a Reply to

Respondent’s Appeal Memorandum.13

Consequently, the petitioner elevated the NLRC’s November 30, 2005 Decision to the

CA by way of a Petition for Certiorari under Rule 65 of the Rules of Court. On the










other hand, the respondents filed no appeal from the NLRC’s finding that the

petitioner was illegally dismissed.

The CA, in consideration of substantial justice and the jurisprudential dictum

that an appealed case is thrown open for the appellate court’s review, disagreed with

the NLRC and proceeded to review the evidence on record to determine if Royale is

Sceptre’s alter ego that would warrant the piercing of its corporate veil.14 According to

the CA, errors not assigned on appeal may be reviewed as technicalities should not

serve as bar to the full adjudication of cases. Thus:

In Cuyco v. Cuyco, which We find application in the instant case, the

Supreme Court held:

―In their Reply, petitioners alleged that their petition only

raised the sole issue of interest on the interest due, thus, by

not filing their own petition for review, respondents waived

their privilege to bring matters for the Court’s review that

[does] not deal with the sole issue raised.

Procedurally, the appellate court in deciding the case shall

consider only the assigned errors, however, it is equally

settled that the Court is clothed with ample authority to

review matters not assigned as errors in an appeal, if it

finds that their consideration is necessary to arrive at a just

disposition of the case.‖

Therefore, for full adjudication of the case, We have to primarily resolve

the issue of whether the doctrine of piercing the corporate veil be justly

applied in order to determine petitioner’s length of service with private

respondents.15 (citations omitted)











Nonetheless, the CA ruled against the petitioner and found the evidence he

submitted to support his allegation that Royale and Sceptre are one and the same

juridical entity to be wanting. The CA refused to pierce Royale’s corporate mask as

one of the ―probative factors that would justify the application of the doctrine of

piercing the corporate veil is stock ownership by one or common ownership of both

corporations‖ and the petitioner failed to present clear and convincing proof that

Royale and Sceptre are commonly owned or controlled. The relevant portions of the

CA’s Decision state:

In the instant case, We find no evidence to show that Royale

Security Agency, Inc. (hereinafter ―Royale‖), a corporation duly

registered with the Securities and Exchange Commission (SEC) and

Sceptre Security Agency (hereinafter ―Sceptre‖), a single proprietorship,

are one and the same entity.

Petitioner, who has been with Sceptre since 1976 and, as ruled by

both the Labor Arbiter and the NLRC, was illegally dismissed by Royale

on October 1, 2003, alleged that in order to circumvent labor laws,

especially to avoid payment of money claims and the consideration on

the length of service of its employees, Royale was established as an alter

ego or business conduit of Sceptre. To prove his claim, petitioner

declared that Royale is conducting business in the same office of

Sceptre, the latter being owned by the late retired Gen. Roso Sabalones,

and was managed by the latter’s daughter, Dr. Aida Sabalones-Tan; that

two of Royale’s incorporators are grandchildren [of] the late Gen. Roso

Sabalones; that all the properties of Sceptre are now owned by Royale,and that the officers and staff of both business establishments are the

same; that the heirs of Gen. Sabalones should have applied for

dissolution of Sceptre before the SEC before forming a new corporation.



On the other hand, private respondents declared that Royale was

incorporated only on March 10, 2003 as evidenced by the Certificate of

Incorporation issued by the SEC on the same date; that Royale’s

incorporators are Bruino M. Kuizon, Wilfredo Gracia K. Tan, Karen

Therese S. Tan, Cesar Antonio S. Tan II and [Gabeth] Maria K. Tan.

Settled is the tenet that allegations in the complaint must be duly

proven by competent evidence and the burden of proof is on the party

making the allegation. Further, Section 1 of Rule 131 of the Revised

Rules of Court provides:

―SECTION 1. Burden of proof. – Burden of proof isthe duty of a party to present evidence on the facts in issue

necessary to establish his claim or defense by the amount of

evidence required by law.‖

We believe that petitioner did not discharge the required burden of

proof to establish his allegations. As We see it, petitioner’s claim that

Royale is an alter ego or business conduit of Sceptre is without basis

because aside from the fact that there is no common ownership of bothRoyale and Sceptre, no evidence on record would prove that Sceptre,

much less the late retired Gen. Roso Sabalones or his heirs, has control

or complete domination of Royale’s finances and business transactions.

Absence of this first element, coupled by petitioner’s failure to present

clear and convincing evidence to substantiate his allegations, would

prevent piercing of the corporate veil. Allegations must be proven by

sufficient evidence. Simply stated, he who alleges a fact has the burden

of proving it; mere allegation is not evidence.16 (citations omitted)

By way of this Petition, the petitioner would like this Court to revisit the computation

of his backwages, claiming that the same should be computed from the time he was

illegally dismissed until the finality of this decision.17 The petitioner would likewise











have this Court review and examine anew the factual allegations and the supporting

evidence to determine if the CA erred in its refusal to pierce Royale’s corporate mask

and rule that it is but a mere continuation or successor of Sceptre. According to the

petitioner, the erroneous computation of his separation pay was due to the CA’s

failure, as well as the NLRC and LA Gutierrez, to consider evidence conclusivelydemonstrating that Royale and Sceptre are one and the same juridical entity. The

petitioner claims that since Royale is no more than Sceptre’s alter ego, it should

recognize and credit his length of service with Sceptre.18

The petitioner claimed that Royale and Sceptre are not separate legal persons

for purposes of computing the amount of his separation pay and other benefits under

the Labor Code. The piercing of Royale’s corporate personality is justified by several

indicators that Royale was incorporated for the sole purpose of defeating his right to

security of tenure and circumvent payment of his benefits to which he is entitled under

the law: (i) Royale was holding office in the same property used by Sceptre as its

principal place of business;19 (ii) Sceptre and Royal have the same officers and

employees;20 (iii) on October 14, 1994, Roso, the sole proprietor of Sceptre, sold to

Aida, and her husband, Wilfredo Gracia K. Tan (Wilfredo),21 the property used by

Sceptre as its principal place of business;22 (iv) Wilfredo is one of the incorporators of

Royale;23

(v) on May 3, 1999, Roso ceded the license to operate Sceptre issued by thePhilippine National Police to Aida;24 (vi) on July 28, 1999, the business name ―Sceptre

Security & Detective Agency‖ was registered with the Department of Trade and

Industry (DTI) under the name of Aida;25 (vii) Aida exercised control over the affairs

of Sceptre and Royale, as she was, in fact, the one who dismissed the petitioner from

employment;26 (viii) Karen, the daughter of Aida, was Sceptre’s Operation Manager

and is one of the incorporators of Royale;27 and (ix) Cesar Tan II, the son of Aida was

one of Sceptre’s officers and is one of the incorporators of Royale.28

In their Comment, the respondents claim that the petitioner is barred from

questioning the manner by which his backwages and separation pay were computed.

Earlier, the petitioner moved for the execution of the NLRC’s November 30, 2005

Decision29 and the respondents paid him the full amount of the monetary award


















































thereunder shortly after the writ of execution was issued.30 The respondents likewise

maintain that Royale’s separate and distinct corporate personality should be respected

considering that the evidence presented by the petitioner fell short of establishing that

Royale is a mere alter ego of Sceptre.

The petitioner does not deny that he has received the full amount of backwages

and separation pay as provided under the NLRC’s November 30, 2005

Decision.31 However, he claims that this does not preclude this Court from modifying

a decision that is tainted with grave abuse of discretion or issued without jurisdiction.32

ISSUES

Considering the conflicting submissions of the parties, a judicious

determination of their respective rights and obligations requires this Court to resolve

the following substantive issues:

a. Whether Royale’s corporate fiction should be pierced for the

purpose of compelling it to recognize the petitioner’s length of service

with Sceptre and for holding it liable for the benefits that have accrued to

him arising from his employment with Sceptre; and

b. Whether the petitioner’s backwages should be limited to his

salary for three (3) months.

OUR RULING















Because his receipt of the proceeds of the

award under the NLRC’s November 30,

2005 Decision is qualified and without

prejudice to the CA’s resolution of his

petition for certiorari , the petitioner is not

barred from exercising his right to elevate

the decision of the CA to this Court.

Before this Court proceeds to decide this Petition on its merits, it is imperative to

resolve the respondents’ contention that the full satisfaction of the award under the

NLRC’s November 30, 2005 Decision bars the petitioner from questioning the

validity thereof. The respondents submit that they had paid the petitioner the amount

of P21,521.67 as directed by the NLRC and this constitutes a waiver of his right to file

an appeal to this Court.

The respondents fail to convince.

The petitioner’s receipt of the monetary award adjudicated by the NLRC is not

absolute, unconditional and unqualified. The petitioner’s May 3, 2007 Motion for

Release contains a reservation, stating in his prayer that: ―it is respectfully prayed that

the respondents and/or Great Domestic Insurance Co. be ordered to RELEASE/GIVE

the amount of P23,521.67 in favor of the complainant TIMOTEO H. SARONA

without prejudice to the outcome of the petition with the CA.‖

33

In Leonis Navigation Co., Inc., et al. v. Villamater, et al.,34 this Court ruled that

the prevailing party’s receipt of the full amount of the judgment award pursuant to a

writ of execution issued by the labor arbiter does not










close or terminate the case if such receipt is qualified as without prejudice to the

outcome of the petition for certiorari pending with the CA.

Simply put, the execution of the final and executory decision or

resolution of the NLRC shall proceed despite the pendency of a petition

for certiorari, unless it is restrained by the proper court. In the present

case, petitioners already paid Villamater’s widow, Sonia, the amount

of P3,649,800.00, representing the total and permanent disability award

plus attorney’s fees, pursuant to the Writ of Execution issued by the

Labor Arbiter. Thereafter, an Order was issued declaring the case as

"closed and terminated". However, although there was no motion for

reconsideration of this last Order, Sonia was, nonetheless, estopped from

claiming that the controversy had already reached its end with theissuance of the Order closing and terminating the case. This is because

the Acknowledgment Receipt she signed when she received petitioners’

payment was without prejudice to the final outcome of the petition

for certiorari pending before the CA.35

The finality of the NLRC’s decision does not preclude the filing of a petitionfor certiorari under Rule 65 of the Rules of Court. That the NLRC issues an entry of

judgment after the lapse of ten (10) days from the parties’ receipt of its decision36 will

only give rise to the prevailing party’s right to move for the execution thereof but will

not prevent the CA from taking cognizance of a petition for certiorari on

jurisdictional and due process considerations.37 In turn, the decision rendered by the

CA on a petition for certiorari may be appealed to this Court by way of a petition for

review on certiorari under Rule 45 of the Rules of Court. Under Section 5, Article

VIII of the Constitution, this Court has the power to ―review, revise, reverse, modify,

or affirm on appeal or certiorari as the law or the Rules of Court may provide, final

judgments and orders of lower courts in x x x all cases in which only an error or

question of law is involved.‖ Consistent with this constitutional mandate, Rule 45 of

the Rules of Court provides the remedy of an appeal by certiorari from decisions,

final orders or resolutions of the CA in any case, i.e., regardless of the nature of the

action or proceedings














involved, which would be but a continuation of the appellate process over the original

case.38 Since an appeal to this Court is not an original and independent action but a

continuation of the proceedings before the CA, the filing of a petition for review

under Rule 45 cannot be barred by the finality of the NLRC’s decision in the same

way that a petition for certiorariunder Rule 65 with the CA cannot.

Furthermore, if the NLRC’s decision or resolution was reversed and set aside for

being issued with grave abuse of discretion by way of a petition for certiorari to the

CA or to this Court by way of an appeal from the decision of the CA, it is considered

void ab initio and, thus, had never become final and executory.39

A Rule 45 Petition should be confined to

questions of law. Nevertheless, this Court

has the power to resolve a question of fact,

such as whether a corporation is a mere

alter ego of another entity or whether the

corporate fiction was invoked for

fraudulent or malevolent ends, if the

findings in assailed decision is not

supported by the evidence on record orbased on a misapprehension of facts.

The question of whether one corporation is merely an alter ego of another is

purely one of fact. So is the question of whether a corporation is a paper company, a

sham or subterfuge or whether the petitioner adduced the requisite quantum of

evidence warranting the piercing of the veil of the respondent’s corporate

personality.40















As a general rule, this Court is not a trier of facts and a petition for review

on certiorari under Rule 45 of the Rules of Court must exclusively raise questions of

law. Moreover, if factual findings of the NLRC and the LA have been affirmed by the

CA, this Court accords them the respect and finality they deserve. It is well-settled

and oft-repeated that findings of fact of administrative agencies and quasi-judicial bodies, which have acquired expertise because their jurisdiction is confined to specific

matters, are generally accorded not only respect, but finality when affirmed by the

CA. 41

Nevertheless, this Court will not hesitate to deviate from what are clearly

procedural guidelines and disturb and strike down the findings of the CA and those of

the labor tribunals if there is a showing that they are unsupported by the evidence on

record or there was a patent misappreciation of facts. Indeed, that the impugned

decision of the CA is consistent with the findings of the labor tribunals does not per

se conclusively demonstrate the correctness thereof. By way of exception to the

general rule, this Court will scrutinize the facts if only to rectify the prejudice and

injustice resulting from an incorrect assessment of the evidence presented.

A resolution of an issue that has supposedlybecome final and executory as the

petitioner only raised it in his reply to the

respondents’ appeal may be revisited by

the appellate court if such is necessary for a

just disposition of the case.

As above-stated, the NLRC refused to disturb LA Gutierrez’s denial of the

petitioner’s plea to pierce Royale’s corporate veil as the petitioner did not appeal any

portion of LA Gutierrez’s May 11, 2005 Decision.







In this respect, the NLRC cannot be accused of grave abuse of discretion. Under

Section 4(c), Rule VI of the NLRC Rules,42 the NLRC shall limit itself to reviewing

and deciding only the issues that were elevated on appeal. The NLRC, while not

totally bound by technical rules of procedure, is not licensed to disregard and violate

the implementing rules it implemented. 43

Nonetheless, technicalities should not be allowed to stand in the way of equitably and

completely resolving the rights and obligations of the parties. Technical rules are not

binding in labor cases and are not to be applied strictly if the result would be

detrimental to the working man.44 This Court may choose not to encumber itself with

technicalities and limitations consequent to procedural rules if such will only serve as

a hindrance to its duty to decide cases judiciously and in a manner that would put an

end with finality to all existing conflicts between the parties.

Royale is a continuation or successor of

Sceptre.

A corporation is an artificial being created by operation of law. It possesses the right

of succession and such powers, attributes, and properties expressly authorized by law

or incident to its existence. It has a personality separate and distinct from the persons

composing it, as well as from any other legal entity to which it may be related. This is

basic.45

Equally well-settled is the principle that the corporate mask may be removed or

the corporate veil pierced when the corporation is just an alter ego of a person or of

another corporation. For reasons of public policy and in the interest of justice, the

corporate veil will justifiably be impaled only when it becomes a shield for fraud,

illegality or inequity committed against third persons.46























Hence, any application of the doctrine of piercing the corporate veil should be

done with caution. A court should be mindful of the milieu where it is to be applied. It

must be certain that the corporate fiction was misused to such an extent that injustice,fraud, or crime was committed against another, in disregard of rights. The wrongdoing

must be clearly and convincingly established; it cannot be presumed. Otherwise, an

injustice that was never unintended may result from an erroneous application.47

Whether the separate personality of the corporation should be pierced hinges on

obtaining facts appropriately pleaded or proved. However, any piercing of the

corporate veil has to be done with caution, albeit the Court will not hesitate todisregard the corporate veil when it is misused or when necessary in the interest of

justice. After all, the concept of corporate entity was not meant to promote unfair

objectives.48

The doctrine of piercing the corporate veil applies only in three (3) basic areas,

namely: 1) defeat of public convenience as when the corporate fiction is used as a

vehicle for the evasion of an existing obligation; 2) fraud cases or when the corporateentity is used to justify a wrong, protect fraud, or defend a crime; or 3) alter ego cases,

where a corporation is merely a farce since it is a mere alter ego or business conduit of

a person, or where the

corporation is so organized and controlled and its affairs are so conducted as

to make it merely an instrumentality, agency, conduit or adjunct of another

corporation.49

In this regard, this Court finds cogent reason to reverse the CA’s findings.

Evidence abound showing that Royale is a mere continuation or successor of Sceptre

and fraudulent objectives are behind Royale’s incorporation and the petitioner’s

subsequent employment therein. These are plainly suggested by events that the

respondents do not dispute and which the CA, the NLRC and LA Gutierrez accept as















fully substantiated but misappreciated as insufficient to warrant the use of the

equitable weapon of piercing.

As correctly pointed out by the petitioner, it was Aida who exercised control

and supervision over the affairs of both Sceptre and Royale. Contrary to the

submissions of the respondents that Roso had been the only one in sole control of

Sceptre’s finances and business affairs, Aida took over as early as 1999 when Roso

assigned his license to operate Sceptre on May 3, 1999.50 As further proof of Aida’s

acquisition of the rights as Sceptre’s sole proprietor, she caused the registration of the

business name ―Sceptre Security & Detective Agency‖ under her name with the DTI a

few months after Roso abdicated his rights to Sceptre in her favor .51 As far as Royale

is concerned, the respondents do not deny that she has a hand in its management and

operation and possesses control and supervision of its employees, including the

petitioner. As the petitioner correctly pointed out, that Aida was the one who decided

to stop giving any assignments to the petitioner and summarily dismiss him is an

eloquent testament of the power she wields insofar as Royale’s affairs are concerned.

The presence of actual common control coupled with the misuse of the corporate form

to perpetrate oppressive or manipulative conduct or evade performance of legal

obligations is patent; Royale cannot hide behind its corporate fiction.

Aida’s control over Sceptre and Royale does not, by itself, call for a disregard

of the corporate fiction. There must be a showing that a fraudulent intent or illegal

purpose is behind the exercise of such control to warrant the piercing of the corporate

veil.52 However, the manner by which the petitioner was made to resign from Sceptre

and how he became an employee of Royale suggest the perverted use of the legal

fiction of the separate corporate personality. It is undisputed that the petitioner

tendered his resignation and that he applied at Royale at the instance of Karen andCesar and on the impression they created that these were necessary for his continued

employment. They orchestrated the petitioner’s resignation from Sceptre and

subsequent employment at Royale, taking advantage of their ascendancy over the

petitioner and the latter’s lack of knowledge of his rights and the consequences of his

actions. Furthermore, that the petitioner was made to resign from Sceptre and apply















with Royale only to be unceremoniously terminated shortly thereafter leads to the

ineluctable conclusion that there was intent to violate the petitioner’s rights as an

employee, particularly his right to security of tenure. The respondents’ scheme reeks

of bad faith and fraud and compassionate justice dictates that Royale and Sceptre be

merged as a single entity, compelling Royale to credit and recognize the petitioner’slength of service with Sceptre. The respondents cannot use the legal fiction of a

separate corporate personality for ends subversive of the policy and purpose behind its

creation53 or which could not have been intended by law to which it owed its being.54

For the piercing doctrine to apply, it is of no consequence if Sceptre is a sole

proprietorship. As ruled in Prince Transport, Inc., et al. v. Garcia, et al.,55 it is the act

of hiding behind the separate and distinct personalities of juridical entities to

perpetuate fraud, commit illegal acts, evade one’s obligations that the equitable

piercing doctrine was formulated to address and prevent:

A settled formulation of the doctrine of piercing the corporate veil is that

when two business enterprises are owned, conducted and controlled by

the same parties, both law and equity will, when necessary to protect the

rights of third parties, disregard the legal fiction that these two entitiesare distinct and treat them as identical or as one and the same. In the

present case, it may be true that Lubas is a single proprietorship and not

a corporation. However, petitioners’ attempt to isolate themselves from

and hide behind the supposed separate and distinct personality of Lubas

so as to evade their liabilities is precisely what the classical doctrine of

piercing the veil of corporate entity seeks to prevent and remedy.56

Also, Sceptre and Royale have the same principal place of business. As early as

October 14, 1994, Aida and Wilfredo became the owners of the property used by

Sceptre as its principal place of business by virtue of a Deed of Absolute Sale they

executed with Roso.57 Royale, shortly after its incorporation, started to hold office in

the same property. These, the respondents failed to dispute.






















The respondents do not likewise deny that Royale and Sceptre share the same

officers and employees. Karen assumed the dual role of Sceptre’s Operation Manager

and incorporator of Royale. With respect to the petitioner, even if he has alreadyresigned from Sceptre and has been employed by Royale, he was still using the

patches and agency cloths of Sceptre during his assignment at Highlight Metal.

Royale also claimed a right to the cash bond which the petitioner posted when

he was still with Sceptre. If Sceptre and Royale are indeed separate entities, Sceptre

should have released the petitioner’s cash bond when he resigned and Royale would

have required the petitioner to post a new cash bond in its favor.

Taking the foregoing in conjunction with Aida’s control over Sceptre’s and

Royale’s business affairs, it is patent that Royale was a mere subterfuge for Aida.

Since a sole proprietorship does not have a separate and distinct personality from that

of the owner of the enterprise, the latter is personally liable. This is what she sought to

avoid but cannot prosper.

Effectively, the petitioner cannot be deemed to have changed employers as

Royale and Sceptre are one and the same. His separation pay should, thus, be

computed from the date he was hired by Sceptre in April 1976 until the finality of this

decision. Based on this Court’s ruling in Masagana Concrete Products, et al. v.

NLRC, et al.,58 the intervening period between the day an employee was illegally

dismissed and the day the decision finding him illegally dismissed becomes final and

executory shall be considered in the computation of his separation pay as a period of―imputed‖ or ―putative‖ service:

Separation pay, equivalent to one month's salary for every year of

service, is awarded as an alternative to reinstatement when the latter is







no longer an option. Separation pay is computed from the

commencement of employment up to the time of termination, including

the imputed service for which the employee is entitled to backwages,

with the salary rate prevailing at the end of the period of putative service

being the basis for computation.59

It is well-settled, even axiomatic, that if

reinstatement is not possible, the period

covered in the computation of backwages is

from the time the employee was unlawfully

terminated until the finality of the decision

finding illegal dismissal.

With respect to the petitioner’s backwages, this Court cannot subscribe to the view

that it should be limited to an amount equivalent to three (3) months of his salary.

Backwages is a remedy affording the employee a way to recover what he has lost by

reason of the unlawful dismissal.60

In awarding backwages, the primordialconsideration is the income that should have accrued to the employee from the time

that he was dismissed up to his reinstatement61 and the length of service prior to his

dismissal is definitely inconsequential.

As early as 1996, this Court, in Bustamante, et al. v. NLRC, et al.,62 clarified in

no uncertain terms that if reinstatement is no longer possible, backwages should be

computed from the time the employee was terminated until the finality of the decision,finding the dismissal unlawful.

Therefore, in accordance with R.A. No. 6715, petitioners are entitled on

their full backwages, inclusive of allowances and other benefits or their



















monetary equivalent, from the time their actual compensation was

withheld on them up to the time of their actual reinstatement.

As to reinstatement of petitioners, this Court has already ruled thatreinstatement is no longer feasible, because the company would be

adjustly prejudiced by the continued employment of petitioners who at

present are overage, a separation pay equal to one-month salary granted

to them in the Labor Arbiter's decision was in order and, therefore,

affirmed on the Court's decision of 15 March 1996.Furthermore, since

reinstatement on this case is no longer feasible, the amount of

backwages shall be computed from the time of their illegal

termination on 25 June 1990 up to the time of finality of thisdecision.63 (emphasis supplied)

A further clarification was made in Javellana, Jr. v. Belen:64

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

Republic Act 6715 instructs:

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

employment, the employer shall not terminate the services

of an employee except for a just cause or when authorized

by this Title. An employee who is unjustly dismissed from

work shall be entitled to reinstatement without loss of

seniority rights and other privileges and to his full

backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the

time his compensation was withheld from him up to the

time of his actual reinstatement.











Clearly, the law intends the award of backwages and similar benefits to

accumulate past the date of the Labor Arbiter's decision until the

dismissed employee is actually reinstated. But if, as in this case,

reinstatement is no longer possible, this Court has consistently ruled that

backwages shall be computed from the time of illegal dismissal until the

date the decision becomes final.65 (citation omitted)

In case separation pay is awarded and reinstatement is no longer feasible, backwages

shall be computed from the time of illegal dismissal up to the finality of the decision

should separation pay not be paid in the meantime. It is the employee’s actual receipt

of the full amount of his separation pay that will effectively terminate the employmentof an illegally dismissed employee.66 Otherwise, the employer-employee relationship

subsists and the illegally dismissed employee is entitled to backwages, taking into

account the increases and other benefits, including the 13th month pay, that were

received by his co-employees who are not dismissed.67 It is the obligation of the

employer to pay an illegally dismissed employee or worker the whole amount of the

salaries or wages, plus all other benefits and

bonuses and general increases, to which he would have been normally entitled had he

not been dismissed and had not stopped working.68

In fine, this Court holds Royale liable to pay the petitioner backwages to be

computed from his dismissal on October 1, 2003 until the finality of this decision.

Nonetheless, the amount received by the petitioner from the respondents in

satisfaction of the November 30, 2005 Decision shall be deducted accordingly.

Finally, moral damages and exemplary damages at P25,000.00 each as

indemnity for the petitioner’s dismissal, which was tainted by bad faith and fraud, are

in order. Moral damages may be recovered where the dismissal of the employee was

tainted by bad faith or fraud, or where it constituted an act oppressive to labor, and

done in a manner contrary to morals, good customs or public policy while exemplary



















damages are recoverable only if the dismissal was done in a wanton, oppressive, or

malevolent manner .69

WHEREFORE, premises considered, the Petition is hereby GRANTED.

We REVERSE and SET ASIDE the CA’s May 29, 2008 Decision in C.A.-G.R. SP

No. 02127 and order the respondents to pay the petitioner the following minus the

amount of (P23,521.67) paid to the petitioner in satisfaction of the NLRC’s November

30, 2005 Decision in NLRC Case No. V-000355-05:

a) full backwages and other benefits computed from October 1, 2003 (the dateRoyale illegally dismissed the petitioner) until the finality of this decision;

b) separation pay computed from April 1976 until the finality of this decision at the

rate of one month pay per year of service;

c) ten percent (10%) attorney’s fees based on the total amount of the awards

under (a) and (b) above;

d) moral damages of Twenty-Five Thousand Pesos (P25,000.00); and

5. exemplary damages of Twenty-Five Thousand Pesos (P25,000.00).

This case is REMANDED to the labor arbiter for computation of the separation pay,

backwages, and other monetary awards due the petitioner.







SO ORDERED.

BIENVENIDO L. REYES

Associate Justice

WE CONCUR:

ANTONIO T. CARPIO

Associate Justice



JOSE PORTUGAL PEREZ

Associate Justice


Associate Justice


Associate Justice


I attest that the conclusions in the above Decision had been reached in consultation

before the case was assigned to the writer of the opinion of the Court’s Division.

ANTONIO T. CARPIO

Associate Justice



Chairperson, Second Division


Pursuant to Section 13, Article VIII of the Constitution and the Division Chairperson's

Attestation, I certify that the conclusions in the above Decision had been reached in

consultation before the case was assigned to the writer of the opinion of the Court’s

Division.

RENATO C. CORONA

Chief Justice

Additional Member in lieu of Associate Justice Arturo D. Brion per Special Order No. 1174 dated January 9,

2012.

1 Penned by Associate Justice Francisco P. Acosta, with Associate Justices Amy C. Lazaro-Javier and Florito S.

Macalino, concurring; rollo, pp. 19-30.

2 Id. at 29.

3 Id. at 3, 4 and 21.

4Id. at 4-5, 21.

5 Id. at 5-6.

6 Id. at 5-6, 21.

7 Id. at 55.

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8 Id. at 53-54.

9 Id. at 58-65.

10 Id. at 64-65.

11 Id. at 64.

12 Id.

13 Id.

14 Id. at 24-25.

15 Id.

16 Id. at 26-27.

17 Id. at 13-15.

18 Id. at 7-13.

19 Id. at 5, 6 and 9.

20 Id. at 8-9.

21 Id. at 74-80.

22 Id. at 82.

23 Id. at 44.

24 Id. at 73-79.

25 Id. at 73-80.

26 Id. at 12.

27 Id. at 8, 44, 73-74.

28 Id.

29 Id. at 58-65.

30 Id. at 49.

31 Id. at 77.

32 Id.














































































33 Id. at 67.

34 G.R. No. 179169, March 3, 2010, 614 SCRA 182.

35 Id. at 193-194.

36 2011 NLRC Rules of Procedure, Rule VII, Section 14.

37Id.

38Cua, Jr. v. Tan, G.R. No. 181455-56 , December 4, 2009, 607 SCRA , 686-687.

39 Leonis Navigation Co., Inc. v. Villamater, supra note 34 at 192.

40 China Banking Corporation v. Dyne-Sem Electronics Corporation, 527 Phil 80 (2006).

41 Reyes v. National Labor Relations Commission, G.R. No. 160233, August 8, 2007, 529 SCRA 499.

42 New Rules of Procedure of the National Labor Relations Commission (as amended by NLRC Resolution No. 01-

02, Series of 2002).

43 Del Monte Philippines, Inc. v. NLRC, G.R. No. 87371 , August 6, 1990, 188 SCRA 370.

44 Government Service Insurance System v. NLRC, G.R. No. 180045, November 17, 2010, 635 SCRA 258.

45 General Credit Corporation v. Alsons Development and Investment Corporation, G.R. No. 154975, January 29,

2007, 513 SCRA 237-238.

46 Philippine National Bank v. Andrada Electric Engineering Company, 430 Phil 894 (2002).

47 Id. at 894-895; citations omitted.


49 Id. at 238-239.

50 Rollo, p. 79.

51 Id. at 80.

52 NASECO Guards Association-PEMA (NAGA-PEMA) v. National Service Corporation, G.R. No. 165442, August

25, 2010, 629 SCRA 101.

53 Cf. Emiliano Cano Enterprises, Inc. v. CIR, et al., 121 Phil 276 (1965).

54 Land Bank of the Philippines v. Court of Appeals, 416 Phil 774, 783 (2001).


56 Id. at 328.










































































57 Rollo, pp. 5, 54, 74 and 82.

58 372 Phil 459 (1999).

59 Id. at 481.

60 De Guzman v. National Labor Relations Commission, 371 Phil 202 (1999).

61 Velasco v. NLRC, et al., 525 Phil 749, 761-762, (2006).

62332 Phil 833 (1996).

63 Id. at 843.

64 G.R. No. 181913, March 5, 2010, 614 SCRA 342.

65 Id. at 350-351.

66 Rasonable v. NLRC, 324 Phil 191, 200 (1996).

67 Id.

68 St. Louis College of Tuguegarao v. NLRC, 257 Phil 1008 (1989), citing East Asiatic Co., Ltd. v. Court of

Industrial Relations, 148-B Phil 401, 429 (1971).

69 Norkis Trading Co., Inc. v. NLRC , 504 Phil 709, 719-720 (2005).

FIRST DIVISION

GOLDEN ACE BUILDERS and

ARNOLD U. AZUL, Petitioners,

- versus -

G.R. No. 187200

Present:

PUNO, C.J., Chairperson, CARPIO MORALES,

LEONARDO-DE CASTRO, BERSAMIN, and

VILLARAMA, JR., JJ .










































JOSE A. TALDE,

Respondent. Promulgated:May 5, 2010

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D E C I S I O N

CARPIO MORALES, J.:

Jose A. Talde (respondent) was hired in 1990 as a carpenter by petitionerGolden Ace Builders of which its co-petitioner Arnold Azul (Azul) is the owner-

manager. In February 1999, Azul, alleging the unavailability of construction

projects, stopped giving work assignments to respondent, prompting the latter to

file a complaint[1] for illegal dismissal.

By Decision[2] of January 10, 2001, the Labor Arbiter ruled in favor of

respondent and ordered his immediate reinstatement without loss of seniority rightsand other privileges, and with payment of full backwages, which at that time was

computed at P144,382.23, and the amount of P3,236.37 representing premium pay

for rest days, service incentive leave pay and 13th month pay.

Pending their appeal to the National Labor Relations Commission (NLRC)

and in compliance with the Labor Arbiter’s Decision, petitioners, through counsel,

advised respondent to report for work in the construction site within 10 days from

receipt thereof. Respondent submitted, however, on May 16, 2001 amanifestation[3] to the Labor Arbiter that actual animosities existed between him

and petitioners and there had been threats to his life and his family’s safety, hence,

he opted for the payment of separation pay. Petitioners denied the existence of any

such animosity.

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Meanwhile, the NLRC dismissed petitioners’ appeal by Resolution[4] of

April 22, 2002, holding that respondent was a regular employee and not a project

employee, and that there was no valid ground for the termination of his

services. Petitioners’ motion for reconsideration was denied by Resolution[5] of

August 6, 2002.

Petitioners’ appeal to the Court of Appeals was dismissed by Decision [6] of

August 12, 2004 which attained finality on September 15, 2004.

As an agreement could not be forged by the parties on the satisfaction of the

judgment, the matter was referred to the Fiscal Examiner of the NLRC who

recomputed atP562,804.69 the amount due respondent, which was approved by the

Labor Arbiter by Order

[7]

of July 5, 2005. A writ of execution

[8]

dated July 8, 2005was thereupon issued.

Finding the amount exorbitant, petitioners filed a motion for reconsideration

with the NLRC, contending that since respondent refused to report back to work,

he should be considered to have abandoned the same, hence, the recomputation of

the wages and benefits due him should not be beyond May 15, 2001, the date when

he manifested his refusal to be reinstated.

By Resolution[9] of March 9, 2006, the NLRC granted petitioners’ motionand accordingly vacated the computation. It held that since respondent did not

appeal the Decision of the Labor Arbiter granting him only reinstatement and

backwages, not separation pay in lieu thereof, he may not be afforded affirmative

relief; and since he refused to go back to work, he may recover backwages only up

to May 20, 2001, the day he was supposed to return to the job site. Respondent’s

motion for reconsideration was denied by the NLRC by Resolution[10] of June 30,

2006, hence, he filed a petition for certiorari with the Court of Appeals.

By Decision[11] of September 10, 2008, the appellate court set aside the

NLRC Resolutions, holding that respondent is entitled to both

backwages and separation pay, even if separation pay was not granted by the

Labor Arbiter, the latter in view of the strained relations between the parties. The

appellate court disposed:




























WHEREFORE, in view of all the foregoing premises, judgment is hereby

rendered by us GRANTING the petition filed in this case. The

assailed RESOLUTIONS dated 30, 2006 and March 9, 2006 of the NLRC arehereby SET ASIDE.

Thus, the full backwages and separation pay to be awarded to the petitioner shall be computed as follows:

Full Backwages as of June 30, 2005 = P562,804.69Separation Pay:

P220.00 x 26 days = P5,720,00

P5,720/month x 8 years = 45,760.00

P608,564.69

We also award an additional 10% of the total monetary award by way of

attorney’s fees for the expenses incurred by the petitioner to protect his rights and

interests. Furthermore, when the decision of this Court as to the monetary award becomes final and executory, the rate of legal interest shall be imposed at 12% per

annum from such finality until its satisfaction, this interim period being deemed to

be by then an equivalent to a forbearance of credit.

SO ORDERED. (emphasis in the original)

Petitioners’ motion for reconsideration was denied by Resolution [12] of

March 12, 2009, hence, the present petition for review on certiorari.

Petitioners assail the appellate court’s award of separation pay. They

assailed too as contrary to prevailing jurisprudence the computation of backwages

from the time of dismissal up to actual reinstatement. They contend that, in effect,

the appellate court modified an already final and executory decision.

The petition fails.

The basis for the payment of backwages is different from that for the award

of separation pay. Separation pay is granted where reinstatement is no longeradvisable because of strained relations between the employee and the

employer. Backwages represent compensation that should have been earned but

were not collected because of the unjust dismissal. The basis for computing

backwages is usually the length of the employee’s service while that for separation






pay is the actual period when the employee was unlawfully prevented from

working.[13]

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

Industrial Gases Philippine s[14] instructs:

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

was no illegal dismissal, for under Article 279 of the Labor Code and as held in a

catena of cases, an employee who is dismissed without just cause and without

due process is entitled to backwages and reinstatement or payment of separation pay in lieu thereof:

Thus, an illegally dismissed employee is entitled to two

reliefs: backwages and reinstatement. The two reliefs provided

are separate and distinct. In instances where reinstatement is nolonger feasible because of strained relations between the employee

and the employer, separation pay is granted. In effect, an illegallydismissed employee is entitled to either reinstatement, if viable, or

separation pay if reinstatement is no longer viable, and backwages.

The normal consequences of respondents’ illegal

dismissal, then, are reinstatement without loss of seniority

rights, and payment of backwages computed from the time

compensation was withheld up to the date of actual

reinstatement. Where reinstatement is no longer viable as an

option, separation pay equivalent to one (1) month salary forevery year of service should be awarded as an alternative. The

payment of separation pay is in addition to payment of

backwages. (emphasis, italics and underscoring supplied)

Velasco v. National Labor Relations Commission emphasizes:











The accepted doctrine is that separation pay may avail in

lieu of reinstatement if reinstatement is no longer practical or in the best

interest of the parties. Separation pay in lieu ofreinstatement may likewise beawarded if the employee decides not to be reinstated. (emphasis in the original;

italics supplied)

Under the doctrine of strained relations, the payment of separation pay is

considered an acceptable alternative to reinstatement when the latter option is no

longer desirable or viable. On one hand, such payment liberates the employee

from what could be a highly oppressive work environment. On the other hand, it

releases the employer from the grossly unpalatable obligation of maintaining in its

employ a worker it could no longer trust.[15]

Strained relations must be demonstrated as a fact, however, to be adequately

supported by evidence[16] — substantial evidence to show that the relationship

between the employer and the employee is indeed strained as a necessary

consequence of the judicial controversy.[17]

In the present case, the Labor Arbiter found that actual animosity existed

between petitioner Azul and respondent as a result of the filing of the illegal

dismissal case. Such finding, especially when affirmed by the appellate court as in

the case at bar, is binding upon the Court, consistent with the prevailing rules thatthis Court will not try facts anew and that findings of facts of quasi-judicial bodies

are accorded great respect, even finality.

Clearly then, respondent is entitled to backwages and separation pay as his

reinstatement has been rendered impossible due to strained relations. As correctly

held by the appellate court, the backwages due respondent must be computed from

the time he was unjustly dismissed until his actual reinstatement, or from February

1999 until June 30, 2005 when his reinstatement was rendered impossible without

fault on his part.
















TERESITA J. LEONARDO-DE CASTRO

Associate Justice

LUCAS P. BERSAMIN

Associate Justice

MARTIN S. VILLARAMA, JR.

Associate Justice

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, I certify that the

conclusions in the above decision had been reached in consultation before the case

was assigned to the writer of the opinion of the Court’s Division.

REYNATO S. PUNO

Chief Justice

[1] Annex ―C‖ of Petition; rollo, p. 87.[2] Annex ―D‖ of Petition, id. at 88-100. Penned by Labor Arbiter Joselito Villarosa.[3] Annex ―G‖ of Petition, id. at 109.

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[4] Annex ―I‖ of Petition, id. at 115-120. Penned by Commissioner (now Associate Justice of the Court of

Appeals) Angelita A. Gacutan and concurred in by Presiding Commissioner Raul T. Aquino

and Commissioner Victoriano R. Calaycay.[5] Annex ―K‖ of Petition, id. at 139-1140. Penned by Commissioner (now Associate Justice of the Court of


and Commissioner Victoriano R. Calaycay.[6] Annex ―L‖ of Petition, id. at 142-149. Penned by Associate Justice Fernanda Lampas-Peralta and

concurred in by Associate Justices Conrado M. Vasquez and Josefina Guevara-Salonga.[7] Annex ―M‖ of Petition, id. at. 150-151. Penned by Labor Arbiter Cresencio G. Ramos.[8] Annex ―N‖ of Petition, id. at 152-154. Penned by Labor Arbiter Cresencio G. Ramos.[9] Annex ―P‖ of Petition, id. at 163-170. Penned by Commissioner (now Associate Justice of the Court of


and Commissioner Victoriano R. Calaycay.[10] Annex ―R‖ of Petition, id. at 182-183. Penned by Commissioner (now Associate Justice of the Court of


and Commissioner Victoriano R. Calaycay.[11] Id. at 70-81. Penned by Associate Justice Isaias P. Dicdican and concurred in by Associate Justices Juan

Q. Enriquez, Jr. and Marlene Gonzales-Sison.[12] Id. at. 82-86. Penned by Associate Justice Pampio A. Abarintos and concurred in by Associate Justices

Amelita T. Tolentino and Myrna Dimaranan-Vidal.

[13] Equitable v. Sadac, G.R. No. 164772, June 8, 2006, 490 SCRA 380. [14] G.R. No. 178524, January 30, 2009.

[15] Coca Cola v. Daniel , G.R. No. 156893, June 21, 2005, 460 SCRA 494.[16] Paguio Transport Corporation v. National Labor Relations Commission, 356 Phil. 158, 171 (1998).[17] Coca-Cola v. Daniel , supra.


Supreme Court Manila

SECOND DIVISION













































ANTONIO P. SALENGA and


COMMISSION,

Petitioners,

- versus -

COURT OF APPEALS and

CLARK DEVELOPMENT

CORPORATION,

Respondents.

G.R. Nos. 174941

Present:

CARPIO, Chairperson ,

BRION,

PORTUGAL PEREZ,

SERENO, and

REYES, JJ.

Promulgated:

February 1, 2012

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D E C I S I O N

SERENO , J.:

The present Petition for Certiorari under Rule 65 assails the Decision[1]

of

the Court of Appeals (CA) promulgated on 13 September 2005, dismissing the

Complaint for illegal dismissal filed by petitioner Antonio F. Salenga against

respondent Clark Development Corporation (CDC). The dispositive portion of the

assailed Decision states:

WHEREFORE, premises considered, the original and supplemental petitions

are GRANTED. The assailed resolutions of the National Labor Relations Commission

dated September 10, 2003 and January 21, 2004 are ANNULLED and SET ASIDE. The

complaint filed by Antonio B. Salenga against Clark Development is DISMISSED.

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Consequently, Antonio B. Salenga is ordered to restitute to Clark Development

Corporation the amount of P3,222,400.00, which was received by him as a consequence

of the immediate execution of said resolutions, plus interest thereon at the rate of 6%

per annum from date of

such receipt until finality of this judgment, after which the interest shall be at the rate of

12% per annum until said amount is fully restituted.

SO ORDERED.[2]

The undisputed facts are as follows:

On 22 September 1998, President/Chief Executive Officer (CEO) RufoColayco issued an Order informing petitioner that, pursuant to the decision of the

board of directors of respondent CDC, the position of head executive assistant –

the position held by petitioner – was declared redundant. Petitioner received a

copy of the Order on the same day and immediately went to see Colayco. The

latter informed him that the Order had been issued as part of the reorganization

scheme approved by the board of directors. Thus, petitioner’s employment was

to be terminated thirty (30) days from notice of the Order.

On 17 September 1999, petitioner filed a Complaint for illegal dismissal

with a claim for reinstatement and payment of back wages, benefits, and moral

and exemplary damages against respondent CDC and Colayco. The Complaint was

filed with the National Labor Relations Commission-Regional Arbitration Branch

(NLRC-RAB) III in San Fernando, Pampanga. In defense, respondents, represented

by the Office of the Government Corporate Counsel (OGCC), alleged that the

NLRC had no jurisdiction to entertain the case on the ground that petitioner was a

corporate officer and, thus, his dismissal was an intra-corporate matter falling

properly within the jurisdiction of the Securities and Exchange Commission (SEC).

On 29 February 2000, labor arbiter (LA) Florentino R. Darlucio issued aDecision

[3] in favor of petitioner Salenga. First, the LA held that the NLRC had

jurisdiction over the Complaint, considering that petitioner was not a corporate

officer but a managerial employee. He held the position of head executive

assistant, categorized as a Job Level 12 position, not subject to election or

appointment by the board of directors.










Second, the LA pointed out that respondent CDC and Colayco failed to

establish a valid cause for the termination of petitioner’s employment. The

evidence presented by respondent CDC failed to show that the position of

petitioner was superfluous as to be classified “redundant.” The LA further pointed

out that respondent corporation had not disputed the argument of petitionerSalenga that his position was that of a regular employee. Moreover, the LA found

that petitioner had not been accorded the right to due process. Instead, the latter

was dismissed without the benefit of an explanation of the grounds for his

termination, or an opportunity to be heard and to defend himself.

Finally, considering petitioner’s reputation and contribution as a

government employee for 40 years, the LA awarded moral damages amounting

to P2,000,000 and exemplary damages of P500,000. The dispositive portion of the

LA’s Decision reads:

WHEREFORE, premises considered, judgment is hereby rendered declaring

respondent Clark Development Corporation and Rufo Colayco guilty of illegal dismissal

and for which they are ordered, as follows:

1. To reinstate complainant to his former or equivalent position without loss of

seniority rights and privileges;

2. To pay complainant his backwages reckoned from the date of his dismissal

on September 22, 1998 until actual reinstatement or merely reinstatement

in the payroll which as of this date is in the amount of P722,400.00;

3. To pay complainant moral damages in the amount of P2,000,000.00; and,

4. To pay complainant exemplary damages in the amount of P500,000.00.

SO ORDERED.[4]

At the time the above Decision was rendered, respondent CDC was already

under the leadership of Sergio T. Naguiat. When he received the Decision on 10

March 2000, he subsequently instructed Atty. Monina C. Pineda, manager of the

Corporate and Legal Services Department and concurrent corporate board

secretary, not to appeal the Decision and to so inform the OGCC.[5]

Despite these instructions, two separate appeals were filed before LA

Darlucio on 20 March 2000. One appeal[6]

was from the OGCC on behalf of

respondent CDC and Rufo Colayco. The OGCC reiterated its allegation that















petitioner was a corporate officer, and that the termination of his employment

was an intra-corporate matter. The Memorandum of Appeal was verified and

certified by Hilana Timbol-Roman, the executive vice president of respondent

CDC. The Memorandum was accompanied by a UCPB General Insurance Co.,

Inc. supersedeas bond covering the amount due to petitioner as adjudged by LADarlucio. Timbol-Roman and OGCC lawyer Roy Christian Mallari also executed on

17 March 2000 a Joint Affidavit of Declaration wherein they swore that they were

the “respective authorized representative and counsel” of respondent

corporation. However, the Memorandum of Appeal and the Joint Affidavit of

Declaration were not accompanied by a board resolution from respondent’s

board of directors authorizing either Timbol-Roman or Atty. Mallari, or both, to

pursue the case or to file the appeal on behalf of respondent.

It is noteworthy that Naguiat, who was president/CEO of respondent CDC

from 3 February 2000 to 5 July 2000, executed an Affidavit on 20 March

2002,[7]

wherein he stated that without his knowledge, consent or approval,

Timbol-Roman and Atty. Mallari filed the above-mentioned appeal. He further

alleged that their statements were false.

The second appeal, meanwhile, was filed by former CDC President/CEO

Rufo Colayco. Colayco alleged that petitioner was dismissed not on 22 September

1998, but twice on 9 March 1999 and 23 March 1999. The dismissal was allegedly

approved by respondent’s CDC board of directors pursuant to a new

organizational structure. Colayco likewise stated that he had posteda supersedeas bond – the same bond taken out by Timbol-Roman – issued by the

UCPB General Insurance Co. dated 17 March 2000 in order to secure the

monetary award, exclusive of moral and exemplary damages.

Petitioner thereafter opposed the two appeals on the grounds that both

appellants, respondent CDC – as allegedly represented by Timbol-Roman and

Atty. Mallari – and Rufo Colayco had failed to observe Rule VI, Sections 4 to 6 of

the NLRC Rules of Procedure; and that appellants had not been authorized by

respondent’s board of directors to represent the corporation and, thus, they werenot the “employer” whom the Rules referred to. Petitioner also alleged that

appellants failed to refute the findings of LA Darlucio in the previous Decision.

In the meantime, while the appeal was pending, on 19 October 2000,

respondent’s board chairperson and concurrent President/CEO Rogelio L. Singson







ordered the reinstatement of petitioner to the latter’s former position as head

executive assistant, effective 24 October 2000.[8]

On 28 May 2001, respondent CDC’s new President/CEO Emmanuel Y.

Angeles issued a Memorandum, which offered all managers of respondent

corporation an early separation/redundancy program. Those who wished to avail

themselves of the program were to be given the equivalent of their 1.25-month

basic salary for every year of service and leave credits computed on the basis of

the same 1.25-month equivalent of their basic salary.[9]

In August 2001, respondent CDC offered another retirement plan granting

higher benefits to the managerial employees. Thus, on 12 September 2001,

petitioner filed an application for the early retirement program, which Angeles

approved on 3 December 2001.

Meanwhile, in the proceedings of the NLRC, petitioner received on 12

September 2001 its 30 July 2001 Decision[10]

on the appeal filed by Timbol-Roman

and Colayco. It is worthy to note that the said Decision referred to the reports of

reviewer arbiters Cristeta D. Tamayo and Thelma M. Concepcion, who in turn

found that petitioner Salenga was a corporate officer of CDC. Nevertheless, the

First Division of the NLRC upheld LA Darlucio’s ruling that petitioner Salenga was

indeed a regular employee. It also found that redundancy, as an authorized cause

for dismissal, has not been sufficiently proven, rendering the dismissal illegal.

However, the NLRC held that the award of exemplary and moral damages wereunsubstantiated. Moreover, it also dropped Colayco as a respondent to the case,

since LA Darlucio had failed to provide any ground on which to anchor the

former’s solidary liability.

Petitioner Salenga thereafter moved for a partial reconsideration of the

above-mentioned Decision. He sought the reinstatement of the award of

exemplary and moral damages. He likewise insisted that the NLRC should not

have entertained the appeal on the following grounds: (1) respondent CDC did

not file an appeal and did not post the required cash or surety bond; (2) both

Timbol-Roman and Colayco were admittedly not real parties-in-interest; (3) they

were not the employer or the employer’s authorized representative and, thus,

had no right to appeal; and (4) both appeals had not been perfected for failure to

post the required cash or surety bond. In other words, petitioner’s theory

revolved on the fact that neither Timbol-Roman nor Colayco was authorized to














represent the corporation, so the corporation itself did not appeal LA Darlucio’s

Decision. As a result, that Decision should be considered as final and executory.

For its part, the OGCC also filed a Motion for Reconsideration[11]

of the

NLRC’s 30 July 2001 Decision insofar as the finding of illegal dismissal was

concerned. It no longer questioned the commission’s finding that petitioner was

a regular employee, but instead insisted that he had been dismissed as a

consequence of his redundant position. The motion, however, was not verified by

the duly authorized representative of respondent CDC.

On 5 December 2002, the NLRC denied petitioner Salenga’s Motion for

Partial Reconsideration and dismissed the Complaint. The dispositive portion of

the Resolution[12]

reads as follows:

WHEREFORE, complainant’s partial motion for reconsideration is denied. Asrecommended by Reviewer Arbiters Cristeta D. Tamayo in her August 2, 2000 report

and Thelma M. Concepcion in her November 25, 2002 report, the decision of Labor

Arbiter Florentino R. Darlucio dated 29 February 2000 is set aside.

The complaint below is dismissed for being without merit.

SO ORDERED.[13]

Meanwhile, pending the Motions for Reconsideration of the NLRC’s 30 July

2001 Decision, another issue arose with regard to the computation of the

retirement benefits of petitioner. Respondent CDC did not immediately give his

requested retirement benefits, pending clarification of the computation of these

benefits. He claimed that the computation of his retirement benefits should also

include the forty (40) years he had been in government service in accordance with

Republic Act No. (R.A.) 8291, or the GSIS Act, and should not be limited to the

length of his employment with respondent corporation only, as the latter insisted.

In a letter dated 14 March 2003, petitioner Salenga’s counsel wrote to the

board of directors of respondent to follow up the payment of the retirement

benefits allegedly due to petitioner.[14]

Pursuant to the NLRC’s dismissal of the Complaint of petitioner Salenga,

Angeles subsequently denied the former’s request for his retirement benefits, to

wit:[15]

Please be informed that we cannot favorably grant your client’s claim for

retirement benefits considering that Clark Development Corporation's dismissal of Mr.




















Antonio B. Salenga had been upheld by the National Labor Relations Commission

through a Resolution dated December 5, 2002...

xxx xxx xxx

As it is, the said Resolution dismissed the Complaint filed by Mr. Salenga for

being without merit. Consequently, he is not entitled to receive any retirement pay from

the corporation.

Meanwhile, petitioner Salenga filed a second Motion for Reconsideration of

the 5 December 2002 Resolution of the NLRC, reiterating his claim that it should

not have entertained the imperfect appeal, absent a proper verification and

certification against forum-shopping from the duly authorized representative of

respondent CDC. Without that authority, neither could the OGCC act on behalf of

the corporation.

The OGCC, meanwhile, resurrected its old defense that the NLRC had no

jurisdiction over the case, because petitioner Salenga was a corporate officer.

The parties underwent several hearings before the NLRC First Division.

During these times, petitioner Salenga demanded from the OGCC to present a

board resolution authorizing it or any other person to represent the corporation

in the proceedings. This, the OGCC failed to do.

After giving due course to the Motion for Reconsideration filed bypetitioner Salenga, the NLRC issued a Resolution[16]

on 10 September 2003,

partially granting the motion. This time, the First Division of the NLRC held that,

absent a board resolution authorizing Timbol-Roman to file the appeal on behalf

of respondent CDC, the appeal was not perfected and was thus a mere scrap of

paper. In other words, the NLRC had no jurisdiction over the appeal filed before it.

The NLRC further held that respondent CDC had failed to show that

petitioner Salenga’s dismissal was pursuant to a valid corporate reorganization or

board resolution. It also deemed respondent estopped from claiming that there

was indeed a redundancy, considering that petitioner Salenga had been

reinstated to his position as head executive assistant. While it granted the award

of moral damages, it nevertheless denied exemplary damages. Thus, the

dispositive portion of its Decision reads:

WHEREFORE, premises considered, the complainant’s Motion for

Reconsideration is GRANTED and We set aside our Resolution of December 5, 2002. The






Decision of the Labor Arbiter dated February 29, 2000 is REINSTATED with the

MODIFICATION that:

1.) Being a nominal party, respondent Rufo Colayco is declared to be not jointly

and severally liable with respondent Clark Development Corporation;

2.) Respondent Clark Development Corporation is ordered to pay the

complainant his full backwages and other monetary claims to which he is

entitled under the decision of the Labor Arbiter;

3.) Respondent CDC is likewise ordered to pay the complainant moral and

exemplary damages as provided under the Labor Arbiter’s Decision; and

4.) All other money claims are DENIED for lack of merit.

In the meantime, respondent CDC is ordered to pay the complainant his

retirement benefits without further delay.

SO ORDERED.[17]

On 3 October 2003, the OGCC filed a Motion for Reconsideration[18]

despite

the absence of a verification and the certification against forum shopping.

On 21 January 2004, the motion was denied by the NLRC for lack of

merit.[19]

On 5 February 2004, the executive clerk of the NLRC First Division enteredthe judgment on the foregoing case. Thereafter, on 9 February 2004, the NLRC

forwarded the entire records of the case to the NLRC-RAB III Office in San

Fernando, Pampanga for appropriate action.

On 4 March 2004, petitioner Salenga filed a Motion for Issuance of Writ of

Execution before the NLRC-RAB III, Office of LA Henry D. Isorena. The OGCC

opposed the motion on the ground that it had filed with the CA a Petition for

Certiorari seeking the reversal of the NLRC Decision dated 30 July 2001 and the

Resolutions dated 10 September 2003 and 21 January 2004, respectively. It is

noteworthy that, again, there was no board resolution attached to the Petition

authorizing its filing.

Despite the pending Petition with the CA, LA Isorena issued a Writ of

Execution enforcing the 10 September 2003 Resolution of the NLRC. On 1 April

2004, the LA issued an Order[20]

to the manager of the Philippine National Bank,

















Clark Branch, Angeles City, Pampanga, to immediately release in the name of

NLRC-RAB III the amount ofP3,222,400 representing partial satisfaction of the

judgment award, including the execution fee of P31,720.

Respondent CDC filed with the CA in February 2004 a Petition for Certiorari

with a prayer for the issuance of a temporary restraining order and/or a writ of

preliminary injunction. However, the Petition still lacked a board resolution from

the board of directors of respondent corporation authorizing its then President

Angeles to verify and certify the Petition on behalf of the board. It was only on 16

March 2004 that counsel for respondent filed a Manifestation/Motion[21]

with an

attached Secretary’s Certificate containing the board’s Resolution No. 86, Series

of 2001. The Resolution authorized Angeles to represent respondent corporation

in prosecuting, maintaining, or compromising any lawsuit in connection with its

business.

Meanwhile, in the proceedings before LA Isorena, both respondent CDC’s

legal department and the OGCC on 6 April 2004 filed their respective Motions to

Quash Writ of Execution.[22]

They both cited the failure to afford to respondent

due process in the issuance of the writ. They claimed that the pre-conference

hearing on the execution of the judgment had not pushed through. They also

reiterated that the Petition for Certiorari dated 11 February 2004 was still

pending with the CA.

Both motions were denied by LA Isorena for lack of factual and legal bases.

On 6 May 2004, respondent filed with LA Isorena another Motion to Quash

Writ of Execution, again reiterating the pending Petition with the CA.

This active exchange of pleadings and motions and the delay in the

payment of his money claims eventually led petitioner Salenga to file an Omnibus

Motion[23]

before LA Isorena. In his motion, he recomputed the amount due him

representing back wages, other benefits or allowances, legal interests and

attorney’s fees. He also prayed for the computation of his retirement benefits

plus interests in accordance with R.A. 8291[24]

and R.A. 1616.[25]

He insisted thatsince respondent CDC was a government-owned and -controlled corporation

(GOCC), his previous government service totalling 40 years must also be credited

in the computation of his retirement pay. Thus, he demanded the payment of the

total amount of P23,920,772.30, broken down as follows:

A. From the illegal dismissal suit: (In Philippine peso)




















a. Recomputed award 3,758,786

b. Legal interest 5,089,342.58

c. Attorney’s fees 1,196,052.80

d. Litigation expenses 250,000

B. Retirement pay

a. Retirement gratuity 6,987,944

b. Unused vacation and sick leave 1,440,328

c. Legal interest 4,050,544.96

d. Attorney’s fees 1,147,781.90

On 11 May 2004, the CA issued a Resolution[26]

ordering petitioner Salenga

to comment on the Petition and holding in abeyance the issuance of a temporary

restraining order.

The parties thereafter filed their respective pleadings.

On 19 July 2004, the CA temporarily restrained the NLRC from enforcing the

Decision dated 29 February 2000 for a period of 60 days.[27]

After the lapse of the

60 days, LA Isorena issued a Notice of Hearing/Conference scheduled for 1

October 2004 on petitioner’s Omnibus Motion dated 7 May 2004.

Meanwhile, on 24 September 2004, the CA issued another

Resolution,[28]

this time denying the application for the issuance of a writ of

preliminary injunction, after finding that the requisites for the issuance of the writ

had not been met.

Respondent CDC subsequently filed a Supplemental Petition[29] with the CA,

challenging the computation petitioner Salenga made in his Omnibus Motion filed

with the NLRC. Respondent alleged that the examiner had erred in including the

other years of government service in the computation of retirement benefits. It

claimed that, since respondent corporation was created under the Corporation

Code, petitioner Salenga was not covered by civil service laws. Hence, his

retirement benefits should only be limited to the number of years he had been

employed by respondent.

Subsequently, respondent CDC filed an Omnibus Motion[30] to admit theSupplemental Petition and to reconsider the CA’s Resolution denying the issuance

of a writ of preliminary injunction. In the motion, respondent alleged that

petitioner Salenga had been more than sufficiently paid the amounts allegedly

due him, including the award made by LA Darlucio. On 12 March 2002,

respondent CDC had issued a check amounting to P852,916.29, representing






















respondent had failed to comply with Memorandum Circular No. 9, Series of

1998, which strictly prohibits the hiring of lawyers of private law firms by GOCCs

without the prior written conformity and acquiescence of the Office of Solicitor

General, as the case may be, and the prior written concurrence of the

Commission on Audit (COA). Thus, the NLRC held that all actions and submissionsundertaken by the Laguesma Law Office on behalf of respondent were null and

void.

The second issue raised before the NLRC was whether LA Bactin acted

without jurisdiction in annulling and setting aside the former’s final and executory

judgment contained in its 10 September 2003 Resolution, wherein it held that the

appeal had not been perfected, absent the necessary board resolution allowing or

authorizing Timbol-Roman and Atty. Mallari to file the appeal. On this issue, the

NLRC stated:

The final and executory judgment in this case is clearly indicated in the

dispositive portion of Our Resolution promulgated on September 10, 2003 GRANTING

complainant’s motion for reconsideration, SETTING ASIDE Our Resolution of December

5, 2002, and REINSTATING the Decision of the Labor Arbiter dated February 29, 2000

with the following modification[s]: (1) declaring respondent Rufo Colayco not jointly and

severally liable with respondent Clark Development Corporation; (2) ordering

respondent CDC to pay the complainant his full backwages and other monetary claims

to which he is entitled under the decision of the Labor Arbiter; (3) ordering respondent

CDC to pay complainant moral and exemplary damages as provided under the Labor

Arbiter’s Decision; and (4) ordering respondent CDC to pay the complainant his

retirement benefits without further delay. This was entered in the Book of Entry of

Judgment as final and executory effective as of February 2, 2004.

Implementing this final and executory judgment, Arbiter Isorena issued an

Order dated May 24, 2004, DENYING respondent’s Motion to Quash the Writ of

Execution dated March 22, 2004,correctly stating thusly:

“Let it be stressed that once a decision has become final and

executory, it becomes the ministerial duty of this Office to issue the

corresponding writ of execution. The rationale behind it is based on the

fact that the winning party has suffered enough and it is the time for

him to enjoy the fruits of his labor with dispatch. The very purpose of

the pre-execution conference is to explore the possibility for the parties

to arrive at an amicable settlement to satisfy the judgment award

speedily, not to delay or prolong its implementation.”



Thus, when Arbiter Bactin, who took over from Arbiter Isorena upon the latter’s

filing for leave of absence due to poor health in January 2005, issued the appealed

Order nullifying, instead of implementing, the final and executory judgment of this

Commission, the labor arbiter a quo acted WITHOUT JURISDICTION.[35]

xxx xxx xxx

WHEREFORE, premises considered, the appeal of herein complainant is hereby

GRANTED, and We declare NULL AND VOID the appealed Order of March 8, 2005 and

SET ASIDE said Order; We direct the immediate issuance of the corresponding Alias Writ

of Execution to enforce the final and executory judgment of this Commission as

contained in Our September 10, 2003 Resolution.

SO ORDERED.[36]

Unwilling to accept the above Resolution of the NLRC, the Laguesma LawOffice filed a Motion for Reconsideration dated 29 August 2005 with the

NLRC. Again, the motion lacked proper verification and certification against non-

forum shopping.

In the meantime, the OGCC also filed with the CA a Motion for the Issuance

of a Writ of Preliminary Injunction dated 30 August 2005[37]

against the NLRC’s 22

July 2005 Resolution. The OGCC alleged that the issues in the Resolution

addressed monetary claims that were raised by petitioner Salenga only in his

Omnibus Motion dated 7 May 2004 or after the issuance of the 10 September

2003 Decision of LA Darlucio. Thus, the OGCC insisted that the NLRC had no

jurisdiction over the issue, for the matter was still pending with the CA.

The OGCC likewise filed another Motion for Reconsideration[38]

dated 31

August 2005 with the NLRC. The OGCC maintained that it was only acting in a

collaborative manner with the legal department of respondent CDC, for which the

former remained the lead counsel. The OGCC reiterated that, as the statutory

counsel of GOCCs, it did not need authorization from them to maintain a case,

and thus, LA Bactin had jurisdiction over that case. Finally, it insisted that

petitioner Salenga was not covered by civil service laws on retirement, the CDChaving been created under the Corporation Code.

On 13 September 2005, the CA promulgated the assailed Decision. Relying

heavily on the reports of Reviewer Arbiters Cristeta D. Tamayo and Thelma M.

Concepcion, it held that petitioner Salenga was a corporate officer. Thus, the

issue before the NLRC was an intra-corporate dispute, which should have been

















lodged with the Securities and Exchange Commission (SEC), which had jurisdiction

over the case at the time the issue arose. The CA likewise held that the NLRC

committed grave abuse of discretion when it allowed and granted petitioner

Salenga’s second Motion for Reconsideration, which was a prohibited pleading.

Petitioner subsequently filed a Motion for Reconsideration on 7 October

2005, alleging that the CA committed grave abuse of discretion in reconsidering

the findings of fact, which had already been found to be conclusive against

respondent; and in taking cognizance of the latter’s Petition which had not been

properly verified.

The CA, finding no merit in petitioner’s allegations, denied the motion in its

17 August 2006 Resolution.

On 4 September 2006, petitioner Salenga filed a Motion for Extension ofTime to File a Petition for Review on Certiorari under Rule 45, praying for an

extension of fifteen (15) days within which to file the Petition. The motion was

granted through this Court’s Resolution dated 13 September 2006. The case was

docketed as G.R. No. 174159.

On 25 September 2006, however, petitioner filed a

Manifestation[39]

withdrawing the motion. He manifested before us that he would

instead file a Petition for Certiorari under Rule 65, which was eventually docketed

as G.R. No. 174941. On 7 July 2008, this Court, through a Resolution, considered

the Petition for Review in G.R. No. 174159 closed and terminated.

Petitioner raises the following issues for our resolution:

I.

The Court of Appeals acted without jurisdiction in reviving and re-

litigating the factual issues and matters of petitioner’s illegal

dismissal and retirement benefits.

II.

The Court of Appeals had no jurisdiction to entertain the original

Petition as a remedy for an appeal that had actually not been filed,

absent a board resolution allowing the appeal.

III.






The Court of Appeals acted with grave abuse of discretion when it did

the following:

a. It failed to dismiss the original and supplemental

Petitions despite the lack of a board resolutionauthorizing the filing thereof.

b. It failed to dismiss the Petitions despite the absence of

a proper verification and certification against non-

forum shopping.

c. It failed to dismiss the Petitions despite respondent’s

failure to inform it of the pending proceedings before

the NLRC involving the same issues.

d. It failed to dismiss the Petitions on the ground of

forum shopping.

e. It did not dismiss the Petition when respondent failed

to attach to it certified true copies of the assailed NLRC

30 July 2001 Decision; 10 September 2003 Resolution;

21 January 2004 Resolution; copies of material

portions of the record as are referred to therein; and

copies of pleadings and documents relevant and

pertinent thereto.

f. It did not act on respondent’s failure to serve on the

Office of the Solicitor General a copy of the pleadings,

motions and manifestations the latter had filed before

the Court of Appeals, as well as copies of pertinent

court resolutions and decisions, despite the NLRCbeing a party to the present case.

g. It disregarded the findings of fact and conclusions of

law arrived at by LA Darlucio, subjecting them to a



second analysis and evaluation and supplanting them

with its own findings.

h. It granted the Petition despite respondent’s failure to

show that the NLRC committed grave abuse ofdiscretion in rendering the latter’s 30 July 2001

Decision, 10 September 2003 Resolution and 21

January 2004 Resolution.

i. It dismissed the complaint for illegal dismissal and

ordered the restitution of the P3,222,400 already

awarded to petitioner, plus interest thereon.

In its defense, private respondent insists that the present Petition for

Certiorari under Rule 65 is an improper remedy to question the Decision of the

CA, and thus, the case should be dismissed outright. Nevertheless, it reiterates

that private petitioner was a corporate officer whose employment was

dependent on board action. As such, private petitioner’s employment was an

intra-corporate controversy cognizable by the SEC, not the NLRC. Private

respondent also asserts that it has persistently sought the reversal of LA

Darlucio’s Decision by referring to the letters sent to the OGCC, as well as

Verification and Certificate against forum-shopping. However, these documentswere signed only during Angeles’ time as private respondent’s president/CEO, and

not of the former presidents. Moreover, private respondent contends that private

petitioner is not covered by civil service laws, thus, his years in government

service are not creditable for the purpose of determining the total amount of

retirement benefits due him. In relation to this, private respondent enumerates

the amounts already paid to private petitioner.

The Court’s Ruling

The Petition has merit.

This Court deigns it proper to collapse the issues in this Petition to simplify

the matters raised in what appears to be a convoluted case. First, we need to

determine whether the NLRC and the CA committed grave abuse of discretion

amounting to lack or excess of jurisdiction, when they entertained respondent’s

so-called appeal of the 29 February 2000 Decision rendered by LA Darlucio.



Second, because of the turn of events, a second issue – the computation of

retirement benefits – cropped up while the first case for illegal dismissal was still

pending. Although the second issue may be considered as separate and distinct

from the illegal dismissal case, the issue of the proper computation of the

retirement benefits was nevertheless considered by the relevant administrativebodies, adding more confusion to what should have been a simple case to begin

with.

The NLRC had no jurisdiction

to entertain the appeal filed by

Timbol-Roman and former

CDC CEO Colayco.

To recall, on 29 February 2000, LA Darlucio rendered a Decision in favor of

petitioner, stating as follows:

xxxComplainant cannot be considered as a corporate officer because at the time

of his termination, he was holding the position of Head Executive Assistant which is

categorized as a Job Level 12 position that is not subject to the election or appointment

by the Board of Directors. The approval of Board Resolution Nos. 200 and 214 by the

Board of Directors in its meeting held on February 11, 1998 and March 25, 1998 clearly

refers to the New CDC Salary Structure where the pay adjustment was based and not to

complainant’s relief as Vice-President, Joint Ventures and Special Projects. While it is

true that his previous positions are classified as Job Level 13 which are subject to board

confirmation, the status of his appointment was permanent in nature. In fact, he had

undergone a six-month probationary period before having acquired the permanency of

his appointment. However, due to the refusal of the board under then Chairman

Victorino Basco to confirm his appointment, he was demoted to the position of Head

Executive Assistant. Thus, complainant correctly postulated that he was not elected to

his position and his tenure is not dependent upon the whim of the boardxxx

xxx xxx xxx

Anent the second issue, this Office finds and so holds that respondents have

miserably failed to show or establish the valid cause in terminating the services of

complainant.

Xxx xxx xxx



In the case at bar, respondents failed to adduce any evidence showing that the

position of Head Executive Assistant is superfluous. In fact, they never disputed the

argument advanced by complainant that the position of Head Executive Assistant was

classified as a regular position in the Position Classification Study which is an essential

component of the Organizational Study that had been approved by the CDC board of

directors in 1995 and still remains intact as of the end of 1998. Likewise, studies made

since 1994 by various management consultancy groups have determined the need for

the said position in the Office of the President/CEO in relation to the vision, mission,

plans, programs and overall corporate goals and objectives of respondent CDC. There is

no evidence on record to show that the position of Head Executive Assistant was

abolished by the Board of Directors in its meeting held in the morning of September 22,

1998. The minutes of the meeting of the board on said date, as well as its other three

meetings held in the month of September 1998 (Annexes “B”, “C”, “D” and “E”,

Complainant’s Reply), clearly reveal that no abolition or reorganization plan was

discussed by the board. Hence, the ground of redundancy is merely a device made by

respondent Colayco in order to ease out the complainant from the respondent

corporation.

Moreover, the other ground for complainant’s dismissal is unclear and unknown

to him as respondent did not specify nor inform the complainant of the alleged recent

developmentsxxx

This Office is also of the view that complainant was not accorded his right to due

process prior to his termination. The law requires that the employer must furnish the

worker sought to be dismissed with two (2) written notices before termination may be

validly effected: first, a notice apprising the employee of the particular acts or omissionsfor which his dismissal is sought and, second, a subsequent notice informing the

employee of the decision to dismiss him. In the case at bar, complainant was not

apprised of the grounds of his termination. He was not given the opportunity to be

heard and defend himselfxxx[40]

The OGCC, representing respondent CDC and former CEO Colayco

separately appealed from the above Decision. Both alleged that they had filed the

proper bond to cover the award granted by LA Darlucio.

It is clear from the NLRC Rules of Procedure that appeals must be verifiedand certified against forum-shopping by the parties-in-interest themselves. In the

case at bar, the parties-in-interest are petitioner Salenga, as the employee, and

respondent Clark Development Corporation as the employer.

A corporation can only exercise its powers and transact its business through

its board of directors and through its officers and agents when authorized by a







board resolution or its bylaws. The power of a corporation to sue and be sued is

exercised by the board of directors. The physical acts of the corporation, like the

signing of documents, can be performed only by natural persons duly authorized

for the purpose by corporate bylaws or by a specific act of the board. The purpose

of verification is to secure an assurance that the allegations in the pleading aretrue and correct and have been filed in good faith.

[41]

Thus, we agree with petitioner that, absent the requisite board resolution,

neither Timbol-Roman nor Atty. Mallari, who signed the Memorandum of Appeal

and Joint Affidavit of Declaration allegedly on behalf of respondent corporation,

may be considered as the “appellant” and “employer” referred to by Rule VI,

Sections 4 to 6 of the NLRC Rules of Procedure, which state:

SECTION 4. REQUISITES FOR PERFECTION OF APPEAL. - (a) The Appeal shall be filed within the reglementary

period as provided in Section 1 of this Rule; shall be verified by appellant himself in accordance with Section 4, Rule 7 of

the Rules of Court, with proof of payment of the required appeal fee and the posting of a cash or surety bond as

provided in Section 6 of this Rule; shall be accompanied by memorandum of appeal in three (3) legibly typewritten copies

which shall state the grounds relied upon and the arguments in support thereof; the relief prayed for; and a statement of

the date when the appellant received the appealed decision, resolution or order and a certificate of non-forum shopping

with proof of service on the other party of such appeal. A mere notice of appeal without complying with the other

requisites aforestated shall not stop the running of the period for perfecting an appeal.

(b) The appellee may file with the Regional Arbitration Branch or Regional Office

where the appeal was filed, his answer or reply to appellant's memorandum of appeal,

not later than ten (10) calendar days from receipt thereof. Failure on the part of the

appellee who was properly furnished with a copy of the appeal to file his answer or

reply within the said period may be construed as a waiver on his part to file the same.

(c) Subject to the provisions of Article 218, once the appeal is perfected in

accordance with these Rules, the Commission shall limit itself to reviewing and deciding

specific issues that were elevated on appeal.

SECTION 5. APPEAL FEE. -The appellant shall pay an appeal fee of one hundred

fifty pesos (P150.00) to the Regional Arbitration Branch or Regional Office, and the

official receipt of such payment shall be attached to the records of the case.

SECTION 6. BOND. - In case the decision of the Labor Arbiter or the Regional

Director involves a monetary award, an appeal by the employer may be perfected onlyupon the posting of a cash or surety bond. The appeal bond shall either be in cash or

surety in an amount equivalent to the monetary award, exclusive of damages and

attorney’s fees.







In case of surety bond, the same shall be issued by a reputable bonding

company duly accredited by the Commission or the Supreme Court, and shall be

accompanied by:

(a) a joint declaration under oath by the employer, his counsel, and the

bonding company, attesting that the bond posted is genuine, and shall be ineffect until final disposition of the case.

(b) a copy of the indemnity agreement between the employer-appellant

and bonding company; and

(c) a copy of security deposit or collateral securing the bond.

A certified true copy of the bond shall be furnished by the appellant to the

appellee who shall verify the regularity and genuineness thereof and immediately report

to the Commission any irregularity.

Upon verification by the Commission that the bond is irregular or not genuine,

the Commission shall cause the immediate dismissal of the appeal.

No motion to reduce bond shall be entertained except on meritorious grounds

and upon the posting of a bond in a reasonable amount in relation to the monetary

award.

The filing of the motion to reduce bond without compliance with the requisites

in the preceding paragraph shall not stop the running of the period to perfect an appeal.

(Emphasis supplied)

The OGCC failed to produce any valid authorization from the board of

directors despite petitioner Salenga’s repeated demands. It had been given more

than enough opportunity and time to produce the appropriate board resolution,

and yet it failed to do so. In fact, many of its pleadings, representations, and

submissions lacked board authorization.

We cannot agree with the OGCC’s attempt to downplay this proceduralflaw by claiming that, as the statutorily assigned counsel for GOCCs, it does not

need such authorization. In Constantino-David v. Pangandaman-Gania,[42]

we

exhaustively explained why it was necessary for government agencies or

instrumentalities to execute the verification and the certification against forum-

shopping through their duly authorized representatives. We ruled thereon as

follows:







But the rule is different where the OSG is acting as counsel of record for a

government agency. For in such a case it becomes necessary to determine whether the

petitioning government body has authorized the filing of the petition and is espousing

the same stand propounded by the OSG. Verily, it is not improbable for government

agencies to adopt a stand different from the position of the OSG since they weigh not

just legal considerations but policy repercussions as well. They have their respective

mandates for which they are to be held accountable, and the prerogative to

determine whether further resort to a higher court is desirable and indispensable

under the circumstances.

The verification of a pleading, if signed by the proper officials of the client

agency itself, would fittingly serve the purpose of attesting that the allegations in the

pleading are true and correct and not the product of the imagination or a matter of

speculation, and that the pleading is filed in good faith. Of course, the OSG may opt to

file its own petition as a “People's Tribune” but the representation would not be for a

client office but for its own perceived best interest of the State.

The case of Commissioner of Internal Revenue v. S.C. Johnson and Son, Inc., is

not also a precedent that may be invoked at all times to allow the OSG to sign the

certificate of non-forum shopping in place of the real party-in-interest. The ruling

therein mentions merely that the certification of non-forum shopping executed by the

OSG constitutes substantial compliance with the rule since “the OSG is the only lawyer

for the petitioner, which is a government agency mandated under Section 35, Chapter

12, Title III, Book IV, of the 1987 Administrative Code (Reiterated under Memorandum

Circular No. 152 dated May 17, 1992) to be represented only by the Solicitor General.”

By its very nature, “substantial compliance” is actually inadequate observance

of the requirements of a rule or regulation which are waived under equitable

circumstances to facilitate the administration of justice there being no damage or injury

caused by such flawed compliance. This concept is expressed in the statement “the

rigidity of a previous doctrine was thus subjected to an inroad under the concept of

substantial compliance.” In every inquiry on whether to accept “substantial

compliance,” the focus is always on the presence of equitable conditions to administer

justice effectively and efficiently without damage or injury to the spirit of the legal

obligation.

xxx xxx xxx

The fact that the OSG under the 1987 Administrative Code is the only lawyer

for a government agency wanting to file a petition, or complaint for that matter, does

not operate per se to vest the OSG with the authority to execute in its name the

certificate of non-forum shopping for a client office. For, in many instances, client

agencies of the OSG have legal departments which at times inadvertently take legal





verification and certificate of non-forum shopping, the court reserves the authority to

determine the sufficiency of the OSG's action as measured by the equitable

considerations discussed herein. (Emphasis ours, italics provided)

The ruling cited above may have pertained only to the Office of the Solicitor

General’s representation of government agencies and instrumentalities, but we

see no reason why this doctrine cannot be applied to the case at bar insofar as

the OGCC is concerned.

While in previous decisions we have excused transgressions of these rules,

it has always been in the context of upholding justice and fairness under

exceptional circumstances. In this case, though, respondent failed to provide any

iota of rhyme or reason to compel us to relax these requirements. Instead, what is

clear to us is that the so-called appeal was done against the instructions of then

President/CEO Naguiat not to file an appeal. Timbol-Roman, who signed theVerification and the Certification against forum-shopping, was not even an

authorized representative of the corporation. The OGCC was equally remiss in its

duty. It ought to have advised respondent corporation, the proper procedure for

pursuing an appeal. Instead, it maintained the appeal and failed to present any

valid authorization from respondent corporation even after petitioner had

questioned OGCC’s authority all throughout the proceedings. Thus, it is evident

that the appeal was made in bad faith.

The unauthorized and overzealous acts of officials of respondent CDC andthe OGCC have led to a waste of the government’s time and resources. More

alarmingly, they have contributed to the injustice done to petitioner Salenga. By

taking matters into their own hands, these officials let the case drag on for years,

depriving him of the enjoyment of property rightfully his. What should have been

a simple case of illegal dismissal became an endless stream of motions and

pleadings.

Time and again, we have said that the perfection of an appeal within the

period prescribed by law is jurisdictional, and the lapse of the appeal perioddeprives the courts of jurisdiction to alter the final judgment.[43]

Thus, there is no

other recourse but to respect the findings and ruling of the labor arbiter. Clearly,

therefore, the CA committed grave abuse of discretion in entertaining the Petition

filed before it after the NLRC had dismissed the case based on lack of

jurisdiction. The assailed CA Decision did not even resolve petitioner Salenga’s

consistent and persistent claim that the NLRC should not have taken cognizance







of the appeal in the first place, absent a board resolution. Thus, LA Darlucio’s

Decision with respect to the liability of the corporation still stands.

However, we note from that Decision that Rufo Colayco was made

solidarily liable with respondent corporation. Colayco thereafter filed his separate

appeal. As to him, the NLRC correctly held in its 30 July 2001 Decision that he may

not be held solidarily responsible to petitioner. As a result, it dropped him as

respondent. Notably, in the case at bar, petitioner does not question that ruling.

Based on the foregoing, all other subsequent proceedings regarding the

issue of petitioner’s dismissal are null and void for having been conducted

without jurisdiction. Thus, it is no longer incumbent upon us to rule on the other

errors assigned in the matter of petitioner Salenga’s dismissal.

CDC is not under the civil service laws on retirement.

While the case was still persistently being pursued by the OGCC, a new

issue arose when petitioner Salenga reached retirement age: whether his

retirement benefits should be computed according to civil service laws.

To recall, the issue of how to compute the retirement benefits of petitioner

was raised in his Omnibus Motion dated 7 May 2004 filed before the NLRC after ithad reinstated LA Darlucio’s original Decision. The issue was not covered by

petitioner’s Complaint for illegal dismissal, but was a different issue altogether

and should have been properly addressed in a separate Complaint. We cannot

fault petitioner, though, for raising the issue while the case was still pending with

the NLRC. If it were not for the “appeal” undertaken by Timbol-Roman and the

OGCC through Atty. Mallari, the issue would have taken its proper course and

would have been raised in a more appropriate time and manner. Thus, we deem

it proper to resolve the matter at hand to put it to rest after a decade of litigation.

Petitioner Salenga contends that respondent CDC is covered by the GSIS

Law. Thus, he says, the computation of his retirement benefits should include all

the years of actual government service, starting from the original appointment

forty (40) years ago up to his retirement.



Respondent CDC owes its existence to Executive Order No. 80 issued by then

President Fidel V. Ramos. It was meant to be the implementing and operating arm of

the Bases Conversion and Development Authority (BCDA) tasked to manage the

Clark Special Economic Zone (CSEZ). Expressly, respondent was formed in

accordance with Philippine corporation laws and existing rules and regulationspromulgated by the SEC pursuant to Section 16 of Republic Act (R.A.) 7227.

[44] CDC, a

government-owned or -controlled corporation without an original charter, was

incorporated under the Corporation Code. Pursuant to Article IX-B, Sec. 2(1), the civil

service embraces only those government-owned or -controlled corporations with

original charter. As such, respondent CDC and its employees are covered by

the Labor Code and not by the Civil Service Law, consistent with our ruling

in NASECO v. NLRC ,[45]

in which we established this distinction. Thus,

in Gamogamo v. PNOC Shipping and Transport Corp. ,[46]

we held:

Retirement results from a voluntary agreement between the employer andthe employee whereby the latter after reaching a certain age agrees to sever his

employment with the former.

Since the retirement pay solely comes from Respondent's funds, it is but

natural that Respondent shall disregard petitioner's length of service in anothercompany for the computation of his retirement benefits.

Petitioner was absorbed by Respondent from LUSTEVECO on 1 August

1979. Ordinarily, his creditable service shall be reckoned from such date.

However, since Respondent took over the shipping business of LUSTEVECO and

agreed to assume without interruption all the service credits of petitioner with

LUSTEVECO, petitioner's creditable service must start from 9 November 1977when he started working with LUSTEVECO until his day of retirement on 1 April

1995. Thus, petitioner's creditable service is 17.3333 years.

We cannot uphold petitioner's contention that his fourteen years of service

with the DOH should be considered because his last two employers were

government-owned and controlled corporations, and fall under the Civil Service

Law. Article IX(B), Section 2 paragraph 1 of the 1987 Constitution states —

Sec. 2. (1)The civil service embraces all branches,subdivisions, instrumentalities, and agencies of the Government,

including government-owned or controlled corporations with

original charters.It is not at all disputed that while Respondent and LUSTEVECO are

government-owned and controlled corporations, they have no original

charters; hence they are not under the Civil Service Law . In Philippine

National Oil Company-Energy Development Corporation v. National Labor Relations Commission, we ruled:















xxx ―Thus under the present state of the law, the test in

determining whether a government-owned or controlled

corporation is subject to the Civil Service Law are [sic] the mannerof its creation, such that government corporations created by

special charter(s) are subject to its provisions while those

incorporated under the General Corporation Law are not within itscoverage.‖ (Emphasis supplied)

Hence, petitioner Salenga is entitled to receive only his retirement benefits

based only on the number of years he was employed with the corporation under

the conditions provided under its retirement plan, as well as other benefits given

to him by existing laws.

WHEREFORE, in view of the foregoing, the Petition in G.R. No. 174941 is

partially GRANTED. The Decision of LA Darlucio is REINSTATED insofar as

respondent corporation’s liability is concerned. Considering that petitioner did

not maintain the action against Rufo Colayco, the latter is not solidarily liable with

respondent Clark Development Corporation.

The case is REMANDED to the labor arbiter for the computation of

petitioner’s retirement benefits in accordance with the Social Security Act of 1997

otherwise known as Republic Act No. 8282, deducting therefrom the sums already

paid by respondent CDC. If any, the remaining amount shall be subject to the legal

interest of 6% per annum from the filing date of petitioner’s Omnibus Motion on

11 May 2004 up to the time this judgment becomes final and executory.

Henceforth, the rate of legal interest shall be 12% until the satisfaction of judgment.

SO ORDERED.


Associate Justice





Associate Justice


I attest that the conclusions in the above Decision had been reached in

consultation before the case was assigned to the writer of the opinion of the

Court’s Division.

ANTONIO T. CARPIO

Associate Justice



Pursuant to Section 13, Article VIII of the Constitution and the Division

Chairperson’s Attestation, I certify that the conclusions in the above Decision had

been reached in consultation before the case was assigned to the writer of the

opinion of the Court’s Division.

RENATO C. CORONA

Chief Justice



[1] Penned by Associate Justice Edgardo P. Cruz, with Associate Justices Romeo A. Brawner and Jose C. Mendozaconcurring; rollo, pp. 240-254.[2] Id. at 253.[3] Id. at 577-604.[4] Id. at 603-604.[5] Id. at 688.[6] Id. at 647-658.[7] Id. at 606-607.[8] Id. at 739.[9] Id. at 743.[10] Penned by Commissioner Vicente S.E. Veloso, with Commissioners Roy V. Señeres and Alberto R. Quimpo

concurring; id. at 810-830.[11] Id. at 1142-1146.[12]

Id. at 862-875.[13] Id. at 874.[14] Id. at 955-959.[15] Id. at 961.[16] Penned by Commissioner Roy V. Señeres, with Commissioners Romeo L. Go and Victoriano R. Calaycay

concurring, id. at 1162-1174.[17] Id. at 1173-1174.[18] Id. at 1176-1209.[19] Id. at 1212.[20] Id. at 1467.[21] Id. at 1458-1461.[22] Id. at 1472.[23] Id. at 1504-1530.[24]

Philippine Government Service Insurance System Act of 1997.[25] Amending Commonwealth Act No. 186, or the Government Service Insurance Act.[26] Rollo, p. 1498.[27] Id. at 1931-1932.[28] Id. at 1975-1976.[29] Id. at 1983-1991.[30] Id. at 1978-1982.[31] Id. at 2154-2155.[32] Id. at 2206-2207.[33] Id. at 2240-2257.[34] Id. at 2260-2275.[35] Id. at 2264-2265.[36] Id. at 2274.[37] Id. at 2277-2281[38] Id. at 2299-2318.[39] Id. at 30-35.[40] Id. at 593-598.[41] Firme v. Bukal Enterprises and Development Corp., 460 Phil. 321 (2003). [42] 456 Phil. 273, 294-298 (2003).[43] Galima v. Court of Appeals, 166 Phil. 1231(1977).[44] E.O. No. 80, Sec. 1.[45] 250 Phil. 129 (1988).[46] 431 Phil. 510, 521-522 (2002).

http://sc.judiciary.gov.ph/jurisprudence/2012/february2012/174941.htm#_ftnref1













































































































































Supreme Court

Manila

SECOND DIVISION

TIMOTEO H. SARONA,

Petitioner,

- versus -


COMMISSION, ROYALE SECURITY

AGENCY (FORMERLY SCEPTRE

G.R. No. 185280

Present:

CARPIO, J.,

Chairperson,

PEREZ,

SERENO,

REYES, and

BERNABE, JJ.







SECURITY AGENCY) and

CESAR S. TAN,

Respondents.

Promulgated:

anuary 18, 2012

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

DECISION

REYES, J.:

This is a petition for review under Rule 45 of the Rules of Court from the May

29, 2008 Decision1 of the Twentieth Division of the Court of Appeals (CA) in CA-

G.R. SP No. 02127 entitled ―Timoteo H. Sarona v. National Labor RelationsCommission, Royale Security Agency (formerly Sceptre Security Agency) and Cesar S.

Tan‖ (Assailed Decision), which affirmed the National Labor Relations

Commission’s (NLRC) November 30, 2005 Decision and January 31, 2006

Resolution, finding the petitioner illegally dismissed but limiting the amount of his

backwages to three (3) monthly salaries. The CA likewise affirmed the NLRC’s

finding that the petitioner’s separation pay should be computed only on the basis of

his length of service with respondent Royale Security Agency (Royale). The CA held

that absent any showing that Royale is a mere alter ego of Sceptre Security Agency

(Sceptre), Royale cannot be compelled to recognize the petitioner’s tenure with

Sceptre. The dispositive portion of the CA’s Assailed Decision states:

WHEREFORE, in view of the foregoing, the instant petition

is PARTLY GRANTED, though piercing of the corporate veil is hereby






denied for lack of merit. Accordingly, the assailed Decision and

Resolution of the NLRC respectively dated November 30, 2005 and

January 31, 2006 are hereby AFFIRMED as to the monetary awards.

SO ORDERED. 2

Factual Antecedents

On June 20, 2003, the petitioner, who was hired by Sceptre as a security guard

sometime in April 1976, was asked by Karen Therese Tan (Karen), Sceptre’s

Operation Manager, to submit a resignation letter as the same was supposedly

required for applying for a position at Royale. The petitioner was also asked to fill up

Royale’s employment application form, which was handed to him by Royale’s

General Manager, respondent Cesar Antonio Tan II (Cesar).3

After several weeks of being in floating status, Royale’s Security Officer,

Martin Gono (Martin), assigned the petitioner at Highlight Metal Craft, Inc.

(Highlight Metal) from July 29, 2003 to August 8, 2003. Thereafter, the petitioner was

transferred and assigned to Wide Wide World Express, Inc. (WWWE, Inc.). During

his assignment at Highlight Metal, the petitioner used the patches and agency cloths of

Sceptre and it was only

when he was posted at WWWE, Inc. that he started using those of Royale.4

On September 17, 2003, the petitioner was informed that his assignment at

WWWE, Inc. had been withdrawn because Royale had allegedly been replaced by

another security agency. The petitioner, however, shortly discovered thereafter that

Royale was never replaced as WWWE, Inc.’s security agency. When he placed a call

















―Abandonment of position is a matter of intention

expressed in clearl y certain and unequivocal acts,

however, an inter im employment does not mean

abandonment.” (Jardine Davis, Inc. vs. NLRC, 225 SCRA

757).

―I n abandonment, there must be a concurrence of

the intention to abandon and some overt acts from which

an employee may be declared as having no more interest

to work.” (C. Alcontin & Sons, Inc. vs. NLRC, 229 SCRA

109).

―I t is clear, deli berate and unjustif ied refusal to

severe employment and not mere absence that i s required

to constitute abandonment.” x x x” (De Ysasi III vs.

NLRC, 231 SCRA 173).

Aside from lack of proof showing that complainant has

abandoned his employment, the record would show that immediate

action was taken in order to protest his dismissal from employment. Hefiled a complaint [for] illegal dismissal on October 4, 2004 or three (3)

days after he was dismissed. This act, as declared by the Supreme Court

is inconsistent with abandonment, as held in the case of Pampanga Sugar

Development Co., Inc. vs. NLRC, 272 SCRA 737 where the Supreme

Court ruled:

―The immediate fi li ng of a complaint for [ i] ll egal

[d]ismissal by an employee is inconsistent withabandonment.” 7






The respondents were ordered to pay the petitioner backwages, which LA

Gutierrez computed from the day he was dismissed, or on October 1, 2003, up to the

promulgation of his Decision on May 11, 2005. In lieu of reinstatement, the

respondents were ordered to pay the petitioner separation pay equivalent to his one (1)

month salary in consideration of his tenure with Royale, which lasted for only one (1)month and three (3) days. In this

regard, LA Gutierrez refused to pierce Royale’s corporate veil for purposes of

factoring the petitioner’s length of service with Sceptre in the computation of his

separation pay. LA Gutierrez ruled that Royale’s corporate personality, which is

separate and distinct from that of Sceptre, a sole proprietorship owned by the late

Roso Sabalones (Roso) and later, Aida, cannot be pierced absent clear and convincing

evidence that Sceptre and Royale share the same stockholders and incorporators and

that Sceptre has complete control and dominion over the finances and business affairsof Royale. Specifically:

To support its prayer of piercing the veil of corporate entity of

respondent Royale, complainant avers that respondent Royal (sic) was

using the very same office of SCEPTRE in C. Padilla St., Cebu City. In

addition, all officers and staff of SCEPTRE are now the same officers

and staff of ROYALE, that all [the] properties of SCEPTRE are now

being owned by ROYALE and that ROYALE is now occupying the property of SCEPTRE. We are not however, persuaded.

It should be pointed out at this juncture that SCEPTRE, is a single

proprietorship. Being so, it has no distinct and separate personality. It is

owned by the late Roso T. Sabalones. After the death of the owner, the

property is supposed to be divided by the heirs and any claim against the

sole proprietorship is a claim against Roso T. Sabalones. After his death,

the claims should be instituted against the estate of Roso T. Sabalones.In short, the estate of the late Roso T. Sabalones should have been

impleaded as respondent of this case.



Complainant wanted to impress upon us that Sceptre was organized into

another entity now called Royale Security Agency. There is however, no

proof to this assertion. Likewise, there is no proof that Roso T.

Sabalones, organized his single proprietorship business into a

corporation, Royale Security Agency. On the contrary, the name of Roso

T. Sabalones does not appear in the Articles of Incorporation. The namestherein as incorporators are:

Bruno M. Kuizon – [P]150,000.00

Wilfredo K. Tan – 100,000.00

Karen Therese S. Tan – 100,000.00

Cesar Antonio S. Tan – 100,000.00

Gabeth Maria K. Tan – 50,000.00

Complainant claims that two (2) of the incorporators are the

granddaughters of Roso T. Sabalones. This fact even give (sic) us further

reason to conclude that respondent Royal (sic) Security Agency is not an

alter ego or conduit of SCEPTRE. It is obvious that respondent Royal(sic) Security Agency is not owned by the owner of ―SCEPTRE‖.

It may be true that the place where respondent Royale hold (sic)

office is the same office formerly used by ―SCEPTRE.‖ Likewise, it may

be true that the same officers and staff now employed by respondent

Royale Security Agency were the same officers and staff employed by

―SCEPTRE.‖ We find, however, that these facts are not sufficient to

justify to require respondent Royale to answer for the liability of Sceptre,which was owned solely by the late Roso T. Sabalones. As we have

stated above, the remedy is to address the claim on the estate of Roso T.

Sabalones.8







The respondents appealed LA Gutierrez’s May 11, 2005 Decision to the

NLRC, claiming that the finding of illegal dismissal was attended with grave abuse of

discretion. This appeal was, however, dismissed by the NLRC in its November 30,2005 Decision,9 the dispositive portion of which states:

WHEREFORE, premises considered, the Decision of the Labor

Arbiter declaring the illegal dismissal of complainant is

hereby AFFIRMED.

However[,] We modify the monetary award by limiting the grant

of backwages to only three (3) months in view of complainant’s very

limited service which lasted only for one month and three days.

1. Backwages - [P]15,600.00

2. Separation Pay - 5,200.00

3. 13th Month Pay - 583.34

[P]21,383.34 Attorney’s Fees- 2,138.33

Total [P]23,521.67

The appeal of respondent Royal (sic) Security Agency is

hereby DISMISSED for lack of merit.

SO ORDERED.10











The NLRC partially affirmed LA Gutierrez’s May 11, 2005 Decision. It

concurred with the latter’s finding that the petitioner was illegally dismissed and the

manner by which his separation pay was computed, but modified the monetary awardin the petitioner’s favor by reducing the amount of his backwages from P95,600.00

to P15,600.00. The NLRC determined the petitioner’s backwages as limited to three

(3) months of his last monthly salary, considering that his employment with Royale

was only for a period for one (1) month and three (3) days, thus:11

On the other hand, while complainant is entitled to backwages, We are

aware that his stint with respondent Royal (sic) lasted only for one (1)

month and three (3) days such that it is Our considered view that his

backwages should be limited to only three (3) months.

Backwages:

[P]5,200.00 x 3 months = [P]15,600.0012

The petitioner, on the other hand, did not appeal LA Gutierrez’s May 11, 2005

Decision but opted to raise the validity of LA Gutierrez’s adverse findings with

respect to piercing Royale’s corporate personality and computation of his separation

pay in his Reply to the respondents’ Memorandum of Appeal. As the filing of an

appeal is the prescribed remedy and no aspect of the decision can be overturned by amere reply, the NLRC dismissed the petitioner’s efforts to reverse LA Gutierrez’s

disposition of these issues. Effectively, the petitioner had already waived his right to

question LA Gutierrez’s Decision when he failed to file an appeal within the

reglementary period. The NLRC held:










On the other hand, in complainant’s Reply to Respondent’s Appeal

Memorandum he prayed that the doctrine of piercing the veil of

corporate fiction of respondent be applied so that his services with

Sceptre since 1976 [will not] be deleted. If complainant assails this

particular finding in the Labor Arbiter’s Decision, complainant should

have filed an appeal and not seek a relief by merely filing a Reply to

Respondent’s Appeal Memorandum.13

Consequently, the petitioner elevated the NLRC’s November 30, 2005 Decision to the

CA by way of a Petition for Certiorari under Rule 65 of the Rules of Court. On the

other hand, the respondents filed no appeal from the NLRC’s finding that the

petitioner was illegally dismissed.

The CA, in consideration of substantial justice and the jurisprudential dictum

that an appealed case is thrown open for the appellate court’s review, disagreed with

the NLRC and proceeded to review the evidence on record to determine if Royale is

Sceptre’s alter ego that would warrant the piercing of its corporate veil.14 According to

the CA, errors not assigned on appeal may be reviewed as technicalities should not

serve as bar to the full adjudication of cases. Thus:

In Cuyco v. Cuyco, which We find application in the instant case, the

Supreme Court held:

―In their Reply, petitioners alleged that their petition only

raised the sole issue of interest on the interest due, thus, by

not filing their own petition for review, respondents waived

their privilege to bring matters for the Court’s review that

[does] not deal with the sole issue raised.











Procedurally, the appellate court in deciding the case shall

consider only the assigned errors, however, it is equally

settled that the Court is clothed with ample authority to

review matters not assigned as errors in an appeal, if itfinds that their consideration is necessary to arrive at a just

disposition of the case.‖

Therefore, for full adjudication of the case, We have to primarily resolve

the issue of whether the doctrine of piercing the corporate veil be justly

applied in order to determine petitioner’s length of service with private

respondents.15 (citations omitted)

Nonetheless, the CA ruled against the petitioner and found the evidence he

submitted to support his allegation that Royale and Sceptre are one and the same

juridical entity to be wanting. The CA refused to pierce Royale’s corporate mask as

one of the ―probative factors that would justify the application of the doctrine of

piercing the corporate veil is stock ownership by one or common ownership of bothcorporations‖ and the petitioner failed to present clear and convincing proof that

Royale and Sceptre are commonly owned or controlled. The relevant portions of the

CA’s Decision state:

In the instant case, We find no evidence to show that Royale

Security Agency, Inc. (hereinafter ―Royale‖), a corporation duly

registered with the Securities and Exchange Commission (SEC) and

Sceptre Security Agency (hereinafter ―Sceptre‖), a single proprietorship,

are one and the same entity.

Petitioner, who has been with Sceptre since 1976 and, as ruled by

both the Labor Arbiter and the NLRC, was illegally dismissed by Royale







on October 1, 2003, alleged that in order to circumvent labor laws,

especially to avoid payment of money claims and the consideration on

the length of service of its employees, Royale was established as an alter

ego or business conduit of Sceptre. To prove his claim, petitioner

declared that Royale is conducting business in the same office of

Sceptre, the latter being owned by the late retired Gen. Roso Sabalones,and was managed by the latter’s daughter, Dr. Aida Sabalones-Tan; that

two of Royale’s incorporators are grandchildren [of] the late Gen. Roso

Sabalones; that all the properties of Sceptre are now owned by Royale,

and that the officers and staff of both business establishments are the

same; that the heirs of Gen. Sabalones should have applied for

dissolution of Sceptre before the SEC before forming a new corporation.

On the other hand, private respondents declared that Royale wasincorporated only on March 10, 2003 as evidenced by the Certificate of

Incorporation issued by the SEC on the same date; that Royale’s

incorporators are Bruino M. Kuizon, Wilfredo Gracia K. Tan, Karen

Therese S. Tan, Cesar Antonio S. Tan II and [Gabeth] Maria K. Tan.

Settled is the tenet that allegations in the complaint must be duly

proven by competent evidence and the burden of proof is on the party

making the allegation. Further, Section 1 of Rule 131 of the Revised Rules of Court provides:

―SECTION 1. Burden of proof. – Burden of proof is

the duty of a party to present evidence on the facts in issue

necessary to establish his claim or defense by the amount of

evidence required by law.‖

We believe that petitioner did not discharge the required burden of

proof to establish his allegations. As We see it, petitioner’s claim that

Royale is an alter ego or business conduit of Sceptre is without basis

because aside from the fact that there is no common ownership of both

Royale and Sceptre, no evidence on record would prove that Sceptre,



much less the late retired Gen. Roso Sabalones or his heirs, has control

or complete domination of Royale’s finances and business transactions.

Absence of this first element, coupled by petitioner’s failure to present

clear and convincing evidence to substantiate his allegations, would

prevent piercing of the corporate veil. Allegations must be proven by

sufficient evidence. Simply stated, he who alleges a fact has the burdenof proving it; mere allegation is not evidence.16 (citations omitted)

By way of this Petition, the petitioner would like this Court to revisit the computation

of his backwages, claiming that the same should be computed from the time he was

illegally dismissed until the finality of this decision.17

The petitioner would likewisehave this Court review and examine anew the factual allegations and the supporting

evidence to determine if the CA erred in its refusal to pierce Royale’s corporate mask

and rule that it is but a mere continuation or successor of Sceptre. According to the

petitioner, the erroneous computation of his separation pay was due to the CA’s

failure, as well as the NLRC and LA Gutierrez, to consider evidence conclusively

demonstrating that Royale and Sceptre are one and the same juridical entity. The

petitioner claims that since Royale is no more than Sceptre’s alter ego, it should

recognize and credit his length of service with Sceptre.18

The petitioner claimed that Royale and Sceptre are not separate legal persons

for purposes of computing the amount of his separation pay and other benefits under

the Labor Code. The piercing of Royale’s corporate personality is justified by several

indicators that Royale was incorporated for the sole purpose of defeating his right to

security of tenure and circumvent payment of his benefits to which he is entitled under

the law: (i) Royale was holding office in the same property used by Sceptre as its

principal place of business;19 (ii) Sceptre and Royal have the same officers and

employees;20 (iii) on October 14, 1994, Roso, the sole proprietor of Sceptre, sold to

Aida, and her husband, Wilfredo Gracia K. Tan (Wilfredo),21 the property used by

Sceptre as its principal place of business;22 (iv) Wilfredo is one of the incorporators of

Royale;23 (v) on May 3, 1999, Roso ceded the license to operate Sceptre issued by the

Philippine National Police to Aida;24 (vi) on July 28, 1999, the business name ―Sceptre







































Security & Detective Agency‖ was registered with the Department of Tr ade and

Industry (DTI) under the name of Aida;25 (vii) Aida exercised control over the affairs

of Sceptre and Royale, as she was, in fact, the one who dismissed the petitioner from

employment;26 (viii) Karen, the daughter of Aida, was Sceptre’s Operation Manager

and is one of the incorporators of Royale;27 and (ix) Cesar Tan II, the son of Aida wasone of Sceptre’s officers and is one of the incorporators of Royale.28

In their Comment, the respondents claim that the petitioner is barred from

questioning the manner by which his backwages and separation pay were computed.

Earlier, the petitioner moved for the execution of the NLRC’s November 30, 2005

Decision29 and the respondents paid him the full amount of the monetary award

thereunder shortly after the writ of execution was issued.30 The respondents likewise

maintain that Royale’s separate and distinct corporate personality should be respected

considering that the evidence presented by the petitioner fell short of establishing that

Royale is a mere alter ego of Sceptre.

The petitioner does not deny that he has received the full amount of backwages

and separation pay as provided under the NLRC’s November 30, 2005

Decision.31 However, he claims that this does not preclude this Court from modifying

a decision that is tainted with grave abuse of discretion or issued without jurisdiction.32

ISSUES

Considering the conflicting submissions of the parties, a judiciousdetermination of their respective rights and obligations requires this Court to resolve

the following substantive issues:


































a. Whether Royale’s corporate fiction should be pierced for the

purpose of compelling it to recognize the petitioner’s length of service

with Sceptre and for holding it liable for the benefits that have accrued to

him arising from his employment with Sceptre; and

b. Whether the petitioner’s backwages should be limited to his

salary for three (3) months.

OUR RULING

Because his receipt of the proceeds of the

award under the NLRC’s November 30,

2005 Decision is qualified and without

prejudice to the CA’s resolution of his

petition for certiorari , the petitioner is not

barred from exercising his right to elevate

the decision of the CA to this Court.

Before this Court proceeds to decide this Petition on its merits, it is imperative to

resolve the respondents’ contention that the full satisfaction of the award under the

NLRC’s November 30, 2005 Decision bars the petitioner from questioning the

validity thereof. The respondents submit that they had paid the petitioner the amount

of P21,521.67 as directed by the NLRC and this constitutes a waiver of his right to file

an appeal to this Court.

The respondents fail to convince.



The petitioner’s receipt of the monetary award adjudicated by the NLRC is not

absolute, unconditional and unqualified. The petitioner’s May 3, 2007 Motion for

Release contains a reservation, stating in his prayer that: ―it is respectfully prayed thatthe respondents and/or Great Domestic Insurance Co. be ordered to RELEASE/GIVE

the amount of P23,521.67 in favor of the complainant TIMOTEO H. SARONA

without prejudice to the outcome of the petition with the CA.‖33

In Leonis Navigation Co., Inc., et al. v. Villamater, et al.,34 this Court ruled that

the prevailing party’s receipt of the full amount of the judgment award pursuant to a

writ of execution issued by the labor arbiter does notclose or terminate the case if such receipt is qualified as without prejudice to the

outcome of the petition for certiorari pending with the CA.

Simply put, the execution of the final and executory decision or

resolution of the NLRC shall proceed despite the pendency of a petition

for certiorari, unless it is restrained by the proper court. In the present

case, petitioners already paid Villamater’s widow, Sonia, the amount

of P3,649,800.00, representing the total and permanent disability award

plus attorney’s fees, pursuant to the Writ of Execution issued by the

Labor Arbiter. Thereafter, an Order was issued declaring the case as

"closed and terminated". However, although there was no motion for

reconsideration of this last Order, Sonia was, nonetheless, estopped from

claiming that the controversy had already reached its end with the

issuance of the Order closing and terminating the case. This is because

the Acknowledgment Receipt she signed when she received petitioners’

payment was without prejudice to the final outcome of the petition

for certiorari pending before the CA.35














The finality of the NLRC’s decision does not preclude the filing of a petition

for certiorari under Rule 65 of the Rules of Court. That the NLRC issues an entry of

judgment after the lapse of ten (10) days from the parties’ receipt of its decision36 will

only give rise to the prevailing party’s right to move for the execution thereof but will

not prevent the CA from taking cognizance of a petition for certiorari on jurisdictional and due process considerations.37 In turn, the decision rendered by the

CA on a petition for certiorari may be appealed to this Court by way of a petition for

review on certiorari under Rule 45 of the Rules of Court. Under Section 5, Article

VIII of the Constitution, this Court has the power to ―review, revise, reverse, modify,

or affirm on appeal or certiorari as the law or the Rules of Court may provide, final

judgments and orders of lower courts in x x x all cases in which only an error or

question of law is involved.‖ Consistent with this constitutional mandate, Rule 45 of

the Rules of Court provides the remedy of an appeal by certiorari from decisions,final orders or resolutions of the CA in any case, i.e., regardless of the nature of the

action or proceedings

involved, which would be but a continuation of the appellate process over the original

case.38 Since an appeal to this Court is not an original and independent action but a

continuation of the proceedings before the CA, the filing of a petition for review

under Rule 45 cannot be barred by the finality of the NLRC’s decision in the same

way that a petition for certiorariunder Rule 65 with the CA cannot.

Furthermore, if the NLRC’s decision or resolution was reversed and set aside for

being issued with grave abuse of discretion by way of a petition for certiorari to the

CA or to this Court by way of an appeal from the decision of the CA, it is considered

void ab initio and, thus, had never become final and executory.39

A Rule 45 Petition should be confined toquestions of law. Nevertheless, this Court

has the power to resolve a question of fact,

such as whether a corporation is a mere

alter ego of another entity or whether the

corporate fiction was invoked for

fraudulent or malevolent ends, if the


















findings in assailed decision is not

supported by the evidence on record or

based on a misapprehension of facts.

The question of whether one corporation is merely an alter ego of another is

purely one of fact. So is the question of whether a corporation is a paper company, a

sham or subterfuge or whether the petitioner adduced the requisite quantum of

evidence warranting the piercing of the veil of the respondent’s corporate

personality.40

As a general rule, this Court is not a trier of facts and a petition for review

on certiorari under Rule 45 of the Rules of Court must exclusively raise questions of

law. Moreover, if factual findings of the NLRC and the LA have been affirmed by the

CA, this Court accords them the respect and finality they deserve. It is well-settled

and oft-repeated that findings of fact of administrative agencies and quasi-judicial

bodies, which have acquired expertise because their jurisdiction is confined to specific

matters, are generally accorded not only respect, but finality when affirmed by the

CA. 41

Nevertheless, this Court will not hesitate to deviate from what are clearly

procedural guidelines and disturb and strike down the findings of the CA and those of

the labor tribunals if there is a showing that they are unsupported by the evidence on

record or there was a patent misappreciation of facts. Indeed, that the impugned

decision of the CA is consistent with the findings of the labor tribunals does not per

se conclusively demonstrate the correctness thereof. By way of exception to the

general rule, this Court will scrutinize the facts if only to rectify the prejudice and

injustice resulting from an incorrect assessment of the evidence presented.











A resolution of an issue that has supposedly

become final and executory as the

petitioner only raised it in his reply to the

respondents’ appeal may be revisited by

the appellate court if such is necessary for a

just disposition of the case.

As above-stated, the NLRC refused to disturb LA Gutierrez’s denial of the

petitioner’s plea to pierce Royale’s corporate veil as the petitioner did not appeal any

portion of LA Gutierrez’s May 11, 2005 Decision.

In this respect, the NLRC cannot be accused of grave abuse of discretion. Under

Section 4(c), Rule VI of the NLRC Rules,42 the NLRC shall limit itself to reviewing

and deciding only the issues that were elevated on appeal. The NLRC, while not

totally bound by technical rules of procedure, is not licensed to disregard and violate

the implementing rules it implemented. 43

Nonetheless, technicalities should not be allowed to stand in the way of equitably and

completely resolving the rights and obligations of the parties. Technical rules are not

binding in labor cases and are not to be applied strictly if the result would be

detrimental to the working man.44 This Court may choose not to encumber itself with

technicalities and limitations consequent to procedural rules if such will only serve as

a hindrance to its duty to decide cases judiciously and in a manner that would put an

end with finality to all existing conflicts between the parties.

Royale is a continuation or successor of

Sceptre.















A corporation is an artificial being created by operation of law. It possesses the right

of succession and such powers, attributes, and properties expressly authorized by law

or incident to its existence. It has a personality separate and distinct from the personscomposing it, as well as from any other legal entity to which it may be related. This is

basic.45

Equally well-settled is the principle that the corporate mask may be removed or

the corporate veil pierced when the corporation is just an alter ego of a person or of

another corporation. For reasons of public policy and in the interest of justice, the

corporate veil will justifiably be impaled only when it becomes a shield for fraud,illegality or inequity committed against third persons.46

Hence, any application of the doctrine of piercing the corporate veil should be

done with caution. A court should be mindful of the milieu where it is to be applied. It

must be certain that the corporate fiction was misused to such an extent that injustice,

fraud, or crime was committed against another, in disregard of rights. The wrongdoing

must be clearly and convincingly established; it cannot be presumed. Otherwise, aninjustice that was never unintended may result from an erroneous application.47

Whether the separate personality of the corporation should be pierced hinges on

obtaining facts appropriately pleaded or proved. However, any piercing of the

corporate veil has to be done with caution, albeit the Court will not hesitate to

disregard the corporate veil when it is misused or when necessary in the interest of

justice. After all, the concept of corporate entity was not meant to promote unfairobjectives.48

The doctrine of piercing the corporate veil applies only in three (3) basic areas,

namely: 1) defeat of public convenience as when the corporate fiction is used as a



















vehicle for the evasion of an existing obligation; 2) fraud cases or when the corporate

entity is used to justify a wrong, protect fraud, or defend a crime; or 3) alter ego cases,

where a corporation is merely a farce since it is a mere alter ego or business conduit of

a person, or where the

corporation is so organized and controlled and its affairs are so conducted asto make it merely an instrumentality, agency, conduit or adjunct of another

corporation.49

In this regard, this Court finds cogent reason to reverse the CA’s findings.

Evidence abound showing that Royale is a mere continuation or successor of Sceptre

and fraudulent objectives are behind Royale’s incorporation and the petitioner’s

subsequent employment therein. These are plainly suggested by events that the

respondents do not dispute and which the CA, the NLRC and LA Gutierrez accept as

fully substantiated but misappreciated as insufficient to warrant the use of the

equitable weapon of piercing.

As correctly pointed out by the petitioner, it was Aida who exercised control

and supervision over the affairs of both Sceptre and Royale. Contrary to the

submissions of the respondents that Roso had been the only one in sole control of

Sceptre’s finances and business affairs, Aida took over as early as 1999 when Roso

assigned his license to operate Sceptre on May 3, 1999.50 As further proof of Aida’s

acquisition of the rights as Sceptre’s sole proprietor , she caused the registration of the

business name ―Sceptre Security & Detective Agency‖ under her name with the DTI a

few months after Roso abdicated his rights to Sceptre in her favor .51 As far as Royale

is concerned, the respondents do not deny that she has a hand in its management and

operation and possesses control and supervision of its employees, including the

petitioner. As the petitioner correctly pointed out, that Aida was the one who decidedto stop giving any assignments to the petitioner and summarily dismiss him is an

eloquent testament of the power she wields insofar as Royale’s affairs are concerned.

The presence of actual common control coupled with the misuse of the corporate form

to perpetrate oppressive or manipulative conduct or evade performance of legal

obligations is patent; Royale cannot hide behind its corporate fiction.

















are distinct and treat them as identical or as one and the same. In the

present case, it may be true that Lubas is a single proprietorship and not

a corporation. However, petitioners’ attempt to isolate themselves f rom

and hide behind the supposed separate and distinct personality of Lubas

so as to evade their liabilities is precisely what the classical doctrine of

piercing the veil of corporate entity seeks to prevent and remedy.56

Also, Sceptre and Royale have the same principal place of business. As early as

October 14, 1994, Aida and Wilfredo became the owners of the property used by

Sceptre as its principal place of business by virtue of a Deed of Absolute Sale they

executed with Roso.57

Royale, shortly after its incorporation, started to hold office inthe same property. These, the respondents failed to dispute.

The respondents do not likewise deny that Royale and Sceptre share the same

officers and employees. Karen assumed the dual role of Sceptre’s Operation Manager

and incorporator of Royale. With respect to the petitioner, even if he has already

resigned from Sceptre and has been employed by Royale, he was still using the

patches and agency cloths of Sceptre during his assignment at Highlight Metal.

Royale also claimed a right to the cash bond which the petitioner posted when

he was still with Sceptre. If Sceptre and Royale are indeed separate entities, Sceptre

should have released the petitioner’s cash bond when he resigned and Royale would

have required the petitioner to post a new cash bond in its favor.

Taking the foregoing in conjunction with Aida’s control over Sceptre’s and

Royale’s business affairs, it is patent that Royale was a mere subterfuge for Aida.

Since a sole proprietorship does not have a separate and distinct personality from that

of the owner of the enterprise, the latter is personally liable. This is what she sought to

avoid but cannot prosper.











Effectively, the petitioner cannot be deemed to have changed employers as

Royale and Sceptre are one and the same. His separation pay should, thus, be

computed from the date he was hired by Sceptre in April 1976 until the finality of thisdecision. Based on this Court’s ruling in Masagana Concrete Products, et al. v.

NLRC, et al.,58 the intervening period between the day an employee was illegally

dismissed and the day the decision finding him illegally dismissed becomes final and

executory shall be considered in the computation of his separation pay as a period of

―imputed‖ or ―putative‖ service:

Separation pay, equivalent to one month's salary for every year ofservice, is awarded as an alternative to reinstatement when the latter is

no longer an option. Separation pay is computed from the

commencement of employment up to the time of termination, including

the imputed service for which the employee is entitled to backwages,

with the salary rate prevailing at the end of the period of putative service

being the basis for computation.59

It is well-settled, even axiomatic, that if

reinstatement is not possible, the period

covered in the computation of backwages is

from the time the employee was unlawfully

terminated until the finality of the decision

finding illegal dismissal.

With respect to the petitioner’s backwages, this Court cannot subscribe to the view

that it should be limited to an amount equivalent to three (3) months of his salary.

Backwages is a remedy affording the employee a way to recover what he has lost by

reason of the unlawful dismissal.60 In awarding backwages, the primordial















consideration is the income that should have accrued to the employee from the time

that he was dismissed up to his reinstatement61 and the length of service prior to his

dismissal is definitely inconsequential.

As early as 1996, this Court, in Bustamante, et al. v. NLRC, et al.,62 clarified in

no uncertain terms that if reinstatement is no longer possible, backwages should be

computed from the time the employee was terminated until the finality of the decision,

finding the dismissal unlawful.

Therefore, in accordance with R.A. No. 6715, petitioners are entitled on

their full backwages, inclusive of allowances and other benefits or their

monetary equivalent, from the time their actual compensation was

withheld on them up to the time of their actual reinstatement.

As to reinstatement of petitioners, this Court has already ruled that

reinstatement is no longer feasible, because the company would be

adjustly prejudiced by the continued employment of petitioners who at

present are overage, a separation pay equal to one-month salary granted

to them in the Labor Arbiter's decision was in order and, therefore,

affirmed on the Court's decision of 15 March 1996.Furthermore, since

reinstatement on this case is no longer feasible, the amount of

backwages shall be computed from the time of their illegal

termination on 25 June 1990 up to the time of finality of thisdecision.63 (emphasis supplied)

A further clarification was made in Javellana, Jr. v. Belen:64

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

Republic Act 6715 instructs:



















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

employment, the employer shall not terminate the services

of an employee except for a just cause or when authorized

by this Title. An employee who is unjustly dismissed fromwork shall be entitled to reinstatement without loss of

seniority rights and other privileges and to his full

backwages, inclusive of allowances, and to his other

benefits or their monetary equivalent computed from the

time his compensation was withheld from him up to the

time of his actual reinstatement.

Clearly, the law intends the award of backwages and similar benefits toaccumulate past the date of the Labor Arbiter's decision until the

dismissed employee is actually reinstated. But if, as in this case,

reinstatement is no longer possible, this Court has consistently ruled that

backwages shall be computed from the time of illegal dismissal until the

date the decision becomes final.65 (citation omitted)

In case separation pay is awarded and reinstatement is no longer feasible, backwages

shall be computed from the time of illegal dismissal up to the finality of the decision

should separation pay not be paid in the meantime. It is the employee’s actual receipt

of the full amount of his separation pay that will effectively terminate the employment

of an illegally dismissed employee.66 Otherwise, the employer-employee relationship

subsists and the illegally dismissed employee is entitled to backwages, taking into

account the increases and other benefits, including the 13th month pay, that were

received by his co-employees who are not dismissed.67 It is the obligation of the

employer to pay an illegally dismissed employee or worker the whole amount of the

salaries or wages, plus all other benefits and

bonuses and general increases, to which he would have been normally entitled had he

not been dismissed and had not stopped working.68



















In fine, this Court holds Royale liable to pay the petitioner backwages to be

computed from his dismissal on October 1, 2003 until the finality of this decision.

Nonetheless, the amount received by the petitioner from the respondents in

satisfaction of the November 30, 2005 Decision shall be deducted accordingly.

Finally, moral damages and exemplary damages at P25,000.00 each as

indemnity for the petitioner’s dismissal, which was tainted by bad faith and fraud, are

in order. Moral damages may be recovered where the dismissal of the employee was

tainted by bad faith or fraud, or where it constituted an act oppressive to labor, and

done in a manner contrary to morals, good customs or public policy while exemplary

damages are recoverable only if the dismissal was done in a wanton, oppressive, or

malevolent manner .69

WHEREFORE, premises considered, the Petition is hereby GRANTED.

We REVERSE and SET ASIDE the CA’s May 29, 2008 Decision in C.A.-G.R. SP

No. 02127 and order the respondents to pay the petitioner the following minus the

amount of (P23,521.67) paid to the petitioner in satisfaction of the NLRC’s November

30, 2005 Decision in NLRC Case No. V-000355-05:

a) full backwages and other benefits computed from October 1, 2003 (the date

Royale illegally dismissed the petitioner) until the finality of this decision;

b) separation pay computed from April 1976 until the finality of this decision at the

rate of one month pay per year of service;

c) ten percent (10%) attorney’s fees based on the total amount of the awards

under (a) and (b) above;







d) moral damages of Twenty-Five Thousand Pesos (P25,000.00); and

5. exemplary damages of Twenty-Five Thousand Pesos (P25,000.00).

This case is REMANDED to the labor arbiter for computation of the separation pay,

backwages, and other monetary awards due the petitioner.

SO ORDERED.

BIENVENIDO L. REYES

Associate Justice

WE CONCUR:



ANTONIO T. CARPIO

Associate Justice

JOSE PORTUGAL PEREZ

Associate Justice


Associate Justice


Associate Justice




I attest that the conclusions in the above Decision had been reached in consultation

before the case was assigned to the writer of the opinion of the Court’s Division.

ANTONIO T. CARPIO

Associate Justice



Pursuant to Section 13, Article VIII of the Constitution and the Division Chairperson's

Attestation, I certify that the conclusions in the above Decision had been reached in

consultation before the case was assigned to the writer of the opinion of the Court’s

Division.

RENATO C. CORONA

Chief Justice



Additional Member in lieu of Associate Justice Arturo D. Brion per Special Order No. 1174 dated January 9,

2012.

1 Penned by Associate Justice Francisco P. Acosta, with Associate Justices Amy C. Lazaro-Javier and Florito S.

Macalino, concurring; rollo, pp. 19-30.

2 Id. at 29.

3 Id. at 3, 4 and 21.

4Id. at 4-5, 21.

5 Id. at 5-6.

6 Id. at 5-6, 21.

7 Id. at 55.

8 Id. at 53-54.

9 Id. at 58-65.

10 Id. at 64-65.

11 Id. at 64.

12 Id.

13 Id.

14 Id. at 24-25.

15 Id.

16 Id. at 26-27.

17 Id. at 13-15.

18 Id. at 7-13.

19 Id. at 5, 6 and 9.

20 Id. at 8-9.

21 Id. at 74-80.

22 Id. at 82.

23 Id. at 44.

24 Id. at 73-79.














































































25 Id. at 73-80.

26 Id. at 12.

27 Id. at 8, 44, 73-74.

28 Id.

29 Id. at 58-65.

30 Id. at 49.

31 Id. at 77.

32 Id.

33 Id. at 67.

34 G.R. No. 179169, March 3, 2010, 614 SCRA 182.

35 Id. at 193-194.

36 2011 NLRC Rules of Procedure, Rule VII, Section 14.

37Id.

38Cua, Jr. v. Tan, G.R. No. 181455-56 , December 4, 2009, 607 SCRA , 686-687.

39 Leonis Navigation Co., Inc. v. Villamater, supra note 34 at 192.

40 China Banking Corporation v. Dyne-Sem Electronics Corporation, 527 Phil 80 (2006).

41 Reyes v. National Labor Relations Commission, G.R. No. 160233, August 8, 2007, 529 SCRA 499.

42 New Rules of Procedure of the National Labor Relations Commission (as amended by NLRC Resolution No. 01-

02, Series of 2002).

43 Del Monte Philippines, Inc. v. NLRC, G.R. No. 87371 , August 6, 1990, 188 SCRA 370.

44 Government Service Insurance System v. NLRC, G.R. No. 180045, November 17, 2010, 635 SCRA 258.

45 General Credit Corporation v. Alsons Development and Investment Corporation, G.R. No. 154975, January 29,

2007, 513 SCRA 237-238.

46 Philippine National Bank v. Andrada Electric Engineering Company, 430 Phil 894 (2002).

47 Id. at 894-895; citations omitted.











































































49 Id. at 238-239.

50 Rollo, p. 79.

51 Id. at 80.

52 NASECO Guards Association-PEMA (NAGA-PEMA) v. National Service Corporation, G.R. No. 165442, August

25, 2010, 629 SCRA 101.

53 Cf. Emiliano Cano Enterprises, Inc. v. CIR, et al. , 121 Phil 276 (1965).

54 Land Bank of the Philippines v. Court of Appeals, 416 Phil 774, 783 (2001).


56 Id. at 328.

57 Rollo, pp. 5, 54, 74 and 82.

58 372 Phil 459 (1999).

59 Id. at 481.



































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