(17) Lambert Pawnbrokers v. Binamira

8/11/2019 (17) Lambert Pawnbrokers v. Binamira

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9/12/14, 9:0UPREME COURT REPORTS ANNOTATED VOLUME 624

Page 1ttp://www.central.com.ph/sfsreader/session/00000148675fa6eae5a55402000a0082004500cc/p/AMB964/?username=Guest

G.R. No. 170464.July 12, 2010.*

LAMBERT PAWNBROKERS and JEWELRY

CORPORATION and LAMBERT LIM, petitioners, vs.

HELEN BINAMIRA, respondent.

Certiorari; Courts exercising certiorari jurisdiction should

refrain from reviewing factual assessments of the respondent court

or agency.As a rule, a petition for certiorariunder Rule 65 is validonly when the question involved is an error of jurisdiction, or when

there is grave abuse of discretion amounting to lack or excess of

jurisdiction on the part of the court or tribunals exercising quasi-

judicial functions. Hence, courts exercising certiorari jurisdiction

should refrain from reviewing factual assessments of the

respondent court or agency. Occasionally, however, they are

constrained to wade into factual matters when the evidence on

record does not support those factual findings; or when too much is

concluded, inferred or deduced from the bare or incomplete facts

appearing on record, as in the present case.

Labor Law; Termination of Employment; Retrenchment;

Requisites.To effect a valid retrenchment, the following elements

must be present: (1) the retrenchment is reasonably necessary and

likely to prevent business losses which, if already incurred, are not

merely de minimis, but substantial, serious and real, or only if

expected, are reasonably imminent as perceived objectively and in

good faith by the employer; (2) the employer serves written notice

both to the employee/s concerned and the DOLE at least one month

before the intended date of retrenchment; (3) the employer pays the

retrenched employee separation pay in an amount prescribed by the

Code; (4) the employer exercises its prerogative to retrench in good

faith; and (5) the employer uses fair and reasonable criteria in

ascertaining who would be retrenched or retained.

Same; Same; Same; A mere decline in gross income cannot in

any manner be considered as serious business lossesit should be
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substantial, sustained and real.At any rate, we perused over the

financial statements submitted by petitioners and we find no evi-

_______________

*FIRST DIVISION.

706

706 SUPREME COURT REPORTS ANNOTATED

Lambert Pawnbrokers and Jewelry Corporation vs. Binamira

dence at all that the company was suffering from business losses. In

fact, in their Position Paper, petitioners merely alleged a sharp drop

in its income in 1998 from P1 million to only P665,000.00. This is

not the business losses contemplated by the Labor Code that would

justify a valid retrenchment. A mere decline in gross income cannot

in any manner be considered as serious business losses. It should be

substantial, sustained and real.

Same; Same; Redundancy; Requisites; A redundant position is

one rendered superfluous by any number of factors, such as over

hiring of workers, decreased volume of business, dropping of a

particular product line previously manufactured by the company, or

phasing out of a service activity previously undertaken by thebusiness.Redundancy, on the other hand, exists when the service

capability of the workforce is in excess of what is reasonably needed

to meet the demands of the enterprise. A redundant position is one

rendered superfluous by any number of factors, such as over hiring

of workers, decreased volume of business, dropping of a particular

product line previously manufactured by the company, or phasing

out of a service activity previously undertaken by the business.

Under these conditions, the employer has no legal obligation to keep

in its payroll more employees than are necessary for the operation

of its business. For the implementation of a redundancy program to

be valid, the employer must comply with the following requisites:

(1) written notice served on both the employees and the DOLE at

least one month prior to the intended date of termination of

employment; (2) payment of separation pay equivalent to at least

one month pay for every year of service; (3) good faith in abolishing

the redundant positions; and (4) fair and reasonable criteria in
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ascertaining what positions are to be declared redundant and

accordingly abolished.

Same; Same; Corporation Law; It is settled that in the absence

of malice and bad faith, a stockholder or an officer of a corporation

cannot be made personally liable for corporate liabilitiesthey are

only solidarily liable with the corporation for the illegal termination

of services of employees if they acted with malice or bad faith.As ageneral rule, only the employer-corporation, partnership or

association or any other entity, and not its officers, which may be

held liable for illegal dismissal of employees or for other wrongful

acts. This is as it should be because a corporation is a juridical

entity with legal personality separate and distinct from those acting

for and in its

707

VOL. 624, JULY 12, 2010 707


behalf and, in general, from the people comprising it. A corporation,

as a juridical entity, may act only through its directors, officers and

employees. Obligations incurred as a result of the directors and

officers acts as corporate agents, are not their personal liability but

the direct responsibility of the corporation they represent. It is

settled that in the absence of malice and bad faith, a stockholder or

an officer of a corporation cannot be made personally liable for

corporate liabilities. They are only solidarily liable with the

corporation for the illegal termination of services of employees if

they acted with malice or bad faith. In Philippine American Life

and General Insurance v. Gramaje, 442 SCRA 274 (2004), bad faith

is defined as a state of mind affirmatively operating with furtive

design or with some motive of self-interest or ill will or for ulterior

purpose. It implies a conscious and intentional design to do a

wrongful act for a dishonest purpose or moral obliquity.Same; Same; Same; The lack of authorized or just cause to

terminate ones employment and the failure to observe due process do

not ipso facto mean that the corporate officer acted with malice or

bad faith.In the present case, malice or bad faith on the part of

Lim as a corporate officer was not sufficiently proven to justify a

ruling holding him solidarily liable with the corporation. The lack of


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authorized or just cause to terminate ones employment and the

failure to observe due process do not ipso facto mean that the

corporate officer acted with malice or bad faith. There must be

independent proof of malice or bad faith which is lacking in the

present case.

Legal Ethics; Attorneys; Privileged Communications; We find

no merit in an employers assertion that a lawyer gravely breachedand abused the rule on privileged communication when he

represented a complainant against the corporation where records

show that although the employer previously employed said lawyer to

manage several businesses, there is no showing that it likewise

engaged his professional services as a lawyer.We find no merit in

petitioners assertion that Atty. Binamira gravely breached and

abused the rule on privileged communication under the Rules of

Court and the Code of Professional Responsibility of Lawyers when

he represented Helen in the present case. Notably, this issue was

never raised before the labor tribunals and was raised for the first

time only on appeal. Moreover, records show that although

petitioners previously employed Atty. Binamira to manage several

businesses, there is no

708



showing that they likewise engaged his professional services as a

lawyer. Likewise, at the time the instant complaint was filed, Atty.

Binamira was no longer under the employ of petitioners.

Labor Law; Termination of Employment; Illegal Dismissals;

Damages; The award of moral and exemplary damages cannot be

justified solely upon the premise that the employer dismissed his

employee without authorized cause and due process.A dismissal

may be contrary to law but by itself alone, it does not establish badfaith to entitle the dismissed employee to moral damages. The

award of moral and exemplary damages cannot be justified solely

upon the premise that the employer dismissed his employee without

authorized cause and due process. Considering that there is no clear

and convincing evidence showing that the termination of Helens

services had been carried out in an arbitrary, capricious and


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malicious manner, the award of moral and exemplary damages is

not warranted.

PETITION for review on certiorari of a decision of the

Court of Appeals.

The facts are stated in the opinion of the Court.

Pepito & Pepito Law Offices for petitioners.

Romualdo G. Buno and Boler B. Binamira for

respondent.

DEL CASTILLO,J.:

It is fundamental that an employer is liable for illegal

dismissal when it terminates the services of the employee

without just or authorized cause and without due process of

law.

This Petition for Review on Certiorari1 assails the

Decision

2

dated August 4, 2005 of the Court of Appeals(CA) in CA-G.R. CEB SP No. 00010, which reversed and set

aside the Resolu-

_______________

1Rollo, pp. 21-42.

2CARollo, pp. 323-331; penned by Associate Justice Vicente L. Yap

and concurred in by Associate Justices Isaias P. Dicdican and Enrico A.

Lanzanas.

709

VOL. 624, JULY 12, 2010 709

Lambert Pawnbrokers and Jewelry Corporation vs.

Binamira

tions dated July 30, 20033and May 31, 20044issued by the

National Labor Relations Commission (NLRC) in NLRC

Case No. V-000454-00 (RAB VII-01-0003-99-B).Factual Antecedents

Petitioner Lambert Lim (Lim) is a Malaysian national

operating various businesses in Cebu and Bohol one of

which is Lambert Pawnbrokers and Jewelry Corporation.

Lim is married to Rhodora Binamira, daughter of Atty.

Boler Binamira, Sr., (Atty. Binamira), who is also the
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counsel and father-in-law of respondent Helen Binamira

(Helen). Lambert Pawnbrokers and Jewelry Corporation

Tagbilaran Branch hired Helen as an appraiser in July

1995 and designated her as Vault Custodian in 1996.

On September 14, 1998, Helen received a letter5 from

Lim terminating her employment effective that same day.

Lim cited business losses necessitating retrenchment asthe reason for the termination.

Helen thus filed a case for illegal dismissal against

petitioners docketed as NLRC RAB-VII CASE NO. 01-

0003-99-B.6 In her Position Paper7Helen alleged that she

was dismissed without cause and the benefit of due

process. She claimed that she was a mere casualty of the

war of attrition between Lim and the Binamira family.

Moreover, she claimed that there was no proof that the

company was suffering from business losses.

In their Position Paper,8 petitioners asserted that theyhad no choice but to retrench respondent due to economic

reverses. The corporation suffered a marked decline in

profits

_______________

3Id., at pp. 164-168.

4Id., at pp. 185-187.

5CARollo, p. 46.

6Id., at pp. 21-32.

7Id., at pp. 21-26.

8Id., at pp. 33-46.

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Binamira

as well as substantial and persistent increase in losses. In

its Statement of Income and Expenses, its gross income for

1998 dropped from P1million to P665,000.00.

Ruling of the Labor Arbiter

On November 26, 1999, Labor Arbiter Geoffrey P.

Villahermosa rendered a Decision9 which held that Helen
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was not illegally dismissed but was validly retrenched. The

dispositive portion of the Labor Arbiters Decision reads:

WHEREFORE, all the foregoing premises being considered

judgment is hereby rendered declaring the respondent not guilty of

illegally terminating the complainant but is however directed to pay

the complainant her retrenchment benefit in the amount of Seven

Thousand Five Hundred Pesos (P7,500.00), considering that she

was receiving a monthly salary of P5,000.00 and rendered service

for three (3) years.

SO ORDERED.10

Ruling of the NLRC

On appeal, the NLRC reversed and set aside the

Decision of the Labor Arbiter. It observed that for

retrenchment to be valid, a written notice shall be given to

the employee and to the Department of Labor and

Employment (DOLE) at least one month prior to the

intended date thereof. Since none was given in this case,

then the retrenchment of Helen was not valid. The

dispositive portion of the Decision11reads:

WHEREFORE, premises duly considered, the decision of the

Labor Arbiter dated 26 November 1999 is hereby REVERSED and

SET ASIDE and respondents are ordered to reinstate complainant

_______________

9Id., at pp. 98-104.

10Id., at p. 103.

11Id., at pp. 135-138; penned by Commissioner Edgardo M. Enarlan and

concurred in by Presiding Commissioner Irenea E. Ceniza and Commissioner

Oscar S. Uy.

711

VOL. 624, JULY 12, 2010 711


Helen Binamira to her former position without loss of seniority

rights and with full backwages from the time of her dismissal up to

the promulgation of this decision.

Other claims are denied for lack of merit.

SO ORDERED.12
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Petitioners filed a Motion for Reconsideration.13On July

30, 2003, the NLRC set aside its Decision dated September

27, 2002 and entered a new one, the dispositive portion of

which reads:

WHEREFORE, the Decision of November [sic] 27, 2002 is

hereby SET ASIDE and a New One Entered declaring as valid theredundancy of the position of the complainant. Accordingly

respondent is hereby ordered to pay the complainant her

redundancy pay of one month for every year of service and in lieu of

notice, she should also be paid one (1) month salary as indemnity.

SO ORDERED.14

In arriving at this conclusion, the NLRC opined that

what was actually implemented by the petitioners was not

retrenchment due to serious business losses but

termination due to redundancy. The NLRC observed thatthe Tagbilaran operations was overstaffed thus

necessitating the termination of some employees. Moreover,

the redundancy program was not properly implemented

because no written notices were furnished the employee

and the DOLE one month before the intended date of

termination.

The Motion for Reconsideration filed by Helen was

denied by the NLRC through its Resolution15 dated May

31, 2004.

_______________

12Id., at p. 137.

13Id., at pp. 139-154.

14Id., at pp. 164-168.

15Id., at pp. 185-187.

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Binamira

Ruling of the Court of Appeals
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On petition for certiorari,16 the CA found that both the

Labor Arbiter and the NLRC failed to consider substantial

evidence showing that the exercise of management

prerogative, in this instance, was done in bad faith and in

violation of the employees right to due process. The CA

ruled that there was no redundancy because the position of

vault custodian is a requisite, necessary and desirableposition in the pawnshop business. There was likewise no

retrenchment because none of the conditions for

retrenchment is present in this case.

On August 4, 2005, the CA issued its Decision which

provides:

WHEREFORE, the Resolution dated July 30, 2003 and May 31,

2004 issued by the National Labor Relations Commission in NLRC

Case No. V-000454-00 (RAB VII-01-0003-99-B), is hereby

REVERSED and SET ASIDE.A new Decision is hereby entered declaring the dismissal of

petitioner, Helen B. Binamira, as illegal and directing the private

respondents, Lamberts Pawnbroker and Jewelry Corporation and

Lambert Lim, jointly and solidarily, to pay to the petitioner, the

following monetary awards:

1.

Backwages from the date of her illegal suspension and

dismissal until she is reinstated;

2. Considering that reinstatement is not feasible in view of the

strained relations between the employer and the employee,

separation pay is hereby decreed at the rate of one (1) months pay

for every year of service;

3.Moral damages in the amount of Twenty Five Thousand Pesos

(P25,000.00);

4.Exemplary damages in the amount of Twenty Five Thousand

Pesos (P25,000.00);

5.

Attorneys fees in the amount equivalent to Ten Percent (10%)

of the monetary awards herein above enumerated; and

_______________

16Id., at pp. 3-204, inclusive of attachments.

713

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6.Costs.

SO ORDERED.17

The Motion for Reconsideration filed by petitioners was

denied by the CA through its Resolution18dated November

7, 2005.

Issues

Hence, this petition raising the following issues:

I.

Whether the CA gravely erred in reversing, through the extra-

ordinary remedy of certiorari, the findings of facts of both the Labor

Arbiter and the NLRC that the dismissal of respondent was with

valid and legal basis.

II.Whether the CA gravely erred in reversing, through the extra-

ordinary remedy of certiorari, the unanimous findings of fact of both

the Labor Arbiter and the NLRC that the dismissal of respondent

was not attended by bad faith or fraud.

III.

Whether the CA erred in reversing, through the extra-ordinary

remedy of certiorari, the findings of facts of both the Labor Arbiter

and the NLRC based merely on the allegations and evidences made

and submitted by the former counsel, adviser and business partner

of petitioners.19

Petitioners Arguments

Petitioners assail the propriety of the reversal by the CA

of the factual findings of both the Labor Arbiter and the

NLRC on a Petition for Certiorari under Rule 65.

Petitioners posit

_______________

17Id., at pp. 330-331.

18Id., at pp. 452-456.

19Rollo, p. 27.

714

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Binamira

that a writ of certiorari is proper only to correct errors of

jurisdiction or when there is grave abuse of discretion

tantamount to lack or excess of jurisdiction committed by

the labor tribunals. They asserted that where the issue orquestion involved affects the wisdom or legal soundness of

a decision, the same is beyond the province of a special civil

action for certiorari.

Petitioners further contend that the CA erred in ruling

that the dismissal was not valid and that it was done in

bad faith.

Respondents Arguments

On the other hand, Helen avers that the contradictory

findings of fact of the Labor Arbiter and the NLRC justifies

the CA to review the findings of fact of the labor tribunals.She further submits that both labor tribunals failed to

consider substantial evidence showing that petitioners

exercise of management prerogative was done in utter bad

faith and in violation of her right to due process.

Our Ruling

The petition is without merit.

The CA correctly reviewed the factual

findings of the labor tribunals.

As a rule, a petition for certiorariunder Rule 65 is valid

only when the question involved is an error of jurisdiction,

or when there is grave abuse of discretion amounting to

lack or excess of jurisdiction on the part of the court or

tribunals exercising quasi-judicial functions. Hence, courts

exercising certiorari jurisdiction should refrain from

reviewing factual assessments of the respondent court or

agency. Occasionally, however, they are constrained to wade

into factual matters when the evidence on record does notsupport those factual findings; or when too much is

concluded, inferred or deduced

715

VOL. 624, JULY 12, 2010 715


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Binamira

from the bare or incomplete facts appearing on record,20as

in the present case.

We find that the CA rightfully reviewed the correctness

of the labor tribunals factual findings not only because ofthe foregoing inadequacies, but also because the NLRC and

the Labor Arbiter came up with conflicting findings. The

Labor Arbiter found that Helens dismissal was valid on

account of retrenchment due to economic reverses. On the

other hand, the NLRC originally ruled that Helens

dismissal was illegal as none of the requisites of a valid

retrenchment was present. However, upon motion for

reconsideration, the NLRC changed its posture and ruled

that the dismissal was valid on the ground of redundancy

due to over-hiring. Considering the diverse findings of theLabor Arbiter and the NLRC, it behooved upon the CA in

the exercise of its certiorarijurisdiction to determine which

findings are more in conformity with the evidentiary facts.

There was no valid dismissal

based on retrenchment.

Retrenchment is the termination of employment

initiated by the employer through no fault of and without

prejudice to the employees. It is resorted to during periods

of business recession, industrial depression, seasonalfluctuations, or during lulls occasioned by lack of orders,

shortage of materials, conversion of the plant to a new

production program, or automation.21 It is a management

prerogative resorted to avoid or minimize business losses,

and is recognized by Article 283 of the Labor Code, which

reads:

_______________

20Pascua v. National Labor Relations Commission, 351 Phil. 48, 61;287 SCRA 554, 579 (1998).

21Anabe v. Asian Construction, G.R. No. 183233, December 23, 2009,

609 SCRA 213.

716
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Binamira

Art.

283.

Closure of establishment and reduction of personnel.The employer may also terminate the employment of any employee

due to x x x retrenchment to prevent losses or the closing or

cessation of operations of the establishment x x x by serving a

written notice on the worker and the DOLE at least one month

before the intended date thereof. x x x In case of retrenchment to

prevent losses, the separation pay shall be equivalent to one (1)

month pay or at least one-half month for every year of service

whichever is higher. x x x (Emphasis ours)

To effect a valid retrenchment, the following elementsmust be present: (1) the retrenchment is reasonably

necessary and likely to prevent business losses which, if

already incurred, are not merely de minimis, but

substantial, serious and real, or only if expected, are

reasonably imminent as perceived objectively and in good

faith by the employer; (2) the employer serves written

notice both to the employee/s concerned and the DOLE at

least one month before the intended date of retrenchment;

(3) the employer pays the retrenched employee separation

pay in an amount prescribed by the Code; (4) the employer

exercises its prerogative to retrench in good faith; and (5)

the employer uses fair and reasonable criteria in

ascertaining who would be retrenched or retained.22

The losses must be supported by sufficient and

convincing evidence. The normal method of discharging

this is by the submission of financial statements duly

audited by independent external auditors. In this case,

however, the Statement of Income and Expenses23 for the

year 1997-1998 submitted by the petitioners was preparedonly on January 12, 1999. Thus, it is highly improbable

that the management already knew on September 14,

1998, the date of Helens retrenchment, that they would be

incurring substantial losses.

At any rate, we perused over the financial statements

submitted by petitioners and we find no evidence at all that
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_______________

22Id.

23CARollo, p. 45.

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the company was suffering from business losses. In fact, in

their Position Paper, petitioners merely alleged a sharp

drop in its income in 1998 from P1 million to only

P665,000.00. This is not the business losses contemplated

by the Labor Code that would justify a valid retrenchment.

A mere decline in gross income cannot in any manner beconsidered as serious business losses. It should be

substantial, sustained and real.

To make matters worse, there was also no showing that

petitioners adopted other cost-saving measures before

resorting to retrenchment. They also did not use any fair

and reasonable criteria in ascertaining who would be

retrenched. Finally, no written notices were served on the

employee and the DOLE prior to the implementation of the

retrenchment. Helen received her notice only on September14, 1998, the day when her termination would supposedly

take effect. This is in clear violation of the Labor Code

provision which requires notice at least one month prior to

the intended date of termination.

There was no valid dismissal

based on redundancy.

Redundancy, on the other hand, exists when the service

capability of the workforce is in excess of what is

reasonably needed to meet the demands of the enterprise.

A redundant position is one rendered superfluous by anynumber of factors, such as over hiring of workers,

decreased volume of business, dropping of a particular

product line previously manufactured by the company, or

phasing out of a service activity previously undertaken by

the business. Under these conditions, the employer has no

legal obligation to keep in its payroll more employees than
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are necessary for the operation of its business.24

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24Asian Alcohol Corporation v. National Labor Relations Commis-

sion, 364 Phil. 912, 930; 305 SCRA 416, 432 (1999).

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Binamira

For the implementation of a redundancy program to be

valid, the employer must comply with the following

requisites: (1) written notice served on both the employees

and the DOLE at least one month prior to the intended

date of termination of employment; (2) payment of

separation pay equivalent to at least one month pay for

every year of service; (3) good faith in abolishing the

redundant positions; and (4) fair and reasonable criteria in

ascertaining what positions are to be declared redundant

and accordingly abolished.25

In this case, there is no proof that the essential

requisites for a valid redundancy program as a ground for

the termination of the employment of respondent arepresent. There was no showing that the function of

respondent is superfluous or that the business was

suffering from a serious downturn that would warrant

redundancy considering that such serious business

downturn was the ground cited by petitioners in the

termination letter sent to respondent.26

In fine, Helens dismissal is illegal for lack of just or

authorized cause and failure to observe due process of law.

Lambert Pawnbrokers and Jewelry

Corporation is solely liable for the

illegal dismissal of respondent.

As a general rule, only the employer-corporation,

partnership or association or any other entity, and not its

officers, which may be held liable for illegal dismissal of

employees or for other wrongful acts. This is as it should be

because a corporation is a juridical entity with legal
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personality separate and distinct from those acting for and

in its behalf and, in general, from the people comprising

it.27A corporation, as a

_______________

25Philippine Carpet Employees Association (PHILCEA) v. Sto. Tomas,

G.R. No. 168719, February 22, 2006, 483 SCRA 128, 145-146.

26CARollo, p. 46.

27 Equitable Banking Corporation v. National Labor Relations

Commission, 339 Phil. 541, 566; 273 SCRA 352, 371 (1977).

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Binamira

juridical entity, may act only through its directors, officers

and employees. Obligations incurred as a result of the

directors and officers acts as corporate agents, are not

their personal liability but the direct responsibility of the

corporation they represent.28 It is settled that in the

absence of malice and bad faith, a stockholder or an officer

of a corporation cannot be made personally liable for

corporate liabilities.29

They are only solidarily liable withthe corporation for the illegal termination of services of

employees if they acted with malice or bad faith. In

Philippine American Life and General Insurance v.

Gramaje,30 bad faith is defined as a state of mind

affirmatively operating with furtive design or with some

motive of self-interest or ill will or for ulterior purpose. It

implies a conscious and intentional design to do a wrongful

act for a dishonest purpose or moral obliquity.

In the present case, malice or bad faith on the part of

Lim as a corporate officer was not sufficiently proven to

justify a ruling holding him solidarily liable with the

corporation. The lack of authorized or just cause to

terminate ones employment and the failure to observe due

process do not ipso facto mean that the corporate officer

acted with malice or bad faith. There must be independent

proof of malice or bad faith which is lacking in the present
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case.

There is no violation of attorney-

client relationship.

We find no merit in petitioners assertion that Atty.

Binamira gravely breached and abused the rule on

privileged communication under the Rules of Court and the

Code of Professional Responsibility of Lawyers when herepresented Helen in the present case. Notably, this issue

was never

_______________

28Santos v. National Labor Relations Commission, 325 Phil. 145, 156;

254 SCRA 673, 681-682 (1996).

29Tan v. Timbal, 478 Phil. 497, 505; 434 SCRA 381, 387 (2004).

30484 Phil. 880, 891; 442 SCRA 274, 285 (2004).

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Binamira

raised before the labor tribunals and was raised for the

first time only on appeal. Moreover, records show that

although petitioners previously employed Atty. Binamira tomanage several businesses, there is no showing that they

likewise engaged his professional services as a lawyer.

Likewise, at the time the instant complaint was filed, Atty.

Binamira was no longer under the employ of petitioners.

Respondent is entitled to the

following relief under the law.

An illegally dismissed employee is entitled to

reinstatement without loss of seniority rights and other

privileges and to this full backwages, inclusive of

allowances, and to her other benefits or their monetary

equivalent, computed from the time the compensation was

withheld up to the time of actual reinstatement. Where

reinstatement is no longer feasible, separation pay

equivalent to at least one month salary or one month

salary for every year of service, whichever is higher, a

fraction of at least six months being considered as one
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whole year, should be awarded to respondent.

In this case, Helen is entitled to her full backwages from

the time she was illegally dismissed on September 14,

1998. Considering the strained relations between the

parties, reinstatement is no longer feasible. Consequently,

Helen is also entitled to receive separation pay equivalent

to one month salary for every year of service.A dismissal may be contrary to law but by itself alone, it

does not establish bad faith to entitle the dismissed

employee to moral damages. The award of moral and

exemplary damages cannot be justified solely upon the

premise that the employer dismissed his employee without

authorized cause and due process.31

_______________

31Manila Water Company, Inc. v. Pea, 478 Phil. 68, 84; 434 SCRA53, 61-62 (2004).

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Considering that there is no clear and convincingevidence showing that the termination of Helens services

had been carried out in an arbitrary, capricious and

malicious manner, the award of moral and exemplary

damages is not warranted.

Consequently, the moral and exemplary damages

awarded by the CA are hereby deleted.

However, the award of attorneys fee is warranted

pursuant to Article 111 of the Labor Code. Ten (10%)

percent of the total award is usually the reasonable amount

of attorneys fees awarded. It is settled that where an

employee was forced to litigate and, thus, incur expenses to

protect his rights and interest, the award of attorneys fees

is legally and morally justifiable.32

WHEREFORE, the instant petition for review on

certiorariis DENIED. The Decision of the Court of Appeals

in CA-G.R. CEB SP No. 00010 dated August 4, 2005
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finding the dismissal of respondent Helen B. Binamira as

illegal is Affirmed with MODIFICATIONSthat respondent

is entitled to receive full backwages from the time she was

illegally dismissed on September 14, 1998 as well as to

separation pay in lieu of reinstatement equivalent to one

month salary for every year of service. The amounts

awarded as moral damages and exemplary damages aredeleted for lack of basis. Finally, only petitioner Lambert

Pawnbrokers and Jewelry Corporation is found liable for

the illegal dismissal of respondent.

SO ORDERED.

Corona (C.J., Chairperson), Brion,**Abad*** and Perez,

JJ.,concur.

Petition denied, judgment affirmed with modifications.

_______________

32 Quijano v. Mercury Drug Corporation and National Labor

Relations Commission, 354 Phil. 112, 127; 292 SCRA 109, 123 (1998).

** Per Special Order No. 856 dated July 1, 2010.

*** Per Special Order No. 869 dated July 5, 2010.

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Binamira

Notes.Where the closure is due to serious business

losses, the Labor Code does not impose any obligation upon

the employer to pay separation benefitsit is only in

instances of retrenchment to prevent losses and in case of

closures or cessation of operations of establishment or

undertaking not due to serious business losses or financialreverses that employees whose employment has been

terminated as a result are entitled to separation pay.

(Galaxie Steel Workers Union (GSWU-NAFLU-KMU) vs.

National Labor Relations Commission, 504 SCRA 692

[2006])

The National Labor Relations Commission is not
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Page 20ttp://www central com ph/sfsreader/session/00000148675fa6eae5a55402000a0082004500cc/p/AMB964/?username Guest

precluded from receiving evidence on appeal as technical

rules of evidence are not binding in labor cases. (Anabe vs.

Asian Construction (ASIAKONSTRUKT), 609 SCRA 213

[2009])

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