Republic of the PhilippinesSupreme Court

Manila  

SECOND DIVISION 

 VARORIENT SHIPPING CO., INC., and.,d ARIA MARITIME CO., LTD.,Petitioners, - versus -

  GIL A. FLORES,Respondent.

G.R. No. 161934     

Promulgated: October 6, 2010

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D E C I S I O N  

PERALTA, J.: Before the Court is a petition for review on certiorari seeking to set aside the Decision[1] dated February 28, 2003, of the Court of Appeals (CA) in CA-G.R. SP. No. 55512, entitled Varorient Shipping Co., Inc. and Aria Maritime Co., Ltd. v. National Labor Relations Commission, Third Division and Gil A. Flores, which affirmed with modification the Decision[2] dated May 25, 1999, and Resolution[3] dated August 18, 1999, of the National Labor Relations Commission (NLRC) in NLRC CN OCW RAB-IV-9-917-97-C, and its Resolution [4] dated January 29, 2004, denying petitioners motion for reconsideration thereof. The assailed CA Decision ordered petitioners Varorient Shipping Co., Inc. and Aria Maritime Co., Ltd., jointly and severally, to pay respondent Gil A. Flores the balance of sickness wages in the amount of US$3,790.00, or its peso equivalent at the time of actual payment, and to reimburse his medical and surgical expenses in the total amount of P15,373.26, instead of P13,579.76. However, it dismissed all the other claims of respondent for lack of merit.

 The antecedent facts are as follows: 

On April 7, 1997, petitioners employed respondent, in behalf of its foreign principal, Aria Maritime Co., Ltd. of Piraeus, Greece, for the position of Chief Officer on board M/V Aria, per Contract of Employment[5] dated April 7, 1997, duly approved by the Philippine Overseas Employment Administration (POEA), for a period of 12 months, with a basic monthly salary of US$1,200.00 at 48 hours of work weekly, overtime pay of US$600.00, allowance of US$200.00, and vacation leave with pay of 30 days a year (or US$100.00 a month) or pro-rata. The total fixed monthly salary of respondent was US$2,100.00.

 On April 16, 1997, he was deployed aboard M/V Aria in Bangkok,

Thailand. During his employment, the master of the vessel sent respondent to the Centre Medical de Ngodi at Doula, Cameroon, where he was treated for three days due to the shooting pain in the lower extremities, particularly on his right foot. In the Medical Certificate[6] dated June 19, 1997, the attending physician, Dr. R. Mongou Tchouakẻ, stated that he diagnosed respondent's pain on the right foot as sciatic neuralgia and administered [drips], injection, and acupuncture. Respondent was declared not fit to work. The doctor recommended respondents repatriation to the Philippines for continuing treatment. 

On June 21, 1997, respondent was repatriated to the Philippines. When he reported back to work, he was referred to the company physician, Dr. John H.E. Cusi who, in turn, referred him to Dr. Irene B. Roman-Igual, a neurologist at Makati Medical Center. On June 30, 1997, respondent was subjected to the Computed Tomography Scan (CT Scan), which yielded the following results:

 CT scan examination of the lumbosacral spine demonstrates a large disc herniation ventral and right lateral at the L5-S1 level encroaching into the right neural exit foramina.There is compression of the right nerve root at the same L5-S1 level.Smaller disc protrusion is also noted ventral and bilateral at the L4-L5 interspace level obliterating the underlying epidural fatty plane. The right nerve root appears relatively swollen when compared with the left at the L5-S1.The ligamentum flavum, however, is not hypertrophic.The vertebral bodies, pedicles, laminae, facets and sacro-iliac joints are intact. There is straightening of the lumbar curvature, but with no compression deformities nor spondylolisthesis.

 IMPRESSION: Large disc herniation, ventral and right lateral at the L5-S1 level with secondary right nerve root compression and edema. Small disc protrusion also noted ventral and bilateral at the L4-L5.[7]

  

Dr. Igual observed that the CT scan showed large disc herniation L5-S1 with 2 nerve root compression and edema and recommended respondents confinement for at least two weeks for P.T. [physical therapy] and medications; if not resolved, may need surgical decompression.[8]

 In a letter[9] to petitioner Varorient dated July 29, 1997, respondent, through

his counsel, stated that due to the gross and evident bad faith of petitioners in refusing to grant him continued medical assistance until he becomes fit to work, as recommended by their company doctors, he was forced to seek medical treatment at his own expense.[10] Respondent demanded that petitioners should provide him medical treatment and pay him sickness wages and disability compensation, within five (5) days from receipt of the letter; otherwise, he would be constrained to institute appropriate legal action against them.

 In a Certification[11] dated November 7, 1997, Dr. Copernico J. Villaruel, Jr.,

attending orthopedic surgeon at the Philippine General Hospital, stated that respondent has been admitted under his care from October 9 to 10, 1997 for hemilaminectomy and foraminotomy of L4-L5 and L5-SI, due to the pain in his right foot, and that respondent is now fit to go back to work.

 Acting on the endorsement letter[12] dated November 24, 1997 by Labor

Arbiter Pedro C. Ramos, Dr. Francisco A. Estacio, Chief of the Medical and Rehabilitation Division of the Employees Compensation Commission (ECC), submitted the Disability Evaluation Report[13] dated December 15, 1997, conducted on the health condition of respondent, with the following findings:

PHYSICAL EXAMINATION:- Fairly developed fairly nourished- Head, Eyes, Ears, Nose, and Throat no abnormal findings- Heart and lungs no rales and no murmur appreciated- Abdomen no abnormal finding- Extremities no limitation of movements, no atrophy of muscles. DIAGNOSIS:- Large Herniated Disc L5 S1, with Nerve Roat Compression and Edema- Small Disc Protrusion, L4 L5  

RECOMMENDATION:Based on ECC Schedule of Compensation, the Complainant deserves to receive daily income benefit for the loss of income he incurred from June 1997 to November 1997, plus reimbursement of hospital and medical expenses for his injury, Herniated Disc.

On September 19, 1997, respondent filed a Complaint[14] against petitioners, alleging that (1) per his employment contract, he boarded M/V Aria at Bangkok, Thailand on April 16, 1997; (2) prior to his deployment, he was employed by petitioner for the past 12 years; (3) during his employment and while in the performance of his duties, he suffered injuries consisting of large disc herniation, ventral and right lateral at the L5-S1 level with secondary right and nerve root compression and edema, small disc protrusion also noted at ventral and bilateral at the L4-L5; (4) due to petitioners refusal to provide for his medical treatment and continued failure to pay his sickness wages amounting to US$4,800.00, he was constrained to provide for his own medical expenses; (5) his injuries constituted permanent and total disability which, under POEA Memorandum Circular No. 5, series of 1994, would make petitioners liable for disability benefits under his employment contract in the amount of US$60,000.00; and (6) his injury or disability was directly and proximately due to the direct and vicarious acts of negligence of petitioners and their agents. Respondent prayed that judgment be rendered, declaring petitioners liable to reimburse his medical and hospital expenses in the total amount of P103,969.00 and to pay him disability benefits in the amount of US$60,000.00, sickness wages of US$4,800.00, compensatory damages of US$604,800.00 (this amount was reduced to US$13,370.00 in his Position Paper), moral damages of P1,100,000.00, and exemplary damages and attorneys fees in such an amount as the labor arbiter may deem proper. In his Position Paper,[15] respondent sought reimbursement of his medical expenses and asserted that petitioners are liable to pay him sickness wages, compensatory damages, moral damages, and attorney's fees. However, respondent withdrew his claim for disability benefits with reservation to re-file a complaint should there be a recurrence of his injury. In their Position Paper,[16] petitioners countered that respondent is not entitled to the benefits arising from his alleged permanent and total disability as he was later declared to be fit to work per Certification dated November 7, 1997 by Dr. Copernico J. Villaruel, Jr., the attending orthopedic surgeon at the Philippine General Hospital; that respondent can no longer seek continuation of his medical treatment and claim for sickness wages and reimbursement of medical expenses

because upon his repatriation, he had received the amount of US$1,010.00 (or the equivalent then of about P40,400.00) as settlement for his sickness wages and other benefits, as evidenced by the Receipt and Quitclaim [17] dated June 25, 1997, executed by respondent; and that respondent is not entitled to moral and exemplary damages and attorney's fees. By way of counterclaim, they sought recovery of litigation expenses, actual damages, and attorney's fees in an amount not less thanP20,000.00 and, also, exemplary damages in an amount at the discretion of the labor arbiter. 

In their Supplement to Position Paper,[18] petitioners averred that respondent sought another employment with Tara Trading Shipmanagement, Inc. (for and in behalf of Amethyst Shipping Co.), on board M/V Luna Azul, for a period of twelve (12) months, with a basic monthly salary of US$967.00 at 48 hours of work weekly, overtime pay of US$535.00/month (US$6.24 per hour beyond 105 hours), and vacation leave with pay of 3 days a year (or US$98.00 a month), as evidenced by his Contract of Employment,[19] Seafarer Info-Sheet[20] and POEA Overseas Employment Certificate.[21]

 On September 7, 1998, Acting Executive Labor Arbiter Pedro C. Ramos dismissed respondent's complaint for permanent and total disability benefits, sickness wages and all other claims and, likewise, petitioners' counterclaim for damages, for lack of merit. The labor arbiter found that petitioners have substantially complied withall their obligations to respondent under the POEA-approved employment contract. He debunked respondent's claim for permanent and total disability benefits because respondent had been duly proven and declared to be fit to work not only by the hospital of his choice, i.e., Philippine General Hospital, but also by the Employees Compensation Commission (ECC); that respondent withdrew his claim during the pendency of the proceedings, although with reservation to re-file the same; and that respondent is now on board M/V Luna Azul on an overseas deployment. He upheld the validity of the Receipt and Quitclaim executed by respondent and stated that respondent had received reimbursement of his medical expenses in the amount P4,896.50. He declared that respondent is no longer entitled to sickness wages as it would amount to double recovery of benefits, as provided for under Paragraph 11, Section 4 of the POEA Standard Employment Contract.

 On May 25, 1999, the NLRC rendered a Decision which reversed and set

aside the Decision of the labor arbiter. It ruled that respondent is entitled to

sickness wages and to free medical and hospital treatment for the injury he sustained during the term of his contract, pursuant to Section C 4(b) and (c), Part II of the Standard Employment Contract Governing All Filipino Seamen On Board Ocean-Going Vessels, which obligates the employer to: (1) provide continuous medical treatment to the repatriated injured seaman until such time he is declared fit or the degree of his disability has been established by the company-designated physician; and (2) pay the injured seaman one hundred percent (100%) of his basic wages from the time he leaves the vessel for treatment until he is declared fit to work, but in no case shall this period exceed 120 days. The NLRC observed that petitioners cannot be considered to have adequately discharged their obligation in providing continuous treatment for respondent, as they failed to follow through their company-designated physicians recommendation, which required respondent to undergo a two-week confinement and physical therapy and, if the injury remains unresolved, for respondent to have surgical decompression. As a consequence, respondent was constrained to seek treatment and surgery from a doctor other than the company-designated physician. The NLRC also declared that respondent is entitled to sickness wages equivalent to 120 days in the amount of US$4,800.00, less the amount of US$1,010.00 which he had received, as full settlement of the claim from the petitioners, per Receipt and Quitclaim dated June 25, 1997, or a net total of US$3,790.00. However, the NLRC denied respondent's claim for compensatory damages, as the contractual benefit of sickness wages provided for under the Standard Contract is already a compensatory measure intended to assist the injured seaman during the term of his contract. The dispositive portion of the Decision reads:

WHEREFORE, the decision appealed from is hereby SET ASIDE. Respondents Varorient Shipping Co., Inc. and Aria Maritime Co., Ltd., are, jointly and severally, ordered to pay complainant Gil A. Flores the Philippine Peso equivalent at the time of actual payment of THREE THOUSAND SEVEN HUNDRED NINETY US DOLLARS (US$3,790.00), plus THIRTEEN THOUSAND FIVE HUNDRED SEVENTY-NINE and 76/00 PESOS (P13,579.76), representing the balance of the sickness wages and reimbursement of medical and surgical expenses. All other claims are DISMISSED for lack of merit. SO ORDERED.[22]

  Both parties filed their respective motions for reconsideration. Petitioners sought exoneration from liability, while respondent averred that the NLRC erred in

excluding certain items or receipts from the reimbursable medical expenses, deducting US$1,010.00 from the award of sickness wages, not holding petitioners liable for his entire wages up to the time he would be employed with another company, and not awarding him compensatory and moral damages and attorneys fees. The NLRC denied respondent's motion for reconsideration in a Resolution dated June 30, 1999 and, likewise, petitioners' motion for reconsideration in its Resolution dated August 18, 1999. 

On petition for review by petitioners, the CA affirmed the Decision dated May 25, 1999 and the Resolution dated August 18, 1999 of the NLRC with the following disposition:

                       WHEREFORE, the Decision of the National Labor Relations

Commission dated May 25, 1999 is AFFIRMED with

MODIFICATION. Petitioners Varorient Shipping Co., Inc. and Aria Maritime

Co., Ltd., are, jointly and severally, ordered to pay private respondent Gil A.

Flores:

 1) the balance of sickness wages in the amount of US$3,790.00, or its peso equivalent at the time of actual payment; and2) reimbursement of medical and surgical expenses in the total amount of P15,373.26, instead of P13,579.76.

 All other claims are DISMISSED for lack of merit.[23]

  

As the CA denied their motion for reconsideration in the Resolution dated January 29, 2004, petitioners filed this present petition.

 Petitioners contend that respondent is not entitled to sickness wages, as this would be tantamount to unjust enrichment and double recovery on the part of respondent.They maintain that they had paid him US$1,010.00 as full payment of his salaries and benefits, including his medical treatment and, by reason thereof, respondent executed the Receipt and Quitclaim. They also claim that prior to his departure from the country and actual deployment overseas, respondent and his wife received financial accommodations in the form of cash advances, i.e., US$1,000.00, per cash voucher dated April 16, 1997, signed by respondent; and

US$2,790.00, per cash voucher dated April 21, 1997, signed by Crisanta Flores (wife of respondent), or the total amount of US$3,790.00. According to petitioners, since the amount of US$3,790.00 remained unpaid by respondent and his wife, therefore, they can properly offset the said amount with the sickness wages they would be paying to respondent. Respondent denies that he and his wife were given cash advances while he was on board; that he had received the amount of US$1,010.00 from the petitioners as settlement of all his claims; and that the Receipt and Quitclaim dated June 25, 1997, allegedly executed by him, was a falsified document as the signature appearing therein was a forgery.Contrary to petitioners' contention, respondent is entitled to sickness wages. The shooting pain on his right foot is an injury which he suffered during the course of his employment and, therefore, obligates petitioners to compensate him and provide him the appropriate medical treatment. This is in consonance with the mandated provisions under Section 20 B (1), (2), (3), (4), and (5) of the Standard Terms and Conditions Governing the Employment of Filipino Seafarers On Board Ocean-Going Vessels,[24] pursuant to Department Order No. 4, series of 2000, of the Department of Labor and Employment (by then Secretary Bienvenido E. Laguesma), adopted on May 31, 2000, which provides  that: SECTION 20. COMPENSATION AND BENEFITSB. COMPENSATION AND BENEFITS FOR INJURY OR ILLNESS

The liabilities of the employer when the seafarer suffers work-related injury or illness during the term of his contract are as follows: 

1. The employer shall continue to pay the seafarer his wages during the time he is on board the vessel; 2. If the injury or illness requires medical and/or dental treatment in a foreign port, the employer shall be liable for the full cost of such medical, serious dental, surgical and hospital treatment, as well as board and lodging, until the seafarer is declared fit to work or to be repatriated. However, if after repatriation, the seafarer still requires medical attention arising from said injury or illness, he shall be so provided at cost to the employer until such time he is declared fit or the degree of his disability has been established by the company-designated physician.

 3. Upon sign-off from the vessel for medical treatment, the seafarer is entitled to sickness allowance equivalent to his basic wage until he is declared fit to work, or the degree of permanent disability has been assessed by the company-designated physician, but in no case shall this period exceed one hundred twenty (120) days.

 For this purpose, the seafarer shall submit himself to a post-

employment medical examination by a company-designated physician within three working days upon his return, except when he is physically incapacitated to do so, in which case a written notice to the agency within the same period is deemed as compliance. Failure of the seafarer to comply with the mandatory reporting requirement shall result in his forfeiture of the right to claim the above benefits.

 If a doctor appointed by the seafarer disagrees with the assessment,a third doctor may be agreed jointly between the employer and the seafarer. The third doctor's decision shall be final and binding on both parties.

 4. Those illnesses not listed in Section 32 of this Contract are disputably presumed as work related. 5. Upon sign-off of the seafarer from the vessel for medical treatment, the employer shall bear the full cost of repatriation in the event the seafarer is declared (1) fit for repatriation; or (2) fit to work, but the employer is unable to find employment for the seafarer on board his former vessel or another vessel of the employer despite earnest efforts.

6. In case of permanent total or partial disability of the seafarer caused by either injury or illness, the seafarer shall be compensated in accordance with the schedule of benefits enumerated in Section 32 of his Contract. Computation of his benefits arising from an illness or disease shall be governed by the rates and the rules of compensation applicable at the time the illness or disease was contracted.On June 21, 1997, respondent was repatriated to the Philippines and declared fit to work on November 7, 1997, or a total period of 141 days. Applying the said provisions of the Standard Contract, respondent is entitled to receive sickness wages, covering the maximum period of 120 days, or the amount of US$4,800.00. The NLRC, as affirmed by the CA, found that petitioners are liable to pay respondent the total amount of US$3,790.00 (US$4,800.00 less the amount of US$1,010.00 which he already received by virtue of the Receipt and Quitclaim dated June 25, 1997). 

As pointed out by the CA, petitioners, in their motion for reconsideration of the NLRC Decision dated May 25, 1999, raised for the first time that they had given the amount of US$3,790.00 to respondent and belatedly submitted two (2) cash vouchers, i.e., US$1,000.00, dated April 16, 1997, which was signed by respondent; and US$2,290.00, dated April 21, 1997, which was signed by respondent's wife Cristina Flores, or a total of US$3,790.00. The CA observed that the said cash vouchers do not bear the name and logo of petitioners, unlike the check voucher they issued for the reimbursement of the medical expenses of respondent amounting toP4,896.50, and that these vouchers were supposedly already in existence or in the possession of the petitioners since April 1997, but they never interposed such fact in their pleadings, e.g., Position Paper, Supplement to Respondent's Position Paper, or Opposition to Complainant's Appeal. The Court sees no reason to disturb this factual finding.Moreover, petitioners were remiss in providing continuous treatment for respondent in accordance with the recommendation of their company physician that respondent should undergo a two-week confinement and physical therapy and, if his condition does not improve, then he would have to be subjected to surgical decompression to alleviate the pain on his right foot. Respondent's ailment required urgent medical response, thereby necessitating him to seek immediate medical attention, even at his own expense. The CA enumerated the medical expenses of respondent for which petitioner would be liable. Thus,

 [w]hile we agree substantially with the NLRCs decision in

allowing the reimbursement of P13,579.76, we disagree with its findings that the receipts for medicines were not covered by prescriptions. Dr. Irene Igual recommended the continued use of neo-pyrozon, ne[u]robin, and myonal [and], thus, respondent should accordingly be reimbursed for the purchase of these medicines. The records disclose the following purchases: 1. Mercury Drug Receipt No. 535112 (Annex F)Myonal - P97.50Neo-pyrozon - 71.50 - P169.002. Mercury Drug Receipt No. 532746 (Annex F-1)Ne[u]robin - P76.00Myonal - 97.50 - P173.503. Mercury Drug Receipt No. 533708 (Annex F-2)Neo-pyrazon - P71.50Neurobin - 76.00Myonal - 97.50 - P244.004. Mercury Drug Receipt No. 251929 (Annex F-3)Pyrazon - P71.50 - P71.50

5. Mercury Drug Receipt No. 251931 (Annex F-4)Myonal - P97.50 - P97.506. Mercury Drug Receipt No. 534528 (Annex F-5)Neo Pyrozon - P71.50Myonal - 97.50 - P169.007. Mercury Drug Receipt No. 253117 (Annex F-6)Myobal - P97.50Neo-Pyrozon - 71.50 - P169.00TOTAL - P1,093.50 x x x x In the same vein, receipt numbers 630 and 0091, issued by the offices of Dr. Betty Dy Mancao (Annex F-40) and Dr. Copernico J. Villaruel (Annex F-39) for P300.00 andP400.00, respectively, should be reimbursed to Flores. The PGH hospital bills do not include the doctors fee, thus, it is safe to conclude that the doctors who attended to Flores billed him personally. x x x x x x xIn fine, private respondent is entitled to reimbursement of his medical expenses totalling P15,373.26.[25]

  

In view of the foregoing, respondent should be reimbursed the amount of P13,579.76, representing the balance of the sickness wages due him, the cost of the prescribed medicines he purchased, and the surgical expenses he incurred, as evaluated by the CA.Petitioners argue that the Receipt and Quitclaim sufficed to cover the balance of the sickness wages, after deducting the cash advances, which respondent would be entitled to; while respondent questions the veracity of the said document. The Receipt and Quitclaim executed by respondent lacks the elements of voluntariness and free will and, therefore, does not absolve petitioners from liability in paying him the sickness wages and other monetary claims. Although respondent avers that his signature on the said quitclaim was a forgery, the CA relied on the factual findings of the labor arbiter and the NLRC that gave credence to it. Thus, the matter to be resolved would be whether the Receipt and Quitclaim can be considered substantial compliance to the contractual obligation by petitioners under the standard employment contract. 

In More Maritime Agencies, Inc. v. NLRC,[26] the Court ruled that the law does not consider as valid any agreement to receive less compensation than what a worker is entitled to recover nor prevent him from demanding benefits to which he is entitled. Quitclaims executed by the employees are thus commonly frowned upon as contrary to public policy and ineffective to bar claims for the full measure of the workers legal rights, considering the economic disadvantage of the employee and the inevitable pressure upon him by financial necessity. Thus, it is never enough to assert that the parties have voluntarily entered into such a quitclaim. There are other requisites, to wit: (a) that there was no fraud or deceit on the part of any of the parties; (b) that the consideration of the quitclaim is credible and reasonable; and (c) that the contract is not contrary to law, public order, public policy, morals or good customs, or prejudicial to a third person with a right recognized by law. A perusal of the provisions of the Receipt and Quitclaim shows that respondent would be releasing and discharging petitioners from all claims, demands, causes of action, and the like in an all-encompassing manner, including the fact that he had not contracted or suffered any illness or injury in the course of his employment and that he was discharged in good and perfect health. These stipulations clearly placed respondent in a disadvantageous position vis--vis the petitioners. 

WHEREFORE, the petition is DENIED. The Decision dated February 28, 2003 and the Resolution dated January 29, 2004 of the Court of Appeals in CA-G.R. SP No. 55512, which affirmed with modification the Decision dated May 25, 1999 and Resolution dated August 18, 1999 of the National Labor Relations Commission, are AFFIRMED.

 SO ORDERED.

Case Digest: ST. MARY’S ACADEMY OF DIPOLOG CITY vs. TERESITA PALACIO, ET AL.

G.R. No. 164913 08 September 2010

FACTS:

In the 1990s, Petitioner hired Respondents Calibod, Laquio, Santander, Saile Padilla, Andalahao, Decipulo and Montederamos, as teachers, and respondent Palacio as guidance counselor. In accordance to DECS Memorandum No. 10, S. 1998 pursuant to RA 7836, the Petitioner informed the respondents that they cannot be re-accepted for the school year 2000-2001 for not having passed the LET (Licensure Examinations for Teachers), nor can they continue with their teaching profession.

They filed a complaint contesting that their termination as highly irregular and premature. They averred their right to security of tenure despite the requirements set by the PRC for they had special permits to teach and the civil service eligibility required under the law. In addition to this, the deadline for teachers to register under the Memorandum was set to 19 September 2000, but the petitioner decided to terminate them as early as 31 March 2000. Lastly, the acceptance of the Petitioner of other teacher who do not also possess the required eligibility under the Memorandum showed evident bad faith.

LA Decision:

The LA adjudged the petitioner guilty of illegal dismissal. Thus, petitioner was ordered to reinstate the respondents or to pay them separation pay at the rate of ½ month wage for every year of service, plus limited backwages.

NLRC Decision:

The NLRC upheld the LA’s decision, stating that the grounds relied upon by the petitioner or dismiss the respondents are not among those enumerated by the Labor Code and that the respondents are regular employees, who cannot be removed without just cause.

CA Decision:

The CA upheld both the decisions of the LA and the NLRC. It further held that the Petitioner should have adopted a contingency plan if in case the respondents still have not complied with the aforementioned requirements when the deadline has arrived. The CA also observed that the petitioner’s ulterior motive for the termination may have been the result of a confrontation between the principal and the respondents. However, as regards to Padilla, Palacio, Andalahao and Decipulo, the CA found them to be merely probationary; therefore, there is no illegal dismissal to speak of.

ISSUE(S):

Whether the dismissal of the respondents were premature because it was effected prior to the deadline set by the PRC to acquire their license.

Whether the respondents are entitled to backwages from March to 19 September 2000, because it is only on such date that they were already dismissible for cause.

HELD:

Yes. The Supreme Court agrees with the decisions of the LA, the NLRC and the CA. It is incumbent upon the Court to afford full protection to labor.The law has provided a specific timeframe within which respondents could comply, petitioner has no right to deny them of this privilege accorded to them by law. In so far as Palacio, Calibod, Laquio, Santander and Montedramos are concerned, being dismissed on March 2000 was premature. However, Saile is not qualified to take the LET, therefore, no prematurity is to speak of on her end. Petitioner’s intention and desire not to put the students’ education and school operation in jeopardy is neither a decisive consideration for respondents’ termination prior to the deadline set by law. The prejudice that respondents’ retention would cause to the school’d operation is only trivial.

Yes. The respondents are entitled to limited backwages computed from 31 March 2000 to September 2000 in favor of Palacio, Calibod, Laquio, Santander and Montederamos. The Petitioner cannot possibly presume that respondents could not timely comply with the requirements set by law.

Jumuad vs. KFC 

On May 22, 1995, petitioner Pamela Florentina P. Jumuad (Jumuad) began her employment with respondent Hi-Flyer Food, Inc. (Hi-Flyer), as management trainee. Hi-Flyer is a corporation licensed to operate Kentucky Fried Chicken (KFC) restaurants in the Philippines. Based on her performance through the years, Jumuad received several promotions until she became the area manager for the entire Visayas-Mindanao 1 region, comprising the provinces of Cebu, Bacolod, Iloilo andBohol.[5]

 Aside from being responsible in monitoring her subordinates, Jumuad was tasked to: 1) be highly visible in the restaurants under her jurisdiction; 2) monitor and support day-to-day operations; and 3) ensure that all the facilities and equipment at the restaurant were properly maintained and serviced.[6] Among the branches under her supervision were the KFC branches in Gaisano Mall, Cebu City (KFC-Gaisano); in Cocomall, Cebu City (KFC-Cocomall); and in Island City Mall, Bohol(KFC-Bohol). As area manager, Jumuad was allowed to avail of Hi-Flyers car loan program,[7] wherein forty (40%) percent of the total loanable amount would be subsidized by Hi-Flyer and the remaining sixty (60%) percent would be deducted from her salary. It was also agreed that in the event that she would resign or would be terminated prior to the payment in full of the said car loan, she could opt to surrender the car to Hi-Flyer or to pay the full balance of the loan.[8]

In just her first year as Area Manager, Jumuad gained distinction and was awarded the 3rd top area manager nationwide. She was rewarded with a trip toSingapore for her excellent performance.[9]

On October 4, 2004, Hi Flyer conducted a food safety, service and sanitation audit at KFC-Gaisano. The audit, denominated as CHAMPS Excellence Review(CER), revealed several sanitation violations, such as the presence of rodents and the use of a defective chiller for the storage of food. [10] When asked to explain, Jumuad first pointed out that she had already taken steps to prevent the further infestation of the branch. As to why the branch became infested with rodents, Jumuad faulted managements decision to terminate the services of the branchs pest control program and to rely solely on the pest control program of the mall. As for the defective chiller, she explained that it was under repair at the time of the CER.[11] Soon thereafter, Hi-Flyer ordered the KFC-Gaisano branch closed. 

Then, sometime in June of 2005, Hi-Flyer audited the accounts of KFC-Bohol amid reports that certain employees were covering up cash shortages. As a result, the following irregularities were discovered: 1) cash shortage amounting to ₱62,290.85; 2) delay in the deposits of cash sales by an average of three days; 3) the presence of two sealed cash-for-deposit envelopes containing paper cut-outs instead of cash; 4) falsified entries in the deposit logbook; 5) lapses in inventory control; and 6) material product spoilage.[12] In her report regarding the incident, Jumuad disclaimed any fault in the incident by pointing out that she was the one responsible for the discovery of this irregularity.[13]

 On August 7, 2005, Hi-Flyer conducted another CER, this time at its KFC-

Cocomall branch. Grout and leaks at the branchs kitchen wall, dried up spills from the marinator, as well as a live rat under postmix, and signs of rodent gnawing/infestation were found.[14] This time, Jumuad explained to management that she had been busy conducting management team meetings at the other KFC branches and that, at the date the CER was conducted, she had no scheduled visit at the KFC-Cocomall branch.[15]

 Seeking to hold Jumuad accountable for the irregularities uncovered in the branches under her supervision, Hi-Flyer sent Jumuad an Irregularities Report[16] and Notice of Charges[17] which she received on September 5, 2005. On September 7, 2005 Jumuad submitted her written explanation.[18] On September 28, 2005, Hi-Flyer held an administrative hearing where Jumuad appeared with counsel. Apparently not satisfied with her explanations, Hi-Flyer served her a Notice of Dismissal[19] dated October 14, 2005, effecting her termination on October 17, 2005. This prompted Jumuad to file a complaint against Hi-Flyer and/or Jesus R. Montemayor (Montemayor) for illegal dismissal before the NLRC on October 17, 2005, praying for reinstatement and payment of separation pay, 13th month pay, service incentive leave, moral and exemplary damages, and attorneys fees. Jumuad also sought the reimbursement of the amount equivalent to her forty percent (40%) contribution to Hi-Flyers subsidized car loan program.  

While the LA found that Jumuad was not completely blameless for the anomalies discovered, she was of the view that the employers prerogative to dismiss or layoff an employee must be exercised without abuse of discretion and should be tempered with compassion and understanding.[20] Thus, the dismissal was

too harsh considering the circumstances. After finding that no serious cause for termination existed, the LA ruled that Jumuad was illegally dismissed. The LA disposed: 

WHEREFORE, VIEWED FROM THE FOREGOING PREMISES, judgment is hereby rendered declaring complainants dismissal as ILLEGAL. Consequently, reinstatement not being feasible, respondents HI-FLYER FOOD, INC. AND OR JESUS R. MONTEMAYOR are hereby ordered to pay, jointly and severally, complainant PAMELA FLORENTINA P. JUMUAD, the total amount of THREE HUNDRED THIRTY-SIX THOUSAND FOUR HUNDRED PESOS (₱336,400.00), Philippine currency, representing Separation Pay, within ten (10) days from receipt hereof, through the Cashier of this Arbitration Branch.

Further, same respondents are ordered to reimburse complainant an amount equivalent to 40% of the value of her car loaned pursuant to the car loan entitlement memorandum. Other claims are DISMISSED for lack of merit.[21]

 Both Jumuad and Hi-Flyer appealed to the NLRC. Jumuad faulted the LA for not awarding backwages and damages despite its finding that she was illegally dismissed. Hi-Flyer and Montemayor, on the other hand, assailed the finding that Jumuad was illegally dismissed and that they were solidarily liable therefor. They also questioned the orders of the LA that they pay separation pay and reimburse the forty percent (40%) of the loan Jumuad paid pursuant to Hi-Flyers car entitlement program.

 Echoing the finding of the LA that the dismissal of Jumuad was too harsh, the NLRC affirmed in toto the LA decision dated August 10, 2006. In addition, the NLRC noted that even before the Irregularities Report and Notice of Charges were given to Jumuad on September 5, 2005, two (2) electronic mails (e-mails) between Montemayor and officers of Hi-Flyer showed that Hi-Flyer was already determined to terminate Jumuad. The first e-mail[22] read: 

From: Jess R. MontemayorSent: Tuesday, August 16, 2005 5:59 PMTo: bebe chaves; Maria Judith N. Marcelo; Jennifer Coloma Ravela; Bernard Joseph A. Velasco

Cc: Odjie Belarmino; Jesse D. CruzSubject: RE: 049 KFC Cocomall Food Safety Risk/Product Quality Violation I agree if the sanctions are light we should change them. In the case of Pamela however, the fact that Cebu Colon store had these violations is not the first time this incident has happened in her area. The Bohol case was also in her area and maybe these two incidents is enough grounds already for her to be terminated or maybe asked to resign instead of being terminated.  I know if any Ops person serves expired product this is ground for termination. I think serving off specs products such as this lumpy gravy in the case of Coco Mall should be grounds for termination. How many customers have we lost due to this lumpy clearly out of specs gravy? 20 customers maybe. Jess.

  The second e-mail,[23] sent by one Bebe Chaves of Hi-Flyer to Montemayor and other officers of Hi-Flyer, reads: 

From: bebe chaves Sent: Sat 9/3/2005 3:45 AMTo: Maria Judith N. MarceloCC: Jennifer Coloma Ravela; Goodwin Belarmino; Jess R. MontemayorSubject: RE: 049 KFC Cocomall Food Safety Risk/Product Quality Violation

     

Jojo, Just an update of our meeting yesterday with Jennifer. After having reviewed the case and all existing documents, we have decided that there is enough ground

to terminate her services. IR/Jennifer are working hand in hand to service due notice and close the case.

 According to the NLRC, these e-mails were proof that Jumuad was denied due process considering that no matter how she would refute the charges hurled against her, the decision of Hi-Flyer to terminate her would not change.[24]

 Sustaining the order of the LA to reimburse Jumuad the amount equivalent to 40% of the value of the car loan, the NLRC explained that Jumuad enjoyed this benefit during her period of employment as Area Manager and could have still enjoyed the same if not for her illegal dismissal.[25]

Finally, the NLRC held that the active participation of Montemayor in the illegal dismissal of Jumuad justified his solidary liability with Hi-Flyer. Both Jumuad and Hi-Flyer sought reconsideration of the NLRC Decision but their respective motions were denied on November 29, 2007.[26]

 Alleging grave abuse of discretion on the part of the NLRC, Hi-Flyer appealed the case before the CA in Cebu City. On April 20, 2009, the CA rendered the subject decision reversing the decision of the labor tribunal. The appellate court disposed: 

WHEREFORE, in view of the foregoing, the Petition is GRANTED. The Decision of the National Labor Relations Commission (4th Division) dated 28 September 2007 in NLRC Case No. V-000813-06 (RAB Case No. VII-10-2269-05, as well as the Decision dated 10 August 2006 of the Honorable Labor Arbiter Julie C. Ronduque, and the 29 November 2006 Resolution of the NLRC denying petitioners Motion for Reconsideration dated 08 November 2007, are hereby REVERSED and SET ASIDE. No pronouncement as to costs. SO ORDERED.[27]

 Contrary to the findings of the LA and the NLRC, the CA was of the opinion that the requirements of substantive and procedural due process were complied with affording Jumuad an opportunity to be heard first, when she submitted her written

explanation and then, when she was informed of the decision and the basis of her termination.[28] As for the e-mail exchanges between Montemayor and the officers of Hi-Flyer, the CA opined that they did not equate to a predetermination of Jumuads termination. It was of the view that the e-mail exchanges were mere discussions between Montemayor and other officers of Hi-Flyer on whether grounds for disciplinary action or termination existed. To the mind of the CA, the e-mails just showed that Hi-Flyer extensively deliberated the nature and cause of the charges against Jumuad.[29]

 On the issue of loss of trust and confidence, the CA considered the deplorable sanitary conditions and the cash shortages uncovered at three of the seven KFC branches supervised by Jumuad as enough bases for Hi-Flyer to lose its trust and confidence in her.[30]

   With regard to the reimbursement of the 40% of the car loan as awarded by the labor tribunal, the CA opined that the terms of the car loan program did not provide for reimbursement in case an employee was terminated for just cause and they, in fact, required that the employee should stay with the company for at least three (3) years from the date of the loan to obtain the full 40% subsidy. The CA further stated that the rights and obligations of the parties should be litigated in a separate civil action before the regular courts.[31]

 The CA also exculpated Montemayor from any liability since it considered Jumuads dismissal with a just cause and it found no evidence that he acted with malice and bad faith.[32]

 Hence, this petition on the following 

GROUNDS: 

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN UPHOLD[ING] AS VALID THE TERMINATION OF PETITIONERS SERVICES BY RESPONDENTS. 

THE HONORABLE COURT OF APPEALS GRAVELY ERRED WHEN IT REVERSED THE DECISION OF THE NATIONAL LABOR RELATIONS COMMISSION 4TH DIVISION OF CEBU CITY WHICH

AFFIRMED THE DECISION OF LABOR ARBITER JULUE RENDOQUE. THE HONORABLE COURT OF APPEALS GRAVELY ERRED WHEN IT REVERSED THE DECISION OF THE NATIONAL LABOR RELATIONS COMMISSION 4TH DIVISION OF CEBU CITY WHEN IT RULED THAT PETITIONER IS NOT ENTITLED TO REIMBURSEMENT OF FORTY PERCENT (40%) OF THE CAR VALUE BENEFITS.

  It is a hornbook rule that factual findings of administrative or quasi-judicial

bodies, which are deemed to have acquired expertise in matters within their respective jurisdictions, are generally accorded not only respect but even finality, and bind the Court when supported by substantial evidence.[33] While this rule is strictly adhered to in labor cases, the same rule, however, admits exceptions. These include: (1) when there is grave abuse of discretion; (2) when the findings are grounded on speculation; (3) when the inference made is manifestly mistaken; (4) when the judgment of the Court of Appeals is based on a misapprehension of facts; (5) when the factual findings are conflicting; (6) when the Court of Appeals went beyond the issues of the case and its findings are contrary to the admissions of the parties; (7) when the Court of Appeals overlooked undisputed facts which, if properly considered, would justify a different conclusion; (8) when the facts set forth by the petitioner are not disputed by the respondent; and (9) when the findings of the Court of Appeals are premised on the absence of evidence and are contradicted by the evidence on record.[34]

 In the case at bench, the factual findings of the CA differ from that of the LA

and the NLRC. This divergence of positions between the CA and the labor tribunal below constrains the Court to review and evaluate assiduously the evidence on record. The petition is without merit.On whether Jumuad was illegally dismissed, Article 282 of the Labor Code provides: 

Art. 282. Termination by Employer. An employer may terminate an employment for any of the following causes:

  (a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his work;  (b) Gross and habitual neglect by the employee of his duties;  (c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative;  (d) Commission of a crime or offense by the employee against the person of his employer or any immediate member of his family or his duly authorized representative; and (e) Other causes analogous to the foregoing.

 Jumuad was terminated for neglect of duty and breach of trust and confidence. Gross negligence connotes want or absence of or failure to exercise slight care or diligence, or the entire absence of care. It evinces a thoughtless disregard of consequences without exerting any effort to avoid them. Fraud and willful neglect of duties imply bad faith of the employee in failing to perform his job, to the detriment of the employer and the latters business. Habitual neglect, on the other hand, implies repeated failure to perform one's duties for a period of time, depending upon the circumstances. It has been said that a single or an isolated act of negligence cannot constitute as a just cause for the dismissal of an employee.[35] To be a ground for removal, the neglect of duty must be both gross and habitual.[36]

 On the other hand, breach of trust and confidence, as a just cause for termination of employment, is premised on the fact that the employee concerned holds a position of trust and confidence, where greater trust is placed by management and from whom greater fidelity to duty is correspondingly expected. The betrayal of this trust is the essence of the offense for which an employee is penalized.[37]

 

It should be noted, however, that the finding of guilt or innocence in a charge of gross and habitual neglect of duty does not preclude the finding of guilty or innocence in a charge of breach of trust and confidence. Each of the charges must be treated separately, as the law itself has treated them separately. To repeat, to warrant removal from service for gross and habitual neglect of duty, it must be shown that the negligence should not merely be gross, but also habitual. In breach of trust and confidence, so long as it is shown there is some basis for management to lose its trust and confidence and that the dismissal was not used as an occasion

for abuse, as a subterfuge for causes which are illegal, improper, and unjustified and is genuine, that is, not a mere afterthought intended to justify an earlier action taken in bad faith, the free will of management to conduct its own business affairs to achieve its purpose cannot be denied.

 After an assiduous review of the facts as contained in the records, the Court is convinced that Jumuad cannot be dismissed on the ground of gross and habitual neglect of duty. The Court notes the apparent neglect of Jumuad of her duty in ensuring that her subordinates were properly monitored and that she had dutifully done all that was expected of her to ensure the safety of the consuming public who continue to patronize the KFC branches under her jursidiction. Had Jumuad discharged her duties to be highly visible in the restaurants under her jurisdiction, monitor and support the day to day operations of the branches and ensure that all the facilities and equipment at the restaurant were properly maintained and serviced, the deplorable conditions and irregularities at the various KFC branches under her jurisdiction would have been prevented. Considering, however, that over a year had lapsed between the incidences at KFC-Gaisano and KFC-Bohol, and that the nature of the anomalies uncovered were each of a different nature, the Court finds that her acts or lack of action in the performance of her duties is not born of habit. Despite saying this, it cannot be denied that Jumuad willfully breached her duties as to be unworthy of the trust and confidence of Hi-Flyer. First, there is no denying that Jumuad was a managerial employee. As correctly noted by the appellate court, Jumuad executed management policies and had the power to discipline the employees of KFC branches in her area. She recommended actions on employees to the head office. Pertinent is Article 212 (m) of the Labor Code defining a managerial employee as one who is vested with powers or prerogatives to lay down and execute management policies and/or hire, transfer, suspend, lay off, recall, discharge, assign or discipline employees. 

Based on established facts, the mere existence of the grounds for the loss of trust and confidence justifies petitioners dismissal. Pursuant to the Courts ruling inLima Land, Inc. v. Cuevas,[38] as long as there is some basis for such loss of confidence, such as when the employer has reasonable ground to believe that the employee concerned is responsible for the purported misconduct, and the nature of

his participation therein renders him unworthy of the trust and confidence demanded of his position, a managerial employee may be dismissed. In the present case, the CERs reports of Hi-Flyer show that there were anomalies committed in the branches managed by Jumuad. On the principle of respondeatsuperior or command responsibility alone, Jumuad may be held liable for negligence in the performance of her managerial duties. She may not have been directly involved in causing the cash shortages in KFC-Bohol, but her involvement in not performing her duty monitoring and supporting the day to day operations of the branches and ensure that all the facilities and equipment at the restaurant were properly maintained and serviced, could have truly prevented the whole debacle from ever occurring. Moreover, it is observed that rather than taking proactive steps to prevent the anomalies at her branches, Jumuad merely effected remedial measures. In the restaurant business where the health and well-being of the consuming public is at stake, this does not suffice. Thus, there is reasonable basis for Hi-Flyer to withdraw its trust in her and dismissing her from its service.The disquisition of the appellate court on the matter is also worth mentioning: 

In this case, there is ample evidence that private respondent indeed committed acts justifying loss of trust and confidence of Hi-Flyer, and eventually, which resulted to her dismissal from service. Private respondents mismanagement and negligence in supervising the effective operation of KFC branches in the span of less than a year, resulting in the closure of KFC-Gaisano due to deplorable sanitary conditions, cash shortages in KFC-Bohol, in which the said branch, at the time of discovery, was only several months into operation, and the poor sanitation at KFC-Cocomall. The glaring fact that three (3) out of the seven (7) branches under her area were neglected cannot be glossed over by private respondents explanation that there was no negligence on her part as the sanitation problem was structural, that she had been usually busy conducting management team meetings in several branches of KFC in her area or that she had no participation whatsoever in the alleged cash shortages. x x x 

It bears stressing that both the Labor Arbiter and the NLRC found that private respondent was indeed lax in her duties. Thus, said the NLRC: xxx [i]t is Our considered view that xxx complainant cannot totally claim that she was not remiss in her duties xxx.[39]

   

 As the employer, Hi-Flyer has the right to regulate, according to its

discretion and best judgment, all aspects of employment, including work assignment, working methods, processes to be followed, working regulations, transfer of employees, work supervision, lay-off of workers and the discipline, dismissal and recall of workers.  Management has the prerogative to discipline its employees and to impose appropriate penalties on erring workers pursuant to company rules and regulations.[40]

           So long as they are exercised in good faith for the advancement of the employers interest and not for the purpose of defeating or circumventing the rights of the employees under special laws or under valid agreements, the employers exercise of its management prerogative must be upheld.[41]  

In this case, Hi-Flyer exercised in good faith its management prerogative as there is no dispute that it has lost trust and confidence in her and her managerial abilities, to its damage and prejudice. Her dismissal, was therefore, justified.

 As for Jumuads claim for the reimbursement of the 40% of the value of the

car loan subsidized by Hi-Flyer under its car loan policy, the same must also be denied. The rights and obligations of the parties to a car loan agreement is not a proper issue in a labor dispute but in a civil one.[42] It involves the relationship of debtor and creditor rather than employee-employer relations.[43] Jurisdiction, therefore, lies with the regular courts in a separate civil action.[44]

The law imposes many obligations on the employer such as providing just compensation to workers, observance of the procedural requirements of notice and hearing in the termination of employment.  On the other hand, the law also recognizes the right of the employer to expect from its workers not only good performance, adequate work and diligence, but also good conduct and loyalty.  The employer may not be compelled to continue to employ such persons whose continuance in the service will patently be inimical to its interests.[45]

 

 WHEREFORE, the petition is DENIED. 

SO ORDERED.

PLDT v. TevesGR No. 143511: November 15, 2010

Philippine Long Distance Telephone Company, Petitioner, v. Joey B. Teves, Respondent

Peralta, J.:

FACTS:

Respondent was employed as Clerk of PLDT until he was terminated because he violated the (3) unauthorized leaves of absence committed within 3 years, contrary to the policy of PLDT. From 1990 and 1992, there were 3 instances of unauthorized leaves of absence from the Respondent. On the final instance, the explanation of Teves was unmeritorious, which led to his dismissal. He filed a complaint of illegal dismissal before the Labor Arbiter.

The Arbiter found out that the dismissal was legal, but it ordered PLDT to give 20,000 php to Teves. Teves appealed to the NLRC, which reversed the Arbiters decision. It upheld the validity of the absence on account of Teves wife having complications during childbirth.

PLDT filed a petition for Certiorari with the CA, which affirmed the decision of the NLRC. The CA found that respondent's comportment cannot be characterized as grave so as to constitute grave misconduct; that his first two leaves of absence were satisfactorily justified

ISSUE:

1. Whether the conduct of Teves warrants and justifies dismissal

HELD:

No. But the petition is partially granted.

Labor Law: Termination of Employment

Even assuming that respondent's absenteeism constitutes willful disobedience, such offense does not warrant respondent's dismissal.Not every case of insubordination or willful disobedience by an employee reasonably deserves the penalty of dismissal. There must be a reasonable proportionality between the offense and the penalty.

While management has the prerogative to discipline its employees and to impose appropriate penalties on erring workers, pursuant to company rules and regulations, however, such management prerogatives must be exercised in good faith for the advancement of the employers interest and not for the purpose of defeating or circumventing the rights of the employees under special laws and valid agreements. The

Court is wont to reiterate that while an employer has its own interest to protect, and pursuant thereto, it may terminate an employee for a just cause, such prerogative to dismiss or lay off an employee must be exercised without abuse of discretion.Its implementation should be tempered with compassion and understanding.The employer should bear in mind that, in the execution of said prerogative, what is at stake is not only the employees position, but his very livelihood,his very breadbasket.

However, since one of the instances is unjustified, it is to be subtracted from the reinstatement.

Petition PARTIALLY GRANTED.

 

COCA-COLA   BOTTLERS PHILIPPINES, INC.,

Petitioner,

 

 

 

- versus -

 

 

 

 

ANGEL U. DEL VILLAR,

Respondent.

  G.R. No. 163091

 

Present:

 CORONA, C.J.,

Chairperson,

VELASCO, JR.,

LEONARDO-DE CASTRO,

DEL CASTILLO, and

PEREZ,  JJ.

 

Promulgated:

 

October 6, 2010

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

 

 

D E C I S I O N 

 

LEONARDO-DE CASTRO, J.:

 

 

Petitioner Coca-Cola Bottlers Philippines, Inc. (the Company) filed this Petition for Review on Certiorari, under Rule 45 of the Rules of Court, seeking the reversal of (1) the Decision[1] dated October 30, 2003 of the Court of Appeals in CA-G.R. SP No. 53815, which reversed and set aside the Decision[2] dated February 26, 1999 of   the  National   Labor   Relations   Commission   (NLRC)   in  NLRC   CN.  NCR-00-12-07634-96; and (2) the Resolution[3] dated March 29, 2004 of the appellate court in the same case, which denied for lack of merit the Motion for Reconsideration of the Company.

 

The antecedent facts are as follows:

 

The Company, one of the leading and largest manufacturers of beverages in the country, initially hired respondent Angel U. del Villar (Del Villar) on May 1, 1990 as Physical Distribution Fleet Manager with a job grade of S-7 and monthly salary of P50,000.00,  aside   from the  use  of  a   company  car,   gasoline  allowance,  and annual foreign travel, among other benefits. In 1992, as part of the reorganization of the Company, Del Villar became the Transportation Services Manager, under the Business Logistic Directorate,  headed by Director Edgardo I.  San Juan (San Juan). As Transportation Services Manager, Del Villar prepares the budget for the vehicles of the Company nationwide.

 

While serving as Transportation Services Manager, Del Villar submitted a Report dated January 4, 1996 to the Company President, Natale J. Di Cosmo (Di Cosmo), detailing an alleged fraudulent scheme undertaken by certain Company officials   in   conspiracy  with   local   truck  manufacturers,   overpricing   the   trucks purchased by the Company by as much as P70,000.00 each. In the same Report, Del   Villar   implicated   San   Juan   and   Jose   L.   Pineda,   Jr.   (Pineda),   among  other Company officials, as part of the conspiracy. Pineda then served as the Executive 

Assistant   in   the   Business   Logistic   Directorate   in   charge   of   the   Refrigeration Services of the Company.

 

In  1996,   the  Company  embarked  on a   reorganization  of   the  Business  Logistic Directorate. As a result, the functions related to Refrigeration were assigned to the Transportation Services Manager, which was renamed the Transportation and Refrigeration   Services   Manager. Mr.   Nathaniel   L.   Evangelista,   the   Physical Distribution   Superintendent   of   the   Zamboanga   Plant,   was   appointed   the Corporate Transportation and Refrigeration Services Manager, replacing both Del Villar   and   Pineda,   who   were   in   charge   of   the   Transportation   Services   and Refrigeration Services of the Company, respectively. Pineda was then appointed as the Corporate Purchasing and Materials Control Manager, while Del Villar as Pinedas Staff Assistant. These new appointments took effect on May 1, 1996.[4]

 

On July 8, 1996, seven months after the submission of his Report on the fraudulent   scheme   of   several   company   officials,   Del   Villar   received   a Memorandum[5]from San Juan. Through said Memorandum, San Juan  informed Del Villar that (1) Del Villar was designated as Staff Assistant to the Corporate Purchasing and Materials Control Manager, with a job grade of NS-VII; (2) with Del Villars new assignment, he ceased to be entitled to the benefits accruing to an S-7 position under existing company rules and policies; and (3) Del Villar was to turn over the vehicle assigned to him as Transportation Services Manager to Pineda by July 10, 1996.

 

Although as the Staff Assistant of the Corporate Purchasing and Materials Control   Manager,   Del   Villar   continued   to   receive   the   same   salary   as Transportation Services Manager, but his car and other privileges were withdrawn and he spent his time at his new post sitting at a desk with no meaningful work whatsoever.[6] Del Villar believed that he was demoted by the Company to force him to resign. Unable to endure any further the harassment, Del Villar filed with the Arbitration Branch of the NLRC on November 11, 1996 a complaint against the Company for illegal demotion and forfeiture of company privileges. Del Villar also impleaded   in  his   complaint  Company  President  Di  Cosmo,  Vice-President   and General Manager Jaime G. Oracion (Oracion), Senior Vice-President and Human Resources Director Rosa Maria Chua (Chua), San Juan, and Pineda. The complaint 

was docketed as NLRC CN. NCR-00-12-07634-96, assigned to Labor Arbiter Felipe Pati.

 

The   Company   failed   to   appear,   despite   due   notice,   at   the   scheduled preliminary conference before the NLRC Arbitration Branch.

 

Del Villar filed his Position Paper, supported by his Complaint Affidavit.

 

The Company filed a Motion to Dismiss, instead of a position paper, praying for the dismissal  of Del Villars complaint on the ground that Del Villar had no cause of action. The Company reasoned that in appointing Del Villar as the Staff Assistant of the Corporate Purchasing and Materials Control Manager, from his former position as Transportation Services Manager,  the Company was merely exercising  its   inherent  management prerogative to transfer  an employee from one  position   to  another. The  Company  also   contended   that  Del  Villar  had  no vested right to the privileges he previously  enjoyed as Transportation Services Manager. In an Order dated July 24, 1997, the Labor Arbiter deferred action on the Motion to Dismiss until after submission by the Company of its Position Paper within 15 days from receipt of said order.

 

The Company filed on October 13, 1997 a Manifestation in which it stated that it was adopting its Motion to Dismiss as its Position Paper.

 

 

Thereafter, NLRC CN. NCR-00-12-07634-96 was submitted for resolution.

 

On March  3,  1998,   the  Labor  Arbiter   rendered  a  Decision   in  Del  Villars favor. The   Labor   Arbiter   held   that   the   allegations   in   Del   Villars   complaint sufficiently presented a cause of action against the Company. The Company, in filing a Motion to Dismiss, hypothetically admitted the truth of the facts alleged in the   complaint,   and   the   failure   of   the   Company   to   deny   or   rebut  Del   Villars allegations of bad faith on the part of the Company, gave rise to the presumption against the latter.

 

The Labor Arbiter proceeded to rule:  

The issue as to whether or not [the Company] acted illegally in demoting [Del Villar] is, therefore, answered in the affirmative.

 

This   office   is   inclined   to   believe   and   so   holds   that   the reorganization of [the Company] appears to have been done sans the necessary   requisite   of   good   faith,   after   [Del   Villar]   had   filed   his complaint to the company President detailing the scam involving the purchase of the truck fleet of 1996.

 

[Del   Villar]   was   not   outrightly   dismissed;   instead,   he   was removed from his former position as Transportation Services Manager, and   demoted   to   Staff   Assistant   to   the   Corporate   Purchasing   and Materials Control Manager. Furthermore, as Staff Assistant [Del Villar] allegedly   receives   his   usual   salary   but   his   car   privileges,   gasoline allowances,  and foreign travel  were withdrawn and he now sits at a desk with no meaningful work whatsoever.

 

[Del  Villar]  appears   to  have been singled out  or  discriminated upon due to his having reported the 1996 truck scam, and his present isolation can be seen as  a  punishment   for  acting  in  a  righteous  and forthright  manner. Otherwise,   as   a   Staff  Assistant   [Del  Villar]   should have been given some meaningful or responsible work appurtenant to the job designation.

 

x x x x

 

This Office finds and so holds that in all the foregoing rulings, the concept   of   management   prerogative   is   limited   or   otherwise qualified. Procedurally   and   substantively,   [the   Company]   through   its named officers appears to have acted illegally and in bad faith  in  its 

purported reorganization, in demoting [Del Villar] and in removing [Del Villars] company privileges.

 

Had [Del Villar] resigned under the circumstances, he could be said   to   have   been   constructively   discharged   because   a   constructive discharge   is  defined as  a  quitting because  continued  employment   is rendered impossible, unreasonable and unlikely, as an offer involving demotion   in   rank  and  a  diminution   in  pay.   (Philippine   Japan  Active Carbon Corporation and Tukuichi Satofuka vs. NLRC, G.R. 83239, Mar. 1989).[7]

 

 

For demoting Del Villar without justifiable cause, the Labor Arbiter ruled that the Company was liable for the following:

 

As a consequence of [the Companys] acts [Del Villar] suffered the effects  of  humiliation,  a  besmirched repurtation,  serious  anxiety  and sleepless nights which justify an award of moral damages.

 

In order to serve as an example to other companies who may be so   inclined   as   to   emulate   [the   Companys]   act   of   punishing   their employees  honesty  and  sense  of   fair  play,   [the  Company]  must  per force be assessed exemplary damages.

 

In order to protect and vindicate his rights under the Labor Code, [Del Villar] was constrained to retain counsel for which [the Company] should be assessed attorneys fees of not less than ten percent (10%) of the awarded sum.

 

In   the  matter  of   the  unlawful  withdrawal  of   [Del  Villars]   car, gasoline allowance and foreign travel by [the Company], it is obligated to rectify the withdrawal of privileges by returning to [Del Villar] the said Toyota car, and if that is not possible, its value as of the time said 

car was withdrawn including the value of the gasoline allowance and foreign travel due him.[8]

 

 

In the end, the Labor Arbiter decreed: 

WHEREFORE, premises considered judgment is hereby rendered against   [the  Company  and   the   impleaded  Company  officials]   and   in favor of [Del Villar] ordering [the Company] to (1) reinstate [Del Villar] to   his   former   job   level;   (2)   to   return   the   car   to   [Del   Villar]   or   to compensate [Del Villar] for the loss of his privileges such as the value of the   Toyota   car   as   of   the  time  of   taking   including   the   value  of   the gasoline allowance and the foreign travel due [Del Villar]; (3) indemnify [Del   Villar]   moral   damages   ofP1,000,000.00   Pesos   and   exemplary damages of P1,000,000.00 Pesos, aside from attorneys fees of 10% of sums herein awarded.[9]

 

 

The Company expectedly appealed to the NLRC.

 

While the case was still pending appeal before the NLRC, Del Villar received a letter dated April 28, 1998, signed by one Virgilio B. Jimeno for the Company, which read:

 

Dear Mr. Del Villar:

 

Presently,   the Company  is   implementing various programs to ensure the   accomplishment   of   its   corporate   goals   and   objectives,   and   to increase the productivity of its workforce.

 

Since   the   various   programs  will   affect   some   of   its   employees,   the Company has initiated a special program called Project New Start. This 

program   is   intended   to   assist   employees   whose   positions   will   be declared   redundant   with   the   implementation   of   new   distribution systems, utilization of  improved operational processes and functional re-organizations.

 

Your position has been determined as no longer necessary due to the reorganization of the Business Logistics Directorate. The Transportation and   Refrigeration   Services   Department   of   the   Technical   Operations Directorate has absorbed your function and our efforts to transfer you to   a   similar   position   within   the   organization   have   not   been successful. Thus,   you   are   considered   separated   from   [the   Company] effective May 31, 1998.

 

Thank you for your kind understanding. We wish you success and Gods blessings in all your future undertakings.[10]

 

 

In a Decision dated February 26, 1999, the NLRC reversed the Labor Arbiter, reasoning that: 

Contrary   to   the   Labor   Arbiters   pronouncement   that   [the Company] should have rebutted allegations of bad faith and malice, we are   more   inclined   to   apply   the   presumption   of   good   faith. Mere conclusions   of   fact   and   law   should   not   be   used   as   bases   for   an automatic   finding   of   bad   faith. As   it   is,   we   do   not   even   see   any disclosure of the scam and his alleged demotion. If indeed the so-called great grandmother of Coca cola scams of 1996 were true, the logical consequence of such disclosure is for the president of the company to dismiss the erring employees and officers for their highly irregular acts and not to penalize [Del Villar] for making such disclosure. This is amply supported by the fact that the [the Company] conducted a thorough investigation of the reported scam and even obtained the services of an independent   auditor   to   determine  whether   the   alleged   anomalous transactions were actually irregular and/or questionable. This manifests that [Del Villars] disclosure was taken seriously contrary to his claims of discrimination. Accordingly,   it   cannot   be   said   that   the   act   of   the [Company] was retaliatory or penal in nature nor tainted with bad faith 

and/or malice. Otherwise, [the Company] would not have given grave attention to the disclosure of [Del Villar].

 

On the issue of whether there was a demotion, we are of the view that it was improper to conclude that [Del Villars] movement from the position of Transportation Services Manager to Staff Assistant to the Corporate Purchasing and Materials  Control  Manager necessarily indicated a demotion. The records show that there was no diminution of   salary. While   it   appears   that   his   transportation   benefits   were withheld, it does not follow that his position as Staff Assistant is inferior to that of a Transportation Services Manager. We take notice of the fact that certain positions in a company involve traveling from one place to another, hence the necessity to provide for a car, and related benefits like   allowances   for   gasoline   and   maintenance. A   company   cannot, however, be reasonably expected to provide the same benefits to an employee whose position for  example,   requires   that  he stays   in   the office  during  working  hours. Benefits,   privileges   and  perquisites   that attach   to   a   certain   position   do   not   provide   sufficient   bases   for determining the superiority or inferiority of the position so held.[11]

 

 

Hence, the NLRC concluded:

 

In fine We find that [Del Villar] was not demoted and that the [Company] has not acted in bad faith or with malice.

 

WHEREFORE, in view of the foregoing, the Decision dated March 3, 1998 rendered by Labor Arbiter Felipe R. Pati is hereby REVERSED and SET ASIDE and a new one rendered DISMISSING the complaint for lack of merit.[12]

 

 

Del Villar moved for the reconsideration of the foregoing NLRC Decision, but the NLRC denied such motion for lack of merit in a Resolution dated April 26, 1999.[13]

 

Unsatisfied, Del Villar brought his case before the Court of Appeals via a Petition for Certiorari under Rule 65 of the Rules of Court, docketed as CA-G.R. SP No. 53815.

 

On   October   30,   2003,   the   Court   of   Appeals   promulgated   its   Decision favoring Del Villar. According to the Court of Appeals, the NLRC committed grave abuse of discretion by turning a blind eye on several indicia that clearly showed Del  Villar  was demoted without  any  lawful  reason:   (1)   the very nomenclature used   by   the   Company   designating   Del   Villars   new   job:   from   Transportation Services Manager, Del Villar was suddenly designated as staff assistant to another manager; (2) the diminution in the benefits being enjoyed by Del Villar prior to his transfer,  such as  the use of   the company car,  gasoline allowance,  and annual foreign travel; and (3) Del Villars new post in the Company did not require him to perform  any  meaningful  work,   a   far   cry   from his   previous   responsibilities   as Transportation Services Manager which include the preparation of the budget of the Company for all of its vehicles nationwide.

 

The Court of Appeals also made a finding of bad faith against the Company:

 

It is true that Labor Arbiters cannot dictate business owners on how   to   run   their   enterprises. Concededly,   employers   and   their managers have all  the leeway to make the necessary adjustments  in their   organizations. But   the   prerogative   is   not   absolute. It   must   be accompanied by good faith. x x x.

 

x x x x

 

We have reasonable ground to believe that the reorganization theory poised by [the Company] was a mere afterthought. If indeed [Del Villar]   was   a   casualty   of   a   valid   reorganization,   officials   of   [the 

Company] could have easily told him in the several memos they issued to   [Del   Villar]. Edgardo   San   Juan,   in   a  memo  dated  April   29,   1996, merely   informed   [Del   Villar]   the   name   of   his   replacement   as Transportation  Services  Manager   (Rollo,   p.   53). In  his   second  memo dated  May   8,   1996,   San   Juan   informed   [Del   Villar]   that   he  would be under   the   direct   supervision   of  Mr.   Jose   L.   Pineda,   Jr.   until   an  assignment, if any, would have been determined for [Del Villar].

 

Two (2) subsequent memos were received by [Del Villar] but still no hint on the reason behind his relief. Rosa Marie Chua, in a memo dated June 11, 1996, simply ordered [Del Villar] to return the company car (Rollo, p. 56). Again, Chua sent a memo dated June 17, 1996, telling [Del   Villar]   that   the   car  was   part   of perquisites of   a   Transportation Services Manager and must be returned as he was already relieved of his position (Rollo, 56).

 

In   all   four   (4)  memos,   officials   of   [the  Company]   never   once attributed to company reorganization as the reason behind [Del Villars] relief   as   Transportation   Services   Manager. Instead,   [the   Company] waited for [Del Villar] to file a complaint before it declared publicly its reason for relieving him from his post.

 

It is unfortunate enough for [the Company] to give San Juan, the very  person  charged  by   [Del  Villar]  of   committing   fraud  against   the company, the free hand to deal with his accuser. And whatever remains of   [the  Companys]   tattered   claim   to   good   faith   towards   [Del  Villar] evaporated   by   its   absence   of   forthrightness   to   the   latter. [The Companys] lack of candor clearly lends support to a conclusion that [Del Villars] relief was occasioned by a reason alien to an alleged company reorganization. The evidence presented by [Del Villar] tend to show that he was demoted, not because of company reorganization, but because of  his  authorship  of   the report  about the fraud being committed by certain officials of [the Company].[14]

 

 

Just like the Labor Arbiter, the Court of Appeals held the Company liable for the following but in reduced amounts:

 

Albeit We are inclined to reinstate the decision dated March 3, 1998 of the Labor Arbiter, We feel, however, that the amount of moral and exemplary damages thereunder awarded to [Del Villar] to the tune of P1  million   each  was   excessive. To  Our  mind,   the   liability   of   [the Company] is mitigated when it continued providing [Del Villar] despite his   demotion   with   the   salary   he   was   receiving   as Transportation Services Manager. The moral and exemplary damages should thus be reduced to the reasonable amount ofP500,000.00, for each item.[15]

 

 

The   dispositive   portion   of   the   assailed  Decision   of   the   appellate   court stated:

 

WHER[E]FORE,   the   instant   petition   is hereby GRANTED. Accordingly,   the   assailed Decision   dated   February 26,   1999 and Resolution   dated   April   26,   1999 of   the  National   Labor Relations Commission are hereby SET ASIDE. Subject to the modification reducing   to P500,000.00   the   amount   of   moral   damages   and to P500,000.00 the amount of exemplary damages, the decision dated March 3, 1998 of the Labor Arbiter is hereby REINSTATED.[16]

 

 

Del Villar filed on November 20, 2003 a Motion for Partial Reconsideration of the above-mentioned decision of the appellate court, praying for the award of backwages to be reckoned from May 31, 1998, the day he had been dropped from the payroll. The Company also moved for the reconsideration of the same judgment,   asserting,   among   other   arguments,   that   Del   Villars   Petition for Certiorari in CA-G.R. SP No. 53815, was filed out of time and should have been dismissed.

 

In its Resolution dated March 29, 2004, the Court of Appeals denied the Motions for Reconsideration of both parties for lack of merit.[17]

 

In   this   Petition   for   Review,   the   Company   raises   three   grounds   for consideration of this Court:

A.     THE HONORABLE COURT OF APPEALS GAVE DUE COURSE TO THE PETITION DESPITE THE FACT THAT IT WAS CLEARLY FILED BEYOND THE REGLEMENTARY PERIOD PRESCRIBED BY LAW.

 

B.     THE HONORABLE COURT OF APPEALS GAVE DUE COURSE TO THE [Court  of  Appeals]  PETITION DESPITE  THE FACT  THAT  [Del  Villar] FAILED   TO   ESTABLISH   THAT   THE   NATIONAL   LABOR   RELATIONS COMMISSION   COMMITTED   GRAVE   ABUSE   OF   DISCRETION   IN RENDERING THE 26 FEBRUARY 1999 DECISION AND 26 APRIL 1999 RESOLUTION.

 

C.     THE HONORABLE COURT OF APPEALS EFFECTIVELY DIRECTED [Del Villars]   REINSTATEMENT  TO  HIS   FORMER   JOB   LEVEL  DESPITE   ITS IMPOSSIBILITY SINCE HE HAD ALREADY BEEN VALIDLY SEPARATED FROM SERVICE.[18]

 

 

The Company avers that the Court of Appeals erred in giving due course to Del Villars Petition for Certiorari  in CA-G.R. SP No. 53815 as the said remedy was filed out of time. Rule 65, Section 4 of the Rules of Court, as amended by Supreme Court Circular No. 39-98 on September 1, 1998, provided:

 

Sec. 4. Where and when petition to be filed. The petition may be filed not later than sixty (60) days from notice of the judgment, order or resolution sought to be assailed in the Supreme Court or, if it relates to the acts or omissions of a lower court or of a corporation, board, officer or person, in the Regional Trial Court exercising jurisdiction over the territorial area as defined by the Supreme Court. It may also be filed in the Court of Appeals whether or not the same is in aid of its appellate 

jurisdiction, or in the Sandiganbayan  if it is in aid of its jurisdiction. If it involves   the  acts  or  omissions  of  a  quasi-judicial  agency,  and unless otherwise provided by law or these Rules, the petition shall be filed in and cognizable only by the Court of Appeals.

 

If   the   petitioner   had   filed   a motion   for   new   trial   or reconsideration in  due  time  after  notice  of   said   judgment,   order  or resolution, the period herein fixed shall be interrupted. If the motion is denied, the aggrieved party may file the petition within the remaining period, but which shall  not be less than five (5) days in any event, reckoned from notice of such denial. No extension of time to file the petition shall be granted except for the most compelling reason and in no case to exceed fifteen (15) days.(Emphases ours.)

 

 

The   Company   points   out   that   Del   Villar   received   a   copy   of   the   NLRC Decision   dated   February   26,   1999   on March   17,   1999. Twelve   days   later, on March   29,   1999,   Del   Villar   filed   a   Motion   for   Reconsideration,   thus, interrupting the 60-day reglementary period for filing a petition for certiorari. The NLRC denied Del Villars Motion for Reconsideration in a Resolution dated April 26, 1999, a copy of which Del Villar received on May 21, 1999. From May 21, 1999, Del Villar only had 48 days more, or until July 8, 1999, within which to file his petition for certiorari; but he only did so 60 days later, on July 20, 1999. Clearly, Del Villars Petition for Certiorari in CA-G.R. SP No. 53815 was filed 12 days late and way beyond the reglementary period as provided under the Rules of Court.

 

We do not agree.While  CA-G.R.  SP  No.  53815  was  pending  before   the  Court  of  Appeals, 

Section 4 of Rule 65 of the Rules of Court was amended anew by Supreme Court Circular No. 56-2000, which took effect on September 1, 2000, to read:

 

Sec.   4.   When  and  where   petition  filed.   The   petition   shall   be filed not later than sixty (60) days from notice of the judgment, order or   resolution.   In   case   a motion   for   reconsideration   or   new   trial is 

timely filed, whether such motion is required or not, the sixty (60) day period shall be counted from notice of the denial of the said motion.

 

The petition shall be filed in the Supreme Court or, if it relates to the acts or omissions of a lower court or of a corporation, board, officer or person,  in the Regional  Trial  Court exercising jurisdiction over the territorial area as defined by the Supreme Court. It may also be filed in the  Court   of  Appeals  whether  or   not   the   same   is   in   the   aid  of   its appellate   jurisdiction,   or   in   the   Sandiganbayan   if   it   is   in   aid   of   its appellate   jurisdiction.   If   it   involves   the acts  or  omissions  of  a  quasi-judicial  agency,  unless otherwise provided by  law or these rules,  the petition shall be filed in and cognizable only by the Court of Appeals.

 

No extension of time to file the petition shall be granted except for   compelling   reason   and   in   no   case   exceeding   fifteen   (15)   days. (Emphases ours.)

 

 

It is clear that under Supreme Court Circular No. 56-2000, in case a motion for reconsideration of the judgment, order, or resolution sought to be assailed has been filed, the 60-day period to file a petition for certiorari shall be computed from notice of the denial of such motion.

 

The crucial question now is whether Supreme Court Circular No. 56-2000 should be applied retroactively to Del Villars Petition in CA-G.R. SP No. 53815.

 

We answer affirmatively. As we explained in Perez v. Hermano[19]:

Under this amendment,  the 60-day period within which to file the petition starts to run from receipt of notice of the denial  of the motion for reconsideration, if one is filed.

 

In Narzoles  v. National  Labor  Relations Commission [G.R.  No.  141959, 29   September   2000,   341   SCRA   533-538],   we described   this   latest amendment as curative in nature as it remedied the confusion brought 

about by Circular No. 39-98 because, historically, i.e., even before the 1997 revision to the Rules of Civil Procedure, a party had a fresh period from receipt of the order denying the motion for reconsideration to file a petition for certiorari.   Curative statutes,  which are enacted to cure defects   in  a  prior   law or   to  validate   legal  proceedings  which  would otherwise   be   void   for   want   of   conformity   with   certain   legal requirements,   by   their   very   essence,   are   retroactive   and,   being   a procedural   rule,  we held  in Sps.  Ma.  Carmen and Victor   Javellana v.  Hon. Presiding Judge Benito Legarda (G.R.  No. 139067, 23 November 2004] that procedural  laws are construed to be applicable to actions pending   and   undetermined   at   the   time   of   their   passage,   and   are deemed retroactive in that sense and to that extent.[20]

 

 

In the instant case, Del Villar filed a Motion for Reconsideration of the NLRC Decision   dated   February   26,   1999. Del   Villar   received   a   copy   of   the   NLRC Resolution dated April 26, 1999, denying his Motion for Reconsideration, on May 21, 1999. As already settled by jurisprudence, Del Villar had a fresh period of 60 days from May 21, 1999 within which to file his Petition for Certiorari before the Court of Appeals. Keeping in mind the rule that in computing a period, the first day shall be excluded and the last day included,[21] exactly 60 days had elapsed from May 21, 1999 when Del Villar filed his Petition with the appellate court on July 20, 1999. Hence, without a doubt, Del Villars Petition for Certiorari in CA-G.R. SP No. 53815 was seasonably filed.

 

We now turn our attention to the merits of the case.

 

The Company asserts that the Court of Appeals should not have issued a writ of certiorari in Del Villars favor as there was no grave abuse of discretion on the part  of  the NLRC  in finding that Del  Villar  was not demoted and that the Company had not acted in bad faith or with malice.

 

The issue of whether the Company, in transferring Del Villar from the position of Transportation Services Manager to Staff Assistant to the Corporate Purchasing and Materials Control Manager, validly exercised its management prerogative or 

committed   constructive  dismissal,   is   a   factual  matter. It   is   a   settled   rule   that factual findings of labor officials, who are deemed to have acquired expertise in matters  within   their   respective   jurisdictions,   are   generally   accorded   not   only respect but even finality. Moreover,   in a petition for review on certiorari under Rule 45 of the Rules of Court, the Supreme Court reviews only errors of law and not   errors   of   facts.However,   where   there   is   divergence   in   the   findings   and conclusions of the NLRC, on the one hand, from those of the Labor Arbiter and the  Court  of  Appeals,  on   the  other,   the  Court   is   constrained   to  examine   the evidence,[22] to determine which findings and conclusion are more conformable with   the   evidentiary   facts. Hence,   in   the   instant   Petition,   we   embark   on addressing not only the legal, but the factual issues as well.

 

Jurisprudence   recognizes   the   exercise   of  management   prerogative.    For   this reason,   courts   often   decline   to   interfere   in   legitimate   business   decisions   of employers.  In   fact,   labor   laws  discourage   interference   in  employers   judgment concerning the conduct of their business.[23]

  

In the pursuit of its legitimate business interest, management has the prerogative to transfer or assign employees from one office or area of operation to another provided there is no demotion in rank or diminution of salary, benefits, and other privileges; and the action is not motivated by discrimination, made in bad faith, or effected as a form of punishment or demotion without sufficient cause. The right of  employees   to  security  of   tenure  does  not  give   them vested rights   to   their positions to the extent  of  depriving management  of   its  prerogative to change their assignments or to transfer them.[24]

 

Managerial  prerogatives,  however,  are  subject   to   limitations  provided  by   law, collective bargaining agreements, and general principles of fair play and justice.[25] In the case of Blue Dairy Corporation v. National Labor Relations Commission,[26] we described in more detail  the limitations on the right of management to transfer employees:

 

But,   like   other   rights,   there   are   limits   thereto.   The   managerial prerogative   to   transfer   personnel  must   be   exercised  without   grave abuse of discretion, bearing in mind the basic elements of justice and 

fair play.  Having the right should not be confused with the manner in which that right is exercised.  Thus, it cannot be used as a subterfuge by the employer to rid himself of an undesirable worker.  In particular, the employer must be able to show that the transfer is not unreasonable, inconvenient   or   prejudicial   to   the   employee;   nor   does   it   involve   a demotion in rank or a diminution of his salaries, privileges and other benefits.   Should the employer fail to overcome this burden of proof, the employees transfer shall be tantamount to constructive dismissal, which has been defined as a quitting because continued employment is rendered impossible, unreasonable or unlikely; as an offer involving a demotion   in   rank   and   diminution   in   pay.   Likewise,   constructive dismissal   exists  when   an   act   of   clear   discrimination,   insensibility   or disdain by an employer  has become so unbearable to the employee leaving   him   with   no   option   but   to   forego   with   his   continued employment.[27]

 

 

In   the  case  at  bar,   there   is  no  dispute   that  Del  Villar  was   transferred  by   the Company from the position of Transportation Services Manager to the position of Staff Assistant to the Corporate Purchasing and Materials Control Manager. The burden thus falls upon the Company to prove that Del Villars transfer was not tantamount to constructive dismissal. After a careful scrutiny of the records, we agree with the Labor Arbiter and the Court of Appeals that the Company failed to discharge this burden of proof.

 

The  Company  and   its  officials   attempt   to   justify   the   transfer  of  Del  Villar  by alleging his unsatisfactory performance as Transportation Services Manager. In its Petition, the Company disclosed that:

 

4.1. As Transportation Services Manager, [Del Villar] displayed an utterly woeful performance. He was unable to submit basic data as to type and brand of  vehicles  with highest/lowest  maintenance cost  as requested. [Del   Villar]   could   not   even   update   the   records   of   his office. He   never   complied   with   his   commitments   on   submission   of reports  and his  claims of  the availability  of  such reports  were never substantiated.

 

4.2. [Del   Villar]   could   not   work   with   minimum   or   no supervision. His   activities   needed   to   be   closely   and   constantly monitored by his superiors. [Del Villar] lacked initiative and had to be constantly   reminded  of  what   to  do. The  work  he  performed  and/or submitted, more often than not, had to be redone. In his Performance and Potential Evaluation Sheet for 1995, [Del Villar] merited a mediocre grade of 2 in a scale of one (1) to five (5), the latter number being the highest grade. Copies of the Affidavit of Edgardo I. San Juan [San Juan], the   Companys   then   Business   Logistic   Director,   and   respondents Performance and Potential Evaluation Sheet for 1995 are attached as Annexes B and C, respectively.[28]

 

 

San Juan averred in his Affidavit that Del Villar was inept and incompetent as Transportation Services Manager; and was even more unqualified to take over the new position of Transportation and Refrigeration Services Manager,  which involved additional functions related to Refrigeration. It was for this reason that Del  Villar  was   transferred   to   the  position  of   Staff  Assistant   to   the  Corporate Purchasing and Materials Control Manager.

 

In his Counter-Affidavit submitted before the NLRC, Pineda, the Corporate Purchasing and Materials Control Manager, claimed that:

 

3. As his evaluation would show, Mr. del Villar was not a well-motivated employee. He could not perform his job well and promptly with minimum or no supervision and follow-up from his superiors. He repeatedly   failed   to   observe   the   deadlines   which   I   set   for   the submission of  his   reports  and often procrastinates. His  work product likewise   suffered   from   accuracy   and   thoroughness. Despite   several admonitions   and   guidance   from  me   as   his   immediate   superior,   he simply refused to change his work attitude.[29]

 

 

We are unconvinced. The dismal performance evaluations of Del Villar were prepared  by   San   Juan   and  Pineda   after  Del  Villar   already   implicated  his   two superiors in his Report dated January 4, 1996 in an alleged fraudulent scheme against   the   Company. More   importantly,   we   give   weight   to   the   following instances establishing that Del Villar was not merely transferred from the position of   Transportation   Services  Manager   to   the   position   of   Staff  Assistant   to   the Corporate Purchasing and Materials Control Manager; he was evidently demoted.

A transfer is   a   movement   from   one   position   to   another   which   is   of equivalent rank, level or salary, without break in service. Promotion, on the other hand, is the advancement from one position to another with an increase in duties and responsibilities as authorized by law, and usually accompanied by an increase in   salary.Conversely, demotion involves   a   situation   where   an   employee   is relegated to a subordinate or less important position constituting a reduction to a lower grade or rank, with a corresponding decrease in duties and responsibilities, and usually accompanied by a decrease in salary.[30]

 

First,   as   the  Court  of  Appeals  observed,  Del  Villars  demotion   is   readily apparent  in his new designation. Formerly,  he was the Transportation Services Manager; then he was made a Staff Assistant a subordinate to another manager, particularly, the Corporate Purchasing and Materials Control Manager.

 

Second, the two posts are not of the same weight in terms of duties and responsibilities. Del Villars position as Transportation Services Manager involved a high degree of responsibility, he being in charge of preparing the budget for all of the   vehicles   of   the  Company  nationwide. As   Staff  Assistant   of   the   Corporate Purchasing and Materials Control Manager, Del Villar contended that he was not assigned  any  meaningful  work  at  all. The  Company  utterly   failed   to   rebut  Del Villars contention. It did not even present, at the very least, the job description of such a Staff Assistant. The change in the nature of work resulted in a degrading work condition and reduction of duties and responsibility constitute a demotion in rank. In Globe Telecom, Inc. v. Florendo-Flores,[31] we found that there was a demotion in rank even when the respondent therein continued to enjoy the rank of a supervisor, but her function was reduced to a mere house-to-house or direct sales agent.

 

Third, while Del Villars transfer did not result in the reduction of his salary, there was a diminution in his benefits. The Company admits that as Staff Assistant of the Corporate Purchasing and Materials Control Manager, Del Villar could no longer enjoy the use of a company car, gasoline allowance, and annual foreign travel, which Del Villar previously enjoyed as Transportation Services Manager.

 

Fourth,   it   was   not   bad   enough   that   Del   Villar   was   demoted,   but   he   was even placed by the Company under the control and supervision of Pineda as the latters Staff Assistant. To recall, Pineda was one of the Company officials who Del Villar accused of defrauding the Company in his Report dated January 4, 1996. It is not  too difficult   to  imagine that   the working relations between Del  Villar,   the accuser,  and Pineda, the accused, had been strained and hostile. The situation would be more oppressive for Del Villar because of his subordinate position vis--vis Pineda.

 

Fifth,  all  the foregoing caused Del Villar  inconvenience and prejudice,  so unbearable for him that he was constrained to seek remedy from the NLRC. The Labor   Arbiter   was   correct   in   his   observation   that   had   Del   Villar   resigned immediately   after   his   transfer,   he   could  be   said   to  have  been   constructively dismissed. There   is   constructive   dismissal  when   there   is   a   demotion   in   rank and/or diminution in pay; or when a clear discrimination, insensibility or disdain by an employer becomes unbearable to the employee.[32]

 

Eventually, however, the Company actually terminated Del Villars services effective May 31, 1998, as his position was no longer necessary or was considered redundant due to the reorganization of the Business Logistic Directorate.

 

Redundancy is one of the authorized causes for the dismissal of an employee. It is governed by Article 283 of the Labor Code, which reads:

 

ART. 283. Closure of establishment and reduction of personnel. The employer may also terminate the employment of  any employee due   to   the   installation   of   labor-saving   devices,   redundancy, retrenchment to prevent losses or the closing or cessation of operation 

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

 

 

Redundancy, for purposes of the Labor Code, exists where the services of an   employee   are   in   excess   of   what   is   reasonably   demanded   by   the   actual requirements of the enterprise. Succinctly put, a position is redundant where it is superfluous, and superfluity of a position or positions may be the outcome of a number of factors, such as overhiring of workers, decreased volume of business, or   dropping   of   a   particular   product   line   or   service   activity   previously manufactured or undertaken by the enterprise.[33]

 

The determination that the employee's services are no longer necessary or sustainable and, therefore, properly terminable for being redundant is an exercise of business judgment of the employer. The wisdom or soundness of this judgment is not subject to discretionary review of the Labor Arbiter and the NLRC, provided there is no violation of law and no showing that it was prompted by an arbitrary or malicious act. In other words, it is not enough for a company to merely declare that   it   has   become   overmanned. It   must   produce   adequate   proof   of   such redundancy to justify the dismissal of the affected employees.[34]

 

We mentioned in Panlilio v. National Labor Relations Commission[35] that an employer may proffer new staffing pattern,  feasibility  studies/proposal,  on the viability of the newly created positions, job description and the approval by the 

management   of   the   restructuring   as   evidence   of   redundancy. We   further explained inAMA Computer College Inc. v. Garcia[36] what constitutes substantial evidence of redundancy:

 

ACC attempted to establish its streamlining program by presenting its new   table  of  organization.  ACC  also   submitted  a   certification  by   its Human Resources Supervisor, Ma. Jazmin Reginaldo, that the functions and duties of many rank and file employees, including the positions of Garcia and Balla as Library Aide and Guidance Assistant, respectively, are   now   being   performed   by   the   supervisory   employees.   These, however, do not satisfy the requirement of substantial evidence that a reasonable mind might accept as adequate to support a conclusion. As they  are,   they  are   grossly   inadequate  and  mainly   self-serving. More compelling evidence would have been a comparison of the old and new   staffing   patterns,   a   description   of   the   abolished   and   newly created positions, and proof of the set business targets and failure to attain the same which necessitated the reorganization or streamlining.[37] (Emphases ours.)

 

 

In this case, other than its own bare and self-serving allegation that Del Villars position as Staff Assistant of Corporate Purchasing and Materials Control Manager had already become redundant, no other evidence was presented by the Company. Neither did the Company present proof that it had complied with the procedural requirement in Article 283 of prior notice to the Department of Labor and Employment (DOLE) of the termination of Del Villars employment due to redundancy one month prior to May 31, 1998. The notice to the DOLE would have   afforded   the   labor   department   the   opportunity   to   look   into   and   verify whether there is truth as to the claim of the Company that Del Villars position had become   redundant   with   the   implementation   of   new   distribution   systems, utilization of   improved operational  processes,  and functional   reorganization of the Company.  Compliance with the required notices would have also established that the Company abolished Del Villars position in good faith.[38]

 

Del   Villars   poor   employee   performance   is   irrelevant   as   regards   the   issue   on redundancy. Redundancy arises because there is no more need for the employees 

position   in   relation   to   the  whole  business  organization,   and  not  because   the employee unsatisfactorily performed the duties and responsibilities required by his position.[39]

 

There being no authorized cause for the termination of Del Villars employment, then he was illegally dismissed.

An   employee  who   is   illegally   dismissed   is   entitled   to   the   twin   reliefs   of   full backwages and reinstatement. If   reinstatement   is  not  viable,  separation pay  is awarded to the employee. In awarding separation pay to an illegally dismissed employee, in lieu of reinstatement, the amount to be awarded shall be equivalent to one month salary for every year of service.[40] Under Republic Act No. 6715, employees who are illegally dismissed are entitled to full backwages, inclusive of allowances and other benefits or their monetary equivalent, computed from the time their actual compensation was withheld from them up to the time of their actual reinstatement but if reinstatement is no longer possible, the backwages shall be computed from the time of their illegal termination up to the finality of the decision. We note that Del Villars reinstatement is no longer possible because the position he previously occupied no longer exists, per San Juans Affidavit dated October   15,   1998.[41] Also,   Del   Villar   had   already   received   his   separation   pay sometime in October 1998.[42]

 

Because of his unjustified dismissal, we likewise award in Del Villars favor moral and exemplary damages. Award of moral and exemplary damages for an illegally dismissed   employee   is   proper  where   the   employee   had   been   harrassed   and arbitrarily   terminated   by   the   employer.  Moral   damages  may   be   awarded   to compensate   one   for   diverse   injuries   such   as   mental   anguish,   besmirched reputation,   wounded   feelings,   and   social   humiliation   occasioned   by   the employers   unreasonable   dismissal   of   the   employee. We   have   consistently accorded   the  working   class   a   right   to   recover   damages   for   unjust   dismissals tainted  with   bad   faith;  where   the  motive  of   the   employer   in   dismissing   the employee is far from noble. The award of such damages is based not on the Labor Code but on Article 220 of the Civil  Code.[43] These damages, however, are not intended to enrich the illegally dismissed employee, such that, after deliberations, we   find   the   amount   of P100,000.00   for   moral   damages   and P50,000.00   for exemplary damages sufficient to assuage the sufferings experienced by Del Villar and by way of example or correction for the public good.

WHEREFORE, premises considered, the instant petition is DENIED for lack of merit.  The Decision dated October 30, 2003 and Resolution dated March 29, 2004 of the Court of Appeals in CA-G.R. SP No. 53815 are hereby AFFIRMED with the following MODIFICATIONS: 1) the amount of backwages shall be computed from the date of Del Villars illegal dismissal until the finality of this judgment; and 2)   the   amount   of  moral   and  exemplary   damages   are   reduced   toP100,000.00 and P50,000.00, respectively. For this purpose, the case is hereby REMANDED to the Labor Arbiter for the computation of the amounts due Angel U. del Villar.

 

 

SO ORDERED

AGG Trucking vs. Yuag DigestG.R. No. 195033 : October 12, 2011

AGG TRUCKING AND/OR ALEX ANG GAEID, Petitioners, v. MELANIO B. YUAG, Respondent.

SERENO, J.:

FACTS:

Petitioner Alex Ang Gaeid had employed respondent Melanio Yuag as a driver since 28 February 2002.His clients were Busco Sugar Milling Co., Inc., operating in Quezon, Bukidnon; and Coca-cola Bottlers Company in Davao City and Cagayan de Oro City.

Petitioner noticed that respondent had started incurring substantial shortages. It was also reported that he had illegally sold bags of sugar along the way at a lower price, and that he was banned from entering the premises of the Busco Sugar Mill.Petitioner asked for an explanation from respondent who remained quiet.

Alarmed at the delivery shortages, petitioner took it upon himself to monitor all his drivers, including respondent, by instructing them to report to him their location from time to time through their mobile phones.He also required them to make their delivery trips in convoy, in order to avoid illegal sale of cargo along the way.

Respondent, along with 20 other drivers, was tasked to deliver bags of sugar from Cagayan de Oro City to Coca-Cola Bottlers Plant in Davao City on 4 December 2004.All drivers, with the exception of Yuag who could not be reached through his cellphone, reported their location as instructed.The Coca-Cola Plant in Davao later reported that the delivery had a suspiciously enormous shortage.

When confronted about the shortage and his failure to report his loacation, respondent did not respond to petitioner. Thereafter he was instructed to "just take a rest" which respondent construed as a constructive dismissal. After respondent demanded that his separation be made in writing, petitioner insisted that respondent return the next day and take a rest. Respondent however, went to file a complaint with the BLR for illegal dismissal and asked for his separation pay and 13th month pay; alleging that he was dismissed based on his non-returned call.

The Labor Arbiter however, sustained the dismissal for lack of substantial proof to sustain the allegation of illegal dismissal and that parties were under an employer-employee relationship. Upon appeal with the NLRC, the LA decision was reversed because respondent was deemed to be under preventive suspension without pay. A motion for reconsideration was made but was denied for being filed out of the reglamentary period.

On appeal through certiorari to the Court of Appeals, the court ruled on the existence of an employer-employee relationship and reversed the NLRC decision by reinstating the Labor Arbiters decision instead with modification to the award for damages.

ISSUE:

Whether or not the Court of Appeals committed error in reversing the NLRC decision.

HELD:

Petitioner is correct in its argument that there must first be a finding on whether the NLRC committed grave abuse of discretion and on what these acts were.In this case, the CA seemed to have forgotten that its function in resolving a petition for certiorari was to determine whether there was grave abuse of discretion amounting to lack or excess of jurisdiction on the part of public respondent NLRC.The CA proceeded to review the records and to rule on issues that were no longer disputed during the appeal to the NLRC, such as the existence of an employer-employee relationship.The pivotal issue before the NLRC was whether petitioners telling respondent to take a rest, or to have a break, was already a positive act of dismissing him.

Furthermore, the NLRC Resolution that reversed the LA Decision had nothing in it that was whimsical, unreasonable or patentlyviolative of the law.It was the CA which erred in finding faults that were inexistent in the NLRC Resolution.

In addition to this, the CA erroneously modified the NLRC decision when it can no longer be modified for being filed out of time. It is not a mere technicality that the CA may brush aside. The NLRC Resolution sought to be set aside had become final and executory 25 days before respondent filed his Motion for Reconsideration.Thus, subsequent proceedings and modifications are not allowed and are deemed null and void.

Republic of the PhilippinesSupreme Court

Manila 

                        THIRD DIVISION                         

ST. PAUL COLLEGE G.R. No. 169905

QUEZON CITY, SR. LILIA THERESE TOLENTINO, SPC, SR. BERNADETTE RACADIO, SPC, and SR. SARAH MANAPOL,Petitioners,   

- versus-   REMIGIO MICHAEL A. ANCHETA II and CYNTHIA A. ANCHETA,Respondent.

   

Present: 

VELASCO, JR., J., Chairperson,PERALTA,ABAD,VILLARAMA, JR.,* andMENDOZA, JJ.

    

Promulgated: September 7, 2011

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

                                                 DECISION

  PERALTA, J.:  This resolves the Petition for Review[1] dated November 18, 2005 of petitioners St. Paul College, Quezon City, et al. which seeks to reverse and set aside the Decision[2] dated July 8, 2005 of the Court of Appeals (CA) and its Resolution[3] dated September 29, 2005, reversing the Decision[4] dated February 28, 2003 of the National Labor Relations Commission (NLRC) and the Decision[5] dated November 20, 2000 of the Labor Arbiter. As culled from the records, the antecedent facts are the following: Petitioner St. Paul College, Quezon City (SPCQC) is a private Catholic educational institution. It is represented by its President, petitioner Sr. Lilia Therese Tolentino, SPC, the College Dean, Sr. Bernadette Racadio, SPC, and the Mass Communication Program Director, Sr. Sarah Manapol, SPC. The respondents, Spouses Remigio Michael A. Ancheta II and Cynthia A. Ancheta are former teachers of the same school. 

Respondent Remigio Michael was hired by the SPCQC as a teacher in the General Education Department with a probationary rank in the School Year (SY) 1996-1997 which was renewed in the following SY 1997-1998. His wife, respondent Cynthia was hired by the same school as a part time teacher of the Mass Communication Department in the second semester of SY 1996-1997 and her appointment was renewed for SY 1997-1998. On February 13, 1998, respondent Remigio Michael wrote a letter[6] to petitioner Sr. Lilia, signifying his intention to renew his contract with SPCQC for SY 1998-1999. A letter[7] of the same tenor was also written by respondent Cynthia addressed to petitioner Sr. Lilia. Petitioner Sr. Bernadette, on March 9, 1998, sent two letters[8] with the same contents to the respondent spouses informing them that upon the recommendation of the College Council, the school is extending to them new contracts for SY 1998-1999.A letter[9] dated April 22, 1998 was sent to petitioner Sr. Bernadette and signed by some of the teachers of SPCQC, including the respondent spouses. The said letter contained the teachers' sentiments regarding two school policies, namely: first, the policy of penalizing the delay in encoding final grades and, second, the policy of withholding salaries of the teachers. Meanwhile, a letter[10] dated April 21, 1998 (the date, later on contested by respondent Remigio Michael to be ante-dated) was written by petitioner Sr. Bernadette to respondent Remigio Michael, reiterating the conversation that took place between them the day before the date of the said letter (April 20, 1998). The letter enumerated the departmental and instructional policies that respondent Remigio Michael failed to comply with, such as the late submission of final grades, failure to submit final test questions to the Program Coordinator, the giving of tests in the essay form instead of the multiple choice format as mandated by the school and the high number of students with failing grades in the classes that he handled. Thereafter, petitioner Sr. Bernadette wrote a letter[11] dated April 30, 1998 to petitioner Sr. Lilia, endorsing the immediate termination of the teaching services of the respondent spouses on the following grounds:

  1. Non-compliance with the departmental policy to submit their

final test questions to their respective program coordinators for checking/comments (violating par. 7.1, p. 65 of the Faculty Manual).

 This policy was formulated to ensure the validity and reliability of

test questions of teachers for the good of the students. This in effect can minimize if not prevent unnecessary failure of students.

 2. Non-compliance with the standard format (multiple choice) of

final test questions as agreed upon in the department. Mr. Ancheta prepared purely essay questions for the students.

Well-prepared multiple choice questions are more objective, and develop critical thinking among students.

 3. Failure to encode their modular grade reports as required

(violating par. H. 8, p. 66 of our Faculty manual).  

4. Failure to submit and update required modules (syllabi) of their subject despite reminders (violating D, 1.5, p. 40 of our Faculty Manual). 

5. Both spouses have a gross number of failure in their class. 

Mr. Ancheta failed 27 in a class of 44 students, and had a total number of 56 failures in his sections of Philippine History. Mrs. Ancheta failed 11 students in a class of 37, and had a total number of 16 failures in her 2 classes of Communication Theories. 

When I talked to each of them to re-examine their bases of failure, they refused saying that they had done this; otherwise, the number of failures would have been more. I gathered data as to the mental ability of the students who failed, and the number of students who incurred more than one failure. In Mr. Ancheta's class of 44 students with 27 failures, majority had average IQ's, 8 were on probation status, and 2 had above-average IQ. Only 7 of his 27 failures were also failing in other subjects. 

6. Failure to report to work on time <re: Mr. Ancheta> (violating par. 1, 21, p. 63 of our Faculty Manual).

 7. Both spouses are not open to suggestions to improve

themselves as teachers. They just see their points and their principles. 

When I talked to Mr. Ancheta the second time telling him of the data I gathered, including the information that statistics permits only 1 to 2% failures, he still refused to budge in to review his grades and his quality of teaching. He stood firm in his conviction and ground that the students were to blame for their failures, and reiterated his disagreement with several school policies (which he violated) contained in his letter

which he had asked his wife to give to the dean's office. Not content on writing down his personal disagreement on some policies, he also asked some faculty members to read his letter and put their signatures on it if they were in favor of one or all of his points. In other words, said spouses had refused and continue to refuse to evaluate the students' performance on the bases of an established grading system to ensure just and fair appraisal (violating par. 1.4, p. 40 of our Faculty Manual).[12]

  

Respondent spouses were given an opportunity to comment on the above letter-recommendation of petitioner Sr. Bernadette.[13] On May 4, 1998, respondent spouses sent their respective comments[14] to petitioner Sr. Lilia. Subsequently, the respondent spouses received their respective letters of termination [15] on May 14, 1998. Respondent spouses sent a letter[16] for reconsideration to petitioner Sr. Lilia, but was eventually denied.[17]

 Thus, respondent spouses filed a Complaint[18] for illegal dismissal with the NLRC. On November 20, 2000, the Labor Arbiter dismissed the complaint,[19] the dispositive portion of the decision reads: 

WHEREFORE, premises considered, judgment is hereby rendered DISMISSING the complaint of illegal dismissal for lack of merit. All other claims are denied for lack of basis. SO ORDERED. 

 The decision of the Labor Arbiter was appealed to the NLRC, but was affirmed by the latter on February 28, 2003,[20] disposing the case as follows: 

WHEREFORE, premises considered, the appeal is DISMISSED for lack of merit and the Decision appealed from is AFFIRMED en toto. SO ORDERED.  

After the denial of their motion for reconsideration with the NLRC,[21] the respondent spouses filed a petition for certiorari with the CA. In its Decision[22] dated July 8, 2005, the CA granted the petition and reversed the decisions of the Labor Arbiter and the NLRC, thus, it ruled:

 WHEREFORE, finding grave abuse of discretion amounting to lack or excess of jurisdiction, the court resolved to SET ASIDE the decision dated February 28, 2003 of public respondent National Labor Relations Commission. Private respondents are hereby ordered to pay, jointly and severally, petitioners the following: 

a) Separation pay equivalent to one (1) month's pay for every year of continuous service; 

b) Deficiency wages to be computed from the unexpired portion of petitioners employment contract. 

c) Moral damages in the amount of P250,000.00 to each [of the] petitioners; d) Exemplary damages also in the amount of P250,000.00 to each [of the] petitioners; and e) Attorney's fees. 

SO ORDERED.  

In its Resolution[23] dated September 29, 2005, the CA denied the motion for reconsideration of the petitioners herein; hence, the present petition.

 The petitioners cited the following arguments: 

I. 

THE HONORABLE COURT OF APPEALS, WITH ALL DUE RESPECT, COMMITTED GRAVE AND REVERSIBLE ERROR IN SETTING ASIDE THE FINDING IN THE DECISION DATED 20 NOVEMBER 2000 OF THE HONORABLE LABOR ARBITER IN NLRC NCR CASE NO. 00-07-06018-98 THAT INDIVIDUAL CONTRACTS OF EMPLOYMENT OF ATTY. REMIGIO MICHAEL A. ANCHETA II AND MS. CYNTHIA A. ANCHETA HAD EXPIRED AT THE END OF SY 1997-1998, I.E., 1 JUNE 1997- 31 MARCH 1998, AND WAS NOT RENEWED FOR SY 1998-1999 AND, ACCORDINGLY, THEY WERE NOT ILLEGALLY TERMINATED BY ST. PAUL COLLEGE QUEZON CITY. 

II.

 THE HONORABLE COURT OF APPEALS, WITH ALL DUE RESPECT, COMMITTED GRAVE AND REVERSIBLE ERROR IN SETTING ASIDE THE DECISION DATED 28 FEBRUARY 2003 OF THE NATIONAL LABOR RELATIONS COMMISSION IN NLRC NCR CA NO. 02775-01 FINDING THAT ATTY. REMIGIO MICHAEL A. ANCHETA II AND MS. CYNTHIA A. ANCHETA WERE DISMISSED FOR JUST CAUSE AND AFTER DUE PROCESS. 

III. 

THE HONORABLE COURT OF APPEALS, WITH ALL DUE RESPECT, COMMITTED GRAVE AND REVERSIBLE ERROR IN RULING THAT ATTY. REMIGIO MICHAEL A. ANCHETA II AND MS. CYNTHIA A. ANCHETA WERE (A) EXTENDED A THIRD APPOINTMENT TO TEACH AS PROBATIONARY TEACHERS FOR SY 1998-1999, (B) ILLEGALLY DISMISSED BY ST. PAUL COLLEGE QUEZON CITY AS AN ACT OF RETALIATION ON THE PART OF SR. BERNADETTE RACADIO, SPC AND (C) ENTITLED TO SEPARATION PAY, DEFICIENCY WAGES, MORAL AND EXEMPLARY DAMAGES AND ATTORNEY'S FEES.[24]

  The petition is impressed with merit. Before this Court delves into the merits of the petition, it deems it necessary to discuss the nature of the employment of the respondents. It is not disputed that respondent Remigio Michael was a full-time probationary employee and his wife, a part-time teacher of the petitioner school. A reality we have to face in the consideration of employment on probationary status of teaching personnel is that they are not governed purely by the Labor Code.[25] The Labor Code is supplemented with respect to the period of probation by special rules found in the Manual of Regulations for Private Schools. [26] On the matter of probationary period, Section 92 of these regulations provides: 

Section 92. Probationary Period. - Subject in all instances to compliance with the Department and school requirements, the probationary period for academic personnel shall not be more than three (3) consecutive years of satisfactory service for those in the elementary and secondary levels, six (6) consecutive regular semesters of

satisfactory service for those in the tertiary level, and nine (9) consecutive trimesters of satisfactory service for those in the tertiary level where collegiate courses are offered on a trimester basis.

  

A probationary employee or probationer is one who is on trial for an employer, during which the latter determines whether or not he is qualified for permanent employment.[27] The probationary employment is intended to afford the employer an opportunity to observe the fitness of a probationary employee while at work, and to ascertain whether he will become an efficient and productive employee.[28] While the employer observes the fitness, propriety and efficiency of a probationer to ascertain whether he is qualified for permanent employment, the probationer, on the other hand, seeks to prove to the employer that he has the qualifications to meet the reasonable standards for permanent employment.[29] Thus, the word probationary, as used to describe the period of employment, implies the purpose of the term or period, not its length.[30]

 The common practice is for the employer and the teacher to enter into a contract, effective for one school year.[31] At the end of the school year, the employer has the option not to renew the contract, particularly considering the teacher's performance.[32] If the contract is not renewed, the employment relationship terminates.[33] If the contract is renewed, usually for another school year, the probationary employment continues.[34] Again, at the end of that period, the parties may opt to renew or not to renew the contract.[35] If renewed, this second renewal of the contract for another school year would then be the last year since it would be the third school year of probationary employment.[36] At the end of this third year, the employer may now decide whether to extend a permanent appointment to the employee, primarily on the basis of the employee having met the reasonable standards of competence and efficiency set by the employer.[37] For the entire duration of this three-year period, the teacher remains under probation.[38] Upon the expiration of his contract of employment, being simply on probation, he cannot automatically claim security of tenure and compel the employer to renew his employment contract.[39]

 Petitioner school contends that it did not extend the contracts of respondent spouses. It claims that, although, it has sent letters to the spouses informing them that the school is extending to them new contracts for the coming school year, the letters do not constitute as actual employment contracts but merely offers to teach

on the said school year. The respondent spouses wrote to the president, petitioner Sr. Lilia: Respondent Remigio Michael: 

Dear Sister,Peace! This signifies my intention of renewing my contract of employment with [SPCQC] for SY 1998-1999. Thank you.[40]

 Respondent Cynthia: Dear Sister, I wish to continue teaching in St. Paul College Quezon City for school year 1998-99. Thank you very much.[41]

  

In response to the above, the college dean, petitioner Sr. Bernadette wrote the respondent spouses letters with the same contents, thus: 

This is to acknowledge receipt of your letter of application to teach during the School year of 1998-1999. Upon the recommendation of the College Council, I am happy to inform you that the school is extending to you a new contract for School year 1998-1999. I wish to take this opportunity to thank you for the service which you have rendered to our students and to the school during the past School year 1997-1998. I hope you will again go out of your way and cooperate in this apostolate that we are doing. Congratulations and I look forward to a fruitful and harmonious time with you.[42]

  Section 91 of the Manual of Regulations for Private Schools, states that: 

Section 91. Employment Contract. Every contract of employment shall specify the designation, qualification, salary rate, the period and nature of service and its date of effectivity, and such other terms and condition of employment as may be consistent with laws and rules, regulations and standards of the school. A copy of the contract shall be furnished the personnel concerned.[43]

  It is important that the contract of probationary employment specify the period or term of its effectivity.[44] The failure to stipulate its precise duration could lead to the inference that the contract is binding for the full three-year probationary period.[45] Therefore, the letters sent by petitioner Sr. Racadio, which were void of any specifics cannot be considered as contracts. The closest they can resemble to are that of informal correspondence among the said individuals. As such, petitioner school has the right not to renew the contracts of the respondents, the old ones having been expired at the end of their terms.

 Assuming, arguendo,  that the employment contracts between the petitioner school and the respondent spouses were renewed, this Court finds that there was a valid and just cause for their dismissal. The Labor Code commands that before an employer may legally dismiss an employee from the service, the requirement of substantial and procedural due process must be complied with.[46] Under the requirement of substantial due process, the grounds for termination of employment must be based on just[47] or authorized causes.[48]

 Petitioner school charged respondent Remigio Michael of non-compliance with a school policy regarding the submission of final test questions to his program coordinator for checking or comment. Following due process, the same respondent admitted the charge in his letter,[49] stating that: 

It is true that I failed to submit a copy of my final exam to my program coordinator for checking or comment. But to single me out (and Mrs. Cynthia Ancheta for that matter) and hold me accountable for it would not only defy the basic tenets of fair play and equality. It is a common knowledge that there are many teachers who do not comply with this policy. To impose solely upon me the whole weight of this particular policy, leaving the others who similarly violate the same policy, would put me under the mercy of selective justice and the exercise of gross abuse of discretion by the Dean. If the root cause of this matter which I will discuss later had not happened, I know that my attention would never be called to this policy, as what was the case in

the past. I plead to you, Sister, to find out how many of us have not complied with this policy and how many were actually called their attention for non-compliance. I do not disagree with the objective of this policy; I am only shocked to find out that while many are non-compliant, only few are punished. So be it, I apologize for my violation.[50]

    

Respondent Remigio Michael was further charged with non-compliance with the standard format (multiple choice) of final test questions as agreed upon by the different departments of petitioner school, to which the former replied: 

I am not the only one who does not comply with this policy. Many teachers do not give multiple choice exams at all; others do not give a pure multiple choice exam. I urge you, Sister, to kindly do the rounds. x x xx x x x Again, I apologize if I did not comply with this policy.[51]

  

He was also charged with failure to encode modular grade reports as required by the school. On that charge, respondent Remigio Michael cited a letter dated April 22, 1998 that criticizes the school policy of penalizing the delays in encoding final grades. On the charge that he had a high failure rate in his classes, respondent Remigio Michael claimed that he did not flunk students, but the latter failed. He further commented that petitioner school did not consciously promote academic excellence. Finally, as to the charge that he constantly failed to report for work on time, the same respondent admitted such tardiness but only with respect to his 7:30 a.m. classes. Respondent Remigio Michael's spouse shared the same defenses and admissions as to the charges against her. 

The plain admissions of the charges against them were the considerations taken into account by the petitioner school in their decision not to renew the respondent spouses' employment contracts. This is a right of the school that is mandated by law and jurisprudence. It is the prerogative of the school to set high standards of efficiency for its teachers since quality education is a mandate of the Constitution.[52] As long as the standards fixed are reasonable and not arbitrary, courts are not at liberty to set them aside.[53] Schools cannot be required to adopt standards which barely satisfy criteria set for government recognition.[54] The same academic freedom grants the school the autonomy to decide for itself the terms and conditions for hiring its teacher, subject of course to the overarching limitations under the Labor Code.[55] The authority to hire is likewise covered and protected by its management prerogative the right of an employer to regulate all aspects of employment, such as hiring, the freedom to prescribe work assignments, working methods, process to be followed, regulation regarding transfer of employees, supervision of their work, lay-off and discipline, and dismissal and recall of workers.[56]

 WHEREFORE, the Petition for Review dated November 18, 2005 of petitioners St. Paul College, Quezon City, et al. is hereby GRANTED and the Decision dated July 8, 2005 of the Court of Appeals and its Resolution dated September 29, 2005 are hereby REVERSED and SET ASIDE. Consequently, the Decision dated February 28, 2003 of the National Labor Relations Commission and the Decision dated November 20, 2000 of the Labor Arbiter are hereby REINSTATED. SO ORDERED.