G.R. No. 175960 February 19, 2008PADILLA MACHINE SHOP, RODOLFO PADILLA and LEONARDO PADILLA, petitioners, vs.RUFINO A. JAVILGAS, respondent.DECISIONYNARES-SANTIAGO, J.:This petition for review assails the Decision1 of the Court of Appeals dated August 29, 2006 in CA-G.R. SP No. 89164 which reinstated the decision of the Labor Arbiter finding respondent Rufino A. Javilgas to have been illegally dismissed. Also assailed is the Resolution2 of December 21, 2006 denying the motion for reconsideration.On December 10, 2002, Javilgas filed a Complaint3 for illegal dismissal, underpayment of 13th month pay, separation pay and non-remittance of SSS contributions against petitioners Padilla Machine Shop, Rodolfo Padilla and Leonardo Padilla.Javilgas alleged that in January 1998, he was hired by Padilla Machine Shop, located at Commonwealth Avenue, Quezon City. His work consisted of reconditioning machines and was paid a monthly salary of P6,480.00. In July 1998, his salary was increased to P7,200.00; and in January 1999, his salary was again increased to P8,400.00 until his dismissal in April 2002. Petitioners made regular deductions for his SSS contributions, but sometime in 2002, he found out that his employer was not remitting the contributions to the SSS; as a result, he was not able to avail of the benefits thereof when his wife gave birth. When he complained about the failure of his employer to remit his SSS contributions, the latter transferred him to the Novaliches branch office.Javilgas further alleged that in April 2002, Rodolfo Padilla called him by telephone and told him to "stop working," but "without giving any reason therefor." He stopped reporting for work and sued petitioners for illegal dismissal, with a prayer for the payment of backwages, pro rated 13th month pay, separation pay, and moral and exemplary damages.On the other hand, petitioner Rodolfo Padilla (Rodolfo), proprietor of Padilla Machine Shop, alleged that in 1999, SSS and Medicare contributions were deducted from Javilgas' salary and remitted to the SSS; that in 2000, they (petitioners) submitted a report to the SSS that Javilgas had voluntarily left and abandoned his work, and transferred to another shop, Raymond Machine Shop, located within the same vicinity as Padilla Machine Shop; that some months after, Javilgas returned and pleaded to be re-employed with them; that Rodolfo Padilla took Javilgas back to work, but their customers were not satisfied with the quality of his work; hence Javilgas was assigned to the Novaliches branch; that Javilgas incurred numerous absences in the Novaliches branch; that Javilgas had opened his own machine shop and even "pirated" the clients of petitioners; and finally, Javilgas again voluntarily left Padilla Machine Shop without prior notice.On March 31, 2004, the Labor Arbiter rendered a decision that Javilgas was illegally dismissed, the dispositive portion of which reads, as follows:WHEREFORE, judgment is hereby rendered finding Complainant to have been illegally dismissed. Concomitantly, Respondents are ordered jointly and severally to pay Complainant the following:P232,065.92representing backwages;50,400.00representing separation pay;18,571.00representing 13th month payP301,036.92TotalTen percent of the total award as attorney's fees.The claim of non-remittance of SSS contribution is dismissed for lack of jurisdiction.SO ORDERED.4Petitioners appealed the decision to the National Labor Relations Commission (NLRC) which reversed the decision of the Labor Arbiter, to wit:WHEREFORE, premises considered, we give due course to the appeal of respondents. Consequently, the Decision of the Labor Arbiter below is hereby reversed and set aside and a new decision is entered dismissing the instant case for lack of merit.SO ORDERED.5The NLRC found no sufficient evidence to show that Javilgas was dismissed or prevented from reporting for work; that Javilgas could not categorically state when he was dismissed: in his complaint, he claimed to have been dismissed on February 27, 2002, but in subsequent pleadings he alleged he was dismissed in mid-April, 2002. Relying on the principle enunciated in Chong Guan Trading v. National Labor Relations Commission,6 it ruled that where Javilgas was never notified of his dismissal nor was he prevented from returning to work, there could be no illegal dismissal. The NLRC also found the telephone conversation between Javilgas and Rodolfo Padilla - where the latter told the former to stop reporting to work - self-serving, conjectural and of no probative value, especially where Javilgas himself declares that he was told by Rodolfo not to report to work without giving any reason therefor. In fine, the NLRC held that Javilgas voluntarily resigned, and not illegally dismissed.On appeal, the Court of Appeals reversed the NLRC and reinstated the Decision of the Labor Arbiter. It held that the burden of proof is on the petitioners, to show that Javilgas was dismissed for a valid and just cause. As to the inconsistency in the dates of Javilgas' termination, the appellate court noted that it was a case of miscommunication between Javilgas and the person who filled up the entries in the pro forma labor complaint in his behalf; Javilgas was found to be illiterate, as he did not even get to finish Grade School. Likewise, the delay of eight months in the filing of the complaint should not work against respondent because it took time for him to obtain the services of a counsel.The appellate court did not lend credence to petitioners' claim that respondent voluntarily resigned since the issue was only raised for the first before the NLRC. A change of theory on appeal - from abandonment of work in the Labor Arbiter to voluntary resignation on appeal, is prohibited. It likewise declared as without basis the petitioners' claim that Javilgas was operating a rival machine shop, since petitioners failed to prove with sufficient evidence the veracity of said claim. The Court of Appeals disregarded the documents submitted by the petitioners to the NLRC for the first time (business permit and photographs) which they claim would show that respondent was operating his own machine shop during the period of his employment with Padilla Machine Shop.Petitioners' motion for reconsideration was denied hence, the instant petition raising the following issues:1. The Court of Appeals erred in holding that upon the petitioners rested the burden of proving that the termination of the respondent was for a valid cause, despite their consistent position that the latter was never terminated from employment;2. The Court of Appeals erred in holding that the said consistent position adopted by petitioners - that they never dismissed Javilgas - is not sufficient to negate the charge of illegal dismissal;3. The Court of Appeals erred in disregarding documentary evidence presented for the first time on appeal; and,4. The Court of Appeals erred in awarding attorney's fees to the respondent who was being represented pro bono by the Office of Legal Aid of the U.P. College of Law.Petitioners did not offer any evidence to disprove the allegation that Rodolfo Padilla informed Javilgas by phone to stop reporting to work. On the contrary, Rodolfo admitted that he "advised" Javilgas to "concentrate on his (Javilgas') shop if he has no more time for the company (Padilla Machine Shop)."7 Moreover, it was only in the NLRC that the documents and photographs purporting to show that Javilgas was conducting business inimical to the interests of Padilla Machine Shop were submitted.In illegal dismissal cases, the burden of proof is on the employer to show that the employee was dismissed for a valid and just cause.8 Petitioners have failed to discharge themselves of the burden. With respect to Javilgas' claim of illegal dismissal, petitioners merely alleged that -13. From that time on, Complainant (Javilgas), did not anymore report for work and left Respondent's (Rodolfo) business for the second time without any advance notice of terminating his services as required by law;14. This Complainant requested Respondent to compute all the SSS/Medicare deductions on his weekly/daily salaries for he is planning to have a refund of these deductions;x x x xPetitioner Rodolfo, however, did not elaborate or show proof of the claimed abandonment. Instead, he concluded that Javilgas "abandoned his corresponding duties and responsibilities x x x when he established and created his own machine shop outfit x x x."9 For abandonment to exist, it is essential (a) that the employee must have failed to report for work or must have been absent without valid or justifiable reason; and, (b) that there must have been a clear intention to sever the employer-employee relationship manifested by some overt acts.10 The establishment of his own shop is not enough proof that Javilgas intended to sever his relationship with his employer.Moreover, it was only in 2003 that Rodolfo allegedly confirmed his suspicion that Javilgas was operating his own machine shop. Rodolfo admits that it was only when the case was on appeal to the NLRC that his suspicion was confirmed. Thus, in the petition for review on certiorari11 with this Court, petitioners claim that -During the pendency of this case on appeal with the NLRC, because of the vehement denial of complainant, Rufino Javilgas that he has never operated a machine shop which is doing the same business with (petitioners)(,) Mr. Rodolfo Padilla and the undersigned counsel went to the residence of (respondent), Rufino Javilgas at Barangay Sta. Clara, Sta. Maria, Bulacan on January 3, 2003, and right then and there, Mr. Padilla and the undersigned counsel saw personally the machine shop being operated by Mr. Rufino Javilgas. x x x (Words in parentheses supplied)This only proves that in April 2002, when Rodolfo allegedly "advised" Javilgas to "concentrate on his (Javilgas') shop if he has no more time for the company (Padilla Machine Shop)," petitioners had nothing but unfounded suspicions. In Machica v. Roosevelt Services Center, Inc.,12 we sustained the employer's denial as against the employees' categorical assertion of illegal dismissal. In that case, several employees who allegedly refused to sign a memorandum13 from their employer, detailing the commission of alleged anomalies that resulted in the overpricing and overcharging of customers, filed an illegal dismissal case three days after receiving the said memorandum. They claimed that they were illegally dismissed and were told not to report for work anymore; the employer denied this and asserted that the workers (who appeared to be the suspects in the anomalies) were merely given three to five days off to decide whether or not to agree to share the loss suffered by it as a result of the anomalies. The Court, in ruling that there was no illegal dismissal, held that:The rule is that one who alleges a fact has the burden of proving it; thus, petitioners were burdened to prove their allegation that respondents dismissed them from their employment. It must be stressed that the evidence to prove this fact must be clear, positive and convincing. The rule that the employer bears the burden of proof in illegal dismissal cases finds no application here because the respondents deny having dismissed the petitioners.We have reviewed the Memorandum of respondent Dizon and find nothing therein to indicate that any of the employees of respondent corporation, including the petitioners, would be considered terminated from employment if they refused to share in the P23,997.58 loss. Petitioners and other employees of respondent corporation were merely required to affix their signatures in the Memorandum on the space opposite their respective names, to confirm that they had read and understood the same. As elucidated by the NLRC in the assailed Resolution:Read in its entirety, the Memorandum reflects the GOOD FAITH of the employer in resolving a discovered anomaly. First, it is a declaration of AMNESTY and FORGIVENESS; it did not name names; it did not state that the guilty ones will be pursued and punished. Second, it asked for SHARING among the employees for the loss due to the discovered anomaly. Third, it indicated a POSITIVE BUSINESS DIRECTION as it exhorted the employees from participating in similar anomalies henceforward.14Petitioners, in like manner, consistently deny that Javilgas was dismissed from service; that he abandoned his employment when he walked out after his conversation with Rodolfo and never returned to work again. But denial, in this case, does not suffice; it should be coupled with evidence to support it. In the Machica case, the memorandum, among others, represented clear and convincing proof that there was no intention to dismiss the employees; it constituted evidence in support of the employer's denial.In the instant case, petitioners failed to adduce evidence to rebut Javilgas' claim of dismissal and satisfy the burden of proof required. As regards the eight-month hiatus before Javilgas instituted the illegal dismissal case, we sustain the Court of Appeals' ruling that Javilgas filed the complaint within a reasonable period during the three-year period provided under Article 291 of the Labor Code. Finally, there is no merit in petitioners' claim that attorney's fees may not be awarded to the respondent since his case was being handled pro bono by the U.P. Office of Legal Aid, which provides free legal assistance to indigent litigants. In this jurisdiction, there are two concepts of attorney's fees. In the ordinary sense, attorney's fees represent the reasonable compensation paid to a lawyer by his client for the legal services he has rendered to the latter. On the other hand, in its extraordinary concept, attorney's fees may be awarded by the court as indemnity for damages to be paid by the losing party to the prevailing party,15 and not counsel. In its extraordinary sense, attorney's fees as part of damages is awarded only in the instances specified in Article 2208 of the Civil Code,16 among which are the following which obtain in the instant case:(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;x x x x(11) In any other case where the court deems it just and equitable that attorney's fees and expenses of litigation should be recovered.WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals dated August 29, 2006 in CA-G.R. SP No. 89164 which reinstated the Decision of the Labor Arbiter finding that respondent Rufino Javilgas was illegally dismissed from service and its Resolution of December 21, 2006 denying the motion for reconsideration are hereby AFFIRMED.No costs.SO ORDERED.ARTURO DE GUZMAN, petitioner, vs.NATIONAL LABOR RELATIONS COMMISSION, LABOR ARBITER MA. LOURDES A. SALES, AVELINO D. VALLESTEROL, ALEJANDRO Q. FRIAS, LINDA DE LA CRUZ, CORAZON M. DE LA FUENTE, LILIA F. FLORO, and MARIO F. JAYME, respondents.CRUZ, J.:It is a fundamental principle of law and human conduct that a person "must, in the exercise of his rights and in the performance of his duties, act with justice, give every one his due, and observe honesty and good faith." 1 This is the principle we shall apply in the case at bar to gauge the petitioner's motives in his dealings with the private respondents.Arturo de Guzman was the general manager of the Manila office of the Affiliated Machineries Agency, Ltd., which was based in Hongkong. On June 30, 1986, he received a telex message from Leo A. Fialla, managing director of AMAL in its main office, advising him of the closure of the company due to financial reverses. This message triggered the series of events that are the subject of this litigation.Immediately upon receipt of the advise, De Guzman notified all the personnel of the Manila office. The employees then sent a letter to AMAL accepting its decision to close, subject to the payment to them of their current salaries, severance pay, and other statutory benefits. De Guzman joined them in these representations.These requests were, however, not heeded. Consequently, the employees, now herein private respondents, lodged a complaint with the NLRC against AMAL, through Leo A. Fialla and Arturo de Guzman, for illegal dismissal, unpaid wages or commissions, separation pay, sick and vacation leave benefits, 13th month pay, and bonus.For his part, the petitioner began selling some of AMAL's assets and applied the proceeds thereof, as well as the remaining assets, to the payment of his claims against the company. He also organized Susarco, Inc., with himself as its president and his wife as one of the incorporators and a member of the board of directors. This company is engaged in the same line of business and has the same clients as that of the dissolved AMAL.With this development, Susarco and its officers were impleaded in the amended complaint of the private respondents. Later, William Quasha and/or Cirilo Asperilla were also included in the suit as the resident agents of AMAL of the Philippines.On November 7, 1986, the petitioner filed his own complaint with the NLRC against AMAL for his remaining unsatisfied claims.On May 29, 1987, Labor Arbiter Eduardo G. Magno, to whom the petitioner's complaint was assigned, rendered a decision ordering AMAL to pay the petitioner the amount of P371,469.59 as separation pay, unpaid salary and commissions, after deducting the value of the assets earlier appropriated by the petitioner. 2On September 30, 1987, Labor Arbiter Ma. Lourdes A. Sales, who tried the private respondents' complaint, rendered a decision 1. Ordering Respondents AMAL and Arturo de Guzman to pay jointly and severally to each Complainant separation pay computed at one-half month pay for every year of service, backwages for one month, unpaid salaries for June 16-30, 1986, 13th month pay from January to June 30, 1986 and incentive leave pay equivalent to two and-a-half days pay;2. Dismissing the complaint against respondents Leo Fialla, William Quasha, Susarco, Inc. and its directors Susan de Guzman, Pacita Castaneda, George Estomata and Cynthia Serrano for lack of basis and/or merit;3. Dismissing the claims for damages for lack of basis;4. Ordering respondents AMAL and Arturo de Guzman to pay jointly and severally attorney's fees to Complainants equivalent to 10% of the monetary awards herein. 3This decision was on appeal affirmed in toto by the NLRC, which is now faulted for grave abuse of discretion in this petition for certiorari.The petitioner does not dispute the jurisdiction of the Labor Arbiter and NLRC over the complaint of the private respondents against AMAL in view of their previous employment relationship. He argues, however, that the public respondents acted without or in excess of jurisdiction in holding him jointly and severally liable with AMAL as he was not an employer of the private respondents.The Solicitor General and the private respondents disagree. They maintain that the petitioner, being AMAL's highest local representative in the Philippines, may be held personally answerable for the private respondents' claims because he is included in the term "employer" under Art. 212 (c),(now e) of the Labor Code which provides:Art. 212. Definitions. xxx xxx xxxc. "Employer" includes any person acting in the interest of an employer, directly or indirectly. . . .In the leading case of A.C. Ransom Labor Union-CCLU vs. NLRC, 4 as affirmed in the subsequent cases of Gudez vs. NLRC, 5 and Maglutac vs.NLRC, 6 this Court treated the president of the employer corporation as an "employer" and held him solidarily liable with the said corporation for the payment of the employees' money claims. So was the vice-president of the employer corporation in the case of Chua vs. NLRC. 7The aforecited cases will not apply to the instant case, however, because the persons who were there made personally liable for the employees' claims were stockholders-officers of the respondent corporation. In the case at bar, the petitioner, while admittedly the highest ranking local representative of AMAL in the Philippines, is nevertheless not a stockholder and much less a member of the board of directors or an officer thereof. He is at most only a managerial employee under Art. 212 (m) of the Labor Code, which reads in relevant part as follows:Art 212. Definitions. xxx xxx xxxm. Managerial employee is one who is vested with powers and prerogatives to lay down and execute management policies and/or tohire, transfer, suspend, lay off, recall, discharge, assign or discipline employees. . . .As such, the petitioner cannot be held directly responsible for the decision to close the business that resulted in his separation and that of the private respondents. That decision came directly and exclusively from AMAL. The petitioner's participation was limited to the enforcement of this decision in line with his duties as general manager of the company. Even in a normal situation, in fact, he would not be liable, as a managerial employee of AMAL, for the monetary claims of its employees. There should be no question that the private respondents' recourse for such claims cannot be against the petitioner but against AMAL and AMAL alone.The judgment in favor of the private respondents could have been enforced against the properties of AMAL located in this country except for one difficulty. The problem is that these properties have already been appropriated by the petitioner to satisfy his own claims against the company.By so doing, has the petitioner incurred liability to the private respondents?The Labor Arbiter believed he had because of his bad faith and ruled as follows:Considering that Respondent A. de Guzman is guilty of bad faith in appropriating for himself the properties of Respondent AMAL to the prejudice of Complainants herein whose claims are known to Respondent at the time he made the disposition of AMAL's properties, he is held jointly and severally liable with Respondent AMAL for the award of unpaid wages, separation pay, backwages for one month, 13th month pay and cash value of unused vacation leave.In Velayo v. Shell Co. of the Philippines, 8 Commercial Air Lines, Inc. (CALI), knowing that it did not have enough assets to pay off its liabilities, called a meeting of its creditors where it announced that in case of non-agreement on a pro-rata distribution of its assets, including the C-54 plant in California, it would file insolvency proceedings. Shell Company of the Philippines, one of its creditors, took advantage of this information and immediately made a telegraphic assignment of its credits in favor of its sister corporation in the United States. The latter thereupon promptly attached the plane in California and disposed of the same, thus depriving the other creditors of their proportionate share in its value. The Court declared that Shell had acted in bad faith and betrayed the trust of the other creditors of CALI. The said company was ordered to pay them compensatory damages in a sum equal to the value of the C-54 plane at the time it assigned its credit and exemplary damages in the sum of P25,000.00.We quote with approval the following observations of Labor Arbiter Sales in her decision:While the legitimacy of Respondent A. de Guzman's claims against AMAL is not questioned, it must be stated that the manner and the means by which he satisfied such claims are evidently characterized by bad faith on his part. For one, Respondent A. de Guzman took advantage of his position as General Manager and arrogated to himself the right to retain possession and ownership of all properties owned and left by AMAL in the Philippines, even if he knew that Complainants herein have similar valid claims for unpaid wages and other employee benefits from the Respondent AMAL. . . .Another strong indication of bad faith on the part of Respondent A. de Guzman is his filing of a separate complaint against AMAL before the NLRC Arbitration Branch about four (4) months after the filing of the instant case without informing this Office about the existence of said case during the proceedings in the instant case. This case was deemed submitted for decision on May 18, 1987 but it was only on June 2, 1987 that Respondent A. de Guzman formally notified this Office through his Supplemental Position Paper of his pending complaint before Arbiter Eduardo Magno docketed as NLRC Case No. 11-4441-86. Under Rule V, Section 4 of the revised rules of the NLRC, it is provided that:Sec. 4. CONSOLIDATION OF CASES where there are two or more cases pending before different Labor Arbiters in the same Regional Arbitration Branch involving the same employer and issues or the same parties with different issues, the case which was filed last shall be consolidated with the first to avoid unnecessary costs or delay. Such cases shall be disposed of by the Labor Arbiter to whom the first case was assigned. (Emphasis supplied).Had Respondent A. de Guzman given timely notice of his complaint, his case could have been consolidated with this case and the issues in both cases could have been resolved in a manner that would give due consideration to the rights and liabilities of all parties in interest at the least, in case consolidation is objected to or no longer possible, the Complainants herein could have been given a chance to intervene in the other case so that whatever disposition might be rendered by Arbiter Magno would include consideration of Complainants' claims herein.It is not disputed that the petitioner in the case at bar had his own claims against AMAL and consequently had some proportionate right over its assets. However, this right ceased to exist when, knowing fully well that the private respondents had similarly valid claims, he took advantage of his position as general manager and applied AMAL's assets in payment exclusively of his own claims.According to Tolentino in his distinguished work on the Civil Code:The exercise of a right ends when the right disappears, and it disappears when it is abused, especially to the prejudice of others. The mask of a right without the spirit of justice which gives it life, is repugnant to the modern concept of social law. It cannot be said that a person exercises a right when he unnecessarily prejudices another or offends morals or good customs. Over and above the specific precepts of positive law are the supreme norms of justice which the law develops and which are expressed in three principles: honeste vivere, alterum non laedre and just suum quique tribuere; and he who violates them violates the law. For this reason, it is not permissible to abuse our rights to prejudice others. 9The modern tendency, he continues, is to depart from the classical and traditional theory, and to grant indemnity for damages in cases where there is an abuse of rights, even when the act is not illicit. Law cannot be given an anti-social effect. If mere fault or negligence in one's acts can make him liable for damages for injury caused thereby, with more reason should abuse or bad faith make him liable. A person should be protected only when he acts in the legitimate exercise of his right, that is, when he acts with prudence and in good faith; but not when he acts with negligence or abuse. 10The above-mentioned principles are contained in Article 19 of the Civil Code which provides:Art. 19. Every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith.This is supplemented by Article 21 of the same Code thus:Art. 21. Any person who willfully causes loss or injury to another in a manner that is contrary to morals, good customs or public policy shall compensate the latter for the damage.Applying these provisions, we hold that although the petitioner cannot be made solidarily liable with AMAL for the monetary demand of its employees, he is nevertheless directly liable to them for his questionable conduct in attempting to deprive them of their just share in the assets of AMAL.Under Art. 2219, (10) of the Civil Code, moral damages may be recovered for the acts referred to in Art. 21. In Bert Osmea & Associates vs. Court of Appeals, 11 we held that "fraud and bad faith having been established, the award of moral damages is in order." And in Pan Pacific Company (Phil.) vs. Phil. Advertising Corp., 12 moral damages were awarded against the defendant for its wanton and deliberate refusal to pay the just debt due the plaintiff.It is settled that the court can grant the relief warranted by the allegation and the proof even if it is not specifically sought by the injured party. 13 In the case at bar, while the private respondents did not categorically pray for damages, they did allege that the petitioner, taking advantage of his position as general manager, had appropriated the properties of AMAL in payment of his own claims against the company. That was averment enough of the injury they suffered as a result of the petitioner's bad faith.The fact that no actual or compensatory damages was proven before the trial court does not adversely affect the private respondents' right to recover moral damages. We have held that moral damages may be awarded in the cases referred to in the chapter on Human Relations of the Civil Code (Articles 19-36) without need of proof that the wrongful act complained of had caused any physical injury upon the complainant. 14When moral damages are awarded, exemplary damages may also be decreed. 15 Exemplary damages are imposed by the way of example or correction for the public good, in additional to moral, temperate, liquidated or compensatory damages. 16 According to the Code Commission, "exemplary damages are required by public policy, for wanton acts must be suppressed. They are an antidote so that the poison of wickedness may not run through the body politic." 17 These damages are legally assessible against him.The petitioner asserts that, assuming the private respondents to have a cause of action against him for his alleged bad faith, the civil courts and not the Labor Arbiter have jurisdiction over the case.In Associated Citizen Bank, et al. vs. Judge Japson, 18 this Court held:Primarily, the issue to be resolved is whether or not the respondent court has jurisdiction to hear and decide an action for damages based on the dismissal of the employee.On all fours to the above issue is the ruling of this Court in Primero v. Intermediate Appellate Court (156 SCRA 435 [1987]) which once again reiterated the doctrine that the jurisdiction of the Labor Arbiter under Article 217 of the Labor Code is broad and comprehensive enough to include claims for moral and exemplary damages sought to be recovered by an employee whose services has been illegally terminated by is employer (Ebon v. De Guzman, 113 SCRA 55 [1982]; Aguda v. Vallejos, 113 SCRA 69 [1982]; Getz Corporation v. Court of Appeals, 116 SCRA 86 [1982]).For the unlawful termination of employment, this Court in Primero v. Intermediate Appellate Court, supra, ruled that the Labor Arbiter had the exclusive and original jurisdiction over claims for moral and other forms of damages, so that the employee in the proceedings before the Labor Arbiter should prosecute his claims not only for reliefs specified under the Labor Code but also for damages under the Civil Code.. . . Question of damages which arose out of or connected with the labor dispute should be determined by the labor tribunal to the exclusion of the regular courts of justice (Limquiaco, Jr. v. Ramolete, 156 SCRA 162 [1987]). The regular courts have no jurisdiction over claims for moral and exemplary damages arising from illegal dismissal of an employee (Vargas v. Akai Philippines, Inc., 156 SCRA 531 [1987]).Although the question of damages arising from the petitioner's bad faith has not directly sprung from the illegal dismissal, it is clearly intertwined therewith. The predicament of the private respondents caused by their dismissal was aggravated by the petitioner's act in the arrogating to himself all of AMAL's assets to the exclusion of its other creditors, including its employees. The issue of bad faith is incidental to the main action for illegal dismissal and is thus properly cognizable by the Labor Arbiter.We agree that, strictly speaking, the determination of the amount thereof would require a remand to the Labor Arbiter. However, inasmuch as the private respondents were separated in 1986 and this case has been pending since then, the interests of justice demand the direct resolution of this motion in this proceeding.As this Court has consistently declared:. . . it is a cherished rule of procedure for this Court to always strive to settle the entire controversy in a single proceeding leaving no root or branch to bear the seeds of future litigation. No useful purpose will be served if this case is remanded to the trial court only to have its decision raised again tot the Indeterminate Appellate Court and from there to this Court. (Alger Electric, Inc. v. Court of Appeals, 135 SCRA 37)Remand of the case to the lower court for further reception of evidence is not necessary where the court is in a position to resolve the dispute based on the records before it. On many occasions, the Court, in the public interest and the expeditious administration of justice, has resolved actions on the merits instead of remanding them to the trial court for further proceedings, such as where the ends of justice would not be subserved by the remand of the case or when public interest demands an early disposition of the case. (Lianga Bay Logging Co., Inc. v. CA, 157 SCRA 357)Sound practice seeks to accommodate the theory which avoids waste of time, effort and expense, both to the parties and the government, not to speak of delay in the disposal of the case (cf. Fernandez v. Garcia, 92 Phil. 592, 597). A marked characteristics of our judicial set-up is that where the dictates of justice so demand . . . the Supreme Court should act, and act with finality. (Li Siu Liat v. Republic, 21 SCRA 1039, 1046, citing Samal v. CA, 99 Phil. 230 and U.S. v. Gimenez, 34 Phil. 74). In this case, the dictates of justice do demand that this Court act, and act with finality. (Beautifont, Inc. v. CA, 157 SCRA 481)It is stressed that the petitioner's liability to the private respondents is a direct liability in the form of moral and exemplary damages and not a solidary liability with AMAL for the claims of its employees against the company. He is being held liable not because he is the general manager of AMAL but because he took advantage of his position by applying the properties of AMAL to the payment exclusively of his own claims to the detriment of other employees.WHEREFORE, the questioned decision is AFFIRMED but with the modification that the petitioner shall not be held jointly and severally liable with AMAL for the private respondents' money claims against the latter. However, for his bad faith in arrogating to himself AMAL's properties to the prejudice of the private respondents, the petitioner is ordered: 1) to pay the private respondents moral damages in the sum of P20,00.00 and exemplary damages in the sum of P20,00.00; and 2) to return the assets of AMAL that he has appropriated, or the value thereof, with legal interests thereon from the date of the appropriation until they are actually restored, these amounts to be proportionately distributed among the private respondents in satisfaction of the judgment rendered in their favor against AMAL.SO ORDERED.Grio-Aquino, Medialdea and Bellosillo, JJ., concur.JANSSEN PHARMACEUTICA,Petitioner,- versus -BENJAMIN A. SILAYRO,Respondent.G.R. No. 172528Present:YNARES-SANTIAGO, J.,Chairperson,AUSTRIA-MARTINEZ, CHICO-NAZARIO, NACHURA, andREYES, JJ.Promulgated:February 26, 2008x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - xD E C I S I O NCHICO-NAZARIO, J.:This is a petition for review on certiorari under Rule 45 of the Rules of Court, assailing the Decision,[1] dated 8 February 2006, promulgated by the Court of Appeals in CA-G.R. SP No. 81983, reversing the Decision[2] dated 7 May 2003 of the National Labor Relations Commission (NLRC) in NLRC Case No. V-000880-99. The Court of Appeals, in its assailed Decision, adjudged the dismissal of respondent Benjamin Silayro by petitioner Jansen Pharmaceutica as illegal for being an excessive and unwarranted penalty. The appellate court determined that the suspension of the respondent for five months without salary as just penalty.Petitioner is the division of Johnson & Johnson Philippines Inc. engaged in the sale and manufacture of pharmaceutical products. In 1989, petitioner employed respondent as Territory/Medical Representative. During his employment, respondent received from petitioner several awards and citations for the years 1990 to 1997, such as Territory Representative Award, Quota Buster Award, Sipag Award, Safety Drivers Award, Ring Club Award, and a Nomination as one of the Ten Outstanding Philippine Salesmen.[3] On the dark side, however, respondent was also investigated for, and in some cases found guilty of, several administrative charges. Petitioner alleged that in 1994, respondent was found guilty of granting unauthorized premium/free goods to and unauthorized pull-outs from customers.[4] Petitioner failed to attach records to support its allegation and to explain the nature of and the circumstance surrounding these infractions. Respondent, for his part, admitted to have been guilty of granting unauthorized premium/free goods, but vehemently denied violating the rule on, or having been charged with, unauthorized pull-outs from customers.[5]The respondent was also investigated for dishonesty in connection with the Rewards of Learning (ROL) test. The ROL test is a one-page take-home examination, with two questions to be answered by an enumeration of the standards of performance by which territory representatives are rated as well as the sales competencies expected of territory representatives.[6] It was discovered that respondents answers were written in the handwriting of a co-employee, Joedito Gasendo. Petitioners management then sent respondent a Memo dated 27 July 1998 requiring an explanation for the incident.[7]Soon thereafter, petitioner sent a subsequent Memo dated 20 August 1998 to respondent requiring the latter to explain his delay in submitting process reports.[8]On 8 September 1998, respondent submitted a written explanation to the petitioner stating that the delay in the submission of reports was caused by the deaths of his grandmother and his aunt, and the hospitalization of his mother. He also averred that he had asked his co-employee Joedito Gasendo to write his answers to the ROL test because at the time when the examination was due, he already needed to leave to see his father-in-law, who was suffering from cancer and confined in a hospital in Manila.[9]Respondent was sent a new Memorandum dated 20 October 1998 for his delayed submission of process reports due on 14 October 1998.[10] Respondent was issued another Memo also dated 20 October 1998 regarding the discrepancies between the number of product samples recorded in his Daily/Weekly Coverage Report (DCR) and the number of product samples found in his possession during the 14 October 1998 audit.[11] The actual number of sample products found in respondents possession exceeded the number of sample products he reported to petitioner. Respondent explained, through a Response Memo dated 24 October 1998, that he failed to count the quantity of samples when they were placed in his custody. Thus, he failed to take note of the excess samples from previous months. He, likewise, admitted to committing errors in posting the samples that he distributed to some doctors during the months of August and September 1998.[12] On 20 November 1998, petitioner issued a Notice of Disciplinary Action finding respondent guilty of the following offenses (1) delayed submission of process reports, for which he was subjected to a one-day suspension without pay, effective 24 November 1998;[13] and (2) cheating in his ROL test, for which he was subjected again to a one-day suspension.[14]On the same date, petitioner likewise issued a Notice of Preventive Suspension against respondent for Dishonesty in Accomplishing Other Accountable Documents in connection with the discrepancy between the quantities of sample products in respondents report and the petitioners audit for the September 1998 cycle. In addition, the Notice directed the respondent to surrender to the petitioner the car, promotional materials, and all other accountabilities on or before 25 November 1998. It was also stated therein that since this was respondents third offense for the year, he could be dismissed under Section 9.5.5(c) of petitioners Code of Conduct.[15]Before 25 November 1998 or the date given by petitioner for respondent to surrender all his accountabilities, a Memorandum dated 24 November 1998 was issued to respondent for the following alleged infractions: (1) Failure to turn over company vehicles assigned after the receipt of instruction to that effect from superiors, and (2) Refusing or neglecting to obey Company management orders to perform work without justifiable reason.[16]Respondent wrote a letter dated 26 November 1998 addressed to the petitioner explaining that he failed to surrender his accountabilities because he thought that this was tantamount to an admission that the charges against him were true and, thus, could result in his termination from the job.[17]An administrative investigation of the respondents case was held on 3 December 1998. Respondent was accompanied by union representative Lyndon Lim. The parties discussed matters concerning the discrepancy in respondents report and petitioners audit on the number of product samples in respondents custody in September 1998. They were also able to clarify among themselves respondents failure to return his accountabilities and, as a consequence, respondent promised to surrender the same. They further agreed that another administrative hearing will be set, but no further hearings were held.[18] In line with his promise to surrender his accountabilities, respondent wrote a letter, dated 9 December 1998, asking his superiors where he should return his accountabilities.[19] Union representative Dominic Regoro also made requests, on behalf of respondent, for instructions, to whom petitioners District Supervisor Raymond Bernardo replied via electronic mail on 16 December 1998. According to Bernardo, he was still in the process of making arrangements with Ruben Cauton, petitioners National Sales Manager, in connection with the return of respondents accountabilities.[20] Respondent maintained that he did not receive any instructions from petitioner. In a letter dated 28 December 1998, petitioner terminated the services of respondent.[21] Petitioner found respondent guilty of dishonesty in accomplishing the report on the number of product samples in his possession and failing to return the company vehicle and his other accountabilities in violation of Sections 9.2.9 and 9.2.4 of the Code of Conduct.[22] Petitioner also found respondent to be a habitual offender whose previous offenses included: (1) Granting unauthorized premium/free goods to customer in 1994; (2) Unauthorized pull-out of stocks from customer in 1994; (3) Delay in submission of reports despite oral admonition and written reprimand in 1998; and (4) Dishonesty in accomplishing other accountable documents or instruments (in connection with the ROL test) in 1998.Even after respondents termination from employment, there was still contact between petitioner and respondent regarding the latters accountabilities still in his possession. Sometime in early 1999, in a telephone conversation, respondent informed petitioner that he will return his accountabilities only upon demand from the proper governmental agency.[23] A demand letter dated 3 February 1999 was sent to respondent by petitioner ordering the return of the company car, promotional materials, samples, a slide projector, product manuals, product monographs, and training binders.[24]On 14 January 1999, respondent filed a Complaint[25] against petitioner and its officers, Rafael Besa, Rueben Cauton, Victor Lapid, and Raymond Bernardo before the Sub-Regional Arbitration Branch of the NLRC in Iloilo City for (a) Unfair Labor Practice; (b) Illegal Dismissal; (c) Reimbursement of operating and representation expenses under expense reports for October and November 1998; (d) Nonpayment of salary, bonuses and other earned benefits for December 1998 like rice allocation, free goods allocation, etc.; and (e) Damages and attorneys fees.In a Decision dated 31 August 1999, the Labor Arbiter ruled that respondent committed infractions which breached company rules, and which were sufficient grounds for dismissal. However, the Labor Arbiter found the penalty of dismissal to be too harsh considering the respondents circumstances and ordered his reinstatement without payment of back wages.[26] The dispositive portion of the Decision states that:WHEREFORE, premises considered, judgment is rendered ordering respondents firm to reinstate complainant to his former or equivalent position without backwages.All other claims are hereby dismissed.[27]On appeal, the NLRC modified the Decision of the Labor Arbiter by declaring that reinstatement was improper where respondent was dismissed for just and authorized causes.[28] In a Decision dated 7 May 2003, it pronounced that:WHEREFORE, premises considered, complainants appeal is hereby DISMISSED. The decision of the Labor Arbiter is hereby AFFIRMED with MODIFICATION deleting the award of reinstatement.[29]Respondent filed a Petition for Certiorari under Rule 65 of the Rules of Court before the Court of Appeals. In reversing the Decision of the NLRC, the appellate court pronounced that the causes were insufficient for the dismissal of respondent since respondents acts were not motivated by dishonesty, but were caused by mere inadvertence. Thus, it concluded that the offenses committed by respondent merited only a penalty of suspension for five months without pay. The appellate court also noted that petitioner committed some lapses in its compliance with procedural due process. It further took into account the successive deaths and sickness in respondents family.[30] The dispositive part of the decision reads:WHEREFORE, premises considered, the petition is GRANTED. Thus, the Decision and Resolution respectively dated 7 May 2003 and 14 October 2003 are hereby SET ASIDE. Accordingly, Judgment is hereby rendered:a) Declaring petitioners dismissal to be illegal;b) Reinstating petitioner to the same or equivalent position without loss of seniority rights and other privileges;c) Ordering the payment of backwages (inclusive of allowances and other benefits or their monetary equivalent), computed from the time compensation was withheld up to the time of actual reinstatement; Provided that, from such computed amount of backwages, a deduction of five (5) months (sic) salary be made to serve as penalty; andd) If reinstatement is no longer feasible, ordering the payment of separation pay comprising of one month salary per year of service computed from date of employment up to finality of this decision, in addition to the award of backwages.Let the records of this case be remanded to the Labor Ariter a quo for the proper computation of the foregoing.[31]Hence, this Petition, wherein the following issues were raised:IWHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED IN REVERSING THE UNIFORM FACTUAL FINDINGS OF THE NLRC AND THE LABOR ARBITER.IIWHETHER OR NOT RESPONDENTS DISMISSAL FOR HIS FAILURE TO TRUTHFULLY ACCOMPLISH REPORTS, DELIBERATE AND REPEATED FAILURE TO SUBMIT REQUIRED REPORTS AND HIS DELIBERATE DISREGARD OF HIS SUPERIORS ORDER TO SURRENDER HIS ACCOUNTABILITIES TANTAMOUNT TO DISHONESTY, GROSS AND HABITUAL NEGLECT OF DUTY, WILLFUL DISOBEDIENCE OF COMPANY POLICY, AND BREACH OF TRUST AND CONFIDENCE REPOSED IN HIM BY THE COMPANY UNDER THE PROVISIONS OF THE LABOR CODE WAS LEGAL, VALID AND CARRIED OUT WITH DUE PROCESSIIIWHETHER OR NOT THE TOTALITY OF INFRACTIONS COMMITTED BY RESPONDENT FURTHER MERITED HIS TERMINATION FROM THE COMPANYS EMPLOYIVWHETHER OR NOT THE RESPONDENT HAS ANY BASIS FOR CLAIMING AN AWARD OF REINSTATEMENT AND BACKWAGES.[32]This petition is without merit.The main question in this case is whether or not sufficient grounds existed for the dismissal of the respondent. To constitute a valid dismissal from employment, two requisites must concur: (1) the dismissal must be for any of the causes provided in Article 282 of the Labor Code; and, (2) the employee must be given an opportunity to be heard and to defend himself.[33]In this case, the Court must re-examine the factual findings of the Court of Appeals, as well as the contrary findings of the NLRC and Labor Arbiter. While it is a recognized principle that this Court is not a trier of facts and does not normally embark in the evaluation of evidence adduced during trial, this rule allows for exceptions.[34] One of these exceptions covers instances when the findings of fact of the trial court, or in this case of the quasi-judicial agencies concerned, are conflicting or contradictory with those of the Court of Appeals.[35]In the termination letter dated 28 December 1998, respondent was dismissed on the ground that he committed the following offenses: (1) dishonesty in accomplishing the report on the number of product samples in his possession; and (2) his failure to return the company vehicle and other accountabilities in violation of Sections 9.2.9 and 9.2.4 of the Code of Conduct. In addition to these offenses, petitioner took into account that the petitioner committed the following infractions in the past: (1) granting unauthorized premium/free goods in 1994; (2) unauthorized pull-outs from customers in 1995; (3) cheating during the ROL exam in 1998; and (4) three infractions of delayed process reports in 1998.Initially, the Court must determine whether the respondent violated the Code of Conduct with his dishonesty in accomplishing his report on product samples and/or failure to return the company vehicle and other such accountabilities. The records of this case negate a finding of such culpability on the part of the respondent. Petitioner failed to present evidence that respondent was guilty of dishonesty in accomplishing the DCR, wherein he was supposed to indicate the number of product samples in his possession for August and September 1998. Petitioner merely relied on the fact that the number of product samples the respondent reported was incorrect, and the number of product samples later found in his possession exceeded that which he reported. Respondent admitted that when the product samples had arrived, he failed to check if the number of product samples indicated in the DCR corresponded to the number actually delivered and that he made mistakes in posting the product samples distributed during the period in question.In termination cases, the burden of proof rests with the employer to show that the dismissal is for just and valid cause. Failure to do so would necessarily mean that the dismissal was not justified and therefore was illegal.[36] Dishonesty is a serious charge, which the employer must adequately prove, especially when it is the basis for termination.In this case, petitioner had not been able to identify an act of dishonesty, misappropriation, or any illicit act, which the respondent may have committed in connection with the erroneously reported product samples. While respondent was admittedly negligent in filling out his August and September 1998 DCR, his errors alone are insufficient evidence of a dishonest purpose. Since fraud implies willfulness or wrongful intent, the innocent non-disclosure of or inadvertent errors in declaring facts by the employee to the employer will not constitute a just cause for the dismissal of the employee.[37] In addition, the subsequent acts of respondent belie a design to misappropriate product samples. So as to escape any liability, respondent could have easily just submitted for audit only the number of product samples which he reported. Instead, respondent brought all the product samples in his custody during the audit and, afterwards, honestly admitted to his negligence. Negligence is defined as the failure to exercise the standard of care that a reasonably prudent person would have exercised in a similar situation.[38] To this Court, respondent did not commit any willful violation, rather he merely failed to exercise the standard care required of a territory representative to carefully count the number of product samples delivered to him in August and September 1998. In the Memorandum dated 20 November 1998, petitioner ordered respondent to return the company vehicle and all other accountabilities by 25 November 1998. Petitioner issued its first notice on 24 November 1998, even before respondent was obligated to return his accountabilities. Hence, respondent could not yet have committed any offense when petitioner issued the first notice. Confused by petitioners arbitrary action, respondent did not return his accountabilities, but immediately explained in a letter dated 26 November 1998 his reasons for failing to return his accountabilities on 25 November 1998 as previously ordered by the petitioner. During the company hearing held on 3 December 1998, respondent offered to return his accountabilities in accordance with the instructions to be given by the petitioner. In a letter dated 9 December 1998 addressed to the petitioner, respondent reiterated his request for instructions on the return of his accountabilities. There is no showing that petitioner replied to respondents letter. The letter written by petitioners District Supervisor Raymond Bernardo to union representative Dominic Regoro sent through electronic mail on 16 December 1998 still provided no definite instructions to the respondent for the return of his accountabilities. This is the last communication between the parties on the matter until petitioner wrongfully dismissed the respondent on 28 December 1998 for deliberately refusing to surrender his accountabilities, among other grounds. The petitioner does not refer in its pleadings to any instance after the company hearing was held and before the respondent was dismissed wherein it had finally instructed the respondent as to how he may turn over his accountabilities. Per petitioners pleadings, belated demands for the surrender of respondents accountabilities were made in January and February 1999, after respondent had already been dismissed. Clearly, the charge against respondent of insubordination to the petitioners instructions for the surrender of his accountabilities was unfounded since the respondent was still waiting for said instructions when he was dismissed. Moreover, petitioner failed to observe procedural due process in connection with the aforementioned charge. Section 2(d) of Rule 1 of The Implementing Rules of Book VI states that:For termination of employment based on just causes as defined in Article 282 of the Labor Code:(i) A written notice served on the employee specifying the ground or grounds for termination, and giving said employee reasonable opportunity within which to explain his side.(ii) A hearing or conference during which the employee concerned, with the assistance of counsel if he so desires is given opportunity to respond to the charge, present his evidence, or rebut the evidence presented against him.(iii) A written notice of termination served on the employee, indicating that upon due consideration of all the circumstances, grounds have been established to justify his termination. (Emphases supplied.)From the aforecited provision, it is implicit that these requirements afford the employee an opportunity to explain his side, respond to the charge, present his or her evidence and rebut the evidence presented against him or her.The superficial compliance with two notices and a hearing in this case cannot be considered valid where these notices were issued and the hearing made before an offense was even committed. The first notice, issued on 24 November 1998, was premature since respondent was obliged to return his accountabilities only on 25 November 1998. As respondents preventive suspension began on 25 November 1998, he was still performing his duties as territory representative the day before, which required the use of the company car and other company equipment. During the administrative hearing on 3 December 1998, both parties clarified the confusion caused by the petitioners premature notice and agreed that respondent would surrender his accountabilities as soon as the petitioner gave its instructions. Since petitioners ostensible compliance with the procedural requirements of notice and hearing took place before an offense was even committed, respondent was robbed of his rights to explain his side, to present his evidence and rebut what was presented against him, rights ensured by the proper observance of procedural due process.Of all the past offenses that were attributed to the respondent, he contests having committed the infraction involving the unauthorized pull-outs from customers, allegedly made in 1994. Again, the records show that petitioner did not provide any proof to support said charge. It must be emphasized at this point that the onus probandi to prove the lawfulness of the dismissal rests with the employer,[39] and in light of petitioners failure to discharge the same, the alleged offense cannot be given any credence by this Court. As for the three remaining violations, it is unquestioned that respondent had committed and had already been punished for them. While a penalty may no longer be imposed on offenses for which respondent has already been punished, these offenses, among other offenses, may still be used as justification for an employees dismissal. Hence, this Court must now take into consideration all the offenses that respondent committed during his employment and decide whether these infractions, taken together, constitute a valid cause for dismissal. Undoubtedly, respondent was negligent in reporting the number of product samples in his custody for August and September 1998. He also committed three other offenses in the past. First, he was found guilty of and penalized for granting unauthorized free goods in 1994. Secondly, he incurred delays in submitting his process reports for August, September and October 1998, for which charge he was punished with one-day suspension. Lastly, he cheated in an ROL test in July 1998 for which he was punished with another one-day suspension.Respondents offense of granting unauthorized free goods was vaguely discussed. Petitioner did not offer any evidence in this connection; it was given credence only because of respondents admission of the same. What acts constituted this offense and the circumstances surrounding it were not explained. However, the records show that in the same year it was committed, in 1994, petitioner still gave respondent two awards: membership to the Wild Boar Society and the Five-Year Service Award.[40] Absent any explanation which would give this offense substantial weight and importance, it can only be presumed that petitioner did not consider the offense as sufficiently momentous to disqualify respondent from receiving an award or to even just issue the respondent a warning that a subsequent offense would result in the termination of his employment.The rest of the infractions imputed to the respondent were committed during the time he was undergoing serious family problems. His inability to comply with the deadlines for his process reports and his lack of care in accounting for the product samples in his custody are understandably the result of his preoccupation with very serious problems. Added to the pressure brought about by the numerous charges he found himself facing, his errors and negligence should be viewed in a more compassionate light.Petitioners inability to keep up with his deadlines and his carelessness with his report on product samples during a difficult time in his life are in no way comparable to the transgressions in the cases cited by petitioner involving other territory representatives Chua v. National Labor Relations Commission[41] and Gustilo v. Wyeth Philippines.[42] In the Chua case, it was not a mere case of delay in the submission of reports and the occasional mistakes in the DCR, but an established pattern of inattention in the submission and accomplishing of his reports. The employee therein did not even submit some of the DCRs, while other DCRs were belatedly submitted in batches covering two to three months. Doctors call cards lacked either the corresponding dates or the signatures of the doctors concerned. In the Gustillo case, the employee falsified his application form, a gasoline receipt, a report of his trade outlet calls, and misused his leaves. Evidently, the employee in this case misappropriated company resources by making claims for falsified expenses and making personal calls in lieu of trade outlet calls. In this case, respondent had not defrauded the petitioner of its property. The gravest charge that the respondent faced was cheating in his ROL test. Although he avers that he formulated the answers himself and that he merely allowed his co-employee Joedito Gasendo to write down his answers for him, this Court finds this excuse to be very flimsy. The ROL test consists of one page and two straightforward questions, which can be answered by more or less ten sentences. Respondent could have spared the few minutes it would take to write the examination. If he had lacked the time due to a family emergency, a request for an extension would have been the more reasonable and honest alternative.Despite the disapproving stance taken by this Court against dishonesty, there have been instances when this Court found the ultimate penalty of dismissal excessive, even for cases which bear the stigma of deceit.In Philippine Long Distance Telephone Company v. National Labor Relations Commission,[43] an employee intervened in the anomalous connection of four telephone lines. It was, likewise, established in Manila Electric Company v. National Labor Relations Commission,[44] that the employee was involved in the illegal installation of a power line. In both cases, the violations were clearly prejudicial to the economic activity of his employer. Finally, in National Labor Relations Commission v. Salgarino,[45] a school teacher tampered with the grades of her students, an act which was prejudicial to the schools reputation. Notably, the Court stopped short of dismissing these employees for offenses more serious than the present case.In this case, the ROL test is a take-home examination intended to check a territory representatives understanding of information already contained in their Sales Career Manual, wherein the examinees are even instructed to refer to their manuals. The improper taking of this test, while it puts into question the examinees moral character, does not result in any potential loss of property or damage to the reputation of the employer. Nor does respondents previous performance show lack of knowledge required in his sales career. Additionally, the dishonesty practiced by the employee did not involve company property that was placed in his custody. Furthermore, the gravity of this offense is substantially diminished by the fact that petitioner itself had thought it unimportant enough to merit only a one-day suspension. The respondents ten years of commendable performance cannot be cancelled out by a single mistake made during a difficult period of his life, a mistake that did not pose a potential danger to his employer. The special circumstances of this case -- respondents family crises, the duration of his employment, and the quality of his work during the previous years -- must necessarily influence the penalty to be meted out to the respondent. It would be a cruel disregard of the constitutional guarantee of security of tenure to impose the penalty of dismissal, without giving due consideration to the ill fortune that may befall a normally excellent employee. In National Labor Relations Commission v. Salgarino,[46] special consideration was given to the fact that the respondent therein had been in the employ of the petitioners therein for 10 years and that she was a recipient of numerous academic excellence awards and recognized by her students and some of her peers in the profession as a competent teacher. The Court, in other cases, has repeatedly ruled that in determining the penalty to be imposed on an erring employee, his or her length of service must be taken into account.[47] In Brew Master International, Inc., v. National Federation of Labor Unions,[48] the emotional, psychological, spiritual and physical stress and strain undergone by the employee during a family crisis were regarded as special circumstances which precluded his dismissal from service, despite his prolonged absence from work. The Court explains the circumspection it exercises when faced with the imposition of the extremely severe penalty of dismissal thus:The employers prerogative to discipline its employee must be exercised without abuse of discretion. Its implementation should be tempered with compassion and understanding. While an employer has the inherent right to discipline its employees, we have always held that this right must always be exercised humanely, and the penalty it must impose should be commensurate to the offense involved and to the degree of its infraction. The employer should bear in mind that, in the exercise of such right, what is at stake is not the employees position but her livelihood as well. The law regards the workers with compassion. Even where a worker has committed an infraction, a penalty less punitive may suffice, whatever missteps may be committed by labor ought not to be visited with a consequence so severe. This is not only the laws concern for workingman. There is, in addition, his or her family to consider. Unemployment brings untold hardships and sorrows upon those dependent on the wage-earner.[49]Respondents violations of petitioners Code of Conduct, even if taken as a whole, would not fall under the just causes of termination provided under Article 282 of the Labor Code.[50] They are mere blunders, which may be corrected. Petitioner failed to point out even a potential danger that respondent would misappropriate or improperly dispose of company property placed in his custody. It had not shown that during his employment, respondent took a willfully defiant attitude against it. It also failed to show a pattern of negligence which would indicate that respondent is incapable of performing his responsibilities. At any other time during his employment, respondent had shown himself a commendable worker.Nonetheless, the infractions committed by the respondent, while disproportionate to a penalty of dismissal, will not be overlooked. The suspension of five months without pay, imposed by the Court of Appeals, would serve as a sufficient and just punishment for his violations of the companys Code of Conduct. IN VIEW OF THE FOREGOING, the instant Petition is DISMISSED and the assailed Decision of the Court of Appeals in CA-G.R. SP No. 81983, promulgated on 8 February 2006, is AFFIRMED. Costs against the petitioner.SO ORDERED.[G.R. No. 106600. March 29, 1996]COSMOS BOTTLING CORPORATION, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and GIL C. CASTRO, respondents.D E C I S I O NKAPUNAN, J.:Gil C. Castro was employed by Cosmos Bottling Corporation for a specific period from September 5, 1988 to October 4, 1988. He was re-hired for another specific period from May 30, 1989 to November 6, 1989.[1]Having satisfactorily served the company for two (2) terms, Castro was recommended for reemployment with the companys Maintenance Team for the Davao Project on November 22, 1989.[2] On December 22, 1989, he was re-hired and assigned to the Maintenance Division of the Davao Project tasked to install the private respondents annex plant machines in its Davao plant.[3]On May 21, 1990, Castros employment was terminated due to the completion of the special project.Meanwhile, on May 27, 1990, Cosmos Bottling Corporation in valid exercise of its management prerogative terminated the services of some 228 regular employees by reason of retrenchment.[4] For obvious reasons,[5] Castro was not among the list of those regular employees whose services were terminated by reason of retrenchment or those who voluntarily resigned.On May 25, 1990, Castro filed a complaint for illegal dismissal against Cosmos Bottling Corporation with the Labor Arbiter contending that being a regular employee, he could not be dismissed without a just and valid cause. The case was docketed as NLRC-NCR Case No. 00-05-02902-90.On its part, the company alleged that Castro was a mere project employee whose employment was co-terminous with the project for which he was hired.After the parties submitted their respective position papers, reply and rejoinder thereto, the Labor Arbiter rendered a decision on March 13, 1991 finding Castro a regular employee but ruling that his employment was validly terminated because of retrenchment. Hence, Castro was awarded 45-days separation pay, one (1) month salary as financial assistance and proportionate 13th month pay. The dispositive portion of the decision reads:Premises considered, COSMOS is hereby directed to pay complainants compensation package in the total amount of P11,231.83 by reason of the retrenchment.The charge of illegal dismissal is hereby DISMISSED for lack of merit.SO ORDERED.[6]Both parties appealed the decision to the National Labor Relations Commission (NLRC) which rendered the assailed decision dated June 10, 1992, the decretal portion of which reads:ACCORDINGLY, the decision appealed from is hereby modified to the effect that respondent is declared guilty of illegal dismissal and is hereby ordered to reinstate complainant to his former position as equivalent one without loss of seniority and other benefits and to pay him backwages computed from the time of his dismissal up to the time of his reinstatement.SO ORDERED.[7]Cosmos Bottling Corporations motion for reconsideration of the above decision having been denied, the instant petition for certiorari was filed.Petitioner argues that private respondent was a mere project employee and that his services were co-terminous with the project, hence, may be terminated upon the end or completion of the project for which he was hired. Respondent NLRC and private respondent, on the other hand, maintain that private respondent is a regular employee of petitioner company because his job is necessary and desirable to the petitioners main business. The Office of the Solicitor General filed a Manifestation in Lieu of Comment and supported petitioners contention that private respondent is not a regular employee.The pivotal issue therefore is whether or not private respondent Gil C. Castro is a regular employee or was a mere project employee of petitioner Cosmos Bottling Corporation.After a careful examination of the records of the case, we find merit in the petition and hold that respondent NLRC gravely abused its discretion when it rendered the challenged decision finding private respondent a regular employee.Article 280 of the Labor Code which defines regular, project and casual employment is applicable here. The same reads in full:Article 280. Regular and Casual Employment. - The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season.An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That, any employee who has rendered at least one year of service whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such actually exists.The first paragraph provides that regardless of any written or oral agreement to the contrary, an employee is deemed regular where he is engaged in necessary or desirable activities in the usual trade or business of the employer.A project employee, on the other hand, has been defined to be one whose employment has been fixed for a specific project or undertaking, the completion or termination of which has been determined at the time of the engagement of the employee or where the work or service to be performed is seasonal in nature and the employment is for the duration of the season.The second paragraph of the provision defines casual employees as those who do not fall under the definition of the first paragraph.However, with respect to the first two kinds of employees, the principal test for determining whether an employee is a project employee or a regular employee is whether or not the project employee was assigned to carry out a specific project or undertaking, the duration and scope of which were specified at the time the employee was engaged for that period.In a recent case[8] decided by this Court, the nature of project employment was explained. We noted that in the realm of business and industry, project could refer to at least two (2) distinguishable types of activities. First, a project could refer to a particular job or undertaking that is within the regular or usual business of the employer company, but which is distinct and separate, and identifiable as such, from the other undertakings of the company. Such job or undertaking begins and ends at determined or determinable times. Second, a project could also refer to a particular job or undertaking that is not within the regular business of the corporation. Such a job or undertaking must also be identifiably separate and distinct from the ordinary or regular business operations of the employer. The job or undertaking also begins and ends at determined or determinable times.[9]The case at bar presents what appears, to our mind, as a typical example of the first type. Petitioner Cosmos Bottling Corporation is a duly organized corporation engaged in the manufacture, production, bottling, sale and distribution of beverage. In the course of its business, it undertakes distinct identifiable projects as it did in the instant case when it formed special teams assigned to install and dismantle its annex plant machines in various plants all over the country. These projects are distinct and separate, and are identifiable as such, from its usual business of bottling beverage. Their duration and scope are made known prior to their undertaking and their specified goal and purpose are fulfilled once the projects are completed. When private respondent was initially hired for a period of one month and re-hired for another five months, and then subsequently re-hired for another five months, he was assigned to the petitioners Maintenance Division tasked with the installation and dismantling of its annex plant machines.[10] Evidently, these projects or undertakings, the duration and scope of which had been determined and made known to private respondent at the time of his employment, can properly be treated as projects within the meaning of the first kind. Considered as such, the services rendered by private respondent hired therein for the duration of the projects may lawfully be terminated at the end or completion of the same. In the recent case of Archbuild Masters and Construction, Inc. v. NLRC,[11] we ruled accordingly:It is not disputed that private respondent was a project employee of ARMACON. As such he was employed in connection with a particular project the completion of which had been determined at the time of his employment. Consequently, as a project employee of ARMACON, his employment may be terminated upon the completion of the project as there would be no further need for his services. Since a project employees work depends on the availability of projects, necessarily the duration of his employment is not permanent but co-terminous with the work to which he is assigned. It would be extremely burdensome for the employer, who depends on the availability of projects, to carry him as a permanent employee and pay him wages even if there are no projects for him to work on. The rationale behind this is that once the project is completed it would be unjust to require the employer to maintain these employees in their payroll. To do so would make the employee a privileged retainer who collects payment from his employer for work not done. This is extremely unfair and amounts to labor coddling at the expense of management.Another observation worthwhile noting were the appreciable gaps between the periods of time private respondent was hired and re-hired. He was hired on September 5, 1988 for a period of one (1) month. He was re-hired on May 30, 1989 or almost seven (7) months after the termination of his first job. His second reemployment was no different. He was re-hired almost two (2) months after his first reemployment.[12] Certainly, the lengthy gaps between his employments, together with the fact that his services were contracted for specific undertakings, convincingly show that the services of private respondent were terminated upon completion of a particular project and were sought only when another one was undertaken.Moreover, the mere fact that a project employee has worked on the specific project for more than one (1) year, does not necessary change his status as project employee[13] and convert it to regular or permanent employment. For it is obvious that the second paragraph of Article 280 of the Labor Code, quoted above, providing that an employee who has served for at least one (1) year, shall be considered a regular employee, relates only to casual employees, not to project employees.[14] Consequently, private respondents protestation that his period of employment had exceeded one year[15] and hence must be converted into regular employment is completely baseless because being a project employee, he does not fall within the ambit of the pertinent provision above-stated.Clearly, therefore, private respondent being a project employee, or to use the correct term, seasonal employee, considering that his employment was limited to the installation and dismantling of petitioners annex plant machines after which there was no more work to do, his employment legally ended upon completion of the project.[16] That being so, the termination of his employment cannot and should not constitute an illegal dismissal. Neither should it constitute retrenchment as private respondent was a seasonal employee whose services were already terminated on May 21, 1990 prior to the termination of the other regular employees of Cosmos by reason of retrenchment.WHEREFORE, premises considered the instant petition is given DUE COURSE and is hereby GRANTED. The judgment of respondent NLRC appealed from is hereby REVERSED and SET ASIDE. Consequently, the complaint for illegal dismissal against petitioner Cosmos Bottling Corporation is hereby DISMISSED.SO ORDERED.Padilla, Bellosillo, Vitug, and Hermosisima, Jr., JJ., concur.G.R. No. 109902 August 2, 1994ALU-TUCP, Representing Members: ALAN BARINQUE, with 13 others, namely: ENGR. ALAN G. BARINQUE, ENGR. DARRELL LEE ELTAGONDE, EDUARD H. FOOKSON, JR., ROMEO R. SARONA, RUSSELL GACUS, JERRY BONTILAO, EUSEBIO MARIN, JR., LEONIDO ECHAVEZ, BONIFACIO MEJOS, EDGAR S. BONTUYAN, JOSE G. GARGUENA, JR., OSIAS B. DANDASAN, and GERRY I. FETALVERO, petitioners, vs.NATIONAL LABOR RELATIONS COMMISSION and NATIONAL STEEL CORPORATION (NSC), respondents.Leonard U. Sawal for petitioners.Saturnino Mejorada for private respondent.FELICIANO, J.:In this Petition for Certiorari, petitioners assail the Resolution of the National Labor Relations Commission ("NLRC") dated 8 January 1993 which declared petitioners to be project employees of private respondent National Steel Corporation ("NSC"), and the NLRC's subsequent Resolution of 15 February 1993, denying petitioners' motion for reconsideration.Petitioners plead that they had been employed by respondent NSC in connection with its Five Year Expansion Program (FAYEP I & II) 1 for varying lengths of time when they were separated from NSC's service:Employee Date Nature of SeparatedEmployed Employment1. Alan Barinque 5-14-82 Engineer 1 8-31-912. Jerry Bontilao 8-05-85 Engineer 2 6-30-923. Edgar Bontuyan 11-03-82 Chairman to present4. Osias Dandasan 9-21-82 Utilityman 19915. Leonido Echavez 6-16-82 Eng. Assistant 6-30-926. Darrell Eltagonde 5-20-85 Engineer 1 8-31-917. Gerry Fetalvero 4-08-85 Mat. Expediter regularized8. Eduard Fookson 9-20-84 Eng. Assistant 8-31-919. Russell Gacus 1-30-85 Engineer 1 6-30-9210. Jose Garguena 3-02-81 Warehouseman to present11. Eusebio Mejos 11-17-82 Survey Aide 8-31-9112. Bonifacio Mejos 11-17-82 Surv. Party Head 199213. Romeo Sarona 2-26-83 Machine Operator 8-31-91 2On 5 July 1990, petitioners filed separate complaints for unfair labor practice, regularization and monetary benefits with the NLRC, Sub-Regional Arbitration Branch XII, Iligan City.The complaints were consolidated and after hearing, the Labor Arbiter in a Decision dated 7 June 1991, declared petitioners "regular project employees who shall continue their employment as such for as long as such [project] activity exists," but entitled to the salary of a regular employee pursuant to the provisions in the collective bargaining agreement. It also ordered payment of salary differentials. 3Both parties appealed to the NLRC from that decision. Petitioners argued that they were regular, not project, employees. Private respondent, on the other hand, claimed that petitioners are project employees as they were employed to undertake a specific project NSC's Five Year Expansion Program (FAYEP I & II).The NLRC in its questioned resolutions modified the Labor Arbiter's decision. It affirmed the Labor Arbiter's holding that petitioners were project employees since they were hired to perform work in a specific undertaking the Five Years Expansion Program, the completion of which had been determined at the time of their engagement and which operation was not directly related to the business of steel manufacturing. The NLRC, however, set aside the award to petitioners of the same benefits enjoyed by regular employees for lack of legal and factual basis.Deliberating on the present Petition for Certiorari, the Court considers that petitioners have failed to show any grave abuse of discretion or any act without or in excess of jurisdiction on the part of the NLRC in rendering its questioned resolutions of 8 January 1993 and 15 February 1993.The law on the matter is Article 280 of the Labor Code which reads in full:Art. 280. Regular and Casual Employment The provisions of the written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, and employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season.An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That, any employee who has rendered at least one year service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such actually exists. (Emphasis supplied)Petitioners argue that they are "regular" employees of NSC because: (i) their jobs are "necessary, desirable and work-related to private respondent's main business, steel-making"; and (ii) they have rendered service for six (6) or more years to private respondent NSC. 4The basic issue is thus whether or not petitioners are properly characterized as "project employees" rather than "regular employees" of NSC. This issue relates, of course, to an important consequence: the services of project employees are co-terminous with the project and may be terminated upon the end or completion of the project for which they were hired. 5 Regular employees, in contract, are legally entitled to remain in the service of their employer until that service is terminated by one or another of the recognized modes of termination of service under the Labor Code. 6It is evidently important to become clear about the meaning and scope of the term "project" in the present context. The "project" for the carrying out of which "project employees" are hired would ordinarily have some relationship to the usual business of the employer. Exceptionally, the "project" undertaking might not have an ordinary or normal relationship to the usual business of the employer. In this latter case, the determination of the scope and parameeters of the "project" becomes fairly easy. It is unusual (but still conceivable) for a company to undertake a project which has absolutely no relationship to the usual business of the company; thus, for instance, it would be an unusual steel-making company which would undertake the breeding and production of fish or the cultivation of vegetables. From the viewpoint, however, of the legal characterization problem here presented to the Court, there should be no difficulty in designating the employees who are retained or hired for the purpose of undertaking fish culture or the production of vegetables as "project employees," as distinguished from ordinary or "regular employees," so long as the duration and scope of the project were determined or specified at the time of engagement of the "project employees." 7 For, as is evident from the provisions of Article 280 of the Labor Code, quoted earlier, the principal test for determining whether particular employees are properly characterized as "project employees" as distinguished from "regular employees," is whether or not the "project employees" were assigned to carry out a "specific project or undertaking," the duration (and scope) of which were specified at the time the employees were engaged for that project.In the realm of business and industry, we note that "project" could refer to one or the other of at least two (2) distinguishable types of activities. Firstly, a project could refer to a particular job or undertaking that is within the regular or usual business of the employer company, but which is distinct and separate, and identifiable as such, from the other undertakings of the company. Such job or undertaking begins and ends at determined or determinable times. The typical example of this first type of project is a particular construction job or project of a construction company. A construction company ordinarily carries out two or more discrete identifiable construction projects: e.g., a twenty-five- storey hotel in Makati; a residential condominium building in Baguio City; and a domestic air terminal in Iloilo City. Employees who are hired for the carrying out of one of these separate projects, the scope and duration of which has been determined and made known to the employees at the time of employment, are properly treated as "project employees," and their services may be lawfully terminated at completion of the project.The term "project" could also refer to, secondly, a particular job or undertaking that is not within the regular business of the corporation. Such a job or undertaking must also be identifiably separate and distinct from the ordinary or regular business operations of the employer. The job or undertaking also begins and ends at determined or determinable times. The case at bar presents what appears to our mind as a typical example of this kind of "project."NSC undertook the ambitious Five Year Expansion Program I and II with the ultimate end in view of expanding the volume and increasing the kinds of products that it may offer for sale to the public. The Five Year Expansion Program had a number of component projects: e.g., (a) the setting up of a "Cold Rolling Mill Expansion Project"; (b) the establishment of a "Billet Steel-Making Plant" (BSP); (c) the acquisition and installation of a "Five Stand TDM"; and (d) the "Cold Mill Peripherals Project." 8 Instead of contracting out to an outside or independent contractor the tasks of constructing the buildings with related civil and electrical works that would house the new machinery and equipment, the installation of the newly acquired mill or plant machinery and equipment and the commi