[G.R. No. 175558. February 8, 2012.]

SKIPPERS UNITED PACIFIC, INC. and SKIPPERS MARITIME SERVICES, INC., LTD., petitioners, vs. NATHANIEL DOZA, NAPOLEON DE GRACIA, ISIDRO L. LATA, and CHARLIE APROSTA, respondents.

DECISION

CARPIO, J p:

The Case

This is a Petition for Review under Rule 45 assailing the 5 July 2006 Decision 1 and 7 November 2006 Resolution 2 of the Court of Appeals in CA-G.R. SP No. 88148. 3

This arose from consolidated labor case 4 filed by seafarers Napoleon De Gracia (De Gracia), Isidro L. Lata (Lata), Charlie Aprosta (Aprosta), and Nathaniel Doza (Doza) against local manning agency Skippers United Pacific, Inc. and its foreign principal, Skippers Maritime Services, Inc., Ltd. (Skippers) for unremitted home allotment for the month of December 1998, salaries for the unexpired portion of their employment contracts, moral damages, exemplary damages, and attorney's fees. Skippers, on the other hand, answered with a claim for reimbursement of De Gracia, Aprosta and Lata's repatriation expenses, as well as award of moral damages and attorney's fees.

De Gracia, Lata, Aprosta and Doza's (De Gracia, et al.) claims were dismissed by the Labor Arbiter for lack of merit. 5 The Labor Arbiter also dismissed Skippers' claims. 6 De Gracia, et al. appealed 7 the Labor Arbiter's decision with the National Labor Relations Commission (NLRC), but the First Division of the NLRC dismissed the appeal for lack of merit. 8 Doza, et al.'s Motion for Reconsideration was likewise denied by the NLRC, 9 so they filed a Petition for Certiorari with the Court of Appeals (CA). 10

The CA granted the petition, reversed the Labor Arbiter and NLRC Decisions, and awarded to De Gracia, Lata and Aprosta their unremitted home allotment, three months salary each representing the unexpired portion of their employment contracts and attorney's fees. 11 No award was given to Doza for lack of factual basis. 12The CA denied Skippers' Motion for Partial Reconsideration. 13 Hence, this Petition.

The Facts

Skippers United Pacific, Inc. deployed, in behalf of Skippers, De Gracia, Lata, and Aprosta to work on board the vessel MV Wisdom Star, under the following terms and conditions:

Name: Napoleon O. De Gracia

Position: 3rd Engineer

Contract Duration: 10 months

Basic Monthly Salary: US$800.00

Contract Date: 17 July 1998 14

Name: Isidro L. Lata ETCcSa

Position: 4th Engineer

Contract Duration: 12 months

Basic Monthly Salary: US$600.00

Contract Date: 17 April 1998 15

Name: Charlie A. Aprosta

Position: Third Officer

Contract Duration: 12 months

Basic Monthly Salary: US$600.00

Contract Date: 17 April 1998 16

Paragraph 2 of all the employment contracts stated that: "The terms and conditions of the Revised Employment Contract Governing the Employment of All Seafarers approved per Department Order No. 33 and Memorandum Circular No. 55, both series of 1996 shall be strictly and faithfully observed." 17 No employment contract was submitted for Nathaniel Doza.

De Gracia, et al., claimed that Skippers failed to remit their respective allotments for almost five months, compelling them to air their grievances with the Romanian Seafarers Free Union. 18 On 16 December 1998, ITF Inspector Adrian Mihalcioiu of the Romanian Seafarers Union sent Captain Savvas of Cosmos Shipping a fax letter, relaying the complaints of his crew, namely: home allotment delay, unpaid salaries (only advances), late provisions, lack of laundry services (only one washing machine), and lack of maintenance of the vessel (perforated and unrepaired deck). 19 To date, however, Skippers only failed to remit the home allotment for the month of December 1998. 20 On 28 January 1999, De Gracia, et al. were unceremoniously discharged from MV Wisdom Stars and immediately repatriated. 21 Upon arrival in the Philippines, De Gracia, et al. filed a complaint for illegal dismissal with the Labor Arbiter on 4 April 1999 and prayed for payment of their home allotment for the month of December 1998, salaries for the unexpired portion of their contracts, moral damages, exemplary damages, and attorney's fees. 22

Skippers, on the other hand, claims that at around 2:00 a.m. on 3 December 1998, De Gracia, smelling strongly of alcohol, went to the cabin of Gabriel Oleszek, Master of MV Wisdom Stars, and was rude, shouting noisily to the master. 23 De Gracia left the master's cabin after a few minutes and was heard shouting very loudly somewhere down the corridors. 24 This incident was evidenced by the Captain's Report sent via telex to Skippers on said date. 25

Skippers also claims that at 12:00 noon on 22 January 1999, four Filipino seafarers, namely Aprosta, De Gracia, Lata and Doza, arrived in the master's cabin and demanded immediate repatriation because they were not satisfied with the ship. 26 De Gracia, et al. threatened that they may become crazy any moment and demanded for all outstanding payments due to them. 27 This is evidenced by a telex of Cosmoship MV Wisdom to Skippers, which however bears conflicting dates of 22 January 1998 and 22 January 1999. 28

Skippers also claims that, due to the disembarkation of De Gracia, et al., 17 other seafarers disembarked under abnormal circumstances. 29 For this reason, it was suggested that Polish seafarers be utilized instead of Filipino seamen. 30 This is again evidenced by a fax of Cosmoship

MV Wisdom to Skippers, which bears conflicting dates of 24 January 1998 and 24 January 1999. 31

Skippers, in its Position Paper, admitted non-payment of home allotment for the month of December 1998, but prayed for the offsetting of such amount with the repatriation expenses in the following manner: 32

SeafarerRepatriation ExpenseHome AllotmentBalanceDe GraciaUS$1,340.00US$900.00US$440.00

AprostaUS$1,340.00US$600.00US$740.00

LataUS$1,340.00US$600.00US$740.00

Since De Gracia, et al., pre-terminated their contracts, Skippers claims they are liable for their repatriation expenses 33 in accordance with Section 19 (G) of Philippine Overseas Employment Administration (POEA) Memorandum Circular No. 55, series of 1996 which states:

G.A seaman who requests for early termination of his contract shall be liable for his repatriation cost as well as the transportation cost of his replacement. The employer may, in case of compassionate grounds, assume the transportation cost of the seafarer's replacement.

Skippers also prayed for payment of moral damages and attorney's fees. 34

The Decision of the Labor Arbiter

The Labor Arbiter rendered his Decision on 18 February 2002, with its dispositive portion declaring: cDCEHa

WHEREFORE, judgment is hereby rendered dismissing herein action for lack of merit. Respondents' claim for reimbursement of the expenses they incurred in the repatriation of complainant Nathaniel Doza is likewise dismissed.

SO ORDERED. 35

The Labor Arbiter dismissed De Gracia, et al.'s complaint for illegal dismissal because the seafarers voluntarily pre-terminated their employment contracts by demanding for immediate repatriation due to dissatisfaction with the ship. 36 The Labor Arbiter held that such voluntary pre-termination of employment contract is akin to resignation, 37 a form of termination by employee of his employment contract under Article 285 of the Labor Code. The Labor Arbiter gave weight and credibility to the telex of the master of the vessel to Skippers, claiming that De Gracia, et al. demanded for immediate repatriation. 38 Due to the absence of illegal dismissal, De Gracia, et al.'s claim for salaries representing the unexpired portion of their employment contracts was dismissed. 39

The Labor Arbiter also dismissed De Gracia et al.'s claim for home allotment for December 1998. 40 The Labor Arbiter explained that payment for home allotment is "in the nature of extraordinary money where the burden of proof is shifted to the worker who must prove he is entitled to such monetary benefit." 41 Since De Gracia, et al., were not able to prove their entitlement to home allotment, such claim was dismissed. 42

Lastly, Skippers' claim for reimbursement of repatriation expenses was likewise denied, since Article 19 (G) of POEA Memorandum Circular No. 55, Series of 1996 allows the employer, in case the seafarer voluntarily pre-terminates his contract, to assume the repatriation cost of the seafarer on compassionate grounds. 43

The Decision of the NLRC

The NLRC, on 28 October 2002, dismissed De Gracia, et al.'s appeal for lack of merit and affirmed the Labor Arbiter's decision. 44 The NLRC considered De Gracia, et al.'s claim for home allotment for December 1998 unsubstantiated, since home allotment is a benefit which De Gracia, et al., must prove their entitlement to. 45 The NLRC also denied the claim for illegal dismissal because De Gracia, et al., were not able to refute the telex received by Skippers from the vessel's master that De Gracia, et al., voluntarily pre-terminated their contracts and demanded immediate repatriation due to their dissatisfaction with the ship's operations. 46

The Decision of the Court of Appeals

The CA, on 5 July 2006, granted De Gracia, et al.'s petition and reversed the decisions of the Labor Arbiter and NLRC, its dispositive portion reading as follows:

WHEREFORE, the instant petition for certiorari is GRANTED. The Resolution dated October 28, 2002 and the Order dated August 31, 2004 rendered by the public respondent NLRC are ANNULLED and SET ASIDE. Let another judgment be entered holding private respondents jointly and severally liable to petitioners for the payment of:

1.Unremitted home allotment pay for the month of December, 1998 or the equivalent thereof in Philippine pesos:

a.De Gracia = US$900.00

b.Lata = US$600.00 

c.Aprosta = US$600.00

2.Salary for the unexpired portion of the employment contract or for 3 months for every year of the unexpired term, whichever is less, or the equivalent thereof in Philippine pesos:

a.De Gracia = US$2,400.00

b.Lata = US$1,800.00

c.Aprosta = US$1,800.00

3.Attorney's fees and litigation expenses equivalent to 10% of the total claims.

SO ORDERED. 47

The CA declared the Labor Arbiter and NLRC to have committed grave abuse of discretion when they relied upon the telex message of the captain of the vessel stating that De Gracia, et al., voluntarily pre-terminated their contracts and demanded immediate repatriation. 48 The telex message was "a self-serving document that does not satisfy the requirement of substantial evidence, or that amount of relevant evidence which a reasonable mind might accept as adequate to justify the conclusion that petitioners indeed voluntarily demanded their immediate repatriation." 49 For this reason, the repatriation of De Gracia, et al., prior to the expiration of their contracts showed they were illegally dismissed from employment. 50 DaIACS

In addition, the failure to remit home allotment pay was effectively admitted by Skippers, and prayed to be offset from the repatriation expenses. 51 Since there is no proof that De Gracia, et

al., voluntarily pre-terminated their contracts, the repatriation expenses are for the account of Skippers, and cannot be offset with the home allotment pay for December 1998. 52

No relief was granted to Doza due to lack of factual basis to support his petition. 53 Attorney's fees equivalent to 10% of the total claims was granted since it involved an action for recovery of wages or where the employee was forced to litigate and incur expenses to protect his rights and interest. 54

The Issues

Skippers, in its Petition for Review on Certiorari, assigned the following errors in the CA Decision:

a)The Court of Appeals seriously erred in not giving due credence to the master's telex message showing that the respondents voluntarily requested to be repatriated.

b)The Court of Appeals seriously erred in finding petitioners liable to pay backwages and the alleged unremitted home allotment pay despite the finding of the Labor Arbiter and the NLRC that the claims are baseless.

c)The Court of Appeals seriously erred in awarding attorney's fees in favor of respondents despite its findings that the facts attending in this case do not support the claim for moral and exemplary damages. 55

The Ruling of this Court

We deny the petition and affirm the CA Decision, but modify the award.

For a worker's dismissal to be considered valid, it must comply with both procedural and substantive due process. The legality of the manner of dismissal constitutes procedural due process, while the legality of the act of dismissal constitutes substantive due process. 56

Procedural due process in dismissal cases consists of the twin requirements of notice and hearing. The employer must furnish the employee with two written notices before the termination of employment can be effected: (1) the first notice apprises the employee of the particular acts or omissions for which his dismissal is sought; and (2) the second notice informs the employee of the employer's decision to dismiss him. Before the issuance of the second notice, the requirement of a hearing must be complied with by giving the worker an opportunity to be heard. It is not necessary that an actual hearing be conducted. 57

Substantive due process, on the other hand, requires that dismissal by the employer be made under a just or authorized cause under Articles 282 to 284 of the Labor Code.

In this case, there was no written notice furnished to De Gracia, et al., regarding the cause of their dismissal. Cosmoship furnished a written notice (telex) to Skippers, the local manning agency, claiming that De Gracia, et al., were repatriated because the latter voluntarily pre-terminated their contracts. This telex was given credibility and weight by the Labor Arbiter and NLRC in deciding that there was pre-termination of the employment contract "akin to resignation" and no illegal dismissal. However, as correctly ruled by the CA, the telex message is "a biased and self-serving document that does not satisfy the requirement of substantial evidence." If, indeed, De Gracia, et al., voluntarily pre-terminated their contracts, then De Gracia, et al., should have submitted their written resignations.

Article 285 of the Labor Code recognizes termination by the employee of the employment contract by "serving written notice on the employer at least one (1) month in advance." Given that provision, the law contemplates the requirement of a written notice of resignation. In the

absence of a written resignation, it is safe to presume that the employer terminated the seafarers. In addition, the telex message relied upon by the Labor Arbiter and NLRC bore conflicting dates of 22 January 1998 and 22 January 1999, giving doubt to the veracity and authenticity of the document. In 22 January 1998, De Gracia, et al., were not even employed yet by the foreign principal. For these reasons, the dismissal of De Gracia, et al., was illegal.

On the issue of home allotment pay, Skippers effectively admitted non-remittance of home allotment pay for the month of December 1998 in its Position Paper. Skippers sought the repatriation expenses to be offset with the home allotment pay. However, since De Gracia, et al.'s dismissal was illegal, their repatriation expenses were for the account of Skippers and could not be offset with the home allotment pay.

Contrary to the claim of the Labor Arbiter and NLRC that the home allotment pay is in "the nature of extraordinary money where the burden of proof is shifted to the worker who must prove he is entitled to such monetary benefit," Section 8 of POEA Memorandum Circular No. 55, series of 1996, states that the allotment actually constitutes at least eighty percent (80%) of the seafarer's salary: ScCDET

The seafarer is required to make an allotment which is payable once a month to his designated allottee in the Philippines through any authorized Philippine bank. The master/employer/agency shall provide the seafarer with facilities to do so at no expense to the seafarer. The allotment shall be at least eighty percent (80%) of the seafarer's monthly basic salary including backwages, if any. (Emphasis supplied)

Paragraph 2 of the employment contracts of De Gracia, Lata and Aprosta incorporated the provisions of above Memorandum Circular No. 55, series of 1996, in the employment contracts. Since said memorandum states that home allotment of seafarers actually constitutes at least eighty percent (80%) of their salary, home allotment pay is not in the nature of an extraordinary money or benefit, but should actually be considered as salary which should be paid for services rendered. For this reason, such non-remittance of home allotment pay should be considered as unpaid salaries, and Skippers shall be liable to pay the home allotment pay of De Gracia, et al., for the month of December 1998.

Damages

As admitted by Skippers in its Position Paper, the home allotment pay for December 1998 due to De Gracia, Lata and Aprosta is:

SeafarerHome Allotment PayDe GraciaUS$900.00

AprostaUS$600.00

LataUS$600.00

The monthly salary of De Gracia, according to his employment contract, is only US$800.00. However, since Skippers admitted in its Position Paper a higher home allotment pay for De Gracia, we award the higher amount of home allotment pay for De Gracia in the amount of US$900.00. Since the home allotment pay can be considered as unpaid salaries, the peso equivalent of the dollar amount should be computed using the prevailing rate at the time of termination since it was due and demandable to De Gracia, et al., on 28 January 1999.

Section 10 of Republic Act No. 8042 (Migrant Workers Act) provides for money claims in cases of unjust termination of employment contracts:

In case of termination of overseas employment without just, valid or authorized cause as defined by law or contract, the workers shall be entitled to the full reimbursement of his placement fee with interest of twelve percent (12%) per annum, plus his salaries for the unexpired portion of his employment contract or for three (3) months for every year of the unexpired term, whichever is less.

The Migrant Workers Act provides that salaries for the unexpired portion of the employment contract or three (3) months for every year of the unexpired term, whichever is less, shall be awarded to the overseas Filipino worker, in cases of illegal dismissal. However, in 24 March 2009, Serrano v. Gallant Maritime Services and Marlow Navigation Co., Inc., 58 the Court, in an En Banc Decision, declared unconstitutional the clause "or for three months for every year of the unexpired term, whichever is less" and awarded the entire unexpired portion of the employment contract to the overseas Filipino worker.

On 8 March 2010, however, Section 7 of Republic Act No. 10022 (RA 10022) amended Section 10 of the Migrant Workers Act, and once again reiterated the provision of awarding the unexpired portion of the employment contract or three (3) months for every year of the unexpired term, whichever is less.

Nevertheless, since the termination occurred on January 1999 before the passage of the amendatory RA 10022, we shall apply RA 8042, as unamended, without touching on the constitutionality of Section 7 of RA 10022.

The declaration in March 2009 of the unconstitutionality of the clause "or for three months for every year of the unexpired term, whichever is less" in RA 8042 shall be given retroactive effect to the termination that occurred in January 1999 because an unconstitutional clause in the law confers no rights, imposes no duties and affords no protection. The unconstitutional provision is inoperative, as if it was not passed into law at all. 59  

As such, we compute the claims as follows:

Seafarer Contract Contract Repatriation Unexpired Monthly Total TermDateDateTermSalaryClaimsDe Gracia10 months17 Jul. 199828 Jan. 19993 months & US$800US$2933.3420 days

Lata12 months17 Apr. 199828 Jan. 19992 months & US$600US$160020 days

Aprosta12 months17 Apr. 199828 Jan. 19992 months & US$600US$160020 days

Given the above computation, we modify the CA's imposition of award, and grant to De Gracia, et al., salaries representing the unexpired portion of their contracts, instead of salaries for three (3) months.

Article 2219 of the Civil Code of the Philippines provides for recovery of moral damages in certain cases: HTDAac

Art. 2219.Moral damages may be recovered in the following and analogous cases:

(1)A criminal offense resulting in physical injuries;

(2)Quasi-delicts causing physical injuries;

(3)Seduction, abduction, rape, or other lascivious acts;

(4)Adultery or concubinage;

(5)Illegal or arbitrary detention or arrest;

(6)Illegal search;

(7)Libel, slander or any other form of defamation;

(8)Malicious prosecution;

(9)Acts mentioned in Article 309;

(10)Acts and actions referred to in Articles 21, 26, 27, 28, 29, 30, 32, 34, and 35.

The parents of the female seduced, abducted, raped, or abused, referred to in No. 3 of this article, may also recover moral damages.

The spouse, descendants, ascendants, and brothers and sisters may bring the action mentioned in No. 9 of this article, in the order named.

Article 2229 of the Civil Code, on the other hand, provides for recovery of exemplary damages:

Art. 2229.Exemplary or corrective damages are imposed, by way of example or correction for the public good, in addition to the moral, temperate, liquidated or compensatory damages.

In this case, we agree with the CA in not awarding moral and exemplary damages for lack of factual basis.

Lastly, Article 2208 of the Civil Code provides for recovery of attorney's fees and expenses of litigation:

Art. 2208.In the absence of stipulation, attorney's fees and expenses of litigation, other than judicial costs, cannot be recovered, except:

(1)When exemplary damages are awarded;

(2)When the defendant's act or omission has compelled the plaintiff to litigate with third persons or to incur expenses to protect his interest;

(3)In criminal cases of malicious prosecution against the plaintiff;

(4)In case of a clearly unfounded civil action or proceeding against the plaintiff;

(5)Where the defendant acted in gross and evident bad faith in refusing to satisfy the plaintiff's plainly valid, just and demandable claim;

(6)In actions for legal support;

(7)In actions for the recovery of wages of household helpers, laborers and skilled workers;

(8)In actions for indemnity under workmen's compensation and employer's liability laws;

(9)In a separate civil action to recover civil liability arising from a crime;

(10)When at least double judicial costs are awarded;

(11)In any other case where the court deems it just and equitable that attorney's fees and expenses of litigation should be recovered.

In all cases, the attorney's fees and expenses of litigation must be reasonable.

Article 111 of the Labor Code provides for a maximum award of attorney's fees in cases of recovery of wages:

Art. 111.Attorney's fees. —

a.In cases of unlawful withholding of wages, the culpable party may be assessed attorney's fees equivalent to ten percent of the amount of wages recovered. cHaDIA

b.It shall be unlawful for any person to demand or accept, in any judicial or administrative proceedings for the recovery of wages, attorney's fees which exceed ten percent of the amount of wages recovered.

Since De Gracia, et al., had to secure the services of the lawyer to recover their unpaid salaries and protect their interest, we agree with the CA's imposition of attorney's fees in the amount of ten percent (10%) of the total claims.

WHEREFORE, we AFFIRM the Decision of the Court of Appeals dated 5 July 2006 with MODIFICATION. Petitioners Skippers United Pacific, Inc. and Skippers Maritime Services, Inc., Ltd. are jointly and severally liable for payment of the following:

1)Unremitted home allotment pay for the month of December 1998 in its equivalent rate in Philippine Pesos at the time of termination on 28 January 1999:

a.De Gracia = US$900.00

b.Lata = US$600.00

c.Aprosta = US$600.00

2)Salary for the unexpired portion of the employment contract or its current equivalent in Philippine Pesos:

a.De Gracia = US$2,933.34

b.Lata = US$1,600.00

c.Aprosta = US$1,600.00

3)Attorney's fees and litigation expenses equivalent to 10% of the total claims.

SO ORDERED.

Brion, Perez, Sereno and Reyes, JJ., concur.

[G.R. No. 197528. September 5, 2012.]

PERT/CPM MANPOWER EXPONENT CO., INC., petitioner, vs. ARMANDO A. VINUYA, LOUIE M. ORDOVEZ, ARSENIO S. LUMANTA, JR., ROBELITO S. ANIPAN, VIRGILIO R. ALCANTARA, MARINO M. ERA, SANDY O. ENJAMBRE and NOEL T. LADEA, respondents.

DECISION

BRION, J p:

We resolve the present petition for review on certiorari 1 assailing the decision 2 dated May 9, 2011 and the resolution 3 dated June 23, 2011 of the Court of Appeals (CA) in CA-G.R. SP No. 114353.

The Antecedents

On March 5, 2008, respondents Armando A. Vinuya, Louie M. Ordovez, Arsenio S. Lumanta, Jr., Robelito S. Anipan, Virgilio R. Alcantara, Marino M. Era, Sandy O. Enjambre and Noel T. Ladea (respondents) filed a complaint for illegal dismissal against the petitioner Pert/CPM Manpower Exponent Co., Inc. (agency), and its President Romeo P. Nacino.

The respondents alleged that the agency deployed them between March 29, 2007 and May 12, 2007 to work as aluminum fabricator/installer for the agency's principal, Modern Metal Solution LLC/MMS Modern Metal Solution LLC (Modern Metal) in Dubai, United Arab Emirates.

The respondents' employment contracts, 4 which were approved by the Philippine Overseas Employment Administration (POEA), provided for a two-year employment, nine hours a day, salary of 1,350 AED with overtime pay, food allowance, free and suitable housing (four to a room), free transportation, free laundry, and free medical and dental services. They each paid a P15,000.00 processing fee. 5

On April 2, 2007, Modern Metal gave the respondents, except Era, appointment letters 6 with terms different from those in the employment contracts which they signed at the agency's office in the Philippines. Under the letters of appointment, their employment was increased to three years at 1,000 to 1,200 AED and food allowance of 200 AED. CHDAEc

The respondents claimed that they were shocked to find out what their working and living conditions were in Dubai. They were required to work from 6:30 a.m. to 6:30 p.m., with a break of only one hour to one and a half hours. When they rendered overtime work, they were most of the time either underpaid or not paid at all. Their housing accommodations were cramped and were shared with 27 other occupants. The lodging house was in Sharjah, which was far from their jobsite in Dubai, leaving them only three to four hours of sleep a day because of the long hours of travel to and from their place of work; there was no potable water and the air was polluted.

When the respondents received their first salaries (at the rates provided in their appointment letters and with deductions for placement fees) and because of their difficult living and working conditions, they called up the agency and complained about their predicament. The agency assured them that their concerns would be promptly addressed, but nothing happened.

On May 5, 2007, Modern Metal required the respondents to sign new employment contracts, 7 except for Era who was made to sign later. The contracts reflected the terms of their appointment letters. Burdened by all the expenses and financial obligations they incurred for

their deployment, they were left with no choice but to sign the contracts. They raised the matter with the agency, which again took no action.

On August 5, 2007, despondent over their unbearable living and working conditions and by the agency's inaction, the respondents expressed to Modern Metal their desire to resign. Out of fear, as they put it, that Modern Metal would not give them their salaries and release papers, the respondents, except Era, cited personal/family problems for their resignation. 8 Era mentioned the real reason — "because I dont (sic) want the company policy" 9 — for his resignation. cHCaIE

It took the agency several weeks to repatriate the respondents to the Philippines. They all returned to Manila in September 2007. Except for Ordovez and Enjambre, all the respondents shouldered their own airfare.

For its part, the agency countered that the respondents were not illegally dismissed; they voluntarily resigned from their employment to seek a better paying job. It claimed that the respondents, while still working for Modern Metal, applied with another company which offered them a higher pay. Unfortunately, their supposed employment failed to materialize and they had to go home because they had already resigned from Modern Metal.

The agency further alleged that the respondents even voluntarily signed affidavits of quitclaim and release after they resigned. It thus argued that their claim for benefits, under Section 10 of Republic Act No. (R.A.) 8042, damages and attorney's fees is unfounded.

The Compulsory Arbitration Rulings

On April 30, 2008, Labor Arbiter Ligerio V. Ancheta rendered a decision 10 dismissing the complaint, finding that the respondents voluntarily resigned from their jobs. He also found that four of them — Alcantara, Era, Anipan and Lumanta — even executed a compromise agreement (with quitclaim and release) before the POEA. He considered the POEA recourse a case of forum shopping.

The respondents appealed to the National Labor Relations Commission (NLRC). They argued that the labor arbiter committed serious errors in (1) admitting in evidence the quitclaims and releases they executed in Dubai, which were mere photocopies of the originals and which failed to explain the circumstances behind their execution; (2) failing to consider that the compromise agreements they signed before the POEA covered only the refund of their airfare and not all their money claims; and (3) ruling that they violated the rule on non-forum shopping. SHIETa

On May 12, 2009, the NLRC granted the appeal. 11 It ruled that the respondents had been illegally dismissed. It anchored its ruling on the new employment contracts they were made to sign in Dubai. It stressed that it is illegal for an employer to require its employees to execute new employment papers, especially those which provide benefits that are inferior to the POEA-approved contracts.

The NLRC rejected the quitclaim and release executed by the respondents in Dubai. It believed that the respondents executed the quitclaim documents under duress as they were afraid that they would not be allowed to return to the Philippines if they did not sign the documents. Further, the labor tribunal disagreed with the labor arbiter's opinion that the compromise agreement they executed before the POEA had effectively foreclosed the illegal dismissal complaint before the NLRC and that the respondents had been guilty of forum shopping. It pointed out that the POEA case involved pre-deployment issues; whereas, the complaint before the NLRC is one for illegal dismissal and money claims arising from employment.

Consequently, the NLRC ordered the agency, Nacino and Modern Metal to pay, jointly and severally, the respondents, as follows:

WHEREFORE, the Decision dated 30 April 2008 is hereby REVERSED and SET ASIDE, a new Decision is hereby issued ordering the respondents PERT/CPM MANPOWER EXPONENTS CO., INC., ROMEO NACINO, and MODERN METAL SOLUTIONS, INC. to jointly and severally, pay the complainants the following:

EmployeeUnderpaid Placement Salary forExemplarySalaryfeetheDamagesunexpired portion of the contract(1350 x 6months)Vinuya,150 x 6 =USD 4008100 AEDP20,000.00ARMANDO900 AEDAlcantara150 X 4 =USD 4008100 AEDP20,000.00VIRGILIO600 AEDEra,350 x 4 =USD 4008100 AEDP20,000.00MARINO1400 AEDLadea,150 x 5 =USD 4008100 AEDP20,000.00NOEL750 AEDOrdovez,250 X 3 =USD 4008100 AEDP20,000.00LOUIE750 AEDAnipan,150 x 4 =USD 4008100 AEDP20,000.00ROBELITO600 AEDEnjambre,150 x 4 =USD 4008100 AEDP20,000.00SANDY600 AEDLumanta,250 x 5 =USD 4008100 AEDP20,000.00ARSENIO1250 AEDTOTAL:6,850 AEDUS$3,20064,800 AEDP400,000.00

or their peso equivalent at the time of actual payment plus attorney[']s fees equivalent to 10% of the judgment award. 12

The agency moved for reconsideration, contending that the appeal was never perfected and that the NLRC gravely abused its discretion in reversing the labor arbiter's decision. IECAaD

The respondents, on the other hand, moved for partial reconsideration, maintaining that their salaries should have covered the unexpired portion of their employment contracts, pursuant to the Court's ruling in Serrano v. Gallant Maritime Services, Inc. 13

The NLRC denied the agency's motion for reconsideration, but granted the respondents' motion. 14 It sustained the respondents' argument that the award needed to be adjusted, particularly in relation to the payment of their salaries, consistent with the Court's ruling in Serrano. The ruling declared unconstitutional the clause, "or for three (3) months for every year of the unexpired term, whichever is less," in Section 10, paragraph 5, of R.A. 8042, limiting the entitlement of illegally dismissed overseas Filipino workers to their salaries for the unexpired term of their contract or three months, whichever is less. Accordingly, it modified its earlier decision and adjusted the respondents' salary entitlement based on the following matrix:

EmployeeDuration of Departure dateDate dismissed Unexpired Contract portion of contractVinuya,2 years29 March 20078 August 200719 monthsARMANDOand 21 daysAlcantara,2 years3 April 20078 August 200720 monthsVIRGILIOand 5 daysEra,2 years12 May 20078 August 200721 monthsMARINOand 4 days

Ladea,2 years29 March 20078 August 200719 monthsNOELand 21 daysOrdovez,2 years3 April 200726 July 200721 monthsLOUIEand 23 daysAnipan,2 years3 April 20078 August 200720 monthsROBELITOand 5 daysEnjambre,2 years29 March 200726 July 200720 monthsSANDYand 3 daysLumanta,2 years29 March 20078 August 200719 monthsARSENIOand 21 days 15

Again, the agency moved for reconsideration, reiterating its earlier arguments and, additionally, questioning the application of the Serrano ruling in the case because it was not yet final and executory. The NLRC denied the motion, prompting the agency to seek recourse from the CA through a petition for certiorari.

The CA Decision

The CA dismissed the petition for lack of merit. 16 It upheld the NLRC ruling that the respondents were illegally dismissed. It found no grave abuse of discretion in the NLRC's rejection of the respondents' resignation letters, and the accompanying quitclaim and release affidavits, as proof of their voluntary termination of employment.

The CA stressed that the filing of a complaint for illegal dismissal is inconsistent with resignation. Moreover, it found nothing in the records to substantiate the agency's contention that the respondents' resignation was of their own accord; on the contrary, it considered the resignation letters "dubious for having been lopsidedly-worded to ensure that the petitioners (employer[s]) are free from any liability." 17

The appellate court likewise refused to give credit to the compromise agreements that the respondents executed before the POEA. It agreed with the NLRC's conclusion that the agreements pertain to the respondents' charge of recruitment violations against the agency distinct from their illegal dismissal complaint, thus negating forum shopping by the respondents. aHADTC

Lastly, the CA found nothing legally wrong in the NLRC correcting itself (upon being reminded by the respondents), by adjusting the respondents' salary award on the basis of the unexpired portion of their contracts, as enunciated in the Serrano case.

The agency moved for, but failed to secure, a reconsideration of the CA decision. 18

The Petition

The agency is now before the Court seeking a reversal of the CA dispositions, contending that the CA erred in:

1.affirming the NLRC's finding that the respondents were illegally dismissed;

2.holding that the compromise agreements before the POEA pertain only to the respondents' charge of recruitment violations against the agency; and

3.affirming the NLRC's award to the respondents of their salaries for the unexpired portion of their employment contracts, pursuant to the Serrano ruling.

The agency insists that it is not liable for illegal dismissal, actual or constructive. It submits that as correctly found by the labor arbiter, the respondents voluntarily resigned from their jobs, and

even executed affidavits of quitclaim and release; the respondents stated family concerns for their resignation. The agency posits that the letters were duly proven as they were written unconditionally by the respondents. It, therefore, assails the conclusion that the respondents resigned under duress or that the resignation letters were dubious. TAEcSC

The agency raises the same argument with respect to the compromise agreements, with quitclaim and release, it entered into with Vinuya, Era, Ladea, Enjambre, Ordovez, Alcantara, Anipan and Lumanta before the POEA, although it submitted evidence only for six of them. Anipan, Lumanta, Vinuya and Ladea signing one document; 19 Era 20 and Alcantara 21 signing a document each. It points out that the agreement was prepared with the assistance of POEA Conciliator Judy Santillan, and was duly and freely signed by the respondents; moreover, the agreement is not conditional as it pertains to all issues involved in the dispute between the parties.

On the third issue, the agency posits that the Serrano ruling has no application in the present case for three reasons. First, the respondents were not illegally dismissed and, therefore, were not entitled to their money claims. Second, the respondents filed the complaint in 2007, while the Serrano ruling came out on March 24, 2009. The ruling cannot be given retroactive application. Third, R.A. 10022, which was enacted on March 8, 2010 and which amended R.A. 8042, restored the subject clause in Section 10 of R.A. 8042, declared unconstitutional by the Court.

The Respondents' Position

In their Comment (to the Petition) dated September 28, 2011, 22 the respondents ask the Court to deny the petition for lack of merit. They dispute the agency's insistence that they resigned voluntarily. They stand firm on their submission that because of their unbearable living and working conditions in Dubai, they were left with no choice but to resign. Also, the agency never refuted their detailed narration of the reasons for giving up their employment.

The respondents maintain that the quitclaim and release affidavits, 23 which the agency presented, betray its desperate attempt to escape its liability to them. They point out that, as found by the NLRC, the affidavits are ready-made documents; for instance, in Lumanta's 24 and Era's 25 affidavits, they mentioned a certain G & A International Manpower as the agency which recruited them — a fact totally inapplicable to all the respondents. They contend that they had no choice but to sign the documents; otherwise, their release papers and remaining salaries would not be given to them, a submission which the agency never refuted. CSEHIa

On the agency's second line of defense, the compromise agreement (with quitclaim and release) between the respondents and the agency before the POEA, the respondents argue that the agreements pertain only to their charge of recruitment violations against the agency. They add that based on the agreements, read and considered entirely, the agency was discharged only with respect to the recruitment and pre-deployment issues such as excessive placement fees, non-issuance of receipts and placement misrepresentation, but not with respect to post-deployment issues such as illegal dismissal, breach of contract, underpayment of salaries and underpayment and nonpayment of overtime pay. The respondents stress that the agency failed to controvert their contention that the agreements came about only to settle their claim for refund of their airfare which they paid for when they were repatriated.

Lastly, the respondents maintain that since they were illegally dismissed, the CA was correct in upholding the NLRC's award of their salaries for the unexpired portion of their employment contracts, as enunciated in Serrano. They point out that the Serrano ruling is curative and remedial in nature and, as such, should be given retroactive application as the Court declared in Yap v. Thenamaris Ship's Management. 26 Further, the respondents take exception to the agency's contention that theSerrano ruling cannot, in any event, be applied in the present case

in view of the enactment of R.A. 10022 on March 8, 2010, amending Section 10 of R.A. 8042. The amendment restored the subject clause in paragraph 5, Section 10 of R.A. 8042 which was struck down as unconstitutional in Serrano.

The respondents maintain that the agency cannot raise the issue for the first time before this Court when it could have raised it before the CA with its petition forcertiorari which it filed on June 8, 2010; 27 otherwise, their right to due process will be violated. The agency, on the other hand, would later claim that it is not barred by estoppel with respect to its reliance on R.A. 10022 as it raised it before the CA in CA-G.R. SP No. 114353. 28 They further argue that RA 10022 cannot be applied in their case, as the law is an amendatory statute which is, as a rule, prospective in application, unless the contrary is provided. 29 To put the issue to rest, the respondents ask the Court to also declare unconstitutional Section 7 of R.A. 10022.

Finally, the respondents submit that the petition should be dismissed outright for raising only questions of fact, rather than of law.

The Court's Ruling

The procedural question

We deem it proper to examine the facts of the case on account of the divergence in the factual conclusions of the labor arbiter on the one hand, and, of the NLRC and the CA, on the other. 30 The arbiter found no illegal dismissal in the respondents' loss of employment in Dubai because they voluntarily resigned; whereas, the NLRC and the CA adjudged them to have been illegally dismissed because they were virtually forced to resign. HCITcA

The merits of the case

We find no merit in the petition. The CA committed no reversible error and neither did it commit grave abuse of discretion in affirming the NLRC's illegal dismissal ruling.

The agency and its principal, Modern Metal, committed flagrant violations of the law on overseas employment, as well as basic norms of decency and fair play in an employment relationship, pushing the respondents to look for a better employment and, ultimately, to resign from their jobs.

First. The agency and Modern Metal are guilty of contract substitution. The respondents entered into a POEA-approved two-year employment contract, 31 with Modern Metal providing among others, as earlier discussed, for a monthly salary of 1350 AED. On April 2, 2007, Modern Metal issued to them appointment letters 32whereby the respondents were hired for a longer three-year period and a reduced salary, from 1,100 AED to 1,200 AED, among other provisions. Then, on May 5, 2007, they were required to sign new employment contracts 33 reflecting the same terms contained in their appointment letters, except that this time, they were hired as "ordinary laborer," no longer aluminum fabricator/installer. The respondents complained with the agency about the contract substitution, but the agency refused or failed to act on the matter.

The fact that the respondents' contracts were altered or substituted at the workplace had never been denied by the agency. On the contrary, it admitted that the contract substitution did happen when it argued, "[a]s to their claim for [underpayment] of salary, their original contract mentioned 1350 AED monthly salary, which includes allowance while in their Appointment Letters, they were supposed to receive 1,300 AED. While there was [a] difference of 50 AED monthly, the same could no longer be claimed by virtue of their Affidavits of Quitclaims and Desistance[.]" 34

Clearly, the agency and Modern Metal committed a prohibited practice and engaged in illegal recruitment under the law. Article 34 of the Labor Code provides:

Art. 34.Prohibited Practices. — It shall be unlawful for any individual, entity, licensee, or holder of authority: cAaETS

xxx xxx xxx

(i)To substitute or alter employment contracts approved and verified by the Department of Labor from the time of actual signing thereof by the parties up to and including the periods of expiration of the same without the approval of the Secretary of Labor[.]

Further, Article 38 of the Labor Code, as amended by R.A. 8042, 35 defined "illegal recruitment" to include the following act:

(i)To substitute or alter to the prejudice of the worker, employment contracts approved and verified by the Department of Labor and Employment from the time of actual signing thereof by the parties up to and including the period of the expiration of the same without the approval of the Department of Labor and Employment[.]

Second. The agency and Modern Metal committed breach of contract. Aggravating the contract substitution imposed upon them by their employer, the respondents were made to suffer substandard (shocking, as they put it) working and living arrangements. Both the original contracts the respondents signed in the Philippines and the appointment letters issued to them by Modern Metal in Dubai provided for free housing and transportation to and from the jobsite. The original contract mentioned free and suitable housing. 36 Although no description of the housing was made in the letters of appointment except: "Accommodation: Provided by the company," it is but reasonable to think that the housing or accommodation would be "suitable."

As earlier pointed out, the respondents were made to work from 6:30 a.m. to 6:30 p.m., with a meal break of one to one and a half hours, and their overtime work was mostly not paid or underpaid. Their living quarters were cramped as they shared them with 27 other workers. The lodging house was in Sharjah, far from the jobsite in Dubai, leaving them only three to four hours of sleep every workday because of the long hours of travel to and from their place of work, not to mention that there was no potable water in the lodging house which was located in an area where the air was polluted. The respondents complained with the agency about the hardships that they were suffering, but the agency failed to act on their reports. Significantly, the agency failed to refute their claim, anchored on the ordeal that they went through while in Modern Metal's employ.

Third. With their original contracts substituted and their oppressive working and living conditions unmitigated or unresolved, the respondents' decision to resign is not surprising. They were compelled by the dismal state of their employment to give up their jobs; effectively, they were constructively dismissed. A constructive dismissal or discharge is "a quitting because continued employment is rendered impossible, unreasonable or unlikely, as, an offer involving a demotion in rank and a diminution in pay." 37

Without doubt, the respondents' continued employment with Modern Metal had become unreasonable. A reasonable mind would not approve of a substituted contract that pays a diminished salary — from 1350 AED a month in the original contract to 1,000 AED to 1,200 AED in the appointment letters, a difference of 150 AED to 250 AED (not just 50 AED as the agency claimed) or an extended employment (from 2 to 3 years) at such inferior terms, or a "free and suitable" housing which is hours away from the job site, cramped and crowded, without potable water and exposed to air pollution. cSEaTH

We thus cannot accept the agency's insistence that the respondents voluntarily resigned since they personally prepared their resignation letters 38 in their own handwriting, citing family problems as their common ground for resigning. As the CA did, we find the resignation letters "dubious," 39 not only for having been lopsidedly worded to ensure that the employer is rendered free from any liability, but also for the odd coincidence that all the respondents had, at the same time, been confronted with urgent family problems so that they had to give up their employment and go home. The truth, as the respondents maintain, is that they cited family problems as reason out of fear that Modern Metal would not give them their salaries and their release papers. Only Era was bold enough to say the real reason for his resignation — to protest company policy.

We likewise find the affidavits 40 of quitclaim and release which the respondents executed suspect. Obviously, the affidavits were prepared as a follow through of the respondents' supposed voluntary resignation. Unlike the resignation letters, the respondents had no hand in the preparation of the affidavits. They must have been prepared by a representative of Modern Metal as they appear to come from a standard form and were apparently introduced for only one purpose — to lend credence to the resignation letters. In Modern Metal's haste, however, to secure the respondents' affidavits, they did not check on the model they used. Thus, Lumanta's affidavit 41 mentioned a G & A International Manpower as his recruiting agency, an entity totally unknown to the respondents; the same thing is true for Era's affidavit. 42 This confusion is an indication of the employer's hurried attempt to avoid liability to the respondents.

The respondents' position is well-founded. The NLRC itself had the same impression, which we find in order and hereunder quote:

The acts of respondents of requiring the signing of new contracts upon reaching the place of work and requiring employees to sign quitclaims before they are paid and repatriated to the Philippines are all too familiar stories of despicable labor practices which our employees are subjected to abroad. While it is true that quitclaims are generally given weight, however, given the facts of the case, We are of the opinion that the complainants-appellants executed the same under duress and fear that they will not be allowed to return to the Philippines. 43

Fourth. The compromise agreements (with quitclaim and release) 44 between the respondents and the agency before the POEA did not foreclose their employer-employee relationship claims before the NLRC. The respondents, except Ordovez and Enjambre, aver in this respect that they all paid for their own airfare when they returned home 45 and that the compromise agreements settled only their claim for refund of their airfare, but not their other claims. 46 Again, this submission has not been refuted or denied by the agency.

On the surface, the compromise agreements appear to confirm the agency's position, yet a closer examination of the documents would reveal their true nature. Copy of the compromise agreement is a standard POEA document, prepared in advance and readily made available to parties who are involved in disputes before the agency, such as what the respondents filed with the POEA ahead (filed in 2007) of the illegal dismissal complaint before the NLRC (filed on March 5, 2008). EHaCID

Under the heading "Post-Deployment," the agency agreed to pay Era 47 and Alcantara 48 P12,000.00 each, purportedly in satisfaction of the respondents' claims arising from overseas employment, consisting of unpaid salaries, salary differentials and other benefits, including money claims with the NLRC. The last document was signed by (1) Anipan, (2) Lumanta, (3) Ladea, (4) Vinuya, (5) Jonathan Nangolinola, and (6) Zosimo Gatchalian (the last four signing on the left hand side of the document; the last two were not among those who filed the illegal dismissal complaint). 49 The agency agreed to pay them a total of P72,000.00. Although there was no breakdown of the entitlement for each of the six, but guided by the

compromise agreement signed by Era and Alcantara, we believe that the agency paid them P12,000.00 each, just like Era and Alcantara.

The uniform insubstantial amount for each of the signatories to the agreement lends credence to their contention that the settlement pertained only to their claim for refund of the airfare which they shouldered when they returned to the Philippines. The compromise agreement, apparently, was intended by the agency as a settlement with the respondents and others with similar claims, which explains the inclusion of the two (Nangolinola and Gatchalian) who were not involved in the case with the NLRC. Under the circumstances, we cannot see how the compromise agreements can be considered to have fully settled the respondents' claims before the NLRC — illegal dismissal and monetary benefits arising from employment. We thus find no reversible error nor grave abuse of discretion in the rejection by the NLRC and the CA of said agreements.

Fifth. The agency's objection to the application of the Serrano ruling in the present case is of no moment. Its argument that the ruling cannot be given retroactive effect, because it is curative and remedial, is untenable. It points out, in this respect, that the respondents filed the complaint in 2007, while the Serrano ruling was handed down in March 2009. The issue, as the respondents correctly argue, has been resolved in Yap v. Thenamaris Ship's Management, 50 where the Court sustained the retroactive application of the Serrano ruling which declared unconstitutional the subject clause in Section 10, paragraph 5 of R.A. 8042, limiting to three months the payment of salaries to illegally dismissed Overseas Filipino Workers.

Undaunted, the agency posits that in any event, the Serrano ruling has been nullified by R.A. No. 10022, entitled "An Act Amending Republic Act No. 8042, Otherwise Known as the Migrant Workers and Overseas Filipinos Act of 1995, As Amended, Further Improving the Standard of Protection and Promotion of the Welfare of Migrant Workers, Their Families and Overseas Filipinos in Distress, and for Other Purposes." 51 It argues that R.A. 10022, which lapsed into law (without the Signature of the President) on March 8, 2010, restored the subject clause in the 5th paragraph, Section 10 of R.A. 8042. The amendment, contained in Section 7 of R.A. 10022, reads as follows:

In case of termination of overseas employment without just, valid or authorized cause as defined by law or contract, or any unauthorized deductions from the migrant worker's salary, the worker shall be entitled to the full reimbursement "of" his placement fee and the deductions made with interest at twelve percent (12%) per annum, plus his salaries for the unexpired portion of his employment contract or for three (3) months for every year of the unexpired term, whichever is less. 52 (emphasis ours) HcACTE

This argument fails to persuade us. Laws shall have no retroactive effect, unless the contrary is provided. 53 By its very nature, the amendment introduced by R.A. 10022 — restoring a provision of R.A. 8042 declared unconstitutional — cannot be given retroactive effect, not only because there is no express declaration of retroactivity in the law, but because retroactive application will result in an impairment of a right that had accrued to the respondents by virtue of the Serrano ruling — entitlement to their salaries for the unexpired portion of their employment contracts.

All statutes are to be construed as having only a prospective application, unless the purpose and intention of the legislature to give them a retrospective effect are expressly declared or are necessarily implied from the language used. 54 We thus see no reason to nullify the application of the Serrano ruling in the present case. Whether or not R.A. 10022 is constitutional is not for us to rule upon in the present case as this is an issue that is not squarely before us. In other words, this is an issue that awaits its proper day in court; in the meanwhile, we make no pronouncement on it.

WHEREFORE, premises considered, the petition is DENIED. The assailed Decision dated May 9, 2011 and the Resolution dated June 23, 2011 of the Court of Appeals in CA-G.R. SP No. 114353 are AFFIRMED. Let this Decision be brought to the attention of the Honorable Secretary of Labor and Employment and the Administrator of the Philippine Overseas Employment Administration as a black mark in the deployment record of petitioner Pert/CPM Manpower Exponent Co., Inc., and as a record that should be considered in any similar future violations.

Costs against the petitioner.

SO ORDERED.

Carpio, Peralta, * Del Castillo and Perez, JJ., concur.

[G.R. No. 177167. January 17, 2013.]

NELSON B. GAN, petitioner, vs. GALDERMA PHILIPPINES, INC. and ROSENDO C. VENERACION, respondents.

DECISION

PERALTA, J p:

This is a petition for review on certiorari under Rule 45 of the Rules of Civil Procedure seeking the reversal of the March 21, 2007 Decision 1 of the Court of Appeals in CA-G.R. SP No. 91118, which upheld the assailed resolutions of the National Labor Relations Commission (NLRC) affirming the Labor Arbiter's ruling that petitioner Nelson B. Gan voluntarily resigned and was not constructively dismissed by respondent Galderma Philippines, Inc.

Now the facts.

Respondent Galderma Philippines, Inc. (Galderma), a wholly-owned subsidiary of Galderma Pharma S.A., is engaged in the business of selling, marketing, and distribution of Cetaphil Brand Product Lines (CBPL) that include Cetaphil liquid and bar cleansers, and pharmaceutical products, such as Locetar, Benzac and other prescription drugs. CBPL, which are over-the-counter products sold and/or distributed through supermarkets and health and beauty outlets, are handled by Galderma's Consumer Products Division, while pharmaceutical products, which are mostly prescription drugs sold and/or distributed through drug stores, are handled by its Ethical Products Division.

On February 9, 2001, petitioner Nelson B. Gan (Gan) was hired by Galderma as Product Manager for its Consumer Products Division to handle the marketing of CBPL effective March 1, 2001 with salary and benefits as follows:

1.Monthly Salary — PHP30,000.00 (Guaranteed 13 months)

2.Sales Incentives Scheme TcHCDE

-Monthly Incentive (should the monthly sales target for the CBPL be achieved) — PHP8,000.00

-Year-to-Date (YTD) Incentive (should the monthly sales target for the CBPL be consistently achieved) — PHP2,000.00

-Annual Incentive (should the annual sales target for the CBPL be achieved) — PHP15,000.00

3.Others

-Provision and free use of company car

-Monthly car allowance — PHP3,200.00

-Vision care annual subsidy for Gan and his dependents — PHP1,200.00

-Rice subsidy — PHP1,500 every other month

-Grocery items — worth PHP900.00 upon attainment of the monthly sales target, subject to upgrade to PHP1,300.00 at the end of every quarter upon national attainment of quarter targets

-Funeral assistance — PHP10,000

-Monthly cellular telephone reimbursement — PHP500.00

-Paid vacation leave of ten (10) working days per annum after one (1) year of employment

-Paid sick leave of ten (10) working days per annum after six (6) months of employment

-Paid funeral leave of five (5) days in case of death of an immediate family member (legitimate wife, children and parents)

-Paternity Leave AICTcE

-Group Life Insurance

-Group Personal Accident Insurance

-Retirement Plan

-Foreign travel incentive like any other employee of Galderma depending on their performance for the year 2

Gan was initially under the immediate supervision of Sales and Marketing Manager, Stephen C. Peregrino (Peregrino). Starting September 1, 2001, however, in view of Peregrino's resignation, he directly reported to Galderma's President and General Manager, respondent Rosendo C. Veneracion (Veneracion). 3

With his satisfactory performance during the first year, Gan was acknowledged and rewarded by Galderma through positive performance appraisal, salary and benefits increases, and informal notations on his marketing reports:

18.1[Gan] was given a FULLY EFFECTIVE RATING by [Veneracion] in his Overall Performance Evaluation for the year 2001, particularly —

Result Assessment

KEY RESULT AREAS RATING DESCRIPTION

Brand Growth 5 Fully effective.

Business Expansion 5 Fully effective.

Profitability 5 Fully effective.

Marketing Plan 5 Fully effective.

Implementation

Behavioral Assessment

AREAS OF BEHAVIOR RATING DESCRIPTION

Client Orientation —understands clients;produces services andproducts for clients; usesknowledge to equip clients;meets clients' needs.

5 Fully effective.

Drive for Results — makesthings happen; is proactive,balances analysis with doing;sets high standards for self;commits to organizationalgoals.

5 Fully effective.

Teamwork — collaborateswith others; sharesknowledge; acknowledges[other's] contributions;works effectively indiversity; seeks help asneeded.

6 Exceptionallyeffective.

NOTE: "6" being the highest rate and "1" the lowest.

18.2.[Gan] was given a 40% increase in his gross monthly salary, that is, from PHP30,000.00 to PHP42,000.00 effective [1] January 2002 through the 10 December 2001 Office Correspondence (or memorandum) of [Veneracion] . . . . TSHIDa

18.3.[Gan's] PHP8,000.00 monthly sales incentive was also increased to PHP9,000.00 effective [1] January 2002 through [Veneracion's] Office Correspondence of 14 December 2001 . . . .

18.4.[Gan's] PHP3,200.00 monthly car allowance was likewise increased to PHP4,125.00. This increase, however, was not evidenced by any memorandum and was merely implemented by [Galderma] and included in his monthly pay.

18.5.[Gan] was also included among the select group of employees of [Galderma] entitled to and given an all expense paid overseas trip for 2001 (in Sydney, Australia), but he was unable to join the same due to visa problem. 4

Gan's above-average performance in handling CBPL continued in the first quarter of 2002:

19.1.The total 1st quarter net sales of the CBPL was almost double the 2000 annual net sales and already 53% of the 2001 annual net sales . . .

19.2.The average monthly net sales for 2002 was already 96% higher than the average monthly net sales for 2001. If this trend continues, the annual net sales for the CBPL is expected at PHP14,020,232.00 or more than double the annual net sales for 2001.

19.3.The excellent year 2002 1st quarter performance of [Gan] was acknowledged by [Veneracion] with his handwritten comments on the CBPL Marketing Report for February 2002 prepared and submitted by [Gan] . . . to wit —

19.3.1. [Veneracion] commended [Gan] for the good sales results for the 1st 2 months of 2002 when he commented — "Good sales results! Looks like we're off to a good start!! Keep it up!" — when [Gan] reported that the CBPL generated total gross sales of PHP1.65 million [or] a 144% attainment vs. the February forecast, which sales total surpassed the previous high of PHP1.46 million for January 2002. IDATCE

19.3.2. [Veneracion] commented as "EXCELLENT" the eight (8) Press Releases or Articles for the CBPL for the month of February 2002. 5

Pursuant to its intention to give him additional product management responsibilities, Galderma provided Gan with product knowledge training on Benzac and Locetar brands in December 2001. Thereafter, Gan's incentive program was revised and took effect in April 2002, thus:

MONTHLY INCENTIVE

Earn cash incentive upon achieving monthly national trade sales forecasts of the Cetaphil Consumer line, Locetar line and Benzac line as follows:

Cetaphil consumer line P4,500.00

Locetar line 3,000.00

Benzac line 1,500.00

Earn monthly cash incentive as YTD Consistency Award as follows:

Cetaphil consumer line P1,000.00

Locetar line 750.00

Benzac line 250.00

ANNUAL INCENTIVE

Earn cash incentive upon achieving Annual Trade Forecasts of the following: CIDTcH

Cetaphil consumer line P7,500.00

Locetar line 5,000.00

Benzac line 2,500.00 6

The above policy actually modified the 2002 Incentive Program previously communicated to Gan per December 14, 2001 Office Correspondence, 7 the mechanics of which were as follows:

MONTHLY INCENTIVE:

Earn Ps 9,000 cash incentive upon achievement of monthly national trade sales forecast of the Cetaphil consumer line and/or any product line that management may add to the line-up of consumer products promoted to supermarket accounts.

Earn Ps 2,000 monthly cash incentive as YTD Consistency Award for the Cetaphil consumer line and/or any product line that management may add to the line-up of consumer products promoted to supermarket accounts.

ANNUAL INCENTIVE:

Earn Ps 15,000 cash incentive upon achievement of annual trade sales forecast of the Cetaphil consumer line and/or any product line that management may add to the line-up of consumer products promoted to supermarket accounts.

The December 14, 2001 Office Correspondence further advised that Galderma's management "reserves the prerogative to modify or cancel [the] incentive program dependent on the company's financial capability to continue with the program" and that "[i]n such an event, a 30-day advance notice shall be provided [to] personnel affected by the change."

On April 11, 2002, Gan severed his employment ties with Galderma. His resignation letter reads:

April 11, 2002

Gerry CastroSr. Product Manager

Please accept my resignation as OTC Product Manager effective July 15, 2002. EDISaA

I am giving the company this notice in advance so that Galderma Philippines may have ample time to find a suitable replacement for my position.

I plan to pursue the establishment of my own business or explore opportunities with other companies.

(Signed) NELSON GAN 8

On the same day, Gerry M. Castro (Castro), his immediate superior at the time, accepted the resignation tendered:

April 11, 2002

G.M. CastroMarketing

Nelson Gan c.c.: R.C. Veneracion

W.M. Marquez

Acceptance

This is to accept your resignation which will take effect on July 15, 2002. We appreciate your gesture for providing the company three months advance notice to recruit and train suitable replacement. We wish you success in your future endeavor.

(Signed) GERRY M. CASTRO 9

Three months passed, on July 25, 2002, Gan filed a Complaint 10 for illegal constructive dismissal, full backwages, separation pay, damages, attorney's fees, and cost of suit against respondents Galderma and Veneracion.

Gan has consistently alleged his version of facts:

The start of [Gan's]Calvary in [Galderma].––––––––––––––––––

20.[In] the morning of [4] March 2002, [Gan] was summoned by [Veneracion], who informed him of his disgust in [Gan's] act of taking an emergency sick leave on 28 February 2002, immediately after availing of a five (5)-day vacation leave from 21-27 February 2002. [Veneracion] also informed [Gan] that he disliked his act in applying for the emergency sick leave, that is, by merely "texting" (short message service or SMS) [Veneracion's] executive secretary instead of informing [Veneracion] himself. [Gan] apologized to [Veneracion] and informed him that it will not be repeated, as in fact it was never repeated . . . .

Incident with[Veneracion] on [7]March 2002.––––––––––––––––

21.[Gan], as previously required by [Veneracion], submitted a five (5)-year sales forecast and marketing program for a Benzac brand anti-acne product (an ethical product, thus not covered by the CBPL). [Veneracion] wanted to include the said product under the brand management functions of [Gan] in the CBPL . . . .

22.[Veneracion] did not like the sales forecast and marketing program prepared by [Gan] to the point that he questioned the competence of [Gan] as product manager. To appease the irritated [Veneracion], [Gan] politely stated that . . . — DCSTAH

22.1.The matters stated in his sales forecast and marketing programs are merely his professional views and should the same be unacceptable to [Veneracion], the decision of the latter would naturally prevail and be implemented by [Gan].

22.2.Perhaps the reason why [Veneracion] did not like the sales forecast and marketing programs submitted by [Gan] is because the Benzac Brand is not within [Gan's] expertise, being an ethical product, and not among the products understood by [Gan] to be covered by his responsibility as product manager when he accepted the work in [Galderma].

23.[Veneracion], however, did not accept the explanation of [Gan] and started enumerating his dissatisfaction with [Gan] unfairly branding the latter as —"slow, lacking in initiative and uncooperative" (THE 1st ACT OF HARASSMENT). Not satisfied, [Veneracion] continued and then asked [Gan] to reconsider his stay [in] [Galderma] (in other words to leave or resign) because of his aforementioned negative attitudes (THE 2nd ACT OF HARASSMENT). [Gan], naturally and considering his excellent performance in 2001-2002 and his immense contribution to [Galderma's] success, refuted as false the unfair allegations of [Veneracion] . . . .

Incident with[Veneracion] on 15March 2002 . . . .––––––––––––––––

24.On or about 10:00 [a.m.], [Veneracion] went to the office cubicle of [Gan] to ask for a list of the advertising rates of the leading newspaper publications, which he [needed] as reference in studying the five (5)-year business plan of [Galderma]. [Gan] respectfully informed [Veneracion] that he does not have a list, but he would ask for one (as in fact he did) from [Galderma's] retained PR Agency, Agatep and Associates . . . .

25.About 10 minutes later, [Veneracion] returned to the office cubicle of [Gan] again asking for the list of ad rates. [Gan] explained to [Veneracion] that he has already requested it from Agatep and Associates, but the PR Agency has not yet forwarded a copy to him as he requested. He informed [Veneracion] that he [would] again call the PR Agency for a copy of the list of ad rates . . . .

26.But even before [Gan] [could] call the PR Agency, [Veneracion], surprisingly, again got angry at [Gan] with his reply. [Veneracion] again unfairly and falsely accused [Gan] of being remiss in his duties as product manager for not having a ready copy of the list of ad rates (THE 3rd ACT OF HARASSMENT). [Gan] explained to [Veneracion] that he does not have a copy of the said list as he does not use paid advertisement as a means of promoting the CBPL, as what he uses are PR articles and paid newspaper advertisements in magazines (not newspapers). This further infuriated [Veneracion] who was still insisting that [Gan] should have a ready copy of the said list of ad rates and again unfairly and without basis questioned his competence as product manager . . . . cSEaTH

27.[Veneracion], still furious, thereafter summoned [Gan] to his office for a closed-door meeting where he continued lambasting [Gan] for his alleged negative work behavior and his poor performance as product manager in [Galderma] (THE 4th ACT OF HARASSMENT). [Gan] defended himself through his good performance record . . . .

28.[Veneracion], notwithstanding the explanation of [Gan], again accused [Gan] of being a distraction in [Galderma] and for the second time asked him to reconsider his stay in [Galderma] (THE 5th ACT OF HARASSMENT). After the outburst of [Veneracion], [Gan] asked him what he wants [Gan] to do to satisfy [Veneracion], to which [Veneracion] replied — "make your move" — insinuating that [Gan] resign from [Galderma]. Shocked at the statement of [Veneracion] for him to resign, [Gan] replied — "no you make your move" — insinuating that [Veneracion] should fire him if he is not satisfied with his performance. [Veneracion] thereafter warned [Gan] not to give a reason to terminate him. At this, [Gan] stated that he will not resign his employment in [Galderma], as he knows he is doing his job very well, as reflected by his sales record . . . .

29.Immediately after their meeting, [Veneracion] verbally ordered that from that time onwards [Gan] [would] start to report directly to the Senior Product Manager Mr. Gerry M. Castro ["Castro"], instead of to [Veneracion] directly . . . .

Incident with [Castro]on [3] April 2002 . . . .––––––––––––––––––

30.[Gan] was called to the office of [Castro]. There[,] [Gan] was informed that his 2002 INCENTIVE SCHEME was revised (hereinafter the "REVISED 2002 INCENTIVE SCHEME" — THE 6th ACT OF HARASSMENT), as follows . . .: cHCSDa

         

2002 INCENTIVESCHEME

REVISED 2002INCENTIVE SCHEME

EFFECTS

PHP 9,000 — monthlyincentive for meetingthe monthly salestarget for the CBPL.

SAME AMOUNT ofMonthly incentivewas distributed asfollows:

• PHP4,500.00 formeeting the monthlysales target for theCBPL.

50% DECREASE inmonthly incentive formeeting the SAME CBPLmonthly sales target.

• PHP3,000.00 formeeting the monthlysales target for theLocetar Brand.

Represents 33% of themonthly incentive for theCBPL DEDUCTED from[Gan].

• PHP1,500.00 formeeting the monthlysales target for theBenzac Brand

Represents 17% of themonthly incentive for theCBPL DEDUCTED from[Gan].

PHP2,000.00 — YTDincentive for regularlymeeting the monthlysales target for the CBPL.

SAME AMOUNT OFYTD incentive wasdistributed as follows:

• PHP1,000.00 for theCBPL.

50% DECREASE inYTD incentive formeeting the same CBPLsales target.

• PHP750.00 for theLocetar Brand.

Represents 37.5% of theYTD incentive for theCBPL DEDUCTED from[Gan].

• PHP250.00 for theBenzac Brand.

Represents 12.5% of theYTD incentive for theCBPL DEDUCTED from[Gan]

PHP15,000.00 —annual incentive formeeting the annualsales target for the CBPL.

SAME AMOUNT of Annual incentive wasdistributed as follows:

• PHP7,500.00 for theCBPL.

50% DECREASE in theannual incentive formeeting the same salestarget for the CBPL.

• PHP5,000.00 for theLocetar Brand.

Represents 33% of theannual incentive for theCBPL DEDUCTED from[Gan]

• PHP2,500.00 for the Represents 17% of the

Benzac Brand. annual incentive for theCBPL DEDUCTED from[Gan]

31.[Gan] requested from [Castro] the following . . .:

31.1.A one (1)-month transition period to familiarize himself with the new products added to his responsibilities and to study its market. cITaCS

31.2.Not to implement his revised incentive scheme during the requested transition period.

[Castro] informed [Gan] that he understood his position and he [would] discuss the matter with [Veneracion] immediately upon the return of the latter from Singapore. On his way out of [Castro's] office, [Gan] was handed a copy of the memorandum dated [2] April 2002 (to take effect [1] April 2002) revising, or to be specific — REDUCING — his incentive scheme for his signature evidencing conformity . . . . [Gan] asked [Castro] if he [could] delay the signing until after [Veneracion] has decided on his above requests, to which [Castro] readily agreed.

Incident with [Castro]on 10 April 2002 . . . .––––––––––––––––––

32.[Gan] was instructed by [Castro] to formally put in writing his request for reconsideration on his REVISED 2002 INCENTIVE SCHEME as they previously discussed on [3] April 2002. [Gan][,] fearing that this [might] only fuel another of [Veneracion's] recent and numerous outbursts against him[,] informed [Castro] that "kung magiging issue lang huwag na tanggapin ko na" but [Castro] insisted that he put it in writing. [Gan] did so as instructed by [Castro] . . . .

Incident with[Veneracion] on 11April 2002 . . . .–––––––––––––––

33.Early that morning, [Gan] and [Castro] were having a discussion in the latter's office when [Veneracion] arrived and started lambasting [Gan] for his alleged incompetence as product manager. [Gan] allegedly failed to consider some details in the CBPL presentation for the Getz Bros. April cycle meeting.[Veneracion] continued his attack on the alleged incompetence of [Gan] and [Veneracion's] inclination to remove the CBPL responsibility from him. [Veneracion] said he [would] handle it himself — THE 7th ACT OF HARASSMENT . . . . SaIEcA

34.Not satisfied, [Veneracion] thereafter summoned both [Gan] and [Castro] in his office where he continued lambasting and humiliating [Gan]. This time, [Veneracion] was furious because of [Gan's] written request for reconsideration on his REVISED 2002 INCENTIVE SCHEME telling [Gan] outright that he has no right to reject management's decision on compensation matters. Not satisfied, [Veneracion] continued that [Gan] has become a liability in [Galderma] and that [Galderma] [would] be better off without him (stated another way, that [Gan] leave [Galderma]) — THE 8th ACT OF HARASSMENT . . . .

35.[Veneracion], thereafter[,] asked [Gan] if he has had any luck in looking for another employment. Surprised at [Veneracion], [Gan] replied that he was not looking for another job. [Veneracion] replied that he was surprised that [Gan] was not planning to leave [Galderma] considering their conflicts. [Veneracion] also asked [Gan] if he has consulted a lawyer and when [Gan] answered no, [Veneracion] again expressed his surprise — THE 9th ACT OF HARASSMENT . . . .

36.Not satisfied with the humiliation inflicted on [Gan], [Veneracion] for the nth time told [Gan] to reconsider his stay in [Galderma] (in other words[,] that [Gan] leave [Galderma]). [Veneracion] told [Gan] that he [would] be given 15 days to look for another job (in short, he [would] be terminated in 15 days), as a gesture of his good will — THE 10th ACT OF HARASSMENT . . . .

The forced resignationof [Gan].––––––––––––––––––

37.Shocked and humiliated at the turn of events, [Gan] requested to talk privately with [Veneracion] (which request was granted). [Gan], who had just lost his job (with the 15-day notice given by [Veneracion]) notwithstanding his excellent performance record, wanted to talk privately with [Veneracion] in thehope of salvaging a better term for his forced exit in [Galderma] (as [Gan] was of the belief, [and] rightfully so, that [Veneracion] [would] not allow him to remain employed in [Galderma] as he [had] clearly and numerously manifested). Finally, [Veneracion] offered him the following, as an alternative to him being terminated in 15 days . . .: aSCHIT

37.1.[Gan] was required to file his voluntary resignation that day, 11 April 2002, which resignation shall take effect on 15 July 2002 or 90 days thereafter.

It must be noted that the initial offer of [Veneracion] to [Gan] was 60 days pay in exchange for his forced resignation, but [Veneracion] increased it to 90 days pay INSTEAD of granting the request of [Gan] to include with the 60 days pay the cash amount equivalent of the Sydney trip incentive, which he failed to avail of because of visa problems . . . .

37.2.In exchange for [Gan's] resignation, [Gan] [would] no longer be required to report for work in [Galderma] starting 12 April 2002 until 15 July 2002 to afford him time to look for another employment.

37.3.Notwithstanding that he [would] no longer [be] reporting for work in [Galderma], [Gan] [would] still be paid his salary and all benefits until 15 July 2002 (the 90-day pay sweetener) in exchange for the resignation.

37.4.To hide their unwritten agreement from the internal auditors of [Galderma] and to justify the continued payment of his salary and benefits, [Gan] was required by [Veneracion] to submit periodic field reports (on the CBPL), on a twice a month basis, until 15 July 2002 to make it appear that he was still working for [Galderma].

38.As required by [Veneracion] and for [Gan] to receive his pay and all benefits until 15 July 2002 (the 90-day pay sweetener), [Gan] was forced to submit his required voluntary resignation . . . on the same day and which resignation was immediately accepted . . . by [Galderma] . . . .

39.[Veneracion] even dictated to [Gan] the reasons to be stated in his forced resignation letter, that — "the 90 days is necessary to afford [Galderma] time to find suitable replacement and to afford [Gan] time to pursue his own business or to explore opportunities outside [Galderma]" . . . .

What transpired afterthe forced resignation.––––––––––––––––––

40.After his forced resignation and as agreed upon, [Gan][,] starting 12 April 2002[,] stopped reporting for work in the offices of [Galderma]. He, however, continued to do occasional field work for [Galderma] and submitted the required periodic field reports on a twice a month basis . . . . SDAaTC

xxx xxx xxx

41.[Veneracion], likewise, complied with his undertaking to continue paying [Gan] his salary and benefits . . . .

xxx xxx xxx

42.On 23 July 2002, [Gan] received, by parcel delivery (LBC), the 22 July 2002 letter of [Galderma] signed by its Finance Manager, Winston Marquez . . ., informing him of the availability for pick-up of his last pay (period 1-15 July 2002) and other benefits (June incentive, pro-rated 13th month pay, reimbursement of expenses, tax refund) amounting to PHP50,425.02. Payment of the check, however, was conditioned on [Gan] signing a quitclaim in favor of [Galderma], which he refused considering the filing of the instant suit. The said amount[,]thus[,] remains unpaid . . . . 11

Respondents' narration of events differs in material details. They aver:

5.In December of 2001, the company provided [Gan] with product knowledge training on the Benzac and Locetar brands. The training was pursuant to the company's intention to give additional product responsibilities to [Gan]. Multi-brand assignment is a usual practice in the company because the product management team of the company is composed of only three persons — the Senior Product Manager, the Product Manager[,] and the Assistant Product Manager. There is no clear division between personnel who handle ethical brands and those who handle consumer products. For example, the company's Assistant Product Manager, Annalyn Gamboa ("Gamboa"), handles some Cetaphil (consumer) products in addition to the ethical products that she manages. Senior Product Manager Gerry M. Castro ("Castro") also handles both consumer and ethical products. Since Cetaphil was the only consumer brand of the company, it was only natural that the additional product responsibilities given to [Gan] were ethical products.

6.Galderma's senior managers noticed that [Gan] had a change of attitude from the time the management decided to include the Benzac and Locetar brands under his responsibility. Despite the fact that the company provided [Gan] with product knowledge training on the said brands, he initially refused to accept the additional assignment. The company had to remind [Gan] that the assignment was part of his Job Description, which allowed the company to assign him to undertake additional tasks as may be deemed necessary by operations. TIaCAc

7.On 4 March 2002, respondent Veneracion summoned [Gan] to his office in order to discuss the latter's failure to report to work after taking a five-day vacation leave. [Gan] previously undertook to come to the office after his vacation leave. However, [Gan] merely sent a "text message" to Executive Assistant Abigail R. Peralta ("Peralta"), saying that he was "still tired" from his trip and will not report to the office. After their discussion, [Gan] apologized and Veneracion accepted his apology. Veneracion refrained from issuing a show-cause memorandum to [Gan] because Veneracion thought that the matter was already settled with [Gan's] apology and undertaking to refrain from repeating the same infraction.

8.On 7 March 2002, Veneracion and [Gan] discussed [Gan's] five-year sales forecast and marketing program for a Benzac brand anti-acne product. In the course of their discussion, Veneracion reiterated to [Gan] that the latter's additional assignment is included in his Job Description. While Veneracion had some comments on [Gan's] sales forecast and marketing program, Veneracion neither asked [Gan] to reconsider his stay in Galderma nor insinuated that [Gan] should resign.

9.On 15 March 2002, Veneracion went to [Gan's] office to ask for a list of the advertising rates of the leading newspaper publications. [Gan] informed Veneracion that he did not have a list, but that he would ask one from Galderma's retained public relations agency. When Veneracion returned to [Gan's] office for the list, [Gan] explained that the public

relations agency had not yet forwarded him a copy. Veneracion then requested Peralta to call up the Philippine Daily Inquirer directly, and they were able to secure the advertising rates within minutes through fax. After obtaining the advertising rates, Veneracion summoned [Gan] for a closed-door meeting for him to explain why a basic consumer marketing data was not available in his fact book. At that point [Gan] raised his voice in a very disrespectful manner. Nevertheless, Veneracion limited the discussion to [Gan's] duties as Product Manager and did not dwell on personal matters.

10.On 3 April 2002, Castro called [Gan] to his (Castro's) office to discuss [Gan's] revised incentive program, which was brought about by the inclusion of the Locetar and Benzac lines among [Gan's] product management responsibilities. Prior to their discussion, Castro gave [Gan] his copy of the revised incentive scheme. [Gan] expressed his disappointment over the change in the program and sought a one-month transition period. Castro told [Gan] that he (Castro) would discuss [Gan's] request with Veneracion, upon Veneracion's return from a business trip abroad. After their discussion, [Gan] returned his copy of the revised incentive program to Castro. Pursuant to company practice on circulation of inter-office correspondence, Castro requested [Gan] to get his copy and to acknowledge receipt thereof. However, [Gan] refused to receive his copy and told Castro to first discuss his request with Veneracion. To avoid further confrontation, Castro let [Gan] leave without him receiving his copy.

11.On 4 April 2002, Castro again requested [Gan] to receive his copy of the revised incentive scheme. [Gan] still refused to receive the copy and even dictated what the management should do in case additional brands are assigned to a product manager. To appease [Gan], Castro reiterated that he would discuss [Gan's] request with Veneracion upon the latter's return from his trip abroad. [Gan] retorted that if Castro should decide to take it up with Veneracion, then Castro should do it quickly. Only then did [Gan] finally agree to receive his copy of the revised incentive scheme, but not without first saying: "Anyway, I will only put it on my file."

12.On 8 April 2002, Castro had a meeting with Veneracion regarding recent developments within the company. In the course of their discussion, Castro gave Veneracion an update about [Gan's] training and scheduled "revalida" or oral examination. In order to help [Gan] manage his newly assigned brands, Veneracion instructed Castro to give [Gan] additional exposure to the ethical marketing operations of the company by asking [Gan] to do clinic visits. Part of Castro's discussion with Veneracion was [Gan's] verbal request for consideration regarding the implementation of the new incentive program. Castro told Veneracion that he (Castro) would ask [Gan] to formalize the request so Castro could put a written endorsement or recommendation for approval. At that time, Veneracion already approved [Gan's] request in principle. Castro immediately told [Gan] to formalize his request so that the former could submit the request to Veneracion's office with Castro's endorsement. After Castro got [Gan's] letter in the afternoon, Castro put his endorsement on it and left it on Veneracion's desk. cCTIaS

13.On 11 April 2002, [Gan] and Castro had a discussion regarding [Gan's] presentation for the Getz Brothers April Cycle Meeting. Veneracion later joined them and informed Castro of the revisions that Veneracion asked [Gan] to make on his presentation. Veneracion further asked [Gan] some information relating to the Cetaphil consumer sales operation, as well as some directions that he expected [Gan] to take. Veneracion also explained to [Gan] that the incentive program offered by the company was subject to change. There was an impassioned discussion between [Gan] and Veneracion, but Veneracion was only reacting to the provocative responses and negative behavior of [Gan]. While the meeting was intense, it covered only business matters. Veneracion did not lambast [Gan], or insinuate that [Gan] should resign from Galderma.

14.Right after the discussion, [Gan] asked for a private meeting with Veneracion. During this meeting, [Gan] informed Veneracion of his desire to leave the company and requested that his resignation be made to take effect after 60 days. [Gan] asked if he could use the period to find another job or evaluate the feasibility of opening up a business. At that time, [Gan] told Veneracion that he was thinking of exploring the possibility of opening a

drugstore. In addition, [Gan] requested for the cash conversion of his Sydney Trip Incentive. Veneracion did not immediately respond to [Gan's] requests, but asked for time to think about it. As [Gan's] proposal was seen to be a precedent-setting arrangement, Veneracion decided to consult the senior managers of the company.

15.At around 11:00 a.m. of 11 April 2002, [Gan] sent a "text message" to the company's Finance Manager, Winston M. Marquez ("Marquez"). [Gan] said that he wanted to ask for help on his request for favorable terms from the company concerning his resignation. At around noon, while [Gan] and Marquez were having lunch, [Gan] told Marquez that he asked the company to give him a sixty-day grace period, which he will use either to explore the possibility of a(sic) setting up his own business or to look for other employment opportunities. [Gan] also told Marquez that he requested for the cash conversion of his Trip Incentive. At no time did [Gan] mention anything about being forced to resign by Veneracion.

16.In the afternoon of 11 April 2002, Veneracion met with Galderma's senior managers (i.e., Executive Assistant Peralta, Finance Manager Marquez[,] and Senior Product Manager Castro) in order to discuss [Gan's] requests. The assessment of the group was that [Gan's] proposal would be a "win-win" situation, considering [Gan's] apparent change in attitude pertaining to his job assignment and sales incentive. As a gesture of goodwill, the group agreed to grant [Gan's] request for a grace period to allow him to either find a new job or set up his own business. It was further agreed that in lieu of [Gan's] Trip Incentive, which was not convertible to cash under company policy, the grace period arrangement could be extended for another 30 days.

17.Immediately after the meeting, Veneracion advised [Gan] of the company's agreement to [Gan's] proposal. [Gan] then submitted his letter of resignation, which was accepted by his immediate superior, Senior Product Manager Castro. Throughout this meeting, [Gan] was very calm and gave the impression to everybody that he was quite pleased with the approval of his requested grace period arrangement.

18.From April to June 2002, [Gan] continued to receive his salaries from the company. During the same period, [Gan] also submitted periodic field reports to the company. 12 EHCcIT

On April 21, 2003, Labor Arbiter Manuel M. Manansala dismissed the complaint for constructive dismissal. 13 He noted that Gan's separation from Galderma was voluntarily initiated and was concluded by the written resignation letter which was accepted in a business-like manner through a formal office correspondence. The text of Gan's letter was treated as conclusive, res ipsa loquitur. Agreeing with respondents' contention, the Labor Arbiter cited the case of St. Michael Academy v. NLRC 14 insofar as it enumerated the requisites of intimidation which would vitiate one's consent, but are wanting in Gan's case. Likewise pointed out was the presence of the sworn affidavits separately executed by Gan's former co-workers — Gerry M. Castro, Annalyn M. Gamboa, Winston M. Marquez, and Abigail R. Peralta — which were fully supportive of respondents' defenses. Lastly, applying Samaniego v. NLRC, 15 Dizon, Jr. vs. NLRC, 16 Habana v. NLRC, 17 and San Miguel Brewery Sales Force Union (PTGWO) v. Ople 18 invoked by respondents, the Labor Arbiter ruled that Gan surely understood the legal effects of his resignation letter considering that he is an Industrial Engineering graduate of the Mapua Institute of Technology and has Master of Business Administration (MBA) units in Letran College. The fallo of the Decision disposed:

WHEREFORE, premises considered, judgment is hereby rendered:

1.Declaring respondent Galderma Philippines, Inc. (GPI) not guilty of constructive dismissal-illegal constructive dismissal for the reasons above-discussed. Consequently, all the money claims as enumerated and prayed for in complainant Nelson B. Gan's Complaint are hereby denied/dismissed for lack of merit for the reasons above-discussed.

2.Declaring complainant Nelson B. Gan as entitled to his final pay amounting to P50,425.02 which he failed to receive from respondent GPI since 15 July 2002. Thus, respondent GPI is hereby directed to pay complainant Gan the aforestated amount.

3.Dismissing the charges against individual respondent Rosendo C. Veneracion as President and General Manager of respondent GPI for lack of merit.

SO ORDERED. 19 AHSaTI

On appeal, the NLRC affirmed the Labor Arbiter's Decision. 20 It said that Gan's resignation letter is more determinative in the present controversy as it "distinctly speaks of [his] reasons for resigning . . . in a mild and sober expression as to graciously give [advance notice to Galderma] without a tinge of remorse on his part." In accord with the Labor Arbiter's findings, the NLRC held:

The interchange of words and ideas between the parties herein appurtenant to [Gan's] resignation does not in any manner show a color of frustration or an iota of anger by any of the parties. Thus, We cannot see nor perceive that [Gan's] resignation letter is a sham or irregular on its face as the same is made by the forced dictation of [respondent Veneracion] and is involuntary on the part of [Gan]. For no reason is convincingly adduced on record for us to rationally conclude that [Gan] was forced, threatened, intimidated or dictated against his will in the absence of a substantial evidence to the contrary. Indeed, [Gan's] resignation letter speaks well of itself. Res ipsa [loquitur]. TCaEAD

In fine, We concur and affirm the Arbiter's disquisition that [Gan's] resignation from work is indeed voluntary on his part. [Gan's] strongly worded supposition that acts of harassment on the part of [respondents] forced him to execute and sign the demanded and dictated resignation letter as he has no other choice considering the options given him by [respondents] which were (a) termination in 15 days, or (b) execute and sign the demanded and dictated letter and get 90 days pay is essentially naked for being unsubstantiated if not totally unfounded. [Gan's] bare allegation of force or "dictation" has no place to support the "involuntariness" of forced resignation.

It is more telling to consider that [Gan] is a managerial employee who holds a sensitive position as Product Manager of respondent company. Undeniably, [Gan] is a man of letters holding a bachelor's degree in Industrial Engineering and possesses a Master's degree in Business Administration (MBA). As a highly educated individual, [Gan] must fully understand if not totally comprehend the import of his own words and the consequences of his own acts. Thus, the natural import of the words and expressions of his ideas as manifested by [Gan] himself should be accorded a literal meaning for being unambiguous. To say the least that the questioned letter is forced is far-fetched and floats in the realm of imagination. 21

When Gan's motion for reconsideration was denied by the NLRC on June 22, 2005, 22 he subsequently filed before the CA a petition for certiorari under Rule 65 of the 1997 Revised Rules on Civil Procedure. 23 On March 21, 2007, the CA denied the petition, finding no grave abuse of discretion on the part of the NLRC. 24 In adopting the NLRC's recitation of facts, which was substantially lifted from the factual findings of the Labor Arbiter, the legal conclusions reached by the NLRC were likewise adhered to by the CA. Further, it opined: ITCHSa

. . . While (sic) it may be true that Respondent VENERACION appeared to be hostile towards [Gan]. However, the latter's allegations failed to show persuasive proof of Respondent VENERACION's desire to deprive him of his employment. [Gan] would like us to believe that the peculiar circumstances alluded to by him is constitutive of his involuntary act to resign from his post. However, this is belied by his allegation in this Petition which in effect is an implied admission of the non-existence of any hint of anger,

dictation, force or harassment employed upon him in the execution of the subject resignation letter. 25

Hence, this petition for review on certiorari under Rule 45 of the Rules of Civil Procedure, with the following assigned errors:

I.THE COURT OF APPEALS GRAVELY ERRED IN FINDING THAT [GAN] VOLUNTARILY RESIGNED AND WAS NOT ILLEGALLY OR CONSTRUCTIVELY DISMISSED, AS EVIDENCED SOLELY BY THE TENOR OF THE SUBJECT RESIGNATION LETTER, WITHOUT CONSIDERING, AS MANDATED BY ESTABLISHED JURISPRUDENCE, THE PECULIAR CIRCUMSTANCES SURROUNDING ITS EXECUTION.

II.COROLLARILY, THE COURT OF APPEALS LIKEWISE COMMITTED GRAVE ABUSE OF DISCRETION IN AFFIRMING THE ERRONEOUS LAMM AND NLRC DECISION DISMISSING ALL OF [GAN'S] COUNTERCLAIMS.

III.FINALLY, THE COURT OF APPEALS ALSO COMMITTED GRAVE ABUSE OF DISCRETION IN AFFIRMING THE ERRONEOUS LAMM AND NLRC DECISION DISMISSING THE COMPLAINT AGAINST RESPONDENT [VENERACION]. 26

We deny the petition.

Settled is the rule that factual findings of labor officials, who are deemed to have acquired expertise in matters within their jurisdiction, are generally accorded not only with respect but even finality by the courts when supported by substantial evidence, i.e., such amount of relevant evidence which a reasonable mind might accept as adequate to justify a conclusion. 27 Likewise, factual findings arrived at by a trier of facts, who is uniquely positioned to observe the demeanor of the witnesses appearing before him and is most competent in judging the credibility of the contending parties, are accorded great weight and certitude. 28

In the same vein, the jurisdiction of this Court in cases brought before it from the CA via Rule 45 is generally limited to reviewing errors of law or jurisdiction. In the exercise of its power of review, the findings of fact of the CA are conclusive and binding. The reason is that this Court does not entertain factual issues. It is not our function to analyze or weigh evidence all over again as the evaluation of facts is best left to the trial or administrative agencies/quasi-judicial bodies and appellate court which are better equipped for the task. 29 ACaDTH

Admittedly, the above rule is not ironclad. 30 There are instances in which factual issues may be resolved by this Court, to wit: (1) the conclusion is a finding grounded entirely on speculation, surmise and conjecture; (2) the inference made is manifestly mistaken, absurd or impossible; (3) there is grave abuse of discretion; (4) the judgment is based on a misapprehension of facts; (5) the findings of fact are conflicting; (6) the Court of Appeals goes beyond the issues of the case, and its findings are contrary to the admissions of both appellant and appellees; (7) the findings of fact of the CA are contrary to those of the trial court (in this case, the Labor Arbiter and NLRC); (8) said findings of fact are conclusions without citation of specific evidence on which they are based; (9) the facts set forth in the petition, as well as in the petitioner's main and reply briefs, are not disputed by the respondent; and (10) the findings of fact of the CA are premised on the supposed absence of evidence and contradicted by the evidence on record. 31

This case, however, does not fall under any of the recognized exceptions. After a judicious consideration of the pleadings filed by both parties, the Court finds no compelling reason to reverse the findings of fact as well as conclusions of law of the CA, which sustained the decision of the NLRC affirming the labor arbiter. Indeed, there is no arbitrary disregard or misapprehension of evidence of such nature as to compel a contrary conclusion.

To begin with, constructive dismissal is defined as quitting or cessation of work because continued employment is rendered impossible, unreasonable or unlikely; when there is a demotion in rank or a diminution of pay and other benefits. 32 It exists if an act of clear discrimination, insensibility, or disdain by an employer becomes so unbearable on the part of the employee that it could foreclose any choice by him except to forego his continued employment. 33 There is involuntary resignation due to the harsh, hostile, and unfavorable conditions set by the employer. 34 The test of constructive dismissal is whether a reasonable person in the employee's position would have felt compelled to give up his employment/position under the circumstances. 35

On the other hand, "[r]esignation is the voluntary act of an employee who is in a situation where one believes that personal reasons cannot be sacrificed in favor of the exigency of the service, and one has no other choice but to dissociate oneself from employment. It is a formal pronouncement or relinquishment of an office, with the intention of relinquishing the office accompanied by the act of relinquishment. As the intent to relinquish must concur with the overt act of relinquishment, the acts of the employee before and after the alleged resignation must be considered in determining whether he or she, in fact, intended to sever his or her employment."36 cDSaEH

Since Gan submitted a resignation letter, it is incumbent upon him to prove with clear, positive, and convincing evidence that his resignation was not voluntary but was actually a case of constructive dismissal; that it is a product of coercion or intimidation. 37 He has to prove his allegations with particularity.

Gan could not have been coerced. Coercion exists when there is a reasonable or well-grounded fear of an imminent evil upon a person or his property or upon the person or property of his spouse, descendants or ascendants. 38 Neither do the facts of this case disclose that Gan was intimidated. In St. Michael Academy v. NLRC,39 we enumerated the requisites for intimidation to vitiate one's consent, thus:

. . . (1) that the intimidation caused the consent to be given; (2) that the threatened act be unjust or unlawful; (3) that the threat be real or serious, there being evident disproportion between the evil and the resistance which all men can offer, leading to the choice of doing the act which is forced on the person to do as the lesser evil; and (4) that it produces a well-grounded fear from the fact that the person from whom it comes has the necessary means or ability to inflict the threatened injury to his person or property. . . . 40

The instances of "harassment" alleged by Gan are more apparent than real. Aside from the need to treat his accusations with caution for being self-serving due to lack of substantial documentary or testimonial evidence to corroborate the same, the acts of "harassment," if true, do not suffice to be considered as "peculiar circumstances" material to the execution of the subject resignation letter.

First, the words allegedly uttered by Veneracion which asked Gan to "reconsider his stay," "make [his] move," or that "[Galderma] will be better off without him,"are ambivalent and susceptible of varying interpretations depending on one's feelings, bias, and emotional threshold. All these are subjective and highly speculative or even presumptuous. Veneracion's intent to dismiss Gan cannot reasonably be inferred therefrom. Much less, the words do not definitely show Veneracion's firm resolve to act on such intent. At the most, the remarks may be regarded as sarcastic or suggestive of a plan of action which may or may not include a plot to actually, or even constructively, dismiss Gan.

Second, Gan repeatedly boasts of his "excellent performance" in and "immense contribution" to Galderma's success. If that is the case, his proper mindset towards Veneracion's attacks on his

purported work ethics (such as "slow," "lacking in initiative," "uncooperative," "negative attitude," "remiss in duties as product manager," "negative work behaviour," "poor performance," "incompetence," "distraction/liability in Galderma") should have been to simply brush them aside and continue doing what he is supposed to do as the product manager of CBPL, Locetar and Benzac brands. He should have thought that his "good performance record" would speak for itself and would stand the test of any baseless accusation, whether it be hurled to him in close-door or in full view of others. Gan did not see it this way. He considered the comments as manifestations of "harassment." His oversensitivity, which is rather surprising for an experienced sales and marketing manager who should have been so used to customer rejection or indifference and to superior's assertive or temperamental side due to constant pressure of keeping up and beating market competition, would not help him make a case. EaSCAH

Third, the revision of Gan's 2002 incentive scheme cannot be considered as a form of harassment. The change is not a diminution of benefits, since Gan would have also received the same sum if he achieved the desired targets for the Locetar and Benzac brands, the two new products which were added under his watch. Gan admitted that such act is a valid exercise of management prerogative; hence, he should have realized that their inclusion necessarily called for a corresponding modification of the incentive scheme so as to accurately measure his effectiveness in handling all three products, not just one or two of them. Nonetheless, while this Court holds that the 2002 revised incentive scheme is a reasonable and valid exercise of management prerogative, We agree with Gan that its immediate implementation, taking effect in April 2002, is improper for want of 30-day prior notice. Thus, for April 2002, Gan should have received the same monetary benefits granted under the 2002 incentive scheme per December 14, 2001 Office Correspondence.

A pivotal argument raised by Gan in this petition is that Veneracion's 10th act of harassment — his statement that Gan "[would] be given 15 days to look for another job" — already constitutes actual illegal dismissal, a termination without just or valid cause. In support thereof, he cited the case of Far East Agricultural Supply, Inc. v. Lebatique. 41

We disagree.

Unlike in Gan's case, the employee involved in Far East Agricultural Supply, Inc. did not submit a resignation letter. Instead, Lebatique's employer alleged that he abandoned his job. Hence, this Court held:

The records show that petitioners failed to prove that Lebatique abandoned his job. Nor was there a showing of a clear intention on the part of Lebatique to sever the employer-employee relationship. When Lebatique was verbally told by Alexander Uy, the company's General Manager, to look for another job, Lebatique was in effect dismissed. Even assuming earlier he was merely suspended for illegal use of company vehicle, the records do not show that he was afforded the opportunity to explain his side. It is clear also from the sequence of the events leading to Lebatique's dismissal that it was Lebatique's complaint for nonpayment of his overtime pay that provoked the management to dismiss him, on the erroneous premise that a truck driver is a field personnel not entitled to overtime pay. 42

What the records of this case reveal is that Gan deliberately wrote and filed a resignation letter that is couched in a clear, concise, and categorical language. Its content confirmed his unmistakable intent to resign. The resignation letter indicates that he was resigning "to pursue the establishment of [his] own business or explore opportunities with other companies." The reasons stated for relinquishing his position are but logical options for a person of his experience and standing. caADIC

Further, distinct from Far East Agricultural Supply, Inc., respondent Veneracion disputed the allegation that Gan was given 15 days to look for another job. His categorical denial was backed

up by Castro, who was also present when the alleged incident happened on April 11, 2002. Their duly sworn statements, unless proven to be false or perjured, bear more weight and credence than Gan's lonesome representations.

Lastly, in contrast with Lebatique who was a mere truck driver of animal feeds receiving a daily wage of Php223.50 at 1996 rate, Gan is no ordinary laborer with limited education and skills; he is not a rank-and-file employee with inadequate understanding such that he would be easily beguiled or forced into doing something against his will. He was a managerial employee holding a responsible position and receiving more than the mandated minimum wage. He also appears to have a good professional track record that highlights his marketability. 43 At the time he resigned, he had more than a decade of experience in sales and marketing with expertise in product management. 44 Indeed, it would be absurd to assume that he did not understand the full import of the words he used in his resignation letter and the consequences of executing the same.

What is evident, therefore, is that Gan's resignation is NOT "a case of adherence, not of choice," but was a product of a mutually beneficial arrangement. We agree with respondents that the result of the negotiation leading to Gan's resignation is a "win-win" solution for both parties. On one hand, Gan was able to obtain a favorable severance pay while getting flexible working hours to implement his post-resignation career options. On the other hand, Galderma was able to cut its relation with an employee perceived to be unwilling to perform additional product responsibilities while being given ample time to look for an alternative to hire and train. Indeed, Gan voluntarily resigned from Galderma for a valuable consideration. He negotiated for an improvement of the resignation package offered and he managed to obtain an acceptable one. As opposed to the case of San Miguel Corporation v. NLRC, 45 Gan was not tricked or was "morally and psychologically hoodwinked" to draft, sign, and tender his resignation letter. It was not made without proper discernment and time to reflect; nor was it a knee-jerk reaction that left him with no alternative but to accede. 46

Having resolved the case on the basis of the foregoing, it is needless to delve into Gan's second and third assigned errors.

WHEREFORE, the March 21, 2007 Decision of the Court of Appeals in CA-G.R. SP No. 91118, which upheld the resolutions of the NLRC affirming the Labor Arbiter's ruling that dismissed Gan's complaint for constructive dismissal, is hereby AFFIRMED WITH MODIFICATION insofar as Our ruling that, for April 2002, Gan is still entitled to the monetary benefits provided under the original 2002 incentive scheme. The Labor Arbiter is hereby DIRECTED to include in Gan's final pay of P50,425.02, the difference in the amount he actually received as incentive/s per his payslip of April 2002.

SO ORDERED.

Velasco, Jr., Abad, Perez * and Mendoza, JJ., concur.

[G.R. No. 174300. December 5, 2012.]

MINDANAO TERMINAL AND BROKERAGE SERVICE, INC. and/or FORTUNATO V. DE CASTRO, petitioners, vs. NAGKAHIUSANG MAMUMUO SA MINTERBRO-SOUTHERN PHILIPPINES FEDERATION OF LABOR and/or MANUEL ABELLANA, GILBERT ABELLO, SIXTO ABELLO, JR., IRENEO ABONITA, ALIEZER ADALIM, CONSTANCIO ALBISO, NELSON ANCAJAS, ROGELIO ANOUEVO, REYNALDO ANTOQUE, DEORIDO ARIOLA,

BERNARDINO AROJADO, JAIME ATILANO, ALBERTO BAHALA, RODRISITO BAHALA, JR., JOVITO BASTASA, TEODORO BASTASA, PACIANO BATICAN, BENJAMIN BAYNOSA, APOLINARIO BERNALDEZ, GODOFREDO BIOCO, ERLINDO BRIGOLI, TEODRICO CABATO, ANARITO CABUDLAN, DARIO CALIBJO, ERDIE CALIBJO, JAIME CAMINERO, BENNY CASI, EDWIN CORTEZ, ARTURO CRISMAS, ALEJANDRO DIO, CATALINO DIONGZON, JR., MANUEL DORADO, ZACARIAS DUMAYAC, ORLANDO EBERO, LEONARDO ENRIQUEZ, GABRIEL ESPERA, ROBERTO ESTRERA, JOEL FERNANDEZ, EDGARDO FLORES, RUSTICO GALAN, ELIEZER GELECANA, PRIMO GELECANA, DANIEL GIDUCOS, FELIPE GUANZON, GORDONIO HURANO, FLORENTINO IBAÑEZ, ALFRED IBORI, NICANOR INTO, ROBERT JAMILA, JESUS JANDAYAN, EWAN JUGAN, DIEGO JULATON, JOVENCIO JULATON, ANGELITO JULIANE, WILFREDO LACNO, LAGRAMA DOMINGO, CERILO MAGDASAL, FERNANDO MANGARON, JOSEPH MANGARON, EDGARDO MANGILAYA, EDGARDO MANSARON, VIRGILIO MATALANG, JEREMIAS MOLATO, CARLOS MONARES, RAMON NECESARIO, DANILO OTADAY, ROGELIO PAL, EBELIO PALMA, GAVINO PAMAN, JR., DANILO PANDAPATAN, NOLI PATRICIO, MODESTO PIOQUINIO, NEMENSIO PLASABAS, JULIUS QUIBOY, RUEL QUINILATAN, SANTOS RASONABE, ROBERTO REBUCAS, ALEJANDRO REDOBLADO, SR., DARIO REYES, RODOLFO ROCA, ROGER MAGAN, NECITO ROSOS, PANTALEON SAGAYNO, VENANCIO SAGAYNO, VICENTE SALARDE, REYNALDO SALCEDO, JOSE SALINAS, DANIEL SAPIO, ROMY SEGOVIA, JENELITO SIOCON, RENATO SODE, EDUARDO SOLIZA, PABLITO TAC-AN, PEPITO TAGALAWAN, ARIEL TIBUS, ARTURO TOLIBAS, ROMEO TUBOG, ALFREDO VIDAD and ARNOLD TIBUS, respondents.

DECISION

LEONARDO-DE CASTRO, J p:

This is a Petition for Review on Certiorari 1 of the Decision 2 and Resolution 3 dated April 21, 2006 and August 7, 2006, respectively, of the Court of Appeals in CA-G.R. SP No. 51656, which dismissed the petition for certiorari of petitioners Mindanao Terminal and Brokerage Service, Inc. (Minterbro) and Fortunato V. De Castro.

Minterbro is a domestic corporation managed by De Castro and engaged in the business of providing arrastre and stevedoring services to its clientele at Port Area, Sasa, Davao City. 4 It has a Contract for Use of Pier 5 with Del Monte Philippines, Inc. (Del Monte), which provides for the exclusive use by Del Monte of the Minterbro pier. 6 Thus, at the time relevant to this controversy, Del Monte was Minterbro's only client.

The docking of vessels at the piers in Davao City, including that of Minterbro, is being carried out by the Davao Pilots' Association, Inc. (DPAI). 7 In a letter 8 dated January 6, 1996, DPAI requested Minterbro to waive any claim of liability against it for any damage to the pier or vessel. DPAI alleged that Minterbro's pier vibrates everytime a ship docks due to weak posts at the underwater portion.

In a letter 9 dated January 15, 1997, Minterbro denied the request explaining that DPAI's observation had no basis as any damage to the pier was actually caused by a vessel under the control of DPAI which bumped the pier on December 28, 1996. DPAI replied in a letter 10 dated January 23, 1997 informing Minterbro of its intention to refrain from docking vessels at

Minterbro's pier for security and safety reasons, until such time as Minterbro shall have caused the restoration of the original independent fenders of the said pier. cHAaCE

This prompted Minterbro to bring up the matter to the Philippine Ports Authority (PPA). The PPA promptly dispatched a team to conduct ocular inspection on Minterbro's pier. 11 In a communication 12 dated February 3, 1997, on the basis of its ocular inspection, the PPA advised Minterbro "to conduct a thorough investigation of the underdeck and underwater structures of the pier and initiate corrective measures if necessary." Thereafter, Minterbro, DPAI, and the PPA had a meeting and agreed that Minterbro would seek the assistance of experts for an ocular inspection and survey of the pier. Minterbro engaged the Davao Engineering Works and Marine Services (Davao Engineering) to carry out the work. 13

In its Survey Report No. 390/97 14 dated May 6, 1997, Davao Engineering stated:

OBSERVATIONS:

The Pier facilities of Minterbro at Ilang, Davao City can still be used for loading and unloading of cargoes provided, however, that docking procedures were properly carried out.

The cracks and spalled concrete on the joints of the RC Piles and Pile caps [do] not affect the strength and capabilities of the Pier. However, immediate attention should be given to the Pier damages in order to prevent further deterioration of its structural members which will lead to a costly [repair] later on. 15

Meanwhile, from January 1 until April 13, 1997, a total of sixteen (16) vessels were serviced at the Minterbro pier:

January 1997 — 7 vesselsFebruary 1997 — 3 vesselsMarch 1997 — 4 vessels SHEIDC

April 1997 — 2 vessels 16

Subsequently, Minterbro decided to rehabilitate the pier on August 1, 1997 and, on the same day, sent a letter to the Department of Labor and Employment (DOLE) to inform DOLE of Minterbro's intention to temporarily suspend arrastre and stevedoring operations. Minterbro alleged that, despite the condition of the pier, it was able to service 16 vessels from January 1997 to April 13, 1997 and it was ready and awaiting vessels to dock at the pier from April 14, 1997 to July 31, 1997 during which Minterbro's office, motor pool, and field personnel continued operations. 17

On November 4, 1997, respondent Nagkahiusang Mamumuo sa Minterbro-Southern Philippines Federation of Labor composed of respondents Manuel Abellana, et al., employees of Minterbro working on a rotation basis and employed for arrastre and stevedoring work depending on the actual requirements of the vessels serviced by Minterbro, filed a complaint for payment of separation pay against Minterbro and De Castro in the Regional Arbitration Branch No. XI at Davao City of the National Labor Relations Commission (NLRC). 18

Meanwhile, on December 8, 1997, Minterbro sent a letter 19 to the PPA the pertinent portion of which reads:

This is to advise you that we have completed the repair of our pier which we did inspite of the earlier certification issued by the Davao Engineering Works & Services, that after the latter carried out the underwater/above water ocular inspection and survey of the pier facilities, said pier can still be used for loading and unloading of cargoes provided that the docking procedures should be properly carried out.

In view of the foregoing, may we request your office to render your own ocular inspection and survey for the issuance of the corresponding certification on its readiness to accept vessels for loading and unloading operations. aSTAcH

At the initial hearing before the Labor Arbiter on December 10, 1997, Minterbro and De Castro informed the union and its members that the rehabilitation of the pier had been completed and that they were just awaiting clearance to operate from the PPA. In a manifestation dated December 12, 1997, the union and its members stated, among others, that "they . . . are not anymore amenable to going back to work with [the] company, for the reason that the latter has not been operating for more than six (6) months, even if it resumes operation at a later date and would just demand that they be given Retirement or Separation Pay, as the case may be."20

On December 17, 1997, the PPA issued the following Certification 21 declaring Minterbro's pier as safe and ready for operation:

CERTIFICATION

This is to certify that the repair and rehabilitation of Minterbro Wharf owned by Mindanao Terminal & Brokerage Services, Inc. located at Tibungco, Ilang, Davao City was inspected by our Engineering Services Division office on Dec. 10, 1997 and was found to be totally completed. The structural design and the supervision of work was undertaken by Bow C. Moreno, Civil Structural Design Engineering Office of San Andres St., Manila.

Further, as certified by the Structural Consultants of the Contractor, copy attached, the Port [M]anagement Office of Davao, Philippine Ports Authority has now declared Minterbro Wharf as safe and ready for operationalization.

This certification is issued for whatever purpose the Mindanao Terminal & Brokerage Services, Inc. will deem necessary.

Done in the City of Davao, Philippines, this 17th day of December 1997.

(Sgd.) MANUEL C. ALBARRACINPort Manager

Thereafter, MV Uranus was serviced at the Minterbro pier on December 22 to 28, 1997. 22

On June 15, 1998, the Labor Arbiter rendered a Decision 23 with the following decretal portion:

WHEREFORE, judgment is hereby rendered dismissing the complaint for separation pay for lack of merit and declaring the ninety-five (95) complainants named in the final list filed on February 3, 1998 to have lost their employment status for abandonment of work; and

Declaring complainants Roberto D. Estrera, Sr., Gorgonio Huraño, Jeremias Molato and Constancio Albiso, who have formally withdrawn their complaint, not to have lost their employment status and ordering respondents to accept them back to their former positions without loss of seniority rights and other privileges. 24 SEHTIc

Aggrieved, the union members appealed the Labor Arbiter's Decision to the NLRC. In a Decision 25 dated September 30, 1998, the NLRC modified the Decision of the Labor Arbiter in this wise:

In denying complainants their separation benefits, the Executive Labor Arbiter considered the period embraced within August 1, 1997, when respondent formally informed [the] DOLE of the temporary cessation of operation up to December 16, 1997, when respondent was issued a certificate declaring the wharf safe and ready for operations and December 22-28, 1997, when the respondent company serviced a vessel MV Uranus which obviously

did not exceed six (6) months, thus denying complainants their monetary benefits. Incidentally, the period reckoned is incorrect.

It is admitted by respondent that the last vessel that was serviced was on April 11-13, 1997 (MV Bosco Polar), and after the rehabilitation of the wharf, on December 22-28, 1997 (MV Uranus) was served, thereby covering a period of more or less eight months.

Respondent cannot conceal or make the August 1, 1997 formal notice to DOLE or the alleged continued operations of its office personnel until July 31, 1997, an excuse to evade the mandated six (6) months period (Article 286 of the Labor Code, as amended), since the issue at bar concerns the complainants who became jobless and penniless because of the December 28, 1996 accident.

With the unrefuted peculiar circumstances, complainants are therefore entitled to their claims for separation benefits.

Moreover, complainants cannot be considered to have abandoned their jobs for the reason that it took respondent a long period [of] time to rehabilitate the wharf causing uncertainties in their minds which culminated in the filing of the case. aACHDS

WHEREFORE, the assailed Decision is Modified. Respondents are ordered to pay complainants their separation benefits to be assessed and computed during the post arbitral stage of the proceedings below upon finality of the herein Decision. 26

In a Resolution 27 dated January 25, 1999, the NLRC maintained its Decision and denied the motion for reconsideration of Minterbro and De Castro.

Thereafter, Minterbro and De Castro took the NLRC and the members of the union to task by filing a Petition for Certiorari 28 in the Court of Appeals asserting that the NLRC acted with grave abuse of discretion in ordering Minterbro and De Castro to pay the union members separation pay under Article 286 of the Labor Code. This was docketed as CA-G.R. SP No. 51656.

In a Decision dated April 21, 2006, the Court of Appeals dismissed the petition. It ruled that the seasonal nature of the services rendered by the members of the union did not negate their status as regular employees and that the temporary suspension of Minterbro's operations should be reckoned from April 14, 1997, the day no more vessel was serviced at Minterbro's pier after MV Bosco Polar was serviced at the said pier on April 11 to 13, 1997. Thus, pursuant to Article 286 of the Labor Code and its application in Sebuguero v. National Labor Relations Commission, 29 the NLRC correctly ordered Minterbro and De Castro to pay the union members their separation benefits as their temporary lay-off exceeded six months.

In a Resolution dated August 7, 2006, reconsideration was denied as the Court of Appeals found no reason to reverse its decision. Hence, this petition.

Petitioners Minterbro and De Castro insist that the Court of Appeals erred when it ruled that the union members are entitled to separation pay under Article 286 of the Labor Code. Petitioners concede that, as enunciated in Sebuguero, where a temporary lay-off lasts longer than six months, the employees should either be recalled to work or permanently retrenched following the requirements of the law. 30 However, according to petitioners, the lack of arrastre and stevedoring services in the pier after the servicing of MV Bosco Polar on April 11 to 13, 1997 was a result of Del Monte's decision, for reasons unknown to Minterbro, to suddenly stop docking its vessels at Minterbro's pier. And while there were no arrastre and stevedoring services for lack of any vessel to service, Minterbro's office, motorpool and field personnel continued their work until July 31, 1997, or a day before Minterbro filed the required notices with the DOLE on August 1, 1997. The decision to rehabilitate the pier is a business decision and had nothing to do with the unfounded complaint of DPAI in January 1997 about the condition of the pier. 31 CSAcTa

For their part, the union members contend that the petition is flawed as it presents a question of fact, not of law. In particular, the determination of the correct reckoning date of the temporary suspension of Minterbro's business, whether April 14, 1997 or August 1, 1997, involves a review of facts and the respective evidence of the parties, which is prohibited under the Rules of Court. Moreover, the NLRC and the Court of Appeals have already fully discussed the matter and both came to the same conclusion, that Minterbro and De Castro are liable to the union members for separation pay. The factual findings of the NLRC and the Court of Appeals should therefore be accorded respect and conclusiveness. 32

The issue thus presented in this petition is whether the union members/employees were deprived of gainful employment on April 14, 1997 after the last vessel was serviced prior to the repair of the pier or on August 1, 1997 when repair works on the pier were commenced. Resolution of this issue will determine whether petitioners are liable for separation pay for effectively dismissing the union members through their prolonged lay-off of more than six months.

Petitioners insist on August 1, 1997 as the reckoning date and rely on Article 286 of the Labor Code. On the other hand, the union members assert that the reckoning date is April 14, 1997 and invoke Sebuguero.

At the outset, the Court notes that the petition is fatally defective. The issue it presents is factual, not legal.

There is a question of fact when the doubt or difference arises as to the truth or the falsehood of alleged facts. There is a question of fact if the issue invites a review of the evidence presented. 33

In this case, this Court is effectively being called upon to determine who among the parties is asserting the truth regarding the date the union members were laid-off. Such venture requires the evaluation of the respective pieces of evidence presented by the parties as well as the consideration of "the existence and relevancy of specific surrounding circumstances as well as their relation to each other and to the whole, and the probability of the situation." 34 However, the nature of petitioners' action, a petition for review under Rule 45 of the Rules of Court, renders that very action inappropriate for this Court to take. Only questions of law should be raised in a petition for review under Rule 45. 35 While there are recognized exceptions to that rule, this case is not among them. CHIScD

Moreover, this Court finds neither compelling reason nor substantial argument that will warrant the reversal of the NLRC Decision which has been affirmed by the Court of Appeals.

The NLRC and the Court of Appeals found that the union members/employees were not given work starting April 14, 1997 and that more than six months have elapsed after the union members were laid off when the next vessel was serviced at the Minterbro pier on December 22 to 28, 1997.

Minterbro claims that it had no hand whatsoever in the lack of work for the union members at the pier from April 14, 1997. It stated that it did not even have any idea as to why Del Monte suddenly stopped docking its vessels at Minterbro's pier. Nonetheless, as between petitioners and the union members, it is petitioners who had the right to demand from Del Monte to perform its obligations under the Contract for Use of Pier. Petitioners' right to compel Del Monte to comply with its contractual obligations becomes stronger in view of the following undertaking of Del Monte:

October 7, 1988

Atty. Eliodoro C. CruzVice-PresidentMindanao Terminal and Brokerage Service, Inc.Davao City

Dear Atty. Cruz:

With reference to our "Contract for Use of Pier", dated 3 October, 1988, (Doc. No. 348, No. 71, Book XXVI of Notary Public D. A. Soriano of Makati, Metro Manila), we confirm our commitment to maximize the use of the [Minterbro] Pier at Ilang, Davao City and not to dock any of the vessels of our principal elsewhere for as long as they can be accommodated therein as per your commitment in the contract and in the customary and usual manner and for the purpose which they are intended to serve. ESHAcI

If this reflects our understanding, please sign below and return to us our copy of this letter. This will serve as our supplemental agreement on the matter.

Very truly yours,

(Sgd.) JUAN F. SIERRAPresident

CONFORME:Mindanao Terminal andBrokerage Service, Inc.

By:

(Sgd.) ELIODORO C. CRUZVice-President 36 (Emphasis supplied.)

Unfortunately, petitioners failed to show any effort on their part to hold Del Monte to its end of the bargain even though the union members were being forced to be laid off. Effectively, when petitioners allowed Del Monte to abandon its agreement with Minterbro for eight months covering the middle of April 1997 until the latter part of December 1997 without holding Del Monte accountable for such breach, petitioners consented to Del Monte's unexplained action and the prejudice it caused to the union members.

Moreover, the communications between Minterbro and the PPA during the relevant period are telling. Among these is a letter dated February 3, 1997 from the PPA: cDHCAE

03 February 1997

MR. FORTUNATO V. DE CASTRO, SR.General ManagerMindanao Terminal & Brokerage Services, Inc.Port Area, Sasa, Davao City

Dear Mr. de Castro,

We had been furnished copy of the communications of the Davao Pilot's, Association dated January 6 and 23, 1997 with the same subject on weakened pier structure of your port facility.

On 22 January 1997, a PMO team was dispatched to conduct an ocular inspection. The related report is herewith furnished for your perusal.

Any report or observation of this nature from port users is considered critical and this should be investigated and verified for the safety of all parties concerned. We therefore advise your company to conduct a thorough investigation of the underdeck and underwater structures of the pier and initiate corrective measures if necessary.

Please advise this end of your actions undertaken.

Very truly yours,

(Sgd.) MANUEL C. ALBARRACIN 37 (Emphasis supplied.)

Another material document is the letter dated December 8, 1997 from Minterbro to the PPA wherein petitioners requested the PPA to confirm the repair and rehabilitation of the Minterbro pier and issue a certification on the pier's "readiness to accept vessels for loading and unloading operations." 38

Petitioners exert much effort to dissociate themselves from Del Monte's act of stopping its vessels from docking at Minterbro's pier beginning April 14, 1997. They also went to great lengths not only to refute the complaint of DPAI that Minterbro's pier is damaged and defective but also to establish that such allegedly baseless claims have no connection with the decision of the vessels not to dock at the Minterbro pier. The above communications, however, negate petitioners' contention. As early as February 1997, the PPA had already advised petitioners that the observation of DPAI that the pier had abnormal vibrations "is considered critical." 39 And in the Petition for Certiorari 40 and Memorandum 41 which they filed in the Court of Appeals, petitioners alleged as follows: CTAIHc

12.MINTERBRO sent copies of the Survey Report No. 390/97 to the PPA, the [Davao Pilots] Association and Del Monte Philippines, Inc. to inform them that the observation/complaint of the [Davao Pilots] Association was clearly unfounded and without any factual basis. Despite receipt of the Survey Report, Del Monte did not dock any of its vessels at MINTERBRO's pier. 42 (Emphasis supplied.)

The above statement shows that petitioners were fully aware that Del Monte's decision to stop docking any of its vessels at the Minterbro pier was basically related to the issue of the condition of the pier. Moreover, petitioners may not rightfully shift the blame to Del Monte in view of the following provision of their Contract for Use of Pier:

3.MINTERBRO shall maintain the pier in good condition suitable for the loading and unloading of [Del Monte] or [Del Monte]-related cargoes[.] 43(Emphasis supplied.)

If petitioners really believed their claim that the pier's condition was still suitable for normal operations even without having undertaken the repairs which it took starting August 1997, petitioners could have simply submitted Survey Report No. 390/97 to the PPA and requested for a certification similar to the PPA certification dated December 17, 1997. Yet, they did not. They had to rehabilitate the pier first before they requested for the certification. Furthermore, the very Survey Report No. 390/97 that petitioners use to support their claim that the claim of DPAI as to the condition of the pier is totally baseless is not completely true. As quoted by petitioners, the Survey Report states that the Minterbro pier "can still be used for loading and unloading of cargoes provided, however, that docking procedures were properly carried out." 44 This can be reasonably taken to mean as saying that the operations at the pier should now be carried out in a mistake free manner because one wrong move may prove to be disastrous. That means that every time arrastre and stevedoring services are conducted at the pier, a sword would be hanging over the heads of those working at the pier. Moreover, the said Survey Report expressly directs that "immediate attention should be given to the Pier damages in order to prevent further deterioration of its structural members." 45 This directive contradicts

petitioners' stance that the Minterbro pier was in good condition even prior to its repair and rehabilitation in August 1997. Thus, the Court of Appeals did not err when it made the following observations: SHECcT

In view of the inspections and surveys conducted on the pier, it could not have failed to dawn upon petitioners that no vessel would take the risk of docking in their pier because of its damaged condition. 46

To Our mind, both petitioners and the Labor Arbiter failed to realize that what had been indisputably established thereby was that petitioners' pier was in critical condition[,] i.e., no longer viable for docking as early as May 1996 in spite of which petitioners decided to make the necessary repairs only in August [1996] or four months thereafter.

. . . Petitioners had already been amply notified of the unstable condition of their pier which required prompt corrective action for the safety of both the facilities and the lives of the laborers therein, so that petitioners should not have insisted that their pier was still in good shape. . . . . 47

In sum, petitioners' inaction on what they allege to be the unexplained abandonment by Del Monte of its obligations under the Contract for the Use of Pier coupled with petitioners' belated action on the damaged condition of the pier caused the absence of available work for the union members. As petitioners were responsible for the lack of work at the pier and, consequently, the layoff of the union members, they are liable for the separation from employment of the union members on a ground similar to retrenchment. In this connection, this Court has ruled:

A lay-off, used interchangeably with "retrenchment," is a recognized prerogative of management. It is the termination of employment resorted to by the employer, through no fault of nor with prejudice to the employees, during periods of business recession, industrial depression, seasonal fluctuations, or during lulls occasioned by lack of orders, shortage of materials, conversion of the plant for a new production program, or the introduction of new methods or more efficient machinery, or of automation. Simply put, it is an act of the employer of dismissing employees because of losses in operation of a business, lack of work, and considerable reduction on the volume of his business, a right consistently recognized and affirmed by this Court. The requisites of a valid retrenchment are covered by Article 283 of the Labor Code. SaHcAC

When a lay-off is temporary, the employment status of the employee is not deemed terminated, but merely suspended. Article 286 of the Labor Code provides, in part, that the bona fide suspension of the operation of the business or undertaking for a period not exceeding six months does not terminate employment. 48 (Citation omitted.)

When petitioners failed to make work available to the union members for a period of more than six months starting April 14, 1997 by failing to call the attention of Del Monte on the latter's obligations under the Contract of Use of Pier and to undertake a timely rehabilitation of the pier, they are deemed to have constructively dismissed the union members. As this Court held in Valdez v. National Labor Relations Commission: 49

Under Article 286 of the Labor Code, the bona fide suspension of the operation of a business or undertaking for a period not exceeding six months shall not terminate employment. Consequently, when the bona fide suspension of the operation of a business or undertaking exceeds six months, then the employment of the employee shall be deemed terminated. By the same token and applying said rule by analogy, if the employee was forced to remain without work or assignment for a period exceeding six months, then he is in effect constructively dismissed. (Citation omitted.)

In Sebuguero, 50 the Court ruled on a case regarding layoff or temporary retrenchment, which subsequently resulted to the separation from employment of the concerned employee as it lasted for more than six months, as follows:

Article 283 of the Labor Code which covers retrenchment, reads as follows: ASTcEa

Art. 283.Closure of establishment and reduction of personnel. — The employer may also terminate the employment of any employee due to the installation of labor saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by servicing a written notice on the workers and the Ministry of Labor and Employment at least one (1) month before the intended date thereof. In case of termination due to the installation of labor saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of closure or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered one (1) whole year.

This provision, however, speaks of a permanent retrenchment as opposed to a temporary lay-off as is the case here. There is no specific provision of law which treats of a temporary retrenchment or lay-off and provides for the requisites in effecting it or a period or duration therefor. These employees cannot forever be temporarily laid-off. To remedy this situation or fill the hiatus, Article 286 may be applied but only by analogy to set a specific period that employees may remain temporarily laid-off or in floating status. 13 Six months is the period set by law that the operation of a business or undertaking may be suspended thereby suspending the employment of the employees concerned. The temporary lay-off wherein the employees likewise cease to work should also not last longer than six months. After six months, the employees should either be recalled to work or permanently retrenched following the requirements of the law, and that failing to comply with this would be tantamount to dismissing the employees and the employer would thus be liable for such dismissal. 51(Citation omitted.) HTASIa

As the Court of Appeals did not err in ruling that Sebuguero applies to this case, the consequences arrived at in Sebuguero also apply. Lay-off is essentially retrenchment and under Article 283 of the Labor Code a retrenched employee is entitled to separation pay equivalent to one (1) month salary or one-half (1/2) month salary per year of service, whichever is higher.

WHEREFORE, the petition is hereby DENIED. The Executive Labor Arbiter of the Regional Arbitration Branch No. XI at Davao City of the National Labor Relations Commission is DIRECTED to ensure the prompt implementation of this Decision.

SO ORDERED.

Bersamin, Villarama, Jr., Perez * and Reyes, JJ., concur.

[G.R. No. 113592. January 15, 1998.]

INDUSTRIAL AND TRANSPORT EQUIPMENT, INC. and/or ANTONIO JARINA, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION and LEOPOLDO MEDRANO, respondents.

Erlinda B. Espejo for petitioners.

Carlo L. Gallarita for private respondent.

SYNOPSIS

Private respondent was employed as a mechanic by petitioner corporation from November 1974 up to his dismissal in July 1990. On May 31, 1990, he was granted an indefinite leave of absence, during which period he was able to secure a temporary job as a mechanic. When he reported for work on June 18, 1990, a supervisor confronted him for having worked in another firm. Consequently, he was asked to resign. On July 2, 1990, private respondent was not allowed to enter the company's premises allegedly because his services had already been terminated. In a complaint for illegal dismissal against petitioner, the Labor Arbiter rendered a decision ordering petitioner corporation to reinstate private respondent to his former position without backwages. Private respondent filed a motion to cite petitioner for indirect contempt for alleged refusal to comply with the reinstatement order and for payment of backwages. The Labor Arbiter issued an order finding petitioner guilty of indirect contempt and directed the reinstatement of respondent with backwages. On appeal, said order was affirmed in toto by the NLRC. Petitioner corporation argues that it could not be held guilty of indirect contempt as it had faithfully complied with the order when it reinstated private respondent to his former position on April 15, 1991.

The Supreme Court dismissed the petition. It must be noted that petitioner corporation received a copy of the Labor Arbiter's decision only on April 18, 1991. Respondent could not have been reinstated prior to said date as claimed by petitioner corporation.

The Labor Arbiter erred in omitting the award of backwages. The law provides that an illegally dismissed employee is entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement. Having become final and executory, the Court is constrained to uphold this decision for failure of the respondent himself to question the inadequacy of the remedy due him.

SYLLABUS

1.LABOR AND SOCIAL LEGISLATION; LABOR CODE; NLRC; NEW RULES OF PROCEDURE; INDIRECT CONTEMPT; DISOBEDIENCE OF OR RESISTANCE TO A LAWFUL JUDGMENT, GROUND. — Section 2, Rule X of the New Rules of Procedure of the NLRC provides that the Commission or any labor arbiter may cite any person for indirect contempt upon grounds and in the manner prescribed under Section 3(b), Rule 71 of the 1997 Rules of Civil Procedure. Section 3(b), Rule 71 provides: "Section 3 — Indirect contempt to be punished after charge and hearing — . . . a) . . . (b) Disobedience of or resistance to a lawful writ, process, order, or judgment of a court . . . ."

2.ID.; ID.; ID.; ID.; ID.; ID.; CASE AT BAR. — Petitioner argues that it could not be held guilty of indirect contempt as it had faithfully complied with the order when it reinstated Medrano to his former position on April 15, 1991. Respondent allegedly abandoned his work after initially reporting on April 15 and 16, 1991. It must be noted that petitioner received a copy of the labor arbiter's decision only on April 18, 1991. It is, therefore, clear that Medrano could not have been reinstated prior to said date as claimed by petitioner. The Solicitor General, in his comment, explained clearly the implausibleness of petitioner's assertion. Thus: "If Medrano was actually reinstated on April 15 and 16, 1991, it would be absurd for him to simply walk away from his job unmindful of the consequences of his act and considering the sacrifices he had made to retrieve his post. It should be pointed out that as early as May 3, 1991, private respondent filed a Motion

for Execution in respect of the Labor Arbiter' s Decision which became final and executory on April 28, 1991. His act of seeking the execution of the decision ordering his reinstatement is absolutely incompatible with an intention to abandon his job." DACTSa

3.REMEDIAL LAW; SPECIAL CIVIL ACTIONS; CONTEMPT; DEFINITION. — Contempt is defined as a disobedience to the Court by setting up an opposition to its authority, justice and dignity. It signifies not only a willful disregard or disobedience of the court's orders. but such conduct as tends to bring the authority of the court and the administration of law into disrepute or in some manner to impede the due administration of justice. There is no question that disobedience or resistance to a lawful writ, process, order, judgment or command of a court or injunction granted by a court or judge constitutes indirect contempt punishable under Rule 71 of the Rules of Court.

4.ID.; ACTIONS; JUDGMENT; FINAL AND EXECUTORY JUDGMENT EXCLUDING AWARD OF BACKWAGES, UPHELD ON APPEAL. — Notably, the March 27, 1991 decision of the labor arbiter, while ordering the reinstatement of respondent, excluded the award of backwages. On this point, we rule that the labor arbiter erred in omitting such award. The law provides that an illegally dismissed employee is "entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement." Having become final and executory, however, we are constrained to uphold this decision, albeit deficient, for failure of the respondent himself to question the inadequacy of the remedy due him.

5.ID.; ID.; APPEALS; PERFECTION OF APPEAL WITHIN STATUTORY PERIOD, JURISDICTIONAL; FAILURE TO DO SO RENDERS QUESTIONED DECISION FINAL AND EXECUTORY. — In Asuncion v. NLRC, the Court ruled that perfection of an appeal within the statutory or reglementary period is not only mandatory but also jurisdictional and failure to do so renders the questioned decision final and executory as to deprive the appellate court of jurisdiction to alter the final judgment, much less to entertain the appeal. In the recently decided case of Aboitiz Shipping Employees Associated v. Trajano, it was pointed out therein that, except for correction of clerical errors or the making of nunc pro tunc entries which cause no prejudice to any party or where the judgment is void, after the judgment has become final and executory, the same can neither be amended nor altered even if the purpose is to correct a perceived conclusion of fact or of law. This is true regardless of whether the modification is to be made by the magistrate that rendered the judgment, or by the appellate magistrate that reviewed the same. Indeed, all litigation must come to an end however unjust the result of error may appear. Otherwise, litigation would even be more intolerable than the wrong or injustice it is designed to correct.

D E C I S I O N

ROMERO, J p:

Petitioner Industrial and Transport Equipment Inc. (INTECO) seeks to set aside the decision of the National Labor Relations Commission dated February 23, 1993, affirming the order of the labor arbiter declaring petitioner guilty of indirect contempt and ordering it to reinstate private respondent to his former position with backwages from July 11, 1991 up to his actual reinstatement, and its resolution denying petitioner's motion for reconsideration. LLjur

Respondent Leopoldo Medrano was employed as a mechanic by INTECO from November 1974 up to his dismissal in July 1990. On May 31, 1990, he was granted an indefinite leave of absence, during which period he was able to secure a temporary job at Porac, Pampanga as a mechanic. When he reported for work on June 18, 1990, a supervisor confronted him for having worked in

another firm, Consequently, he was asked to resign. On July 2, 1990, respondent was not allowed to enter the company's premises allegedly because his services had already been terminated.

In a complaint for illegal dismissal against INTECO, Labor Arbiter Felipe T. Garduque II rendered a decision dated March 27, 1991, the dispositive portion of which reads thus:

"WHEREFORE, premises considered, respondents INDUSTRIAL AND TRANSPORT EQUIPMENT INCORPORATED and/or ANTONIO JARINA are hereby ordered to reinstate within ten (10) days from receipt hereof herein complainant Leopoldo C. Medrano to his former position without backwages, and to pay him his proportionate 13th month pay for 1990 in the amount of P1,300.00.

Complainant's claim for damages including attorney's fee is hereby denied for lack of merit." (Emphasis supplied)

The decision became final and executory upon failure of petitioner to file an appeal within the reglementary period. Consequently, respondent filed on May 3, 1991, a motion for the issuance of a writ of execution, which was accordingly granted.

On August 1, 1991, the proportionate 13th month pay was fully settled. The aspect of reinstatement, however, remained unsatisfied in view of the alleged refusal of petitioner to comply with the said order. Accordingly, respondent filed on November 11, 1991, a motion to cite petitioner for indirect contempt and for payment of backwages.

On April 20, 1992, Labor Arbiter Garduque issued an order finding petitioner guilty of indirect contempt with a fine of P100.00, and likewise directed the reinstatement of respondent with backwages from July 11, 1991, up to his actual reinstatement. On appeal, said order was affirmed in toto by the NLRC on February 23, 1993. Hence, this petition.

The petition must be dismissed.

Section 2, Rule X of the New Rules of Procedure of the NLRC provides that the Commission or any labor arbiter may cite any person for indirect contempt upon grounds and in the manner prescribed under Section 3(b), Rule 71 of the 1997 Rules of Civil Procedure.

 Section 3(b), Rule 71 provides:

"Section 3.Indirect contempt to be punished after charge and hearing. — . . .

a). . .

b)Disobedience of or resistance to a lawful writ, process, order, or judgment of a court . . ."

Contempt is defined as a disobedience to the Court by setting up an opposition to its authority, justice and dignity. It signifies not only a willful disregard or disobedience of the court's orders but such conduct as tends to bring the authority of the court and the administration of law into disrepute or in some manner to impede the due administration of justice. There is no question that disobedience or resistance to a lawful writ, process, order, judgment or command of a court or injunction granted by a court or judge constitutes indirect contempt punishable under Rule 71 of the Rules of Court. 1

Petitioner argues that it could not be held guilty of indirect contempt as it had faithfully complied with the order when it reinstated Medrano to his former position on April 15, 1991. Respondent allegedly abandoned his work after initially reporting on April 15 and 16, 1991. dctai

It must be noted that petitioner received a copy of the labor arbiter's decision only on April 18, 1991. It is, therefore, clear that Medrano could not have been reinstated prior to said date as claimed by petitioner. The Solicitor General, in his comment, explained clearly the implausibleness of petitioner's assertion. Thus:

"If Medrano was actually reinstated on April 15 and 16, 1991, it would be absurd for him to simply walk away from his job unmindful of the consequences of his act and considering the sacrifices he had made to retrieve his post. It should be pointed out that as early as May 3, 1991, private respondent filed a Motion for Execution in respect of the Labor Arbiter's Decision which became final and executory on April 28, 1991. His act of seeking the execution of the decision ordering his reinstatement is absolutely incompatible with an intention to abandon his job." 2

Notably, the March 27, 1991 decision of the labor arbiter, while ordering the reinstatement of respondent, excluded the award of backwages. On this point, we rule that the labor arbiter erred in omitting such award. The law provides that an illegally dismissed employee is "entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement." 3 Having become final and executory, however, we are constrained to uphold this decision, albeit deficient, for failure of the respondent himself to question the inadequacy of the remedy due him.

In Asuncion v. NLRC, 4 the Court ruled that perfection of an appeal within the statutory or reglementary period is not only mandatory but also jurisdictional and failure to do so renders the questioned decision final and executory as to deprive the appellate court of jurisdiction to alter the final judgment, much less to entertain the appeal. In the recently decided case of Aboitiz Shipping Employees Association v. Trajano, 5 it was pointed out therein that, except for correction of clerical errors or the making of nunc pro tunc entries which cause no prejudice to any party or where the judgment is void, after the judgment has become final and executory, the same can neither be amended nor altered even if the purpose is to correct a perceived conclusion of fact or of law. This is true regardless of whether the modification is to be made by the magistrate that rendered the judgment, or by the appellate magistrate that reviewed the same. Indeed, all litigation must come to an end however unjust the result of error may appear. Otherwise, litigation would even be more intolerable than the wrong or injustice it is designed to correct. (Emphasis supplied) cdtai

WHEREFORE, in view of the foregoing, the instant petition is DISMISSED and the February 23, 1993 decision of respondent National Labor Relations Commission is AFFIRMED with the modification that the award of backwages be DELETED. Costs against petitioner.

SO ORDERED.

Narvasa, C.J., Melo and Francisco, JJ., concur.

Panganiban, J., took no part. Former counsel of a party.