Labor Cases 3c50s

SECOND DIVISION

[G.R. No. 160391. August 9, 2005]

DUSIT HOTEL NIKKO and PHILIPPINE HOTELIERS, INC., petitioners, vs. NATIONAL UNION OF WORKERS IN HOTEL, RESTAURANT AND ALLIED INDUSTRIES (NUWHRAIN) - DUSIT HOTEL NIKKO CHAPTER and ROWENA AGONCILLO, respondents. DECISION CALLEJO, SR., J.:

Before us is a petition for review on certiorari of the Decision[1] of the Court of Appeals (CA) in CA-G.R. SP No. 72006 which affirmed the Decision [2] of the National Labor Relations Commission (NLRC) in NLRC NCR CA No. 014111-97 finding Dusit Hotel Nikko (Hotel) and Philippine Hoteliers, Inc. (PHI) of illegally terminating the employment services of respondent Rowena Agoncillo. The Case for Rowena Agoncillo The PHI owned and operated the Dusit Hotel Nikko. Since March 1, 1984, Rowena Agoncillo was employed by the Hotel. After some time, she was promoted as Supervisor of Outlet Cashiers and later promoted as Senior Front Office Cashier, with a monthly salary of P14,600.00, inclusive of service charge. [3] In January 1995, the Hotel decided to trim down the number of its employees from the original count of 820 to 750.[4] On February 21, 1996, the Hotel, through an Inter-Office Memorandum signed by the general manager of Dusit, Yoshikazu Masuda, offered a Special Early Retirement Program (SERP) to all its employees. It was stated therein that the program was intended to provide employees financial benefits prior to prolonged renovation period and, at the same time, to enable management to streamline the organization by eliminating redundant positions and having a more efficient and productive manpower complement. [5] In a Letter dated February 26, 1996 addressed to the Hotel, the National Union of Workers in Hotel, Restaurant and Allied Industries, Hotel Nikko Manila Garden Chapter (Union), through its president, Mr. Reynaldo Rasing, sought a commitment from the management that the employees terminated due to

redundancy will not be replaced by new employees; nor will their positions be given to subcontractors, agencies or casual employees. The Union received a Letter dated March 30, 1996 from Masuda confirming his earlier decision to separate 243 employees from the Hotels services anchored on redundancy and that the separation of the said employees will take effect on April 30, 1996.[6] Consequently, a total of 243 employees, including Agoncillo, 161 of whom were Union officers and , were separated from the Hotels employment. As a result, the hip of the Union was substantially reduced. On April 1, 1996, the Hotel wrote Regional Director Romeo Young of the Department of Labor and Employment (DOLE), National Capital Region, informing him that the Hotel terminated the employment of 243 employees due to redundancy. On the same day, Agoncillo was summoned by Hotel Comptroller Reynaldo Casacop, who gave her a letter of even date informing the latter of her separation from service due to redundancy effective close of office hours of April 30, 1996.[7] Casacop advised Agoncillo to just avail of the Hotel's SERP, as embodied in the inter-office memorandum of Masuda. [8] He informed her that she had the option to avail of the program and that, in the meantime, he will defer the processing of her termination papers to give her time to decide. On April 3, 1996, Agoncillo finally told Casacop that she would not avail of the SERP benefits. By then, she had decided to file a complaint for illegal dismissal against the Hotel. Meanwhile, the Hotel temporarily closed operations because of the renovation thereof. When news spread among the hotel employees that Agoncillo would contest her termination before the NLRC, she was summoned by Personnel Manager Leticia Delarmente to a conference. The two met on May 21, 1996 in the presence of Willy Dizon, who later became the Director for Personnel and Training of the Hotel. At the said meeting, Delarmente and Dizon repeatedly asked Agoncillo to give back the original copy of the April 1, 1996 termination letter. Agoncillo told them that the letter was already in the possession of her counsel. Agoncillo was relieved when she was given another letter of even date stating that, by reason of her non-availment of the SERP, she was still considered an employee but on temporary lay-off due to the ongoing renovation of the Hotel[9] and that she will just be advised accordingly of her work schedule when the Hotel reopens.[10] But her relief was shortlived. Delarmente and Dizon offered to reinstate Agoncillo but not to her former position as Senior Front Office Cashier. Agoncillo objected but informed them that she could accept the position of Reservation Clerk.[11] However, no response was received. Meanwhile, the Hotel hired six (6) Front Office Cashiers on October 1, 1996. On October 21, 1996, Agoncillo received a telegram from the Human Resources Department of the Hotel directing her to report to Dizon as soon as [12]

possible.[13] She was told by Dizon that the Hotel was willing to reinstate her but as an Outlet Cashier. Dizon explained that the Hotel had already hired new employees for the positions of Reservation Clerks. Agoncillo, however, pointed out that she was already an Outlet Cashier Supervisor before her promotion as Senior Front Office Cashier and that if she accepted the position, it would be an unjustified demotion on her part. Dizon, however, explained that the management wanted new graduates as front liners, i.e., new graduates who would occupy the front desks and other sections exposed to guests. On the other hand, Agoncillo reiterated that she could accept the lower position of Reservation Clerk, but Dizon rejected the suggestion. Dizon countered that Agoncillo could be reinstated as a Room Service Cashier para nakatago. At this point, Agoncillo was irked by the comments of Dizon and asked, Bakit Sir, nakakaperhuwisyo ba ang physical appearance ko? As to which Dizon replied, Kasi ikaw, nagpabaya ka sa katawan mo. The conversation between them transpired in the presence and within hearing distance of other hotel employees, including Reynaldo Rasing, the president of the Union.[14] After Agoncillos meeting with Dizon on October 22, 1996, the latter kept on promising to find a suitable position for her. In those meetings, Dizon always offered reinstatement to positions that do not require guest exposure like Linen Dispatcher at the hotel basement or Secretary of Roomskeeping. When Agoncillo refused, Dizon just instructed her to return. Agoncillo had no specific position or assigned task to perform. On November 1, 1996, the Hotel resumed operations. On November 11, 1996, the Union filed a Notice of Strike for unfair labor practice with the DOLE. [15] On November 12, 1996, Agoncillo with the assistance of the Union, filed a Complaint against the PHI and Dusit Hotel Nikko for illegal dismissal before the NLRC. Meantime, the Secretary of Labor and Employment (SOLE) assumed jurisdiction over the dispute on November 29, 1996 after the requisite strike- vote was conducted.[16] The case was docketed as NCMB-NCR-NS-11-425-96. On January 5, 1997, the Hotel published an ment in the newspaper Manila Bulletin inviting prospective applicants as guest relations agents, bell service agents/valet parkers, housekeeping agents, and sales executives. The Hotel hired 135 additional employees, mostly on probationary and contractual bases. These new workers performed tasks according to the reclassified positions under the new Job Code, in violation of the Collective Bargaining Agreement (CBA) between the Hotel and the Union. [17] A total of 215 workers replaced the previously dismissed employees, including Agoncillo. The Case for the Hotel The petitioner Hotel, formerly known as Hotel Nikko Manila Garden, was owned and managed by the PHI, a corporation substantially owned by Japan

Airlines (JAL). In November 1995, JAL formally turned over its majority shareholdings in PHI to a Thai corporation, Dusit Thani Public Co., Ltd. (Dusit). This gave Dusit the managerial control over the Hotel, which was then renamed Dusit Hotel Nikko.[18] With the very stiff competition in the hotel industry in mind, Dusit has set a twofold objective, namely: (1) the total renovation of the Hotel, where it had earmarked the amount of about P300,000,000.00; and (2) a complete reorganization of the Hotels manpower complement. The renovation of the Hotel, which called for its closure, began on May 1, 1996 and ended six months thereafter. On the other hand, the reorganization was done to standardize the Hotels organizational set-up with all Dusit Hotels around the world and train the employees for their eventual deployment to its other chain of hotels. The reorganization program started with a staff reduction program wherein employees were given the chance to voluntarily avail of the SERP. As per its guidelines, the SERP is a one-time program offered by the Hotel to its regular employees who had at least one year of service as of April 30, 1996, in order to achieve the following:

a.) realize optimum operational productivity and efficiency through a  reorganization that will eliminate redundant position; b.) reduce expenses of the company; and c.) provide employees the opportunity to receive lump­sum benefits for  their immediate use before the 6­month closure.[19] Pursuant to the reorganization program, a reclassification of positions ensued upon resumption of the Hotels operation. Consequently, the position of Agoncillo as Senior Front Office Cashier was abolished and a new position of Guest Services Agent absorbing its functions was created. Considering that the new position requires skills in both reception and cashiering operations, respondent Hotel deemed it necessary to transfer Agoncillo to another position as Outlet Cashier, which does not require other skills aside from cashiering. [20] The transfer of Agoncillo from Senior Front Office Cashier to Outlet Cashier does not entail any diminution of salary or rank. Despite which, she vehemently refused the transfer and insisted that she be reinstated to her former position. Since Agoncillo was not amenable to the said transfer, she did not assume her new position and since then had stopped reporting for work despite the Hotels patient reminder to act on the contrary. Instead, she filed a complaint to question the prerogative of the management to validly transfer her to another position as she considers the transfer an act of constructive dismissal amounting to illegal termination and unfair labor practice in the form of union busting. [21]

Proceedings before the Labor Arbiter, NLRC and the CA On September 18, 1997, the Labor Arbiter rendered judgment dismissing the complaint for unfair labor practice and constructive dismissal. The Labor Arbiter ruled that the reassignment of the complainant was done by management in the valid exercise of management prerogative, and that management has not dismissed her in any way.[22] On October 27, 1997, the complainant appealed the decision to the NLRC. In the meantime, on January 6, 1998, the SOLE issued an Order in NCMBNCR-NS-11-425-96 in favor of the Union. The fallo of the Order reads:

WHEREFORE, judgment is hereby rendered: 1. Declaring the termination of 243 employees, including 161 Union officers  and  on April 1, 1996, illegal; 2. Ordering the immediate reinstatement of the 243 employees, without loss of  seniority rights and with full backwages and benefits from the time of their  termination until actual reinstatement, less the amounts received by them on   of the Companys Special Early Retirement Program; 3. Declaring the Company guilty of unfair labor practice for: a. implementing an illegal redundancy program in the guise of a Special Early  Retirement Program, terminating in the process 243 employees, including 161  Union officers and ; b. implementing a New Job and Wage Classification and Manning Standards,  in violation of Article 1, Section VII of the parties Collective Bargaining  Agreement; and c. violation of the CBA provisions on entry rates of new employees and rice  subsidy for retained employees who were on duty during the renovation of the  Hotel. 4. Ordering the Company to cease and desist from further continuing with its  commission of the unfair labor practice acts herein complained of. SO ORDERED.[23] The respondents therein filed a motion for the reconsideration of the order but the SOLE denied the same. On March 10, 2000, the Union and the Hotel

executed a Memorandum of Agreement (MOA) in which the Hotel agreed to pay P15,000.00 to each member of the Union by way of amicable settlement of NCMB-NCR-NS-11-425-96 in addition to the redundancy pay earlier paid to them and that they shall file with the DOLE a motion praying for the following:

a. Dismissal of the case with prejudice in regard to: (i) illegal redundancy as to those who have received the  settlement pay above and signed the Special Power  of Attorney and Release, Waiver and Quitclaim; (ii) all ULP charges; and b. Dismissal of the case without prejudice as to those who have not yet  received the settlement pay.[24] However, the MOA was not submitted to the NLRC for its approval. Neither did Agoncillo receive any monetary benefits based on the MOA. After due proceedings, the NLRC rendered judgment on January 30, 2002, reversing the appealed decision of the Labor Arbiter, dated September 18, 1997. The fallo of the decision reads:

WHEREFORE, the appealed decision is SET ASIDE. Judgment is hereby  rendered ordering respondent to: 1. immediately reinstate complainant to her former or equivalent position  without loss of seniority rights and benefits; and 2. to pay complainant full backwages computed from the time it was  illegally withheld from her as a result of her illegal dismissal up to the  time she is actually reinstated. SO ORDERED.[25] The NLRC ruled that Agoncillo was illegally dismissed. It relied principally on the evidence of the complainant and the Order of the SOLE dated January 6, 1998. The respondents filed a motion for reconsideration, [26] which the NLRC denied. Hence, they filed before the Court of Appeals a Petition for Certiorari with Very Urgent Prayer for the Issuance of a Temporary Restraining Order and/or Writ of Preliminary Injunction,[27] which is anchored on the following grounds, to wit: I

WITH ALL DUE RESPECT, THE HONORABLE NATIONAL LABOR  RELATIONS COMMISSION GRAVELY ERRED WHEN IT RULED THAT  PRIVATE RESPONDENT AGONCILLO WAS ILLEGALLY DISMISSSED  CONSIDERING THAT, IN THE FIRST PLACE, PRIVATE RESPONDENT  AGONCILLO WAS NEVER DISMISSED, CONSTRUCTIVELY OR  OTHERWISE; II

CONTRARY TO THE RULING OF THE HONORABLE COMMISSION,  PRIVATE RESPONDENT AGONCILLO'S TRANSFER FROM THE  POSITION OF SENIOR FRONT OFFICE CASHIER TO THE POSITION OF OUTLET CASHIER WAS A VALID EXERCISE OF MANAGEMENT  PREROGATIVE; III

EVEN ASSUMING IN GRATIA ARGUMENTI THAT PRIVATE  RESPONDENT AGONCILLO WAS INDEED SEPARATED FROM THE  HOTEL, HER SEPARATION DUE TO REDUNDANCY WAS VALID  AND/OR LEGAL. CONTRARY TO THE RULING OF THE HONORABLE  COMMISSION, THE REDUNDANCY PROGRAM IMPLEMENTED BY  THE HOTEL IS VALID. FURTHERMORE, PRIVATE RESPONDENTS  ARE BOUND BY THE COMPROMISE AGREEMENT BETWEEN THE  UNION AND THE HOTEL WHICH, AMONG OTHERS, RECOGNIZES  THE VALIDITY OF THE SAID PROGRAM; IV

CONSIDERING THE FOREGOING, THE PETITIONERS ARE NOT  GUILTY OF UNFAIR LABOR PRACTICE. PRIVATE RESPONDENT  AGONCILLO, ON THE OTHER HAND, IS NOT ENTITLED TO  REINSTATEMENT WITH FULL BACKWAGES.[28] On June 26, 2003, the CA rendered judgment dismissing the petition on the ground that no grave abuse of discretion was committed by the respondents therein. The petitioners motion for reconsideration [29] was denied by the CA. They forthwith filed their petition for review alleging that:

THE HONORABLE COURT OF APPEALS ERRED IN RENDERING THE  ASSAILED DECISION AND RESOLUTION, HAVING DECIDED A  QUESTION OF SUBSTANCE IN A WAY NOT IN ACCORD WITH LAW  AND THE APPLICABLE DECISIONS OF THIS HONORABLE COURT,  CONSIDERING THAT I

THE NLRC GRAVELY ABUSED ITS DISCRETION AMOUNTING TO  LACK OR EXCESS OF JURISDICTION WHEN IT RULED THAT  RESPONDENT AGONCILLO WAS ILLEGALLY DISMISSED BECAUSE,  IN THE FIRST PLACE, SHE WAS NEVER DISMISSED,  CONSTRUCTIVELY OR OTHERWISE. II

RESPONDENT AGONCILLO'S TRANSFER FROM THE POSITION OF  SENIOR FRONT OFFICE CASHIER TO THE POSITION OF OUTLET  CASHIER WAS A VALID EXERCISE OF MANAGEMENT  PREROGATIVE. III

EVEN ON THE ASSUMPTION THAT RESPONDENT AGONCILLO WAS  INDEED SEPARATED FROM THE HOTEL, HER SEPARATION DUE TO  A REDUNDANCY PROGRAM WAS LEGAL. THE REDUNDANCY  PROGRAM IMPLEMENTED BY THE HOTEL IS LIKEWISE VALID.  FURTHERMORE, RESPONDENTS ARE BOUND BY THE COMPROMISE AGREEMENT BETWEEN THE UNION AND THE HOTEL WHICH,  AMONG OTHERS, RECOGNIZES THE VALIDITY OF THE SAID  PROGRAM. IV

IN LIGHT OF THE FOREGOING, THE PETITIONERS ARE NOT GUILTY  OF ILLEGAL DISMISSAL, MUCH LESS UNFAIR LABOR PRACTICE.  HENCE, RESPONDENT AGONCILLO CANNOT BE ENTITLED TO  REINSTATEMENT NOR TO FULL BACKWAGES.[30] The Court's Ruling

The petition is unmeritorious. The issues for resolution are factual and Rule 45 of the Rules of Court provides that only questions of law may be raised in a petition for review on certiorari. The raison detre is that the Court is not a trier of facts. It is not to reexamine and reevaluate the evidence on record. Moreover, the factual findings of the NLRC, as affirmed by the CA, are accorded high respect and finality unless the factual findings and conclusions of the Labor Arbiter clash with those of the NLRC and the CA in which case, the Court will have to review the records and the arguments of the parties to resolve the factual issues and render substantial justice to the parties.[31] The petitioners reiterate their submission that respondent Agoncillo had never been dismissed; she was merely transferred to another position, that of Outlet Cashier. She had been temporarily laid off because of the renovation of the hotel but she remained as an employee of the hotel. Following the completion of the renovation of the hotel, she was offered the position of outlet cashier; but she already filed her complaint before the Hotel was able to determine what position she could occupy which was mutually acceptable. The petitioners aver that the transfer of the respondent to the position of Outlet Cashier was a valid exercise of management prerogative based on its assessment of her qualification, aptitude and competence, absent any showing to be contrary to law, morals or public policy, unreasonable, inconvenient and prejudicial to the employee. The petitioners insist that the transfer of Agoncillo was pursuant to its objective of completely reorganizing its manpower component. It did not entail any diminution in salary, benefits, privileges or job level. The petitioners also maintain that even if the respondent was separated from the Hotel, it was justified to do so due to redundancy. The validity of the said program was even recognized by the respondents in the MOA executed by petitioner Hotel and the respondent Union. The petitioners maintain that the respondents are bound by the MOA. The contentions are untenable. It is plain as day that the petitioners terminated the employment of respondent Agoncillo effective April 30, 1996, as evidenced by their letter which reads:

April 1, 1996 Ms. Rowena Agoncillo 26 A. Soriano, B.F. Homes Paraaque, Metro Manila Dear Ms. Agoncillo:

We have recently conducted a study of the Hotels organizational structure and  found the need to reorganize the same and eliminate many positions that have  become redundant. As a result of such study, it was determined that your position as Senior Front  Office Cashier is redundant. In this connection, please be advised of your  separation from service due to redundancy, effective close of office hours of  April 30, 1996. You will receive not later than April 30, 1996 the separation  pay provided for under the law, plus the amount of P19,000.00. We take this opportunity to thank you for your service to Hotel Nikko Manila  Garden and extend to you our best wishes for your next endeavors. Very truly yours,   (Sgd.) PEARL V. ARAGON Director for istration[32] The letter of the petitioners terminating the employment of Agoncillo on the ground of redundancy was rejected by the Order of the SOLE in NCMB-NCRNS-11-425-96 where he ruled that the petitioners redundancy program was but a ploy, a contrivance cunningly scripted by them to subvert the Union and unlawfully dismiss many of its employees. The SOLE declared that, by their acts, the petitioners were guilty of unfair labor practice. Redundancy exists when the service capability of the workforce is in excess of what is reasonably needed to meet the demands of the business enterprise. A reasonably redundant position is one rendered superfluous by any number of factors, such as overhiring of workers, decreased volume of business, dropping of a particular product line previously manufactured by the company or phasing out of service activity priorly undertaken by the business. Among the requisites of a valid redundancy program are: (1) the good faith of the employer in abolishing the redundant position; and (2) fair and reasonable criteria in ascertaining what positions are to be declared redundant and accordingly abolished. [33] As found by the SOLE, the NLRC and the CA, the position of respondent Agoncillo was not abolished or declared redundant. In fact, the petitioners hired an entirely new set of employees to perform the tasks of respondent Agoncillo, namely:

Don Vincent Hembrador ­ hired on October 1, 1996 Reynaldo Pajarito ­ hired on October 1, 1996 Eliza De Venecia ­ hired on October 1, 1996

Scarlet Galve ­ hired on October 1, 1996 Dheeny Laggui ­ hired on October 1, 1996 Eric Galos ­ hired on October 1, 1996 Carlota Pineda ­ hired on January 25, 1997[34] We agree with the contention of the petitioners that it is the prerogative of management to transfer an employee from one office to another within the business establishment based on its assessment and perception of the employees qualification, aptitude and competence, and in order to ascertain where he can function with the maximum benefit to the company. However, this Court emphasized that:

But, like other rights, there are limits thereto. The managerial prerogative to  transfer personnel must be exercised without grave abuse of discretion, bearing  in mind the basic elements of justice and fair play. Having the right should not  be confused with the manner in which that right is exercised. Thus, it cannot be used as a subterfuge by the employer to rid himself of an undesirable worker.  In particular, the employer must be able to show that the transfer is not  unreasonable, inconvenient or prejudicial to the employee; nor does it involve a demotion in rank or a diminution of his salaries, privileges and other benefits.  Should the employer fail to overcome this burden of proof, the employees  transfer shall be tantamount to constructive dismissal, which has been defined  as a quitting because continued employment is rendered impossible,  unreasonable or unlikely; as an offer involving a demotion in rank and  diminution in pay.[35] There is constructive dismissal when there is a demotion in rank and/or diminution in pay; or when a clear discrimination, insensibility or disdain by an employer becomes unbearable to the employee. [36] In the present case, the petitioners recalled the termination of respondent Agoncillo when they learned that she was going to file a complaint against them with the NLRC for illegal dismissal. However, instead of reinstating her to her former position, she was offered the position of Linen Dispatcher in the hotel basement or Secretary of the Roomskeeping Section, positions much lower than that of a Supervisor of Outlet Cashiers which the respondent held before she was promoted as Senior Front Office Cashier. With the said positions, the respondent would not certainly be receiving the same salary and other benefits as Senior Front Office Cashier. We agree with the ruling of the NLRC that the offers by the petitioners to transfer respondent Agoncillo to other positions were made in bad faith, a ploy to stave off a suit for illegal dismissal. In fact, respondent Agoncillo had not been transferred to another position at all.

Six months from the time the petitioners made offers to respondent Agoncillo, the latter never heard from the petitioners again.

While the hotel gave complainant Rowena Agoncillo a second letter advising  her that she was still an employee who was merely on temporary lay­off, the  circumstances surrounding the issuance of such second letter is highly  suspicious. To date, complainant Agoncillos affidavit (Annex F) on the  issuance of the second letter remains undisputed. It cannot be gainsaid that the  second letter was issued merely to entice complainant Agoncillo to return the  termination letter. The said second letter did not make mention of the  termination letter. If, as claimed by the hotel, the second letter was a  withdrawal of the first letter, why was there no clear statement to this effect  when it could have easily been done? Why was it also necessary for the hotels  officers to retrieve the termination letter that it had issued to complainant?  What we can gather from here is that the hotel had tried to cover its tracks in  order to rectify an error. Certainly, good faith cannot be attributed on the part of the hotel in issuing the second letter.[37] Even assuming, for the sake of argument, that the hotel had a valid ground for  dismissing [the] complainant and that it had merely spared her such fate, the  hotel is still guilty of illegal dismissal. Had the hotel made the transfer of  complainant in good faith and in the normal course of its operation, it would  have been justified. In this case, however, the supposed transfer was made only  after complainant had been earlier terminated. Complainants statement in her  affidavit that she was summoned by the hotel after news of her plan to contest  her dismissal circulated remains unrefuted. Furthermore, the hotel has not  explained why there was no official memorandum issued to complainant  formally informing her of her transfer. All these lead to only one conclusion  that the alleged transfer was not made in good faith as a valid exercise of  management prerogative but was intended as a settlement offer to complainant  to prevent her from filing a case.[38] The offers made by the petitioners could not have the effect of validating an otherwise arbitrary dismissal.[39] We reject the contention of the petitioners that respondent Agoncillo is bound by the MOA executed by the petitioners and respondent Union. There is no denying the right of the Union and the petitioners under Article 227 of the Labor Code to enter into and execute a compromise agreement with the assistance of the DOLE; and that such agreement is binding not only on the Union generally but on its individual .[40]

However, a plain reading of the MOA will readily show that it is not binding on respondent Agoncillo. The MOA reads:

1. The Hotel shall pay the amount of P15,000.00 each to the  of the  bargaining unit who are represented by the Union in this case by way of  amicable settlement of the case and in addition to the redundancy pay already  earlier given to such . 2. For security purposes and an orderly proceeding, only claimants or their  authorized representatives shall be allowed entry into the premises of the Hotel  accompanied by Union representative. 3. On the date of application and actual payment, the claimants shall execute  sworn release, waiver and quitclaim as well as a special power of attorney  authorizing the Union president to amicably settle this case. 4. Unclaimed settlement pay after 15 April 2000 shall be turned over to the  Union for its disposition on condition that the Union shall take care of paying  other claimants if any should show up to lay their claim thereafter. 5. Following the execution of this Agreement, the Union and the Hotel shall  file a manifestation and motion with the DOLE, attached this Agreement,  praying for the following: a. Dismissal of the case with prejudice in regard to: (i.) illegal redundancy as to those who have received the settlement pay  above and signed the Special Power of Attorney and Release,  Waiver and Quitclaim; (ii.) all ULP charges; and b. Dismissal of the case without prejudice as to those who have not yet received the settlement pay.[41] The Union executed the MOA in behalf of the of the bargaining unit. There is no showing that Agoncillo is a member of that unit. The MOA applies only to the of the bargaining unit who agreed to the termination of their employment based on redundancy and received redundancy pay. Agoncillo did not receive any redundancy pay or any monetary benefits under the MOA or executed any deed or waiver or release in favor of the petitioners.

The MOA executed by the petitioners and the Union settled only the case of the parties before the SOLE for unfair labor practice and for illegal redundancy. It did not settle the case between the petitioners and Agoncillo before the NLRC. This is the reason why the MOA was never submitted by the parties therein to the NLRC for its approval. Although the petitioners sought a reconsideration of the decision of the NLRC based, inter alia, on the MOA, the NLRC denied the said motion. Indeed, the NLRC acted in accord with case law that:

First, even if a clear majority of the union  agreed to a settlement with  the employer, the union has no authority to compromise the individual claims  of  who did not consent to such settlement. Rule 138, Section 23 of the 1964 Revised Rules of Court requires a special authority before an attorney  may compromise his clients litigation. The authority to compromise cannot  lightly be presumed and should be duly established by evidence. In the case at bar, minority union  did not authorize the union to  compromise their individual claims. Absent a showing of the unions special  authority to compromise the individual claims of private respondents for  reinstatement and back wages, there is no valid waiver of the aforesaid rights.  As private respondents did not authorize the union to represent them in the  compromise settlement, they are not bound by the  thereof. Second, whether minority union  who did not consent to a  compromise agreement are bound by the majority decision approving a  compromise settlement has been resolved in the negative. In La Campana, we explicitly declared: Money claims due to laborers cannot be the object of settlement or compromise effected by a union or counsel without the specific individual consent of each  laborer concerned. The beneficiaries are the individual complainants  themselves. The union to which they belong can only assist them but cannot  decide for them. The case of La Campana was re­affirmed in the General Rubber case as  follows: In the instant case, there is no dispute that private respondent has not ratified  the Return­to­Work Agreement. It follows, and we so hold, that private  respondents cannot be held bound by the Return­to­Work Agreement. The  waiver of money claims, which in this case were accrued money claims, by 

workers and employees must be regarded as a personal right, that is, a right that must be personally exercised. For a waiver thereof to be legally effective, the  individual consent or ratification of the workers or employees involved must be shown. Neither the officers nor the majority or the union had any authority to  waive the accrued rights pertaining to the dissenting minority , even  under a collective bargaining agreement which provided for a union shop. The  same considerations of public policy which impelled the Court to reach the  conclusion it did in La Campana, are equally compelling in the present case.  The  of the union need the protective shield of this doctrine not  only vis­­vis their employer but also, at times, vis­a­vis the management of their own union, and at other times even against their own imprudence  impecuniousness. We have consistently ruled that a compromise is governed by the basic  principle that the obligations arising therefrom have the force of law between  the parties. Consequently, private respondents may pursue their individual claims against  petitioners before the Labor Arbiter. The judgment of the Labor Arbiter based on the compromise agreement in  question does not have the effect of res judicata upon private respondent who  did not agree thereto. A compromise, once approved by final orders of the court has the force of res  judicata between the parties and should not be disturbed except for vices of  consent or forgery. A compromise is basically a contract perfected by mere  consent. Consent is manifested by the meeting of the offer and the acceptance  upon the thing and the cause which are to constitute the contract. A  compromise agreement is not valid when a party in the case has not signed the  same or when someone signs for and in behalf of such party without authority  to do so. In SMI Fish Industries, Inc. vs. NLRC, this Court declared that where the  compromise agreement was signed by only three of the five respondents, the  non­signatories cannot be bound by that amicable settlement. This is so as a  compromise agreement is a contract and cannot affect third persons who are not parties to it.

Private respondents were not parties to the compromise agreement. Hence, the  judgment approving such agreement cannot have the effect of res judicata upon them since the requirement of identity of parties is not satisfied. A judgment  upon a compromise agreement has all the force and effect of any other  judgment, hence, conclusive only upon parties thereto and their privies. [42] IN LIGHT OF ALL THE FOREGOING, the petition is DENIED for lack of merit. Costs against the petitioners. SO ORDERED. Puno, (Chairman), Austria-Martinez, Tinga, and Chico-Nazario, JJ., concur.

[1]

Penned by Associate Justice Rodrigo V. Cosico, with Associate Justices Juan Q. Enriquez, Jr. and Hakim S. Abdulwahid, concurring.

[2]

Penned by Commissioner Vicente S.E. Veloso, with Presiding Commissioner Roy V. Seeres and Commissioner Alberto R. Quimpo, concurring.

[3]

Rollo, p. 115.

[4]

Id. at 340.

[5]

Id. at 138-139.

[6]

Rollo, p. 137.

[7]

Id. at 130.

[8]

Id. at 138-139.

[9]

Rollo, p. 142.

[10]

Ibid.

[11]

Id. at 117.

[12]

Rollo, p. 119.

[13]

Id. at 143.

[14]

Id. at 200.

[15]

Rollo, p. 349.

[16]

Id. at 341.

[17]

Rollo, pp. 341-342.

[18]

Id. at 160-176, 201-212.

[19]

Rollo, p. 196.

[20]

Id. at 10.

[21]

Rollo, p. 11.

[22]

Id. at 261-262.

[23]

Rollo, pp. 346-347.

[24]

Id. at 365-366.

[25]

Rollo, p. 108.

[26]

Id. at 110-111.

[27]

Id. at 58-93.

[28]

Rollo, pp. 61-62.

[29]

Id. at 367-390.

[30]

Rollo, pp. 6-7.

[31]

Union Motor Corporation v. NLRC, G.R. No. 159738, 9 December 2004, 445 SCRA 683.

[32]

Rollo, p. 290.

[33]

Asian Alcohol Corporation v. NLRC, G.R. No. 131108, 25 March 1999, 305 SCRA 416.

[34]

Rollo, p. 119.

[35]

Blue Dairy Corporation v. NLRC, G.R. No. 129843, 14 September 1999, 314 SCRA 401.

[36]

Escobio v. NLRC, G.R. No. 118159, 15 April 1998, 289 SCRA 48; Philippine Wireless, Inc. (Pocketbell) v. NLRC, G.R. No. 112963, 20 July 1999, 310 SCRA 653.

[37]

Rollo, pp. 102-103.

[38]

Id. at 105.

[39]

Hantex Trading, Co., Inc. v. Court of Appeals, G.R. No. 148241, 27 September 2002, 390 SCRA 181.

[40]

Dionela vs. Court of Industrial Relations, G.R. No. L-18334, 31 August 1963, 8 SCRA 832; Chua v. NLRC, G.R. Nos. 89971-75, 17 October 1990, 190 SCRA 558.

[41]

Rollo, pp. 365-366.

[42]

Golden Donuts, Inc. v. NLRC, G.R. Nos. 113666-68, 19 January 2000, 322 SCRA 294.

FIRST DIVISION

[G.R. No. 155421. July 7, 2004]

ELMER M. MENDOZA, petitioner, LUCBAN, respondent. DECISION PANGANIBAN, J.:

vs. RURAL

BANK

OF

The law protects both the welfare of employees and the prerogatives of management. Courts will not interfere with business judgments of employers, provided they do not violate the law, collective bargaining agreements, and general principles of fair play and justice. The transfer of personnel from one area of operation to another is inherently a managerial prerogative that shall be upheld if exercised in good faith -- for the purpose of advancing business interests, not of defeating or circumventing the rights of employees. The Case The Court applies these principles in resolving the instant Petition for Review under Rule 45 of the Rules of Court, assailing the June 14, 2002 Decision and September 25, 2002 Resolution of the Court of Appeals (CA) in CA-GR SP No. 68030. The assailed Decision disposed as follows: [1]

[2]

[3]

WHEREFORE, the petition for certiorari is hereby DISMISSED for lack of  merit. [4]

The challenged Resolution denied petitioners Motion for Reconsideration. The Facts On April 25, 1999, the Board of Directors of the Rural Bank of Lucban, Inc., issued Board Resolution Nos. 99-52 and 99-53, which read:

Board Res. No. 99­52 RESOLVED AS IT IS HEREBY RESOLVED that in line with the policy of  the bank to familiarize bank employees with the various phases of bank  operations and further strengthen the existing internal control system[,] all  officers and employees are subject to reshuffle of assignments. Moreover, this  resolution does not preclude the transfer of assignment of bank officers and  employees from the branch office to the head office and vice­versa. Board Res. No. 95­53 Pursuant to Resolution No. 99­52, the following branch employees are hereby  reshuffled to their new assignments without changes in their compensation and  other benefits.

NAME OF EMPLOYEES PRESENT ASSIGNMENT NEW ASSIGNMENT JOYCE V. ZETA Bank Teller C/A Teller CLODUALDO ZAGALA C/A Clerk Actg. Appraiser ELMER L. MENDOZA Appraiser Clerk­Meralco Collection CHONA R. MENDOZA Clerk­Meralco Bank Teller Collection [5]

In a letter dated April 30, 1999, Alejo B. Daya, the banks board chairman, directed Briccio V. Cada, the manager of the banks Tayabas branch, to implement the reshuffle. The new assignments were to be effective on May 1, 1999 without changes in salary, allowances, and other benefits received by the aforementioned employees. [6]

[7]

On May 3, 1999, in an undated letter addressed to Daya, Petitioner Elmer Mendoza expressed his opinion on the reshuffle, as follows:

RE: The recent reshuffle of employees as per Board Resolution dated April 25, 1999 Dear Sir: This is in connection with the aforementioned subject matter and which the  undersigned received on April 25, 1999. Needless to state, the reshuffling of the undersigned from the present position  as Appraiser to Clerk­Meralco Collection is deemed to be a demotion without  any legal basis. Before this action on your part[,] the undersigned has been  besieged by intrigues due to [the] malicious machination of a certain public  official who is bruited to be your good friend. These malicious insinuations  were baseless and despite the fact that I have been on my job as Appraiser for  the past six (6) years in good standing and never involved in any anomalous  conduct, my being reshuffled to [C]lerk­[M]eralco [C]ollection is a blatant  harassment on your part as a prelude to my termination in due time. This will  constitute an unfair labor practice. Meanwhile, may I beseech your good office that I may remain in my position  as Appraiser until the reason [for] my being reshuffled is made clear. Your kind consideration on this request will be highly appreciated.

[8]

On May 10, 1999, Daya replied:

Dear Mr. Mendoza, Anent your undated letter expressing your resentment/comments on the recent  managements decision to reshuffle the duties of bank employees, please be  informed that it was never the intention (of management) to downgrade your  position in the bank considering that your due compensation as Bank Appraiser is maintained and no future reduction was intended. Aside from giving bank employees a wider experience in various banking  operations, the reshuffle will also afford management an effective tool in  providing the bank a sound internal control system/check and balance and a  basis in evaluating the performance of each employee. A continuing bankwide  reshuffle of employees shall be made at the discretion of management which  may include bank officers, if necessary as expressed in Board Resolution No.  99­53, dated April 25, 1999. Management merely shifted the duties of  employees, their position title [may be] retained if requested formally. Being a standard procedure in maintaining an effective internal control system  recommended by the Bangko Sentral ng Pilipinas, we believe that the conduct  of reshuffle is also a prerogative of bank management. [9]

On June 7, 1999, petitioner submitted to the banks Tayabas branch manager a letter in which he applied for a leave of absence from work:

Dear Sir: I wish I could continue working but due to the ailment that I always feel every  now and then, I have the honor to apply for at least ten (10) days sick leave  effective June 7, 1999. Hoping that this request [merits] your favorable and kind consideration and  understanding. [10]

On June 21, 1999, petitioner again submitted a letter asking for another leave of absence for twenty days effective on the same date. [11]

On June 24, 1999, while on his second leave of absence, petitioner filed a Complaint before Arbitration Branch No. IV of the National Labor Relations Commission (NLRC). The Complaint -- for illegal dismissal, underpayment, separation pay and damages -- was filed against the Rural Bank of Lucban

and/or its president, Alejo B. Daya; and its Tayabas branch manager, Briccio V. Cada. The case was docketed as NLRC Case SRAB-IV-6-5862-99-Q. [12]

The labor arbiters June 14, 2000 Decision upheld petitioners claims as follows:

WHEREFORE, premises considered, judgment is hereby rendered as follows: 1. Declaring respondents guilty of illegal dismissal. 2. Ordering respondents to reinstate complainant to his former position without  loss of seniority rights with full backwages from date of dismissal to actual  reinstatement in the amount of P55,000.00 as of June 30, 2000. 3. Ordering the payment of separation pay if reinstatement is not possible in the amount of P30,000.00 in addition to 13th month pay of P5,000.00 and the  usual P10,000.00 annual bonus afforded the employees. 4. Ordering the payment of unpaid salary for the period covering July 1­30,  1999 in the amount of P5,000.00 5. Ordering the payment of moral damages in the amount of P50,000.00. 6. Ordering the payment of exemplary damages in the amount of P25,000.00 7. Ordering the payment of Attorneys fees in the amount of P18,000.00 which  is 10% of the monetary award. [13]

On appeal, the NLRC reversed the labor arbiter. In its July 18, 2001 Resolution, it held: [14]

We can conceive of no reason to ascribe bad faith or malice to the respondent  bank for its implementation of its Board Resolution directing the reshuffle of  employees at its Tayabas branch to positions other than those they were  occupying. While at first the employees thereby affected would experience  difficulty in adjusting to their new jobs, it cannot be gainsaid that the objective  for the reshuffle is noble, as not only would the employees obtain additional  knowledge, they would also be more well­rounded in the operations of the bank and thus help the latter further strengthen its already existing internal control  system.

The only inconvenience, as [w]e see it, that the [petitioner] may have  experienced is that from an appraiser he was made to perform the work of a  clerk in the collection of Meralco payments, which he may have considered as  beneath him and his experience, being a pioneer employee. But it cannot be  discounted either that other employees at the Tayabas branch were similarly  reshuffled. The only logical conclusion therefore is that the Board Resolution  was not aimed solely at the [petitioner], but for all the other employees of the x  x x bank as well. Besides, the complainant has not shown by clear, competent  and convincing evidence that he holds a vested right to the position of  Appraiser. x x x. How and by what manner a business concern conducts its affairs is not for this  Commission to interfere with, especially so if there is no showing, as in the  case at bar, that the reshuffle was motivated by bad faith or ill­will. x x x. [15]

After the NLRC denied his Motion for Reconsideration, petitioner brought before the CA a Petition for Certiorari assailing the foregoing Resolution. [16]

[17]

Ruling of the Court of Appeals Finding that no grave abuse of discretion could be attributed to the NLRC, the CA Decision ruled thus:

The so­called harassment which Mendoza allegedly experienced in the  aftermath of the reshuffling of employees at the bank is but a figment of his  imagination as there is no evidence extant on record which substantiates the  same. His alleged demotion, the cold shoulder stance, the things about his chair and table, and the alleged reason for the harassment are but allegations bereft of proof and are perforce inissible as self­serving statements and can never be  considered repositories of truth nor serve as foundations of court decisions  anent the resolution of the litigants rights. When Mendoza was reshuffled to the position of clerk at the bank, he was not  demoted as there was no [diminution] of his salary benefits and rank. He could  even retain his position title, had he only requested for it pursuant to the reply  of the Chairman of the banks board of directors to Mendozas letter protesting  the reshuffle. There is, therefore, no cause to doubt the reasons which the bank  propounded in  of its move to reshuffle its employees, viz:

1. to familiarize bank employees with the various phases of bank operations,  and 2. to further strengthen the existing internal control system of the bank. The reshuffling of its employees was done in good faith and cannot be made  the basis of a finding of constructive dismissal. The fact that Mendoza was no longer included in the banks payroll for July 1 to 15, 1999 does not signify that the bank has dismissed the former from its  employ. Mendoza separated himself from the banks employ when, on June 24,  1999, while on leave, he filed the illegal dismissal case against his employer for no apparent reason at all. [18]

Hence, this Petition.

[19]

The Issues Petitioner raises the following issues for our consideration:

I. Whether or not the petitioner is deemed to have voluntarily separated himself from the service and/or abandoned his job when he filed his Complaint for  constructive and consequently illegal dismissal; II. Whether or not the reshuffling of private respondent[s] employees was done  in good faith and cannot be made as the basis of a finding of constructive  dismissal, even as the [petitioners] demotion in rank is itted by both  parties; III. Whether or not the ruling in the landmark case of Ruben Serrano vs.  NLRC [and Isetann Department Store (323 SCRA 445)] is applicable to the  case at bar; IV. Whether or not the Court of Appeals erred in dismissing the petitioners  money claims, damages, and unpaid salaries for the period July 1­30, 1999,  although this was not disputed by the private respondent; and V. Whether or not the entire proceedings before the Honorable Court of  Appeals and the NLRC are a nullity since the appeal filed by private  respondent before the NLRC on August 5, 2000 was on the 15 th day or five (5) 

days beyond the reglem[e]ntary period of ten (10) days as provided for by law  and the NLRC Rules of Procedure. [20]

In short, the main issue is whether petitioner was constructively dismissed from his employment. The Courts Ruling The Petition has no merit. Main Issue: Constructive Dismissal Constructive dismissal is defined as an involuntary resignation resorted to when continued employment is rendered impossible, unreasonable or unlikely; when there is a demotion in rank or a diminution of pay; or when a clear discrimination, insensibility or disdain by an employer becomes unbearable to the employee. Petitioner argues that he was compelled to file an action for constructive dismissal, because he had been demoted from appraiser to clerk and not given any work to do, while his table had been placed near the toilet and eventually removed. He adds that the reshuffling of employees was done in bad faith, because it was designed primarily to force him to resign. [21]

[22]

[23]

Management Prerogative to Transfer Employees Jurisprudence recognizes the exercise of management prerogatives. For this reason, courts often decline to interfere in legitimate business decisions of employers. Indeed, labor laws discourage interference in employers judgments concerning the conduct of their business. The law must protect not only the welfare of employees, but also the right of employers. [24]

[25]

In the pursuit of its legitimate business interest, management has the prerogative to transfer or assign employees from one office or area of operation to another -- provided there is no demotion in rank or diminution of salary, benefits, and other privileges; and the action is not motivated by discrimination, made in bad faith, or effected as a form of punishment or demotion without sufficient cause. This privilege is inherent in the right of employers to control and manage their enterprise effectively. The right of employees to security of tenure does not give them vested rights to their positions to the extent of depriving management of its prerogative to change their assignments or to transfer them. [26]

[27]

[28]

Managerial prerogatives, however, are subject to limitations provided by law, collective bargaining agreements, and general principles of fair play and justice. The test for determining the validity of the transfer of employees was explained in Blue Dairy Corporation v. NLRC as follows: [29]

[30]

[L]ike other rights, there are limits thereto. The managerial prerogative to  transfer personnel must be exercised without grave abuse of discretion, bearing  in mind the basic elements of justice and fair play. Having the right should not  be confused with the manner in which that right is exercised. Thus, it cannot be used as a subterfuge by the employer to rid himself of an undesirable  worker. In particular, the employer must be able to show that the transfer is not  unreasonable, inconvenient or prejudicial to the employee; nor does it involve a demotion in rank or a diminution of his salaries, privileges and other  benefits. Should the employer fail to overcome this burden of proof, the  employees transfer shall be tantamount to constructive dismissal, which has  been defined as a quitting because continued employment is rendered  impossible, unreasonable or unlikely; as an offer involving a demotion in rank  and diminution in pay. Likewise, constructive dismissal exists when an act of  clear discrimination, insensibility or disdain by an employer has become so  unbearable to the employee leaving him with no option but to forego with his  continued employment. [31]

Petitioners Transfer Lawful The employer bears the burden of proving that the transfer of the employee has complied with the foregoing test. In the instant case, we find no reason to disturb the conclusion of the NLRC and the CA that there was no constructive dismissal. Their finding is ed by substantial evidence -- that amount of relevant evidence that a reasonable mind might accept as justification for a conclusion. [32]

Petitioners transfer was made in pursuit of respondents policy to familiarize bank employees with the various phases of bank operations and further strengthen the existing internal control system of all officers and employees. We have previously held that employees may be transferred -- based on their qualifications, aptitudes and competencies -- to positions in which they can function with maximum benefit to the company. There appears no justification for denying an employer the right to transfer employees to expand their competence and maximize their full potential for the advancement of the establishment. Petitioner was not singled out; other employees were also reassigned without their express consent. [33]

[34]

Neither was there any demotion in the rank of petitioner; or any diminution of his salary, privileges and other benefits. This fact is clear in respondents Board Resolutions, the April 30, 1999 letter of Bank President Daya to Branch Manager Cada, and the May 10, 1999 letter of Daya to petitioner. On the other hand, petitioner has offered no sufficient proof to his allegations. Given no credence by both lower tribunals was his bare and selfserving statement that he had been positioned near the comfort room, made to work without a table, and given no work assignment. Purely conjectural is his claim that the reshuffle of personnel was a harassment in retaliation for an alleged falsification case filed by his relatives against a public official. While the rules of evidence prevailing in courts of law are not controlling in proceedings before the NLRC, parties must nonetheless submit evidence to their contentions. [35]

[36]

[37]

Secondary Issues: Serrano v. NLRC Inapplicable Serrano v. NLRC does not apply to the present factual milieu. The Court ruled therein that the lack of notice and hearing made the dismissal of the employee ineffectual, but not necessarily illegal. Thus, the procedural infirmity was remedied by ordering payment of his full back wages from the time of his dismissal. The absence of constructive dismissal in the instant case precludes the application of Serrano. Because herein petitioner was not dismissed, then he is not entitled to his claimed monetary benefits. [38]

[39]

[40]

Alleged Nullity of NLRC and CA Proceedings Petitioner argues that the proceedings before the NLRC and the CA were void, since respondents appeal before the NLRC had allegedly been filed beyond the reglementary period. A careful scrutiny of his Petition for Review with the appellate court shows that this issue was not raised there. Inasmuch as the instant Petition challenges the Decision of the CA, we cannot rule on arguments that were not brought before it. This ruling is consistent with the due-process requirement that no question shall be entertained on appeal, unless it has been raised in the court below. [41]

[42]

[43]

WHEREFORE, this Petition is DENIED, and the June 14, 2002 Decision and the September 25, 2002 Resolution of the Court of Appeals are AFFIRMED. Costs against petitioner. SO ORDERED.

Davide, JJ., concur.

Jr.,

C.J.,

(Chairman),

Ynares-Santiago,

Carpio, and Azcuna,

[1]

Rollo, pp. 3-31.

[2]

Id., pp. 33-48. Fifteenth Division. Penned by Justice Oswaldo D. Agcaoili (chairman), with the concurrence of Justices Eriberto U. Rosario Jr. and Danilo B. Pine ().

[3]

Id., p. 50.

[4]

Assailed Decision, p. 15; rollo, p. 47.

[5]

Rollo, p. 119.

[6]

Assailed Decision, pp. 2-3; rollo, pp. 34-35.

[7]

Letter of Alejo B. Daya dated April 30, 1999; rollo, p. 120.

[8]

Rollo, p. 121.

[9]

Letter of Daya dated May 10, 1999; rollo, p. 122.

[10]

Letter of petitioner dated June 7, 1999; rollo, p. 123.

[11]

Letter of petitioner dated June 21, 1999; rollo, p. 124.

[12]

Assailed Decision, p. 6; rollo, p. 38.

[13]

Decision of Labor Arbiter Waldo Emerson R. Gan dated June 14, 2000, p. 5-6; rollo, pp. 145146.

[14]

CA Decision dated June 14, 2002, pp. 11-12; rollo, pp. 43-44.

[15]

NLRC Resolution dated July 18, 2001, pp. 4-5; rollo, pp. 79-80.

[16]

Assailed Decision, p. 12; rollo, p. 44.

[17]

Rollo, pp. 51-74.

[18]

Assailed Decision, pp. 14-15; rollo, pp. 46-47.

[19]

This case was deemed submitted for resolution on June 9, 2003, upon this Courts receipt of respondents Memorandum, signed by Atty. Carlos Mayorico E. Caliwara. Petitioners Memorandum, signed by Atty. Manuel M. Maramba, was received by this Court on April 23, 2003.

[20]

Petitioners Memorandum, p. 10; rollo, p. 220. Original in upper case.

[21]

Blue Dairy Corporation v. NLRC, 373 Phil. 179, 186, September 14, 1999; Escobin v. NLRC, 351 Phil. 973, 999, April 15, 1998; Philippine Japan Active Carbon Corporation v. NLRC, 171 SCRA 164, 168, March 8, 1989.

[22]

Petitioners Memorandum, pp. 11, 14; rollo, pp. 221, 224.

[23]

Id., p. 14; id., p. 224.

[24]

Metrolab Industries, Inc. v. Roldan-Confesor, 324 Phil. 416, 429, February 28, 1996.

[25]

Bontia v. NLRC, 325 Phil. 443, 452, March 18, 1996.

[26]

Lanzaderas v. Amethyst Security and General Services, Inc., 404 SCRA 505, June 20, 2003; Jarcia Machine Shop and Auto Supply, Inc. v. NLRC, 334 Phil. 84, 93, January 2, 1997; Escobin v. NLRC, supra.

[27]

Ibid.

[28]

See Antonio H. Abad Jr., Compendium on Labor Law (2004), p. 55.

[29]

Philippine Airlines, Inc. v. NLRC, 225 SCRA 301, 308, August 13, 1993; University of Sto. Tomas v. NLRC, 190 SCRA 758, 771, October 18, 1990.

[30]

Supra.

[31]

Id., p. 186, per Bellosillo, J.

[32]

Tan v. NLRC, 359 Phil. 499, 512, November 24, 1998. Substantial evidence is the quantum of evidence required to establish a fact in cases before istrative and quasi-judicial bodies like the NLRC (Equitable Banking Corporation v. NLRC, 273 SCRA 352, 373-374, June 13, 1997).

[33]

Board Resolution No. 99-52; rollo, p. 119.

[34]

Allied Banking Corporation v. Court of Appeals, GR No. 144412, November 18, 2003; Blue Dairy Corporation v. NLRC, supra, p. 186; Philippine Japan Active Carbon Corporation v. NLRC, supra.

[35]

Petitioners Memorandum, p. 3; rollo, p. 213.

[36]

Ibid.

[37]

Jarcia Machine Shop and Auto Supply, Inc. v. NLRC, supra, p. 92.

[38]

380 Phil. 416, January 27, 2000.

[39]

Id, p. 449. See herein ponentes Separate Opinion in Serrano. See also Dayan v. Bank of Philippine Islands, 421 Phil. 620, 633, November 20, 2001.

[40]

Id, p. 451.

[41]

Petitioners Memorandum, p. 20; rollo, p. 230.

[42]

Rollo, pp. 51-74.

[43]

Del Rosario v. Bonga, 350 SCRA 101, 108, January 23, 2001.

Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. 162021

June 16, 2014

MEGA MAGAZINE PUBLICATIONS, INC., JERRY TIU, AND SARITA V. YAP, Petitioners, vs. MARGARET A. DEFENSOR, Respondent. DECISION BERSAMIN, J.:

In labor cases, the rules on the degree of proof are enforced not as stringently as in other cases in order to better serve the higher ends of justice. This lenity is intended to afford to the employee every opportunity to level the playing field. The Case Being now assailed is the amended decision promulgated on November 19, 2003, whereby the Court of Appeals (CA) reconsidered its original disposition, and granted the petition for certiorari filed by respondent Margaret A. Defensor (respondent) by annulling and setting aside the adverse resolutions dated July 31, 2002 and March 31, 2003 issued by the National Labor Relations Commission (NLRC). 1

Antecedents Petitioner Mega Magazine Publications, Inc. (MMPI) first employed the respondent as an Associate Publisher in 1996, and later promoted her as a Group Publisher with a monthly salary of P60,000.00. 2

In a memorandum dated February 25, 1999, the respondent proposed to MMPI’s Executive Vice-President Sarita V. Yap (Yap) year-end commissions for herself and a special incentive plan for the Sales Department. 3

The proposed schedule of the respondent’s commissions would be as follows: 1. MMPI Total revenue at P28-P29 M 0.05% outright commission 2. MMPI Total revenue at P30-P34 M 0.075% outright commission 3. MMPI Total revenue at P35-P38 M 0.1% outright commission 4. MMPI Total revenue at P39-P41 M 0.1% outright commission 5. MMPI Total revenue at P41M up 0.1% outright commission while the proposed schedule of the special incentive plan would be the following: 1. MMPI Total revenue at P28-P29 M P5,000 each by year-end 2. MMPI Total revenue at P30-P34 M P7,000 each by year-end 3. MMPI Total revenue at P35-P38 M P8,500 each by year-end 4. MMPI Total revenue at P39-P41 M P10,000 each by year-end 5. MMPI Total revenue at P41M up P10,000 each by year-end Plus incentive trip abroad Yap made marginal notes of her counter-proposals on her copy of the respondent’s memorandum dated February 25, 1999 itself, crossing out proposed items 1 and 2 from the schedule of the respondent’s commissions, and proposing instead that outright commissions 4

be at 0.1% of P35-P38 million in accordance with proposed item 3; and crossing out proposed items 1 and 2 from the schedule of the special incentive plan, and writing "start here" and "stet" in reference to item 3. Yap also wrote on the memorandum: "Marge, if everything is ok w/ you, draft something for me to sign …"; "You can also announce that at 5 M net for MMPI [acc to my computation, achievable if they only meet their month min. quota] we can declare 14th month pay for entire company." 5

The respondent sent another memorandum on April 5, 1999 setting out the 1999 ment sales, target and commissions, and proposing that the schedule of her outright commissions should start at .05% of P34.5 million total revenue, or P175,000.00; and further proposing that the special incentives be given when total revenues reached P35-P38 million. 6

On August 31, 1999, the respondent sent Yap a report on sales and sales targets.

7

On October 1999, the respondent tendered her letter of resignation effective at the end of December 1999. Yap accepted the resignation. Before leaving MMPI, the respondent sent Yap another report on the sales and advertising targets for 1999. On December 8, 1999, Yap responded with a "formalization" of her approval of the 1999 special incentive scheme proposed by the respondent through her memorandum dated February 25, 1999, revising anew the schedule by starting commissions at.05% of P35-P38 million gross advertising revenue (including barter), and the proposed special incentives at P35-P38 million with P8,500.00 bonus. 8

1âwphi1

9

10

11

The respondent replied to Yap, pointing out that her memorandum dated April 5, 1999 had been the result of Yap’s own comments on the special incentive scheme she had proposed, and that she had assumed that Yap had been amenable to the proposal when she did not receive any further reaction from the latter. 12

On May 2000, after the respondent had left the company, she filed a complaint for payment of bonus and incentive compensation with damages, specifically demanding the payment ofP271,264.68 as sales commissions, P60,000.00 as 14th month pay, and P8,500.00 as her share in the incentive scheme for the advertising and sales staff. 13

14

Ruling of the Labor Arbiter In a decision dated February 5, 2001, the Labor Arbiter (LA) dismissed the respondent’s complaint, ruling that the respondent had not presented any evidence showing that MMPI had agreed or committed to the proposed in her memorandum of April 5, 1999; that even assuming that the petitioners had agreed to her , the table she had submitted justifying a gross revenue of P36,216,624.07 was not an official by MMPI; and that the petitioners had presented a 1999 statement of income and deficit prepared by the auditing firm of Punongbayan & Araullo showing MMPI’s gross revenue for 1999 being only P31,947,677.00. 15

16

17

Decision of the NLRC The respondent appealed, but the NLRC denied the appeal for its lack of merit, with the NLRC concurring with the LA’s ruling that there had been no agreement between the petitioners and the respondent on the and conditions of the incentives reached. 18

The respondent filed a motion for reconsideration and a supplement to the motion for reconsideration. In the supplement, she included a motion to it additional evidence (i.e., the affidavit of Lie Tabingo who had worked as a traffic clerk in the Advertising Department of MMPI and had been in charge of keeping track of the ments placed with MMPI) on the ground that such evidence had been "unavailable during the hearing as newly discovered evidence in a motion for new trial". 1âwphi1

19

The NLRC denied the respondent’s motions for reconsideration.

20

Judgment of the CA The respondent brought a special civil action for certiorari in the CA. In its decision promulgated on August 28, 2003, the CA dismissed the respondent’s petition for certiorari and upheld the resolutions of the NLRC. 21

On motion for reconsideration by the respondent, however, the CA promulgated on November 19, 2003 its assailed amended decision granting the motion for reconsideration and giving due course to the respondent’s petition for certiorari; annulling the challenged resolutions of the NLRC; and remanding the case to the NLRC for the reception of additional evidence. The CA opined that the NLRC had committed a grave abuse of discretion in finding that there had been no special incentive scheme approved and implemented for 1999, and in disallowing the respondent from presenting additional evidence that was crucial in establishing her claim about MMPI’s gross revenue. The amended decision disposed as follows: 22

23

WHEREFORE, premises considered, the motion for reconsideration is hereby GRANTED. Our Decision of August 28, 2003 is hereby RECONSIDERED AND SET ASIDE. A new judgment is hereby entered GIVING DUE COURSE to the petition and GRANTING the writ prayed for. Accordingly, the challenged Resolutions of the NLRC in NLRC NCR 00-0361361-00 (CA No. 028358-01) dated July 31, 2002 and March 31, 2003 are hereby ANNULLED and SET ASIDE. The case is hereby remanded to the NLRC for reception of additional evidence on appeal as prayed for by petitioner and for proper proceedings in accordance with Our disquisitions herein. The denial of the claim for 14th month pay is sustained for lack of evidentiary basis. No pronouncement as to costs. SO ORDERED.

24

The petitioners and the respondent sought reconsideration of the CA’s amended decision, but the CA denied their motions through the resolution promulgated on February 4, 2004.

25

Issues Hence, this appeal by petition for review on certiorari, with the petitioners urging that the CA erred in ruling that – I. RESPONDENT CAN INTRODUCE EVIDENCE THAT IS NOT NEWLYDISCOVERED FOR THE FIRST TIME ON APPEAL.

II. A [REMAND] OF THE CASETO THE NLRC FOR FURTHER RECEPTION OF EVIDENCE IS JUSTIFIED BY REASON OF DEARTH OF EVIDENCE TO PROVE THAT TARGET GROSS SALES OR REVENUES WEREACTUALLY MET AS TO ENTITLE RESPONDENT TO THE INCENTIVE BONUS FOR THE SUBJECT PERIOD/YEAR. 26

The petitioners argue that the circumstances of the case did not warrant the relaxation of the rules of procedure in order to allow the submission of the memorandum and the affidavit of Tabingo to the LA and the NLRC. They contend that the respondent had sought to introduce in the proceedings before the LA Tabingo’s memorandum dated December 10, 1999 addressed to the ing Department stating that the "gross revenue from all publications was P36,022,624.07, while net revenue was P32,551,890.58"; that Tabingo’s affidavit was meant to validate her memorandum; that such pieces of evidence sought to prove that MMPI’s target gross sales had been met, and would then entitle the respondent to her claims of commissions and special incentives; that the LA actually considered but did not give any weight or value to Tabingo’s memorandum in resolving the respondent’s claims; that any affidavit from Tabingo that the respondent intended to introduce would be merely corroborative of the evidence already presented, like the table purportedly showing MMPI’s gross revenue for 1999; and that such evidence was already considered by the NLRC in resolving the appeal. 27

28

The important issue is whether or not the respondent was entitled to the commissions and the incentive bonus being claimed. Ruling The appeal is partly meritorious. The grant of a bonus or special incentive, being a management prerogative, is not a demandable and enforceable obligation, except when the bonus or special incentive is made part of the wage, salary or compensation of the employee, or is promised by the employer and expressly agreed upon by the parties. By its very definition, bonus is a gratuity or act of liberality of the giver, and cannot be considered part of an employee’s wages if it is paid only when profits are realized or a certain amount of productivity is achieved. If the desired goal of production or actual work is not accomplished, the bonus does not accrue. 29

30

31

Due to the nature of the bonus or special incentive being a gratuity or act of liberality on the part of the giver, the respondent could not validly insist on the schedule proposed in her memorandum of April 5, 1999 considering that the grant of the bonus or special incentive remained a management prerogative. However, the Court agrees with the CA’s ruling that the petitioners had already exercised the management prerogative to grant the bonus or special incentive. At no instance did Yap flatly refuse or reject the respondent’s request for commissions and the bonus or incentive. This is plain from the fact that Yap even "bargained" with the respondent on the schedule of the rates and the revenues on which the bonus or incentive would be pegged. What remained contested was only the schedule of the rates and the revenues. In her initial memorandum of February 25, 1999, the respondent had suggested the following schedule, namely: (a) 0.05% outright commission on total revenue of P28-P29 million; (b) 0.075% on P30-P34 million; (c) 0.1% on P35-P38 million; (d) 0.1% on P39-P41 million pesos; and (f) 0.1% on P41 million or higher, but Yap had countered by revising the schedule to start at 0.1% as outright commissions on a total revenue of P35-P38 million, and the special incentive bonus to start at revenues of P35-P38 million. Moreover, on December 8, 1999, Yap sent to the respondent a memorandum entitled Re: Formalization of

my handwritten approval of 1999 Incentive scheme dated 25 February 1999. Such actuations and actions by Yap indicated that, firstly, the petitioners had already acceded to the grant of the special incentive bonus; and, secondly, the only issue still to be threshed out was at which point and at what rate the respondent’s outright commissions and the special incentive bonus for the sales staff should be given. For sure, Yap’s memorandum dated December 8, 1999, aside from being the petitioners’ categorical ission of the grant of the commissions and the bonus or incentives, laid down the petitioners’ own schedule of the commissions and the bonus or incentives, to wit: 32

Re: Formalization of my handwritten approval of 1999 incentive scheme dated 25 February 1999 1999 Incentive Scheme for Group Publisher 

MMPI Gross Advertising Revenue (includes barter)

P35-38 M P39-41 M P41 M

.05% .075% up 1%

Commissionable ad revenue is net of advertising agency commission and absorbed production costs. Commission will be paid in bartered goods and cash in direct proportion to percentage of cash and bartered goods revenue for the year. This amount will be paid by January 30, 2000 if the documents (contracts, P.O.s) to the gross revenue claim are in order and submitted to Finance. 1avvphi1

Group Incentive for Sale and Traffic Team 

MMPI Gross Advertising Revenue

P35-38 M P39-41 M P41 M up

P8,500.00 each P10,000.00 each P10,000.00 each

+ incentive trip abroad Concerning the remand of the case to the NLRC for reception of additional evidence at the instance of the respondent, we hold that the CA committed a reversible error. Although, as a rule, the submission to the NLRC of additional evidence like documents and affidavits is not prohibited, so that the NLRC may properly consider such evidence for the first time on appeal, the circumstances of the case did not justify the application of the rule herein. 33

The additional evidence the respondent has sought to be itted (i.e., Tabingo’s affidavit executed on October 14, 2002) was already attached to the pleadings filed in the NLRC, and was part of the records thereat. Its introduction was apparently aimed to rebut the petitioners’ claim that its gross revenue was only P31,947,677.00 and did not reach the minimum P35 million necessary for the grant of the respondent’s outright commissions and the special incentive bonus for the sales staff (inclusive of the respondent). Tabingo’s affidavit corroborated her memorandum to the ing Department dated December 10, 1999 stating that MMPI’s revenue for 1999 was P36,216,624.07. 34

1âwphi1

Confronted with the conflicting claims on MMPI’s gross revenue realized in 1999, the question is which evidence must be given more weight?

The resolution of the question requires the re-examination and calibration of evidence. Such re-examination and calibration, being of a factual nature, ordinarily lies beyond the purview of the Court’s authority in this appeal. Yet, because the documents are already before the Court, we hereby treat the situation as an exception in order to resolve the question promptly and finally instead of still remanding the case to the CA for the reevaluation and calibration. 35

We start by observing that the degree of proof required in labor cases is not as stringent as in other types of cases. This liberal approach affords to the employee every opportunity to level the playing field in which her employer is pitted against her. Here, on the one hand, were Tabingo’s memorandum and affidavit indicating that MMPI’s revenues in 1999 totaled P36,216,624.07, and, on the other, the audit report showing MMPI’s gross revenues amounting to only P31,947,677.00 in the same year. That the audit report was rendered by the auditing firm of Punongbayan & Araullo did not make it weightier than Tabingo’s memorandum and affidavit, for only substantial evidence – that amount of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion was required in labor adjudication. Moreover, whenever the evidence presented by the employer and that by the employee are in equipoise, the scales of justice must tilt in favor of the latter. For purposes of determining whether or not the petitioners’ gross revenue reached the minimum target of P35 million, therefore, Tabingo’s memorandum and affidavit sufficed to positively establish that it did, particularly considering that Tabingo’s memorandum was made in the course of the performance of her official tasks as a traffic clerk of MMPI. In her affidavit, too, Tabingo asserted that her issuance of the memorandum was pursuant to MMPI’s year-end procedures, an assertion that the petitioners did not refute. In any event, Tabingo’s categorical declaration in her affidavit that "[because] of that achievement, as part of the Sales and Traffic Team of MMPI, in addition to my other bonuses that year, I received P8,500.00 in gift certificates as my share in the Group Incentive for the Sales and Traffic Team for gross advertising revenue of P35 to P38 million xxx," aside from the petitioners not refuting it, was corroborated by the 1999 Advertising Target sent by the respondent to Yap on December 2, 1999, in which the respondent reported a gross revenue of P36,216,624.07 as of December 1, 1999. 36

37

38

39

40

Accordingly, the Court concludes that the respondent was entitled to her 0.05% outright commissions and to the special incentive bonus of P8,500.00 based on MMPI having reached the minimum target of P35 million in gross revenues paid in "bartered goods and cash in direct proportion to percentage of cash and bartered goods revenue for the year," as provided in Yap’s memorandum of December 8, 1999. 41

WHEREFORE, the Court REVERSES AND SETS ASIDE the amended decision promulgated on November 19, 2003; ENTERS a new decision granting respondent Margaret A. Defensor’s claim for outright commissions in the amount of P 181,083 .12 and special incentive bonus of P8,500.00, or a total of 1!189,583.12; and DIRECTS petitioner Mega Magazine Publications, Inc. to pay the costs of suit. SO ORDERED. LUCAS P. BERSAMIN Associate Justice WE CONCUR: MARIA LOURDES P. A. SERENO Chief Justice

TERESITA J. LEONARDO-DE CASTRO Associate Justice

JOSE PORTUGAL PEREZ* Associate Justice

BIENVENIDO L. REYES Associate Justice C E R TI F I C ATI O N Pursuant to Section 13, Article VIII of the Constitution, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court's Division. MARIA LOURDES P. A. SERENO Chief Justice

Footnotes * Vice Associate Justice Martin S. Villarama, Jr., who penned the decision under review, per the raffle of September 26, 2011. Rollo, pp. 58-74; penned by Associate Justice Martin S. Villarama, Jr. (now a Member of this Court), with the concurrence of Presiding Justice Cancio C. Garcia (retired Member of this Court) and Associate Justice Mario L. Guariña, lll (retired). 1

2

Id. at 59.

3

Id. at 121-122.

4

Id.

5

Id.

6

Id. at 124-125.

7

Id. at 126-127.

8

Id. at 132.

9

Id. at 129.

10

Id. at 108.

11

Id.

12

Id. at 109,131.

13

Id. at 110-116.

14

Id. at 115.

15

Id. at 211-225.

16

Id. at 130.

17

Id. at 275.

18

Id. at 287-305.

19

Id. at 341-342.

20

Id. at 367-376.

21

Id. at 479-487.

22

Id. at 71.

23

Id. at 73.

24

Id. at 74.

25

Id. at 54-56.

26

Id. at 25.

27

Id. at 65.

28

Id. at 31.

See Protacio v. Laya Mananghaya & Co., G.R. No. 168654, March 25, 2009, 582 SCRA 417, 429. 29

Lepanto Ceramics, Inc. v. Lepanto Ceramics Employees Association, G.R. No. 180866, March 2, 2010, 614 SCRA 63, 71. 30

31

Id.

32

Rollo,p. 108; emphasis supplied.

Sasan, Sr. v. National Labor Relations Commission, 4th Division, G.R. No. 176240, October 17, 2008, 569 SCRA 670, 686-687. 33

34

Rollo, pp. 343-347.

Reyes v. National Labor Relations Commission, G.R. No. 160233, August 8, 2007, 529 SCRA 487, 494. 35

36

House of Sara Lee v. Rey, G.R. No. 149013, August 31, 2006, 500 SCRA 419, 435.

Javier v. Fly Ace Corporation, G.R. No. 192558, February 15, 2012, 666 SCRA 382, 395. 37

Uy v. Centro Ceramica Corporation, G.R. No. 174631, October 19, 2011, 659 SCRA 604, 618;Mobile Protective & Detective Agency v. Ompad, G.R. No. 159195, May 9, 2005, 458 SCRA 308, 323. 38

39

Rollo, p. 341.

40

Id. at 129.

41

Id. at 108.

Republic of the Philippines

Supreme Court Manila SECOND DIVISION PRIMO E. CAONG, JR., ALEXANDER J. TRESQUIO, and LORIANO D. DALUYON, Petitioners,

- versus -

G.R. No. 179428 Present: CARPIO, J., Chairperson, NACHURA, PERALTA, ABAD, and MENDOZA, JJ. Promulgated:

AVELINO REGUALOS, Respondent.

January 26, 2011

x------------------------------------------------------------------------------------x DECISION NACHURA, J.:

Is the policy of suspending drivers pending payment of arrears in their boundary obligations reasonable? The Court of Appeals (CA) answered the question in the affirmative in its Decision [1] dated December 14, 2006 and Resolution dated July 16, 2007. In this petition for review on certiorari, we take a second look at the issue and determine whether the situation at bar merits the relaxation of the application of the said policy.

Petitioners Primo E. Caong, Jr. (Caong), Alexander J. Tresquio (Tresquio), and Loriano D. Daluyon (Daluyon) were employed by respondent Avelino Regualos under a boundary agreement, as drivers of his jeepneys. In November 2001, they filed separate complaints[2] for illegal dismissal against respondent who barred them from driving the vehicles due to deficiencies in their boundary payments. Caong was hired by respondent in September 1998 and became a permanent driver sometime in 2000. In July 2001, he was assigned a brandnew jeepney for a boundary fee of P550.00 per day. He was suspended on October 9-15, 2001 for failure to remit the full amount of the boundary. Consequently, he filed a complaint for illegal suspension. Upon expiration of the suspension period, he was reitted by respondent, but he was reassigned to an older jeepney for a boundary fee of P500.00 per day. He claimed that, on November 9, 2001, due to the scarcity of engers, he was only able to remit P400.00 to respondent. On November 11, 2001, he returned to work after his rest day, but respondent barred him from driving because of the deficiency in the boundary payment. He pleaded with respondent but to no avail.[3] Tresquio was employed by respondent as driver in August 1996. He became a permanent driver in 1997. In 1998, he was assigned to drive a new jeepney for a boundary fee of P500.00 per day. On November 6, 2001,

due to the scarcity of engers, he was only able to remit P450.00. When he returned to work on November 8, 2001 after his rest day, he was barred by respondent because of the deficiency of P50.00. He pleaded with respondent but the latter was adamant.[4] On the other hand, Daluyon started working for respondent in March 1998. He became a permanent driver in July 1998. He was assigned to a relatively new jeepney for a boundary fee of P500.00 per day. On November 7, 2001, due to the scarcity of engers, he was only able to pay P470.00 to respondent. The following day, respondent barred him from driving his jeepney. He pleaded but to no avail.[5] During the mandatory conference, respondent manifested that petitioners were not dismissed and that they could drive his jeepneys once they paid their arrears. Petitioners, however, refused to do so. Petitioners averred that they were illegally dismissed by respondent without just cause. They maintained that respondent did not comply with due process requirements before terminating their employment, as they were not furnished notice apprising them of their infractions and another informing them of their dismissal. Petitioners claimed that respondents offer during the mandatory conference to reinstate them was an insincere afterthought as shown by the warning given by respondent that, if they fail to remit the full amount of the boundary yet again, they will be barred from driving the jeepneys. Petitioners questioned respondents policy of automatically dismissing the drivers who fail to remit the full amount of the boundary as it allegedly (a) violates their right to due process; (b) does not constitute a just cause for dismissal; (c) disregards the reality that there are days when they could not raise the full amount of the boundary because of the scarcity of engers. In his Position Paper, respondent alleged that petitioners were lessees of his vehicles and not his employees; hence, the Labor Arbiter had no jurisdiction. He claimed that he noticed that some of his lessees, including petitioners, were not fully paying the daily rental of his jeepneys. In a list which he attached to the Position Paper, it was shown that petitioners had

actually incurred arrears since they started working. The list showed that Caongs total arrears amounted to P10,315.00, that of Tresquio was P10,760.00, while that of Daluyon was P6,890.00. He made inquiries and discovered that his lessees contracted loans with third parties and used the income of the jeepneys in paying the loans. Thus, on November 4, 2001, he gathered all the lessees in a meeting and informed them that, effective November 5, 2001, those who would fail to fully pay the daily rental would not be allowed to rent a jeepney on the following day. He explained to them that the jeepneys were acquired on installment basis, and that he was paying the monthly amortizations through the lease income. Most of the lessees allegedly accepted the condition and paid their arrears. Petitioners, however, did not settle their arrears. Worse, their remittances were again short of the required boundary fee. Petitioner Daluyons rent payment was short of P20.00 on November 5, 2001 and P80.00 on November 7, 2001. On November 6, 2001, it was Tresquio who incurred an arrear of P100.00. On November 7 and 9, 2001, petitioner Caong was in arrear of P50.00 and P100.00, respectively. Respondent stressed that, during the mandatory conference, he manifested that he would renew his lease with petitioners if they would pay the arrears they incurred during the said dates.[6] On March 31, 2003, the Labor Arbiter decided the case in favor of respondent, thus: WHEREFORE, judgment is hereby rendered, DISMISSING the aboveentitled cases for lack of merit. However, respondent Regualos is directed to accept back complainants Caong, Tresquio and Daluyon, as regular drivers of his enger jeepneys, after complainants have paid their respective arrearages they have incurred in the remittance of their respective boundary payments, in the amount of P150.00, P100.00 and P100.00. Complainants, if still interested to work as drivers, are hereby ordered to report to respondent Regualos within fifteen (15) days from the finality of this decision. Otherwise, failure to do so means forfeiture of their respective employments. Other claims of complainants are dismissed for lack of merit. SO ORDERED.[7]

According to the Labor Arbiter, an employer-employee relationship existed between respondent and petitioners. The latter were not dismissed considering that they could go back to work once they have paid their

arrears. The Labor Arbiter opined that, as a disciplinary measure, it is proper to impose a reasonable sanction on drivers who cannot pay their boundary payments. He emphasized that respondent acquired the jeepneys on loan or installment basis and relied on the boundary payments to comply with his monthly amortizations.[8] Petitioners appealed the decision to the National Labor Relations Commission (NLRC). In its resolution[9] dated March 31, 2004, the NLRC agreed with the Labor Arbiter and dismissed the appeal. It also denied petitioners motion for reconsideration.[10] Forthwith, petitioners filed a petition for certiorari with the CA.

In its Decision[11] dated December 14, 2006, the CA found no grave abuse of discretion on the part of the NLRC. According to the CA, the employer-employee relationship of the parties has not been severed, but merely suspended when respondent refused to allow petitioners to drive the jeepneys while there were unpaid boundary obligations. The CA pointed out that the fact that it was within the power of petitioners to return to work is proof that there was no termination of employment. The condition that petitioners should first pay their arrears only for the period of November 5-9, 2001 before they can be reitted to work is neither impossible nor unreasonable if their total unpaid boundary obligations and the need to sustain the financial viability of the employers enterprisewhich would ultimately redound to the benefit of the employeesare taken into consideration.[12] The CA went on to rule that petitioners were not denied their right to due process. It pointed out that the case does not involve a termination of employment; hence, the strict application of the twin-notice rule is not warranted. According to the CA, what is important is that petitioners were given the opportunity to be heard. The meeting conducted by respondent on November 4, 2001 served as sufficient notice to petitioners. During the said meeting, respondent informed his employees, including petitioners, to

strictly comply with the policy regarding remittances and warned them that they would not be allowed to take out the jeepneys if they did not remit the full amount of the boundary.[13] Dissatisfied, petitioners filed a motion for reconsideration, but the CA denied the motion in its Resolution dated July 16, 2007.[14] Petitioners are now before this Court resolutely arguing that they were illegally dismissed by respondent, and that such dismissal was made in violation of the due process requirements of the law. The petition is without merit. In an action for certiorari, petitioner must prove not merely reversible error, but grave abuse of discretion amounting to lack or excess of jurisdiction on the part of respondent. Mere abuse of discretion is not enough. It must be shown that public respondent exercised its power in an arbitrary or despotic manner by reason of ion or personal hostility, and this must be so patent and so gross as to amount to an evasion of a positive duty or to a virtual refusal to perform the duty ened or to act at all in contemplation of law.[15] As correctly held by the CA, petitioners failed to establish that the NLRC committed grave abuse of discretion in affirming the Labor Arbiters ruling, which is ed by the facts on record. It is already settled that the relationship between jeepney owners/operators and jeepney drivers under the boundary system is that of employer-employee and not of lessor-lessee. The fact that the drivers do not receive fixed wages but only get the amount in excess of the so-called boundary that they pay to the owner/operator is not sufficient to negate the relationship between them as employer and employee.[16] The Labor Arbiter, the NLRC, and the CA uniformly declared that petitioners were not dismissed from employment but merely suspended pending payment of their arrears. Findings of fact of the CA, particularly

where they are in absolute agreement with those of the NLRC and the Labor Arbiter, are accorded not only respect but even finality, and are deemed binding upon this Court so long as they are ed by substantial evidence.[17] We have no reason to deviate from such findings. Indeed, petitioners suspension cannot be categorized as dismissal, considering that there was no intent on the part of respondent to sever the employer-employee relationship between him and petitioners. In fact, it was made clear that petitioners could put an end to the suspension if they only pay their recent arrears. As it was, the suspension dragged on for years because of petitioners stubborn refusal to pay. It would have been different if petitioners complied with the condition and respondent still refused to reit them to work. Then there would have been a clear act of dismissal. But such was not the case. Instead of paying, petitioners even filed a complaint for illegal dismissal against respondent. Respondents policy of suspending drivers who fail to remit the full amount of the boundary was fair and reasonable under the circumstances. Respondent explained that he noticed that his drivers were getting lax in remitting their boundary payments and, in fact, herein petitioners had already incurred a considerable amount of arrears. He had to put a stop to it as he also relied on these boundary payments to raise the full amount of his monthly amortizations on the jeepneys. Demonstrating their obstinacy, petitioners, on the days immediately following the implementation of the policy, incurred deficiencies in their boundary remittances. It is acknowledged that an employer has free rein and enjoys a wide latitude of discretion to regulate all aspects of employment, including the prerogative to instill discipline on his employees and to impose penalties, including dismissal, if warranted, upon erring employees. This is a management prerogative. Indeed, the manner in which management conducts its own affairs to achieve its purpose is within the managements discretion. The only limitation on the exercise of management prerogative is that the policies, rules, and regulations on work-related activities of the employees must always be fair and reasonable, and the

corresponding penalties, when prescribed, commensurate to the offense involved and to the degree of the infraction.[18] Petitioners argue that the policy is unsound as it does not consider the times when engers are scarce and the drivers are not able to raise the amount of the boundary. Petitioners concern relates to the implementation of the policy, which is another matter. A company policy must be implemented in such manner as will accord social justice and comion to the employee. In case of noncompliance with the company policy, the employer must consider the surrounding circumstances and the reasons why the employee failed to comply. When the circumstances merit the relaxation of the application of the policy, then its noncompliance must be excused. In the present case, petitioners merely alleged that there were only few engers during the dates in question. Such excuse is not acceptable without any proof or, at least, an explanation as to why engers were scarce at that time. It is simply a bare allegation, not worthy of belief. We also find the excuse unbelievable considering that petitioners incurred the shortages on separate days, and it appears that only petitioners failed to remit the full boundary payment on said dates. Under a boundary scheme, the driver remits the boundary, which is a fixed amount, to the owner/operator and gets to earn the amount in excess thereof. Thus, on a day when there are many engers along the route, it is the driver who actually benefits from it. It would be unfair then if, during the times when engers are scarce, the owner/operator will be made to suffer by not getting the full amount of the boundary. Unless clearly shown or explained by an event that irregularly and negatively affected the usual number of engers within the route, the scarcity of engers should not excuse the driver from paying the full amount of the boundary. Finally, we sustain the CAs finding that petitioners were not denied the right to due process. We thus quote with approval its discussion on this matter:

Having established that the case at bench does not involve termination of employment, We find that the strict, even rigid, application of the twin-notice rule is not warranted. But the due process safeguards are nonetheless still available to petitioners. Due process is not a matter of strict or rigid or formulaic process. The essence of due process is simply the opportunity to be heard, or as applied to istrative proceedings, an opportunity to explain ones side or an opportunity to seek a reconsideration of the action or ruling complained of. A formal or trial-type hearing is not at all times and in all instances essential, as the due process requirements are satisfied where the parties are afforded fair and reasonable opportunity to explain their side of the controversy at hand. x x x. xxxx In the case at bench, private respondent, upon finding that petitioners had consistently failed to remit the full amount of the boundary, conducted a meeting on November 4, 2001 informing them to strictly comply with the policy regarding their remittances and warned them to discontinue driving if they still failed to remit the full amount of the boundary.[19]

WHEREFORE, premises considered, the petition is DENIED. The Court of Appeals Decision dated December 14, 2006 and Resolution dated July 16, 2007 are AFFIRMED. SO ORDERED. ANTONIO EDUARDO B. NACHURA Associate Justice WE CONCUR:

ANTONIO T. CARPIO

Associate Justice Chairperson

DIOSDADO M. PERALTA Associate Justice

ROBERTO A. ABAD Associate Justice

JOSE CATRAL MENDOZA Associate Justice

AT T E S TAT I O N I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

ANTONIO T. CARPIO Associate Justice Chairperson, Second Division

C E R T I F I C AT I O N Pursuant to Section 13, Article VIII of the Constitution and the Division Chairperson's Attestation, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

RENATO C. CORONA Chief Justice

[1]

Penned by Associate Justice Romulo V. Borja, with Associate Justices Sixto C. Marella, Jr. and Mario V. Lopez, concurring; rollo, pp. 38-54. [2] Id. at 92-96. [3] Id. at 98-99. [4] Id. at 100. [5]

Id. at 100-101. Id. at 112-114. [7] Id. at 131. [8] Id. at 128-130. [9] Id. at 183. [10] Id. at 186. [11] Id. at 53. [12] Id. at 43-48. [13] Id. at 50-51. [14] Id. at 58. [15] Solvic Industrial Corporation v. NLRC, 357 Phil. 430, 438 (1998). [16] Martinez v. NLRC, 339 Phil. 176, 182 (1997), citing National Labor Union v. Dinglasan, 98 Phil. 649, 652-653 (1956). [6]

[17]

San Miguel Corporation v. National Labor Relations Commission, G.R. Nos. 146121-22, April 16, 2008, 551 SCRA 410, 422. [18] St. Michaels Institute v. Santos, 422 Phil. 723, 732-733 (2001). [19] Rollo, pp. 50-51.