Republic of the PhilippinesSUPREME COURTManila

FIRST DIVISION

G.R. NO. 146779 January 23, 2006

RENATO S. GATBONTON, Petitioner, vs.NATIONAL LABOR RELATIONS COMMISSION, MAPUA INSTITUTE OF TECHNOLOGY and JOSE CALDERON, Respondents.

D E C I S I O N

AUSTRIA-MARTINEZ, J.:

Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court which seeks to set aside the Decision1 dated November 10, 2000 of the Court of Appeals (CA) in CA-G.R. SP No. 57470, affirming the decision of the National Labor Relations Commission (NLRC); and the CA Resolution dated January 16, 2001, denying the motion for reconsideration.2

Petitioner Renato S. Gatbonton is an associate professor of respondent Mapua Institute of Technology (MIT), Faculty of Civil Engineering. Some time in November 1998, a civil engineering student of respondent MIT filed a letter-complaint against petitioner for unfair/unjust grading system, sexual harassment and conduct unbecoming of an academician. Pending investigation of the complaint, respondent MIT, through its Committee on Decorum and Investigation placed petitioner under a 30-day preventive suspension effective January 11, 1999. The committee believed that petitioners continued stay during the investigation affects his performance as a faculty member, as well as the students learning; and that the suspension will allow petitioner to "prepare himself for the investigation and will prevent his influences to other members of the community."3

Thus, petitioner filed with the NLRC a complaint for illegal suspension, damages and attorneys fees,4 docketed as NLRC-NCR Case No. 01-00388-99.

Petitioner questioned the validity of the administrative proceedings with the Regional Trial Court of Manila in a petition for certiorari but the case was terminated on May 21, 1999 when the parties entered into a compromise agreement wherein respondent MIT agreed to publish in the school organ the rules and regulations implementing Republic Act No. 7877 (R.A. No. 7877) or the Anti-Sexual Harassment Act; disregard the previous administrative proceedings and conduct anew an investigation on the charges against petitioner. Petitioner agreed to recognize the validity of the published rules

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and regulations, as well as the authority of respondent to investigate, hear and decide the administrative case against him.5

On June 18, 1999, the Labor Arbiter rendered a decision, the dispositive portion of which reads:

Wherefore, premises considered, the thirty day preventive suspension of complainant is hereby declared to be illegal. Accordingly, respondents are directed to pay his wages during the period of his preventive suspension.

The rest of complainants claims are dismissed.

SO ORDERED.6

Both respondents and petitioner filed their appeal from the Labor Arbiters Decision, with petitioner questioning the dismissal of his claim for damages. In a Decision dated September 30, 1999, the NLRC granted respondents appeal and set aside the Labor Arbiters decision. His motion for reconsideration having been denied by the NLRC on December 13, 1999, petitioner filed a special civil action for certiorari with the CA.

On November 10, 2000, the CA promulgated the assailed decision affirming the NLRC decision, the dispositive portion of which reads:

WHEREFORE, foregoing premises considered, the petition is hereby DENIED DUE COURSE and ORDERED DISMISSED, and the challenged decision and order of public respondent NLRC AFFIRMED.

SO ORDERED.7

Petitioner filed a motion for reconsideration which the CA denied in its Resolution dated January 16, 2001.

Hence, the present petition based on the following grounds:

A

THE COURT OF APPEALS GRAVELY ERRED IN FINDING THAT THE NLRC WAS NOT GUILTY OF GRAVE ABUSE OF DISCRETION IN RENDERING BOTH THE APPEAL DECISION AND THE NLRC RESOLUTION.

B

THE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THE NLRCS DISMISSAL OF PETITIONERS CLAIM FOR DAMAGES.8

Petitioner finds fault in the CAs decision, arguing that his preventive suspension does not find any justification in the Mapua Rules and Regulations considering that at the time of his preventive suspension on January 11, 1999, the rules have not been promulgated yet as it was published only on February 23, 1999. Petitioner also contests the lack of award of damages in his favor.9

The petition is partly meritorious.

Preventive suspension is a disciplinary measure for the protection of the companys property pending investigation of any alleged malfeasance or misfeasance committed by the employee. The employer may place the worker concerned under preventive suspension if his continued employment poses a serious and imminent threat to the life or property of the employer or of his co-workers.10 However, when it is determined that there is no sufficient basis to justify an employees preventive suspension, the latter is entitled to the payment of salaries during the time of preventive suspension.11

R.A. No. 7877 imposed the duty on educational or training institutions to "promulgate rules and regulations in consultation with and jointly approved by the employees or students or trainees, through their duly designated representatives, prescribing the procedures for the investigation of sexual harassment cases and the administrative sanctions therefor."12 Petitioners preventive suspension was based on respondent MITs Rules and Regulations for the Implemention of the Anti-Sexual Harassment Act of 1995, or R.A. No. 7877. Rule II, Section 1 of the MIT Rules and Regulations provides:

Section 1. Preventive Suspension of Accused in Sexual Harassment Cases. Any member of the educational community may be placed immediately under preventive suspension during the pendency of the hearing of the charges of grave sexual harassment against him if the evidence of his guilt is strong and the school head is morally convinced that the continued stay of the accused during the period of investigation constitutes a distraction to the normal operations of the institution or poses a risk or danger to the life or property of the other members of the educational community.

It must be noted however, that respondent published said rules and regulations only on February 23, 1999. In Taada vs. Tuvera,13 it was ruled that:

all statutes, including those of local application and private laws, shall be published as a condition for their effectivity, which shall begin fifteen days after publication unless a different effectivity is fixed by the legislature.

Covered by this rule are presidential decrees and executive orders promulgated by the President in the exercise of legislative powers whenever the same are validly delegated by the legislature or, at present, directly conferred by the Constitution. Administrative rules and regulations must also be published if their purpose is to enforce or implement existing law pursuant also to a valid delegation.

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Interpretative regulations and those merely internal in nature, that is, regulating only the personnel of the administrative agency and not the public, need not be published. Neither is publication required of the so-called letters of instructions issued by administrative superiors concerning the rules or guidelines to be followed by their subordinates in the performance of their duties.

We agree that the publication must be in full or it is no publication at all since its purpose is to inform the public of the contents of the laws. (Emphasis supplied)

The Mapua Rules is one of those issuances that should be published for its effectivity, since its purpose is to enforce and implement R.A. No. 7877, which is a law of general application.14 In fact, the Mapua Rules itself explicitly required publication of the rules for its effectivity, as provided in Section 3, Rule IV (Administrative Provisions), which states that "[T]hese Rules and Regulations to implement the Anti-Sexual Harassment Act of 1995 shall take effect fifteen (15) days after publication by the Committee." Thus, at the time of the imposition of petitioners preventive suspension on January 11, 1999, the Mapua Rules were not yet legally effective, and therefore the suspension had no legal basis.

Moreover, even assuming that the Mapua Rules are applicable, the Court finds that there is no sufficient basis to justify his preventive suspension. Under the Mapua Rules, an accused may be placed under preventive suspension during pendency of the hearing under any of the following circumstances:

(a) if the evidence of his guilt is strong and the school head is morally convinced that the continued stay of the accused during the period of investigation constitutes a distraction to the normal operations of the institution; or

(b) the accused poses a risk or danger to the life or property of the other members of the educational community.

In petitioners case, there is no indication that petitioners preventive suspension may be based on the foregoing circumstances. Committee Resolution No. 1 (Re: Preventive Suspension of Engr. Renato Gatbonton) passed by the Committee on Decorum and Investigation states the reasons for petitioners preventive suspension, to wit:

Whereas, the committee believe[s] that the continued stay of the respondent during the period of investigation,

1. Affects the respondents performance as a faculty member and laboratory head considering the psychological effects depression and/or emotional stress during investigation;lavvphil.ne+

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2. Affects the student[s] learning and other members of the Mapua Institute of Technology community.

Whereas, the committee believe[s] that this preventive suspension will allow the respondent to prepare himself for the investigation and will prevent his influences to other members of the community.15

Said resolution does not show that evidence of petitioners guilt is strong and that the school head is morally convinced that petitioners continued stay during the period of investigation constitutes a distraction to the normal operations of the institution; or that petitioner poses a risk or danger to the life or property of the other members of the educational community.

Even under the Labor Code, petitioners preventive suspension finds no valid justification. As provided in Section 8, Rule XXIII, Book V of the Omnibus Rules Implementing the Labor Code:

Sec. 8. Preventive Suspension. The employer may place the worker concerned under preventive suspension if his continued employment poses a serious threat to the life or property of the employer or of his co-workers.

As previously stated, there is nothing on record which shows that respondent MIT imposed the preventive suspension on petitioner as his continued employment poses a serious threat to the life or property of the employer or of his co-workers; therefore, his preventive suspension is not justified.16 Consequently, the payment of wages during his 30-day preventive suspension, i.e., from January 11, 1999 to February 10, 1999, is in order.

With regard to petitioners claim for damages, the Court finds the same to be without basis. While petitioners preventive suspension may have been unjustified, this does not automatically mean that he is entitled to moral or other damages. In Cocoland Development Corp. vs. NLRC,17 the Court ruled:lavvphil.ne+

In Primero vs. Intermediate Appellate Court, this Court held that " an award (of moral damages) cannot be justified solely upon the premise (otherwise sufficient for redress under the Labor Code) that the employer fired his employee without just cause or due process. Additional facts must be pleaded and proven to warrant the grant of moral damages under the Civil Code, these being, to repeat, that the act of dismissal was attended by bad faith or fraud, or was oppressive to labor, or done in a manner contrary to morals, good customs, or public policy; and of course, that social humiliation, wounded feelings, grave anxiety, etc., resulted therefrom." This was reiterated in Garcia vs. NLRC, where the Court added that exemplary damages may be awarded only if the dismissal was shown to have been effected in a wanton, oppressive or malevolent manner.

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This the private respondent failed to do. Because no evidence was adduced to show that petitioner company acted in bad faith or in a wanton or fraudulent manner in dismissing the private respondent, the labor arbiter did not award any moral and exemplary damages in his decision. Respondent NLRC therefore had no factual or legal basis to award such damages in the exercise of its appellate jurisdiction.

The records of this case are bereft of any evidence showing that respondent MIT acted in bad faith or in a wanton or fraudulent manner in preventively suspending petitioner, thus, the Labor Arbiter was correct in not awarding any damages in favor of petitioner.

WHEREFORE, the petition is PARTIALLY GRANTED. The Decision dated November 10, 2000 and Resolution dated January 16, 2001 of the Court of Appeals in CA-G.R. SP No. 57470 as well as the NLRC Decision dated September 30, 1999 together with its Resolution dated December 13, 1999, are hereby SET ASIDE and the Labor Arbiters Decision dated June 18, 1999 is REINSTATED.

SO ORDERED.

Republic of the PhilippinesSUPREME COURTManila

THIRD DIVISION

G.R. No. 158458 December 19, 2007

ASIAN TERMINALS, INC. and ATTY. RODOLFO G. CORVITE, JR., petitioners, vs.NATIONAL LABOR RELATIONS COMMISSION, DOMINADOR SALUDARES, and ROMEO L. LABRAGUE, respondents.

D E C I S I O N

AUSTRIA-MARTINEZ, J.:

Before this Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court from the January 23, 2003 Decision1 of the Court of Appeals (CA) in CA-G.R. SP No. 53869, affirming with modification the April 30, 1999 Decision2 of the National Labor Relations Commission (NLRC); and the May 23, 2003 CA Resolution,3 denying the motion for reconsideration.

The facts not in dispute are as follows:

dianeThe award of backwages to ee is proper if the dismissal was illegal due to absence without leave due to causes unrelated to the work of the employee.

Back wages awarded even if the employee did not appeal in the order of e CA. hence, as to the general rule that only those who seek affirmative relief can be benefited by e judgment has an exception which is the awarding of backwages which is a substantial right of e employee,

Romeo Labrague (respondent) was a stevedore antigo employed with Asian Terminals, Inc. since the 1980's. Beginning September 9, 1993, respondent failed to report for work allegedly because he was arrested and placed in detention for reasons not related to his work.4

After respondent had been absent for more than one year, Asian Terminals, Inc., through Atty. Rodolfo G. Corvite, Jr., (petitioners) sent him (respondent) a letter, dated December 27, 1994, at his last known address at Area H, Parola, Tondo, Manila, requiring him to explain within 72 hours why he should not suffer disciplinary penalty for his prolonged absence.5 The following month, petitioner sent respondent another notice of similar tenor.6

Finally, on February 8, 1995, petitioner issued a memorandum stating:

For having incurred absence without official leave (AWOL) from 03 September 1993 up to the present after you were put behind bars due to your involvement in a killing incident, your employment is hereby terminated for cause effective IMMEDIATELY.7

Though addressed to respondent, the foregoing memorandum does not indicate whether it was sent to the latter at his last known address.

Following his acquittal and release from detention, respondent reported for work on July 3, 1996 but was advised by petitioners to file a new application so that he may be rehired.8 Thus, respondent filed with the NLRC a complaint for illegal dismissal, separation pay, non-payment of labor standard benefits, damages and attorney's fees.9

In a Decision dated September 29, 1998, the Labor Arbiter (LA) held:

WHEREFORE, premises considered, judgment is hereby entered ordering respondents, jointly and severally, to pay the total sum of P152,700.00 as separation pay, 13th month and service incentive leave pay of complainant. Other issues or claims are hereby ordered DISMISSED for want of substantial evidence.

SO ORDERED.10

Petitioners appealed but the NLRC issued the April 30, 1999 Decision which merely modified the LA decision, viz.:

WHEREFORE, premises considered, the Decision appealed from is MODIFIED. Respondents are ordered to pay complainant his separation pay in the sum of P124,800.00. The awards representing 13th month pay and service incentive leave pay are DELETED.

SO ORDERED.11

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Petitioners' motion for reconsideration was denied by the NLRC in its Resolution12 on June 15, 1999.

It should be noted that respondent did not appeal from the NLRC decision deleting from the LA decision the award of 13th month pay and service incentive leave pay.

Petitioners went on to file a petition for certiorari13 with the CA which, however, the latter denied in the January 23, 2003 Decision now assailed before us, to wit:

WHEREFORE, the assailed decision of the NLRC is AFFIRMED with MODIFICATION in that:

(a) Labrague's separation pay should be computed on the basis of the aforequoted Section 2 of the collective bargaining agreement (CBA); and

(b) the petitioners are further ordered to pay Labrague his backwages from the time of his illegal dismissal in July 1996 up to the date of finality of this decision, computed also in accordance with Section 2 of the same CBA.

SO ORDERED.14

Respondent did not question the recomputation of his separation pay. Only petitioners filed a motion for reconsideration but the CA denied the same.

Hence, the present petition on the sole ground that:

The Honorable Court of Appeals erred in declaring the dismissal of respondent Romeo L. Labrague from employment illegal notwithstanding his long and unauthorized absences from work which is contrary to law and existing jurisprudence.15

The petition lacks merit.

In declaring the dismissal of respondent illegal, the concurrent view of the CA, NLRC and LA is that the latter's prolonged absence was excusable, for it was brought about by his detention for almost three years for a criminal charge that was later declared baseless. They held that his prolonged absence was not coupled with an intention to relinquish his employment, and therefore did not constitute abandonment. The CA elaborated:

Verily, the Supreme Court ruled in the Magtoto case, involving detention for seven (7) months by military authorities, pursuant to an Arrest, Search and Seizure Order (ASSO), relied upon by the Arbiter, viz.:

"Equitable considerations favor the petitioner. While the respondent employer may have shed no tears over the arrest of one of its employees, there is likewise no showing that

it had any role in the arrest and detention of Mr. Magtoto. But neither was the petitioner at fault. The charges which led to his detention was later found without basis. x x x."16

Petitioners argue that they were justified in dismissing respondent after the latter incurred a three-year absence without leave, and refused to report for work despite several notices.17 Petitioners argue that respondent's prolonged absence was not justified or excused by his so-called detention, which remained a mere allegation that was never quite substantiated by any form of official documentation.18 It being uncertain whether respondent was ever placed in detention, petitioners doubt whether the CA correctly applied the ruling in Magtoto v. National Labor Relations Commission.19

The foregoing arguments of petitioners are specious.

It cannot be gainsaid that respondent was in detention during the entire period of his absence from work and, more importantly, that his situation was known to petitioners. It is of record that in the February 8, 1995 termination notice it issued, petitioners expressly acknowledged that respondent began incurring absences without leave "after [he was] put behind bars due to [his] involvement in a killing incident."20 It clearly indicates that petitioners knew early on of the situation of respondent. It also explains why in its reply21 before the LA, appeal22 before the NLRC and petition for certiorari23 before CA, petitioners never questioned the truth about respondent's detention. Petitioners' skepticism about respondent's detention is a mere afterthought not proper for consideration in a petition for review under Rule 45, which bars reappraisal of facts not disputed before the lower courts or already settled in their proceedings, and unanimously at that.24

It is beyond dispute then that the underlying reason for respondent's absences was his detention. The question is whether the CA erred in holding that such absences did not amount to abandonment as to furnish petitioners cause to dismiss respondent.

To justify the dismissal of respondent for abandonment, petitioners should have established by concrete evidence the concurrence of two elements: first, that respondent had the intention to deliberately and without justification abandon his employment or refuse to resume his work; and second, that respondent performed overt acts from which it may be deduced that he no longer intended to work. 25

Petitioners failed to discharge such burden of proof. Respondent's absences, even after notice to return to work, cannot be equated with abandonment,26 especially when we take into account that the latter incurred said absences unwillingly and without fault.27

Absences incurred by an employee who is prevented from reporting for work due to his detention to answer some criminal charge is excusable if his detention is baseless, in that the criminal charge against him is not at all supported by sufficient evidence. In Magtoto v. National Labor Relations Commission as well as Pedroso v. Castro,28 we declared such absences as not constitutive of abandonment, and held the dismissal of

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the employee-detainee invalid. We recently reiterated this ruling in Standard Electric Manufacturing Corporation v. Standard Electric Employees Union-NAFLU-KMU,29 viz.:

The facts in Pedroso v. Castro are similar to the set of facts in the present case. The petitioners therein were arrested and detained by the military authorities by virtue of a Presidential Commitment Order allegedly for the commission of Conspiracy to Commit Rebellion under Article 136 of the RPC. As a result, their employer hired substitute workers to avoid disruption of work and business operations. They were released when the charges against them were not proven. After incarceration, they reported back to work, but were refused admission by their employer. The Labor Arbiter and the NLRC sustained the validity of their dismissal. Nevertheless, this Court again held that the dismissed employees should be reinstated to their former positions, since their separation from employment was founded on a false or non-existent cause; hence, illegal.

Respondent Javier's absence from August 9, 1995 cannot be deemed as an abandonment of his work. Abandonment is a matter of intention and cannot lightly be inferred or legally presumed from certain equivocal acts. To constitute as such, two requisites must concur: first, the employee must have failed to report for work or must have been absent without valid or justifiable reason; and second, there must have been a clear intention on the part of the employee to sever the employer-employee relationship as manifested by some overt acts, with the second element being the more determinative factor. Abandonment as a just ground for dismissal requires clear, willful, deliberate, and unjustified refusal of the employee to resume his employment. Mere absence or failure to report for work, even after notice to return, is not tantamount to abandonment.

Moreover, respondent Javier's acquittal for rape makes it more compelling to view the illegality of his dismissal. The trial court dismissed the case for "insufficiency of evidence," and such ruling is tantamount to an acquittal of the crime charged, and proof that respondent Javier's arrest and detention were without factual and legal basis in the first place.30

Similarly, respondent herein was prevented from reporting for work by reason of his detention. That his detention turned out to be without basis, as the criminal charge upon which said detention was ordered was later dismissed for lack of evidence, made the absences he incurred as a consequence thereof not only involuntary but also excusable. It was certainly not the intention of respondent to absent himself, or his fault that he was detained on an erroneous charge. In no way may the absences he incurred under such circumstances be likened to abandonment. The CA, therefore, correctly held that the dismissal of respondent was illegal, for the absences he incurred by reason of his unwarranted detention did not amount to abandonment.

His dismissal being illegal, respondent is entitled to backwages as a matter of right provided by law.31 The CA granted him backwages from July 1996, when he reported back for work but was informed of his dismissal, up to the date of finality of its decision.

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It is noted that the LA and NLRC decisions did not award backwages and respondent did not appeal from said decision. Nonetheless, such award of backwages may still be sustained consistent with our ruling in St. Michael's Institute v. Santos,[32] to wit:

On the matter of the award of backwages, petitioners advance the view that by awarding backwages, the appellate court "unwittingly reversed a time-honored doctrine that a party who has not appealed cannot obtain from the appellate court any affirmative relief other than the ones granted in the appealed decision." We do not agree.

The fact that the NLRC did not award backwages to the respondents or that the respondents themselves did not appeal the NLRC decision does not bar the Court of Appeals from awarding backwages. While as a general rule, a party who has not appealed is not entitled to affirmative relief other than the ones granted in the decision of the court below, the Court of Appeals is imbued with sufficient authority and discretion to review matters, not otherwise assigned as errors on appeal, if it finds that their consideration is necessary in arriving at a complete and just resolution of the case or to serve the interests of justice or to avoid dispensing piecemeal justice.

Article 279 of the Labor Code, as amended, mandates that an illegally dismissed employee is entitled to the twin reliefs of (a) either reinstatement or separation pay, if reinstatement is no longer viable, and (b) backwages. Both are distinct reliefs given to alleviate the economic damage suffered by an illegally dismissed employee and, thus, the award of one does not bar the other. Both reliefs are rights granted by substantive law which cannot be defeated by mere procedural lapses. Substantive rights like the award of backwages resulting from illegal dismissal must not be prejudiced by a rigid and technical application of the rules. The order of the Court of Appeals to award backwages being a mere legal consequence of the finding that respondents were illegally dismissed by petitioners, there was no error in awarding the same.33 (Emphasis supplied.)

However, as to whether petitioner Atty. Rodolfo G. Corvite, Jr. should be held jointly and severally liable with petitioner Asian Terminals, Inc., we agree with the latter's view that, absent a distinct finding of bad faith or evident malice on the part of petitioner Atty. Rodolfo G. Corvite, Jr. in terminating the employment of respondent, the former should not be held solidarily liable for the payment of whatever monetary award is due respondent.34

WHEREFORE, the petition is PARTIALLY GRANTED. The Decision dated January 23, 2003 and the May 23, 2004 Resolution of the Court of Appeals are AFFIRMED with the further MODIFICATION that the solidary liability of petitioner Atty. Rodolfo G. Corvite, Jr. is DELETED.

No costs.

SO ORDERED.

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Republic of the PhilippinesSUPREME COURTManila

THIRD DIVISION

G.R. No. 170525 October 2, 2009

BARON REPUBLIC THEATRICAL, MAJOR CINEMA, WILSON PASCUAL and RODRIGO SALAZAR, Petitioners, vs.NORMITA P. PERALTA and EDILBERTO H. AGUILAR, Respondents.

D E C I S I O N

PERALTA, J.:

Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court which seeks the reversal of the Decision1 of the Court of Appeals (CA) dated March 31, 2005 in CA-G.R. SP No. 57483 and its Resolution2 dated October 25, 2005, denying petitioners' Motion for Partial Reconsideration.3 The CA Decision in question set aside the April 16, 1999 Decision of the National Labor Relations Commission (NLRC) in NLRC NCR CA NO. 014340-984 and reinstated with modification the Decision of the Labor Arbiter dated August 15, 1997 in NLRC NCR CASE NO. 00-05-04048-94.5

The factual and procedural antecedents, as narrated by the CA, are as follows:

Petitioner [herein respondent], Normita P. Peralta ("PERALTA") was hired by BARON REPUBLIC THEATRICAL ("BARON") sometime in 1983 as a ticket seller and was later on promoted as General Manager. As General Manager she received a salary of Four Thousand Pesos (P4,000.00) a month.

On March 14, 1993, she was informed by the owner and operator of BARON, respondent [herein petitioner] Rodrigo Salazar ("SALAZAR") that her employment was already terminated effective that day. She was not given any reason why her services were being terminated. Thereafter, she filed a case for illegal dismissal with claim for reinstatement, payment of backwages, unpaid salary, 13th month pay, service incentive leave, damages and attorney's fees against her employer, BARON/SALAZAR.

As to petitioner [herein respondent] Edilberto H. Aguilar ("AGUILAR"), he was hired as electrician/air-conditioner operator at MAJOR CINEMA ("MAJOR") sometime in January of 1983. AGUILAR received a salary of NINETY-SEVEN PESOS (P97.00) per day and his salary was not increased even after the statutory minimum salary was increased.

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Due to illegal dismissal by abandonment, not proven that ee has deemed abandoned his position when after his illegal dismissal he immediately filed for a case alleging reinstatement

In May 1994, he was informed by the owner-operator of MAJOR, [herein petitioner] Wilson Pascual ("PASCUAL"), that his employment was terminated effective that day. No explanation was given to AGUILAR why his service was being terminated. Hence, he filed a complaint against his employers, PASCUAL/MAJOR for illegal dismissal, payment of wage differentials as a result of underpayment, overtime pay, holiday and rest day/pay and service incentive leave pay.6

On August 15, 1997, the Labor Arbiter handling the case rendered a Decision, the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered:

1. Ordering respondent Rodrigo D. Salazar to pay complainant NORMITA P. PERALTA, the following amounts:

13th month pay ......................................... P12,000.00Service incentive leave pay ..................... 1,999.95One month pay in lieu of notice ............... 4,000.00Separation pay (P2,000.00 x 4 years - November 21, 1988 to March 14, 1993) .... 8,000.005% attorney's fees ....................................... 1,300.00TOTAL AWARD ............ P 27,299.952. Declaring the dismissal of complainant EDILBERTO H. AGUILAR by respondent WILSON PASCUAL to be illegal and ordering the latter to reinstate the former to his former position without loss of seniority rights and other privileges and pay him the following amount:

Backwages until reinstatement, computedas of August 15, 1997 ................................. P149,158.5013th month pay (P140,158.50 over 12) ........ 11,679.90Salary differentials (underpayment) ............ 2,740.4013th month pay for the underpayment .......... 228.405 day per year SILP for 3 years .................... 1,860.005% attorney's fees ......................................... 7,833.75TOTAL AWARD FOR AGUILAR P164,501.25All other claims are DISMISSED for insufficiency of evidence and/or lack of merit.

SO ORDERED.7

The Labor Arbiter ruled that Peralta's dismissal was not illegal as the establishment where she was working closed due to business losses and closure of business or establishment is one of the authorized causes recognized by law in dismissing an employee. On the other hand, the Labor Arbiter held that Aguilar's dismissal was illegal for failure of Pascual to present evidence that the former's dismissal was for a just cause.

On appeal, the NLRC modified the Decision of the Labor Arbiter. The decretal portion of the NLRC Decision reads as follows:

WHEREFORE, premises considered, the Decision of the Labor Arbiter is hereby modified and a new one entered:

1. Ordering respondent Rodrigo D. Salazar to pay complainant NORMITA P. PERALTA, the following amounts:

One month pay in lieu of notice P 4,000.00Separation pay (P2,000.00 x 4 yrs.Nov.21, 1998 to March 14, 1993) 8,000.00--------------TOTAL AWARD P12,000.002. Declaring that complainant EDILBERTO H. AGUILAR has voluntarily terminated his employment with respondent WILSON PASCUAL but ordering the latter to pay the former:

Salary differentials (underpayment) P 2,740.4013th month pay for the underpayment 228.40-------------TOTAL AWARD FOR AGUILAR P 2,968.80SO ORDERED.8

In its Decision, the NLRC reversed the Labor Arbiter's ruling that Aguilar was illegally dismissed. Instead, it gave credence to Pascual's representation that it was Aguilar who refused to return or report for work and was guilty of abandonment. The NLRC held that it is against logic for Pascual to terminate Aguilar on the spot without any substitute because his services are essential to Pascual's business. The NLRC ruled that, aside from his self-serving statements, Aguilar failed to show proof that he was indeed terminated.

Herein respondents filed a Motion for Reconsideration,9 but the NLRC denied it in its Resolution10 dated September 28, 1999.

Respondents then filed a petition for certiorari with the CA assailing the abovementioned Decision and Resolution of the NLRC.111avvphi1

On March 31, 2005, the CA rendered its Decision, disposing as follows:

WHEREFORE, except as to the order deleting the award of Service Incentive Leave pay to PERALTA and AGUILAR, the decision of the NLRC dated April 16, 1999 is hereby SET ASIDE and the Decision of Labor Arbiter Ernesto S. Dinopol dated August 15, 1996 is REINSTATED with the MODIFICATION that the award of service incentive leave pay in favor of PERALTA and AGUILAR is DELETED and should the order reinstating AGUILAR be not feasible, MAJOR CINEMA and/or PASCUAL is hereby

ORDERED to pay separation pay at the rate of one month for every year of service, with a fraction of at least six (6) months of service considered as one (1) year.

SO ORDERED.12

The CA held that as to Peralta, Salazar failed to discharge his burden of proving that he paid the former her 13th month pay. In the same manner, the appellate court ruled that Pascual failed to prove that Aguilar was guilty of abandonment. Moreover, the CA reinstated the award of attorney's fees holding that Peralta and Aguilar were both forced to litigate in order to protect their rights and interests. On the other hand, the CA affirmed the ruling of the NLRC which deleted the award of service incentive leave pay to Peralta and Aguilar.

Aggrieved, herein petitioners filed a Motion for Partial Reconsideration,13 but it was denied by the CA in its Resolution14 dated October 25, 2005.

Hence, this petition for review raising the following issues as grounds:

I

WHETHER OR NOT THE EMPLOYER HAS THE BURDEN OF PROVING THAT THE EMPLOYEE WAS DISMISSED FOR A JUST CAUSE ABSENT ANY SHOWING OF AN OVERT OR POSITIVE ACT PROVING THAT THE EMPLOYER HAD DISMISSED THE EMPLOYEE

II

WHETHER OR NOT THE COURT OF APPEALS ERRED IN REINSTATING THE AWARD OF ATTORNEY'S FEES IN FAVOR OF PERALTA AND AGUILAR IN THE ABSENCE OF BAD FAITH ON THE PART OF THE PETITIONERS15

As to the first issue, petitioners contend that the CA erred in ruling that Pascual has the burden of proving that the dismissal of Aguilar was for a just cause; that the CA proceeded on the wrong premise that Aguilar was in fact dismissed from his employment; that petitioners' burden of proving the validity of Aguilar's dismissal comes only after the latter is able to prove that his alleged dismissal from employment was made through some overt or positive act on the part of petitioner Pascual indicating such dismissal; that Aguilar, in fact, refused to work and abandoned his job.

The Court is not persuaded.

It is a basic principle that in illegal dismissal cases, the burden of proof rests upon the employer to show that the dismissal of the employee is for a just cause and failure to do so would necessarily mean that the dismissal is not justified.16 In addition, in claims of abandonment by an employee, the settled rule is that the employer bears the burden of showing a deliberate and unjustified refusal by the employee to resume his employment

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without any intention of returning.17 Moreover, in evaluating a charge of abandonment, the jurisprudential rule is that abandonment is a matter of intention that cannot be lightly presumed from equivocal acts.18 To constitute abandonment, two elements must concur: (1) the failure to report for work or absence without valid or justifiable reason, and (2) a clear intent, manifested through overt acts, to sever the employer-employee relationship.19

In the present case, petitioner Pascual consistently denies that Aguilar was terminated from his employment and that, instead, he abandoned his work and never returned after his request for salary increase was rejected. However, denial, in this case, does not suffice; it should be coupled with evidence to support it.20 In the instant case, the Court finds no error in the ruling of the CA that petitioners failed to adduce evidence to prove abandonment and rebut Aguilar's claim of dismissal.

Contrary to petitioners' asseveration that Aguilar is guilty of abandoning his job, the Court finds no error in the finding of the Labor Arbiter, as affirmed by the CA, that there was no clear intention on Aguilars part to sever the employer-employee relationship. Considering that "intention" is a mental state, petitioners must show that respondent Aguilars overt acts point unerringly to his intent not to work anymore. In this regard, petitioners failed.

In fact, Aguilars filing of a complaint for illegal dismissal the day following his termination, as well as his subsequent prayer for reinstatement in his Position Paper,21 are indications which strongly speak against the petitioners' charge of abandonment. An employee who loses no time in protesting his layoff cannot by any reasoning be said to have abandoned his work for it is illogical for an employee to abandon his employment and, thereafter, file a complaint for illegal dismissal and pray for reinstatement.22

In a long line of cases, this Court has held that abandonment is negated where the immediate filing of a complaint for illegal dismissal was coupled with a prayer for reinstatement and that the filing of the complaint for illegal dismissal is proof enough of the desire to return to work.23 The prayer for reinstatement, as in this case, speaks against any intent to sever the employer-employee relationship.24

In addition, the Court takes note of the fact established by respondents that Aguilar has been in-charge of the air-conditioning system of Major Cinema since 1983, or a total of more than 11 years. No evidence was shown that he had any record of infraction of company rules. Hence, the Court finds it difficult to accept petitioner Pascuals allegation that Aguilar simply walked away with the intent to abandon his job when his request for increase of wage was not granted. The Court agrees with the Labor Arbiter that abandonment after Aguilars long years of service and the consequent surrender of benefits earned from years of hard work are highly unlikely.

Furthermore, the Court agrees with respondents when they argued in their petition filed with the CA that if an employee's aim is to secure the benefits due him from his employer, abandonment would surely be an illogical and impractical recourse,

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especially for simple laborers such as respondent Aguilar. Considering the difficult times in which our country is in it is illogical and even suicidal for an employee like Aguilar to abandon his work, knowing fully well of the widespread unemployment and underemployment problems as well as the difficulty of looking for a means of livelihood, simply because his employer rejected his demand for salary increase. Under the given facts, no basis in reason exists for the petitioners' theory that Aguilar abandoned his job.

With respect to the second issue, petitioners argue that attorney's fees are due only in cases where the plaintiff or complainant is compelled to litigate and that there must be a finding to this effect. Petitioners also assert that the totality of evidence does not support the claims of herein respondents that they were compelled to litigate.

The Court does not agree.

It is settled that in actions for recovery of wages or when the employee is illegally dismissed in bad faith or where an employee was forced to litigate and incur expenses to protect his rights and interests by reason of the unjustified acts of his employer, he is entitled to an award of attorney's fees.25 This award is justifiable under Article 111 of the Labor Code,26 Section 8, Rule VIII, Book III of its Implementing Rules;27 and paragraph 7, Article 2208 of the Civil Code.28

Moreover, in cases for recovery of wages, the award of attorney's fees is proper and there need not be any showing that the employer acted maliciously or in bad faith when it withheld the wages.29 There need only be a showing that the lawful wages were not paid accordingly.30

As to Peralta, it was established that she was denied her 13th month pay. Moreover, both the Labor Arbiter and the NLRC are in agreement that she was unceremoniously dismissed from her employment when her employer, Salazar, failed to serve her a written notice of her dismissal from employment at least 30 days prior to the supposed date of her termination. This is a clear evidence of bad faith on the part of Salazar. Hence, this circumstance, coupled with the denial of her benefits, prompted her to seek representation for the enforcement of her rights and the protection of her interests against the unjustified acts of her employer. Thus, the CA committed no grave abuse of discretion in sustaining the award of attorney's fees to Peralta.

With respect to Aguilar, it is clear that he was illegally terminated from his employment and that his wages and other benefits were withheld from him without any valid and legal basis. As a consequence, he is compelled to file an action for illegal dismissal and for the recovery of his lawful wages and other benefits and, in the process, incurred expenses. On these bases, the Court also finds that the CA did not commit grave abuse of discretion in upholding the grant of attorney's fees to Aguilar.

WHEREFORE, the instant petition is DENIED. The Decision of the Court of Appeals, dated March 31, 2005, and its Resolution of October 25, 2005 in CA-G.R. SP No. 57483, are AFFIRMED.

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SO ORDERED.

Republic of the PhilippinesSUPREME COURT

SECOND DIVISION

G.R. No. 150668 December 15, 2005

FORTUNY GARMENTS/JOHNNY CO., Petitioner, vs.ELENA J. CASTRO, Respondent.

D E C I S I O N

CALLEJO, SR., J.:

Assailed before the Court on petition for review on certiorari is the Decision1 of the Court of Appeals (CA) in CA-G.R. SP No. 56153 granting the petition of Elena J. Castro and nullifying the rulings of the Labor Arbiter and the National Labor Relations Commission (NLRC).

Then 58-year old Elena J. Castro was employed as a sewer by the Fortuny Garments Corporation sometime in 1985. Petitioner Johnny Co was then its president. Elena was paid her salaries and other emoluments for the period up to December 21, 1996.2

On December 16, 1996, Elenas daughter gave birth by caesarian operation. Since nobody would take care of her daughter, she then went on leave of absence.

When Elena reported to work on December 23, 1996, Elsa Co, co-manager of the company and wife of petitioner, told her that she had to stop working because "she was already old." Elena insisted that she could still work and perform her duties despite her age. She was told, this time, that she was already dismissed because of her failure to report for work for several days after her leave of absence. Nevertheless, Elena reported for work during the first week of January 1997, only to be informed again that she had already been dismissed.3

Elena forthwith filed a complaint against the corporation and Johnny Co, for illegal dismissal and payment of monetary benefits inclusive of unpaid overtime pay.

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dianeShe was dismissed because she had to go leave of absence because her daughter undergo a Caesarian operation and no one would take care of her.

She was advised not to work anymore because she was old but she insisted that she can still perform her work properly and don't want to stop work yet.

For his part, the petitioner averred that the complainant was not dismissed but that she resigned voluntarily, as evidenced by a cash voucher dated January 30, 1996.4

By way of reply, the complainant alleged that sometime in 1995, she and her co-workers were made to sign blank vouchers, allegedly as proof that their employer had paid their Social Security Service (SSS) premiums. She insisted that she could not have resigned on January 30, 1996 because she was still working for the corporation up to December 23, 1996 when she was illegally dismissed.5 She did not receive a centavo from the petitioner by way of separation pay, salary, allowance, bonus or overtime pay.

On December 21, 1998, the Labor Arbiter rendered judgment ordering the dismissal of the complaint, holding that Elena had voluntarily resigned.6 The Labor Arbiter reasoned out that:

Moreover, complainants desire to resign was spurred by the giving birth of her child through caesarian operations, and obviously complainant cannot take care of her grandchild and attend to her job at the same time. In all probability, complainant gave priority to her family by opting to resign to give her time, love and care to her daughter and grandchild, but at the same time receiving separation benefits for the years she devoted to the company.

As regards complainants money claims, it is clear that she entered into a package deal with respondents. Basic [is] the fact that when one resigns, the worker forfeits whatever benefits she is entitled to on account of the past services she has rendered to the company, unless there is an agreement policy or practice in the company granting separation benefits to the resigning worker. In this regard, complainant failed to prove the existence of the same.

Upon the other hand, respondents presented a document whereby complainant admitted that "during her stay with Fortuny Garment Manufacturing Co., she was treated well and fairly; that she was given all her salaries, allowances, bonuses and overtime [pay] rendered from the time she started working up to the last day of her service. In addition, complainant acknowledge[d] receipt of the sum of P35,000.00. (Annex A, ibid).

In addition, as proof that complainant was paid her benefits like 13th month pay, and weekly salary, respondents attached samples of the payrolls (Annexes B, B-1 to B-23) to show compliance with the Labor Standard benefits.7

Elena appealed the decision to the NLRC, which rendered judgment on July 21, 1999 affirming the decision of the Labor Arbiter.8 This prompted Elena to file a petition for certiorari with the CA for the reversal of the decision. On June 28, 2001, the appellate court rendered judgment granting the petition and reversing the assailed decision. It held that the only documentary evidence presented to prove that the respondent had voluntarily resigned, in fact, belied the petitioners claim.9

The petitioner filed a motion for the reconsideration of the decision, alleging that it even issued a certification and filed the same with the SSS to the effect that the respondent was no longer connected with the company effective January 31, 1996.10 The appellate court denied the said motion.11

The petitioner thus filed the instant petition, alleging that

I

THE HONORABLE COURT A QUO COMMITTED SERIOUS AND REVERSIBLE ERROR WHEN IT REVERSED THE NLRC AND THE LABOR ARBITER, THEREBY REPLACING THEIR FINDINGS OF FACTS WITH SPECULATIONS, SURMISES AND INFERENCES WHICH ARE MANIFESTLY MISTAKEN.

II

THE HONORABLE COURT A QUO COMMITTED SERIOUS ERROR AND GRAVE ABUSE OF DISCRETION IN FINDING THAT RESPONDENT WAS ILLEGALLY DISMISSED.

III

THE HONORABLE COURT A QUO COMMITTED SERIOUS ERROR AND GRAVE ABUSE OF DISCRETION IN FINDING RESPONDENT TO BE ENTITLED TO HER MONEY CLAIMS, INCLUDING ATTORNEYS FEES.12

The petition has no merit.

A perusal of the petition shows that the petitioners arguments are a mere reiteration of its arguments before the CA. The petitioner was burdened to prove its defense that the respondent had voluntarily resigned and was not dismissed from her employment, and relies principally on the cash voucher which the respondent purportedly signed, to wit:

R.C. No. . No. ______

Date CASH VOUCHER

Place Date January 30, 1996

Paid to Elena Castro

Address _______________________________

P A R T I C U L A R S

I, Elena J. Castro voluntarily tendered my resignation as employee of Fortuny Garment Manufacturing. That during my stay with Fortuny Garment Mfg., I was treated well and fairly; that I was given all my salaries, allowances, bonuses and overtime rendered from the time I started working up to the last day of my service.

That thru the generosity of my said employer, I was given the amount of THIRTY-FIVE THOUSAND PESOS (P35,000.00) for consideration and separation fee (sic).

RECEIVED from FORTUNY GARMENT MFG. the amount of PESOS THIRTY-FIVE THOUSAND ONLY (P35,000.00) in full payment of amount described above.

By: _____SIGNED)____

Signature (Illegible) ELENA J. CASTRO13

Approved

Thus, it appears in the cash voucher that the respondent resigned on January 30, 1996 which was approved by the petitioner, and that she received separation pay of P35,000.00 on the same date. The petitioner maintains that the respondent ceased reporting for work after January 30, 1996.

Resignation is the voluntary act of an employee who is in a situation where one believes that personal reasons cannot be sacrificed in favor of the exigency of the service, and has no other choice but to dissociate from employment. Resignation is a formal pronouncement or relinquishment of an office, and must be made with the intention of relinquishing the office accompanied by the act of relinquishment.14 A resignation must be unconditional and with the intent to operate as such.15

Moreover, the intention to relinquish an office must concur with the overt act of relinquishment. The act of the employee before and after the alleged resignation must be considered to determine whether in fact, he or she intended to relinquish such employment. If the employer introduces evidence purportedly executed by an employee as proof of voluntary resignation and the employee specifically denies the authenticity and due execution of said document, the employer is burdened to prove the due execution and genuineness of such document.16

In the present case, no less than the petitioner adduced documentary evidence consisting of payrolls showing that the respondent reported for work and received her salary/wages up to December 21, 1996, or shortly before she went on leave of absence after her daughter gave birth on December 23, 1996. Based on the petitioners documentary evidence itself, the respondent did not resign or receive P35,000.00 on January 30, 1996. The records show that the respondent was still an employee of the petitioner as late as December 21, 1996. It was only in January 1997 when the petitioner terminated the respondents employment and told her not to report for work

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again. The only reason why the petitioner terminated the respondents employment was because she failed to report for work after her daughter gave birth.

That the petitioner signed the cash voucher is undisputed. However, the Court is inclined to believe the respondents claim that she was made to sign the cash voucher only to make it appear that the petitioner had paid its share in the SSS premiums of its employees.

Incredibly, despite the documentary evidence to the contrary, the Labor Arbiter and the NLRC declared that the respondent had voluntarily resigned.

The Court notes that the respondent filed her complaint against the petitioner in the NLRC shortly after she was told by Elsa Co to stop reporting for work. Indeed, voluntary resignation is difficult to reconcile with the filing of a complaint for illegal dismissal.17

The Court concurs with the following ruling of the CA:

First, the fact is clear that the alleged resignation letter written on a "Cash Voucher" does not contain any reason, explanation or motive why the petitioner wanted to sever her employment from private respondents, which ordinarily and normally appears in a voluntary letter of resignation. Rather the said resignation letter contains statements which would exculpate private respondents from its obligation under the labor laws. This observation strengthens petitioners assertions that she, together with other co-employees, was made to sign blank vouchers and the private respondents merely filled up the column "PARTICULARS" and made it appear that said petitioner voluntarily resigned and was paid all her benefits. (Rollo, p. 21). The Labor Arbiter speculated that petitioners resignation was spurred by the giving birth of petitioners daughter through caesarian operation (Rollo, p. 31) disregarding the blatant facts on record that the alleged resignation occurred on January 30, 1996 (Rollo, p. 50) whereas, complainants daughter gave birth on December 16, 1996 (Rollo, p. 29) or barely less than one year after the alleged resignation.

More important is the fact that while the alleged letter of resignation was executed on January 30, 1996 (Rollo, p. 50), still, herein petitioner continued to receive her salaries for the month of September, 1996 (Rollo, pp. 71, 72, 73, 74), for the month of November 1996 (Rollo, p. 63) and for the month of December, 1996 (Rollo, p. 60). Again, this inconsistency, supports petitioners claim that she was engaged to work at private respondents company until December 23, 1996 (Rollo, p. 35) and, on the other hand, it completely destroys private respondents allegation that herein petitioner voluntarily resigned from her employment.18

IN LIGHT OF ALL THE FOREGOING, the petition is DENIED for lack of merit. Costs against the petitioner.

SO ORDERED.

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Republic of the PhilippinesSUPREME COURTManila

THIRD DIVISION

G.R. No. 178083 July 22, 2008

FLIGHT ATTENDANTS AND STEWARDS ASSOCIATION OF THE PHILIPPINES (FASAP), Petitioner, vs.PHILIPPINE AIRLINES, INC., PATRIA CHIONG and COURT OF APPEALS, Respondents.

D E C I S I O N

YNARES-SANTIAGO, J.:

This petition for review on certiorari assails the Decision1 of the Court of Appeals (CA) dated August 23, 2006 in CA-G.R. SP No. 87956 which affirmed the National Labor Relations Commissions (NLRC) decision setting aside the Labor Arbiters findings of illegal retrenchment and ordering the reinstatement of the retrenched Philippine Airlines, Inc. (PAL) employee-members of petitioner Flight Attendants and Stewards Association of the Philippines (FASAP), with payment of backwages, moral and exemplary damages, and attorneys fees. Also assailed is the May 29, 2007 Resolution2 denying the motion for reconsideration.

Petitioner FASAP is the duly certified collective bargaining representative of PAL flight attendants and stewards, or collectively known as PAL cabin crew personnel. Respondent PAL is a domestic corporation organized and existing under the laws of the Republic of the Philippines, operating as a common carrier transporting passengers and cargo through aircraft.

On June 15, 1998, PAL retrenched 5,000 of its employees, including more than 1,400 of its cabin crew personnel, to take effect on July 15, 1998. PAL adopted the retrenchment scheme allegedly to cut costs and mitigate huge financial losses as a result of a downturn in the airline industry brought about by the Asian financial crisis. During said period, PAL claims to have incurred P90 billion in liabilities, while its assets stood at P85 billion.3

In implementing the retrenchment scheme, PAL adopted its so-called "Plan 14" whereby PALs fleet of aircraft would be reduced from 54 to 14, thus requiring the services of only 654 cabin crew personnel.4 PAL admits that the retrenchment is wholly premised upon

such reduction in fleet,5 and to "the strike staged by PAL pilots since this action also translated into a reduction of flights."6 PAL claims that the scheme resulted in "savings x x x amounting to approximately P24 million per month savings that would greatly alleviate PALs financial crisis."7

Prior to the full implementation of the assailed retrenchment program, FASAP and PAL conducted a series of consultations and meetings and explored all possibilities of cushioning the impact of the impending reduction in cabin crew personnel. However, the parties failed to agree on how the scheme would be implemented. Thus PAL unilaterally resolved to utilize the criteria set forth in Section 112 of the PAL-FASAP Collective Bargaining Agreement8 (CBA) in retrenching cabin crew personnel: that is, that retrenchment shall be based on the individual employees efficiency rating and seniority.

PAL determined the cabin crew personnel efficiency ratings through an evaluation of the individual cabin crew members overall performance for the year 1997 alone.9 Their respective performance during previous years, i.e., the whole duration of service with PAL of each cabin crew personnel, was not considered. The factors taken into account on whether the cabin crew member would be retrenched, demoted or retained were: 1) the existence of excess sick leaves; 2) the crew members being physically overweight; 3) seniority; and 4) previous suspensions or warnings imposed.10

While consultations between FASAP and PAL were ongoing, the latter began implementing its retrenchment program by initially terminating the services of 140 probationary cabin attendants only to rehire them in April 1998. Moreover, their employment was made permanent and regular.11

On July 15, 1998, however, PAL carried out the retrenchment of its more than 1,400 cabin crew personnel.

Meanwhile, in June 1998, PAL was placed under corporate rehabilitation and a rehabilitation plan was approved per Securities and Exchange Commission (SEC) Order dated June 23, 1998 in SEC Case No. 06-98-6004.12

On September 4, 1998, PAL, through its Chairman and Chief Executive Officer (CEO) Lucio Tan, made an offer to transfer shares of stock to its employees and three seats in its Board of Directors, on the condition that all the existing Collective Bargaining Agreements (CBAs) with its employees would be suspended for 10 years, but it was rejected by the employees. On September 17, 1998, PAL informed its employees that it was shutting down its operations effective September 23, 1998,13 despite the previous approval on June 23, 1998 of its rehabilitation plan.

On September 23, 1998, PAL ceased its operations and sent notices of termination to its employees. Two days later, PAL employees, through the Philippine Airlines Employees Association (PALEA) board, sought the intervention of then President Joseph E. Estrada. PALEA offered a 10-year moratorium on strikes and similar actions

and a waiver of some of the economic benefits in the existing CBA. Lucio Tan, however, rejected this counter-offer.14

On September 27, 1998, the PALEA board again wrote the President proposing the following terms and conditions, subject to ratification by the general membership:

1. Each PAL employee shall be granted 60,000 shares of stock with a par value of P5.00, from Mr. Lucio Tans shareholdings, with three (3) seats in the PAL Board and an additional seat from government shares as indicated by His Excellency;

2. Likewise, PALEA shall, as far as practicable, be granted adequate representation in committees or bodies which deal with matters affecting terms and conditions of employment;

3. To enhance and strengthen labor-management relations, the existing Labor-Management Coordinating Council shall be reorganized and revitalized, with adequate representation from both PAL management and PALEA;

4. To assure investors and creditors of industrial peace, PALEA agrees, subject to the ratification by the general membership, (to) the suspension of the PAL-PALEA CBA for a period of ten (10) years, provided the following safeguards are in place:

a. PAL shall continue recognizing PALEA as the duly certified bargaining agent of the regular rank-and-file ground employees of the Company;

b. The union shop/maintenance of membership provision under the PAL-PALEA CBA shall be respected.

c. No salary deduction, with full medical benefits.

5. PAL shall grant the benefits under the 26 July 1998 Memorandum of Agreement forged by and between PAL and PALEA, to those employees who may opt to retire or be separated from the company.

6. PALEA members who have been retrenched but have not received separation benefits shall be granted priority in the hiring/rehiring of employees.

7. In the absence of applicable Company rule or regulation, the provisions of the Labor Code shall apply.15

In a referendum conducted on October 2, 1998, PAL employees ratified the above proposal. On October 7, 1998, PAL resumed domestic operations and, soon after, international flights as well.16

Meanwhile, in November 1998, or five months after the June 15, 1998 mass dismissal of its cabin crew personnel, PAL began recalling to service those it had previously

retrenched. Thus, in November 199817 and up to March 1999,18 several of those retrenched were called back to service. To date, PAL claims to have recalled 820 of the retrenched cabin crew personnel.19 FASAP, however, claims that only 80 were recalled as of January 2001.20

In December 1998, PAL submitted a "stand-alone" rehabilitation plan to the SEC by which it undertook a recovery on its own while keeping its options open for the entry of a strategic partner in the future. Accordingly, it submitted an amended rehabilitation plan to the SEC with a proposed revised business and financial restructuring plan, which required the infusion of US$200 million in new equity into the airline.

On May 17, 1999, the SEC approved the proposed "Amended and Restated Rehabilitation Plan" of PAL and appointed a permanent rehabilitation receiver for the latter.21

On June 7, 1999, the SEC issued an Order confirming its approval of the "Amended and Restated Rehabilitation Plan" of PAL. In said order, the cash infusion of US$200 million made by Lucio Tan on June 4, 1999 was acknowledged.22

On October 4, 2007, PAL officially exited receivership; thus, our ruling in Philippine Air Lines v. Kurangking23 no longer applies.

On June 22, 1998, FASAP filed a Complaint24 against PAL and Patria T. Chiong25 (Chiong) for unfair labor practice, illegal retrenchment with claims for reinstatement and payment of salaries, allowances and backwages of affected FASAP members, actual, moral and exemplary damages with a prayer to enjoin the retrenchment program then being implemented. Instead of a position paper, respondents filed a Motion to Dismiss and/or Consolidation with NCMB Case No. NS 12-514-97 pending with the Office of the Secretary of the Department of Labor and Employment and/or Suspension and Referral of Claims to the interim rehabilitation proceedings (motion to dismiss).26

On July 6, 1998, FASAP filed its Comment to respondents motion to dismiss. On July 23, 1998, the Labor Arbiter issued an Order27 denying respondents motion to dismiss; granting a writ of preliminary injunction against PALs implementation of its retrenchment program with respect to FASAP members; setting aside the respective notices of retrenchment addressed to the cabin crew; directing respondents to restore the said retrenched cabin crew to their positions and PALs payroll until final determination of the case; and directing respondents to file their position paper.

Respondents appealed to the NLRC which reversed the decision of the Labor Arbiter. The NLRC directed the lifting of the writ of injunction and to vacate the directive setting aside the notices of retrenchment and reinstating the dismissed cabin crew to their respective positions and in the PAL payroll.28

FASAP filed its Position Paper29 on September 28, 1999. On November 8, 1999, respondents filed their Position Paper30 with counterclaims against FASAP, to which

FASAP filed its Reply.31 Thereafter, the parties were directed to file their respective Memoranda.32

Meanwhile, instead of being dismissed in accordance with the Kurangking case, the FASAP case (NLRC-NCR Case No. 06-05100-98) was consolidated with the following cases:

1. Ramon and Marian Joy Camahort v. PAL, et al. (NLRC-NCR Case No. 00-07-05854-98);

2. Erlinda Arevalo and Chonas Santos v. PAL, et al. (NLRC-NCR Case No. 00-07-09793-98); and

3. Victor Lanza v. PAL, et al. (NLRC-NCR Case No.00-04-04254-99).

On July 21, 2000, Labor Arbiter Jovencio Ll. Mayor rendered a Decision,33 the dispositive portion of which reads, as follows:

WHEREFORE, premises considered, this Office renders judgment declaring that Philippine Airlines, Inc., illegally retrenched One Thousand Four Hundred (1,400) cabin attendants including flight pursers for effecting the retrenchment program in a despotic and whimsical manner. Philippine Airlines, Inc. is likewise hereby ordered to:

1. Reinstate the cabin attendants retrenched and/or demoted to their previous positions;

2. Pay the concerned cabin attendants their full backwages from the time they were illegally dismissed/retrenched up to their actual reinstatements;

3. Pay moral and exemplary damages in the amount of Five Hundred Thousand Pesos (P500,000.00); and

4. Ten (10%) per cent of the total monetary award as and by way of attorneys fees.

SO ORDERED.34

Respondents appealed to the NLRC. Meanwhile, FASAP moved for the implementation of the reinstatement aspect of the Labor Arbiters decision. Despite respondents opposition, the Labor Arbiter issued a writ of execution with respect to the reinstatement directive in his decision. Respondents moved to quash the writ, but the Labor Arbiter denied the same. Again, respondents took issue with the NLRC.

Meanwhile, on May 31, 2004, the NLRC issued its Decision35 in the appeal with respect to the Labor Arbiters July 21, 2000 decision. The dispositive portion thereof reads:

WHEREFORE, premises considered, the Decision dated July 21, 2000 is hereby SET ASIDE and a new one entered DISMISSING the consolidated cases for lack of merit.

With respect to complainant Ms. Begonia Blanco, her demotion is hereby declared illegal and respondent PAL is ordered to pay her salary differential covering the period from the time she was downgraded in July 1998 up to the time she resigned in October 1999.

Respondent PAL is likewise ordered to pay the separation benefits to those complainants who have not received their separation pay and to pay the balance to those who have received partial separation pay.

The Order of the Labor Arbiter dated April 6, 2000 is also SET ASIDE and the Writ of Execution dated November 13, 2000 is hereby quashed.

Annexes "A" and "B" are considered part of this Decision.

SO ORDERED.36

FASAP moved for reconsideration but it was denied; hence it filed an appeal to the Court of Appeals which was denied in the herein assailed Decision.

FASAPs motion for reconsideration was likewise denied; hence, the instant petition raising the following issues:

WHETHER OR NOT THE COURT OF APPEALS DECIDED THE CASE A QUO IN A WAY CONTRARY TO LAW AND/OR APPLICABLE JURISPRUDENCE WHEN IT DENIED FASAPS PETITION FOR CERTIORARI UNDER RULE 65 AND EFFECTIVELY VALIDATED THE RETRENCHMENT EXERCISED BY RESPONDENT PAL WHICH WAS INITIALLY DECLARED AS ILLEGAL BY THE LABOR ARBITER A QUO SINCE:

FIRST, the record shows that PAL failed or neglected to adopt less drastic cost-cutting measures before resorting to retrenchment. No less than the Supreme Court held that resort to less drastic cost-cutting measures is an indispensable requirement for a valid retrenchment x x x.

SECOND, PAL arbitrarily and capriciously singled out the year 1997 as a reference in its alleged assessment of employee efficiency. With this, it totally disregarded the employees performance during the years prior to 1997. This resulted in the unreasonable and unfair retrenchment or demotion of several flight pursers and attendants who showed impeccable service records during the years prior to 1997.

THIRD, seniority was totally disregarded in the selection of employees to be retrenched, which is a clear and willful violation of the CBA.

FOURTH, PAL maliciously represented in the proceedings below that it could only operate on a fleet of fourteen (14) planes in order to justify the retrenchment scheme. Yet, the evidence on record revealed that PAL operated a fleet of twenty two (22) planes. In fact, after having illegally retrenched the unfortunate flight attendants and pursers, PAL rehired those who were capriciously dismissed and even hired from the outside just to fulfill their manning requirements.

FIFTH, PAL did not use any fair and reasonable criteria in effecting retrenchment. If there really was any, the same was applied arbitrarily, if not discriminatorily.

FINALLY, and perhaps the worst transgression of FASAPs rights, PAL used retrenchment to veil its union-busting motives and struck at the heart of FASAP when it retrenched seven (7) of its twelve (12) officers and demoted three (3) others.37 (Emphasis supplied)

These issues boil down to the question of whether PALs retrenchment scheme was justified.

It is a settled rule that in the exercise of the Supreme Courts power of review, the Court is not a trier of facts and does not normally undertake the re-examination of the evidence presented by the contending parties during trial. However, there are several exceptions to this rule38 such as when the factual findings of the Labor Arbiter differ from those of the NLRC, as in the instant case, which opens the door to a review by this Court.39

Under the Labor Code, retrenchment or reduction of employees is authorized as follows:

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

The law recognizes the right of every business entity to reduce its work force if the same is made necessary by compelling economic factors which would endanger its existence or stability.40 Where appropriate and where conditions are in accord with law

and jurisprudence, the Court has authorized valid reductions in the work force to forestall business losses, the hemorrhaging of capital, or even to recognize an obvious reduction in the volume of business which has rendered certain employees redundant.41

Nevertheless, while it is true that the exercise of this right is a prerogative of management, there must be faithful compliance with substantive and procedural requirements of the law and jurisprudence, for retrenchment strikes at the very heart of the workers employment, the lifeblood upon which he and his family owe their survival. Retrenchment is only a measure of last resort, when other less drastic means have been tried and found to be inadequate.42

The burden clearly falls upon the employer to prove economic or business losses with sufficient supporting evidence. Its failure to prove these reverses or losses necessarily means that the employees dismissal was not justified.43 Any claim of actual or potential business losses must satisfy certain established standards, all of which must concur, before any reduction of personnel becomes legal.44 These are:

(1) That retrenchment is reasonably necessary and likely to prevent business losses which, if already incurred, are not merely de minimis, but substantial, serious, actual and real, or if only expected, are reasonably imminent as perceived objectively and in good faith by the employer;

(2) That the employer served written notice both to the employees and to the Department of Labor and Employment at least one month prior to the intended date of retrenchment;

(3) That the employer pays the retrenched employees separation pay equivalent to one (1) month pay or at least one-half () month pay for every year of service, whichever is higher;

(4) That the employer exercises its prerogative to retrench employees in good faith for the advancement of its interest and not to defeat or circumvent the employees right to security of tenure; and,

(5) That the employer used fair and reasonable criteria in ascertaining who would be dismissed and who would be retained among the employees, such as status, efficiency, seniority, physical fitness, age, and financial hardship for certain workers.45

In view of the facts and the issues raised, the resolution of the instant petition hinges on a determination of the existence of the first, fourth and the fifth elements set forth above, as well as compliance therewith by PAL, taking to mind that the burden of proof in retrenchment cases lies with the employer in showing valid cause for dismissal;46 that legitimate business reasons exist to justify retrenchment.47

FIRST ELEMENT: That retrenchment is reasonably necessary and likely to prevent business losses which, if already incurred, are not merely de minimis, but substantial, serious, actual and real, or if only expected, are reasonably imminent as perceived objectively and in good faith by the employer.

The employers prerogative to layoff employees is subject to certain limitations. In Lopez Sugar Corporation v. Federation of Free Workers,48 we held that:

Firstly, the losses expected should be substantial and not merely de minimis in extent. If the loss purportedly sought to be forestalled by retrenchment is clearly shown to be insubstantial and inconsequential in character, the bona fide nature of the retrenchment would appear to be seriously in question. Secondly, the substantial loss apprehended must be reasonably imminent, as such imminence can be perceived objectively and in good faith by the employer. There should, in other words, be a certain degree of urgency for the retrenchment, which is after all a drastic recourse with serious consequences for the livelihood of the employees retired or otherwise laid-off. Because of the consequential nature of retrenchment, it must, thirdly, be reasonably necessary and likely to effectively prevent the expected losses. The employer should have taken other measures prior or parallel to retrenchment to forestall losses, i.e., cut other costs than labor costs. An employer who, for instance, lays off substantial numbers of workers while continuing to dispense fat executive bonuses and perquisites or so-called "golden parachutes," can scarcely claim to be retrenching in good faith to avoid losses. To impart operational meaning to the constitutional policy of providing "full protection" to labor, the employers prerogative to bring down labor costs by retrenching must be exercised essentially as a measure of last resort, after less drastic means - e.g., reduction of both management and rank-and-file bonuses and salaries, going on reduced time, improving manufacturing efficiencies, trimming of marketing and advertising costs, etc. - have been tried and found wanting.

Lastly, but certainly not the least important, alleged losses if already realized, and the expected imminent losses sought to be forestalled, must be proved by sufficient and convincing evidence.

The law speaks of serious business losses or financial reverses. Sliding incomes or decreasing gross revenues are not necessarily losses, much less serious business losses within the meaning of the law. The fact that an employer may have sustained a net loss, such loss, per se, absent any other evidence on its impact on the business, nor on expected losses that would have been incurred had operations been continued, may not amount to serious business losses mentioned in the law. The employer must show that its losses increased through a period of time and that the condition of the company will not likely improve in the near future,49 or that it expected no abatement of its losses in the coming years.50 Put simply, not every loss incurred or expected to be incurred by a company will justify retrenchment.51

The employer must also exhaust all other means to avoid further losses without retrenching its employees.52 Retrenchment is a means of last resort; it is justified only

when all other less drastic means have been tried and found insufficient.53 Even assuming that the employer has actually incurred losses by reason of the Asian economic crisis, the retrenchment is not completely justified if there is no showing that the retrenchment was the last recourse resorted to.54 Where the only less drastic measure that the employer undertook was the rotation work scheme, or the three-day-work-per-employee-per-week schedule, and it did not endeavor at other measures, such as cost reduction, lesser investment on raw materials, adjustment of the work routine to avoid scheduled power failure, reduction of the bonuses and salaries of both management and rank-and-file, improvement of manufacturing efficiency, and trimming of marketing and advertising costs, the claim that retrenchment was done in good faith to avoid losses is belied.55

Alleged losses if already realized, and the expected imminent losses sought to be forestalled, must be proved by sufficient and convincing evidence. The reason for requiring this is readily apparent: any less exacting standard of proof would render too easy the abuse of this ground for termination of services of employees; scheming employers might be merely feigning business losses or reverses in order to ease out employees.56

In establishing a unilateral claim of actual or potential losses, financial statements audited by independent external auditors constitute the normal method of proof of profit and loss performance of a company.57 The condition of business losses justifying retrenchment is normally shown by audited financial documents like yearly balance sheets and profit and loss statements as well as annual income tax returns. Financial statements must be prepared and signed by independent auditors; otherwise, they may be assailed as self-serving.58 A Statement of Profit and Loss submitted to prove alleged losses, without the accompanying signature of a certified public accountant or audited by an independent auditor, is nothing but a self-serving document which ought to be treated as a mere scrap of paper devoid of any probative value.59

The audited financial statements should be presented before the Labor Arbiter who is in the position to evaluate evidence. They may not be submitted belatedly with the Court of Appeals, because the admission of evidence is outside the sphere of the appellate courts certiorari jurisdiction. Neither can this Court admit in evidence audited financial statements, or make a ruling on the question of whether the employer incurred substantial losses justifying retrenchment on the basis thereof, as this Court is not a trier of facts.60 Even so, this Court may not be compelled to accept the contents of said documents blindly and without thinking.61

The requirement of evidentiary substantiation dictates that not even the affidavit of the Assistant to the General Manager is admissible to prove losses, as the same is self-serving.62 Thus, in Central Azucarera de la Carlota v. National Labor Relations Commission,63 the Court ruled that the mere citation by the employer of the economic setback suffered by the sugar industry as a whole cannot, in the absence of adequate, credible and persuasive evidence, justify its retrenchment program,64 thus:

A litany of woes, from a labor strike way back in 1982 to the various crises endured by the sugar industry, droughts, the 1983 assassination of former Senator Benigno Aquino, Jr., high crop loan interests, spiraling prices of fertilizers and spare parts, the depression of sugar prices in the world market, cutback in the U.S. sugar quota, abandonment of productive areas because of the insurgency problem and the absence of fair and consistent government policies may have contributed to the unprecedented decline in sugar production in the country, but there is no solid evidence that they translated into specific and substantial losses that would necessitate retrenchment. Just exactly what negative effects were borne by petitioner as a result, petitioner failed to underscore.65

In Anino v. National Labor Relations Commission,66 the Court also held that the employers claim that retrenchment was undertaken as a measure of self-preservation to prevent losses brought about by the continuing decline of nickel prices and export volume in the mining industry, as well as its allegation that the reduction of excise taxes on mining from 5% to 1% on a graduated basis as provided under Republic Act No. 7729 was a clear recognition by the government of the industrys worsening economic difficulties was a bare claim in the absence of evidence of actual losses in its business operations.67

In the instant case, PAL failed to substantiate its claim of actual and imminent substantial losses which would justify the retrenchment of more than 1,400 of its cabin crew personnel. Although the Philippine economy was gravely affected by the Asian financial crisis, however, it cannot be assumed that it has likewise brought PAL to the brink of bankruptcy. Likewise, the fact that PAL underwent corporate rehabilitation does not automatically justify the retrenchment of its cabin crew personnel.

Records show that PAL was not even aware of its actual financial position when it implemented its retrenchment program. It initially decided to cut its fleet size to only 14 ("Plan 14") and based on said plan, it retrenched more than 1,400 of its cabin crew personnel. Later on, however, it abandoned its "Plan 14" and decided to retain 22 units of aircraft ("Plan 22"). Unfortunately, it has retrenched more than what was necessary. PAL admits that:

[U]pon reconsideration and with some optimistic prospects for operations, the Company (PAL) decided not to implement "Plan 14" and instead implemented "Plan 22," which would involve a fleet of 22 planes. Since "Plan 14" was abandoned, the Company deemed it appropriate to recall back into employment employees it had previously retrenched. Thus, some of the employees who were initially laid off were recalled back to duty, the basis of which was passing the 1997 efficiency rating to meet the Companys operational requirements.68

PAL decided to adopt "Plan 14" on June 12, 1998. Three days after, or on June 15, 1998, it sent notices of retrenchment to its cabin crew personnel to take effect on July 15, 1998. However, after allegedly realizing that it was going to retain 22 of its aircraft instead of 14, and after more than 1,400 of its cabin crew have been fired during the

period from November 30, 1998 to December 15, 1998, it suddenly recalled to duty 202 of the retrenched cabin crew personnel.69

This only proves that PAL was not aware of the true state of its finances at the time it implemented the assailed massive retrenchment scheme. It embarked on the mass dismissal without first undertaking a well-considered study on the proposed retrenchment scheme. This view is underscored by the fact that previously, PAL terminated the services of 140 probationary cabin attendants, but rehired them almost immediately and even converted their employment into permanent and regular, even as a massive retrenchment was already looming in the horizon.

To prove that PAL was financially distressed, it could have submitted its audited financial statements but it failed to present the same with the Labor Arbiter. Instead, it narrated a litany of woes without offering any evidence to show that they translated into specific and substantial losses that would necessitate retrenchment, thus:

1. It is a matter of public knowledge that PAL had been suffering severe financial losses that reached its most critical condition in 1998 when its liabilities amounted to about P90,642,933,919.00, while its assets amounted to only about P85,109,075,351.00. The precarious situation prompted PAL to adopt cost-cutting measures to prevent it from becoming totally bankrupt, including the reduction of its flight fleet from 56 to 14 aircrafts and the retrenchment of unneeded employees.

x x x x

26. To save its business, PAL had every right to undergo a retrenchment program immediately. PAL did not need, by law, to justify or explain to FASAP the reasons for the retrenchment before it could implement it. Proof of actual financial losses incurred by the company is not a condition sine qua non for retrenchment.70

This bare and unilateral claim does not suffice. The Labor Arbiters finding that PAL "amply satisfied the rules imposed by law and jurisprudence that sustain retrenchment," is without basis, absent the presentation of documentary evidence to that effect. In Saballa v. National Labor Relations Commission,71 we ruled that where the decision of the Labor Arbiter did not indicate the specific ba