Title
Peak Ventures Corp. vs. Heirs of Villareal
Case
G.R. No. 184618
Decision Date
Nov 19, 2014
Security guard Villareal, 42, relieved without cause, forced to resign due to financial hardship, filed illegal dismissal; courts ruled constructive dismissal, awarded backwages, denied separation pay.
illegal dismissal
reinstatement
backwages
A

Case Summary (G.R. No. 184618)

Factual Background

On June 16, 1989, petitioners hired Villareal as a security guard and assigned him at East Greenhills Village. On May 14, 2002, petitioners relieved him from duty without any apparent reason. Villareal was informed that he would no longer be given any assignment because of his age. He was then 42 years old. When he repeatedly requested a new posting in the months of June and July 2002, petitioners declined the requests.

As a result of his prolonged lack of assignment and dwindling resources, Villareal sought to recover his security bond deposits. He was required first to tender a letter of resignation before release of the deposits would be approved. In view of his financial necessity, Villareal submitted a resignation letter. In it, he stated that he was constrained to resign effective July 31, 2002 because he could no longer expect to be given any assignment for another one and a half months and because he could no longer afford the fare going to petitioners’ office. Villareal later claimed that the tenor of his resignation letter was not acceptable because petitioners required another letter stating that the resignation was voluntary.

Petitioners released Villareal’s security bond deposits in the first week of August 2002.

Proceedings Before the Labor Arbiter

On August 27, 2002, Villareal filed before the Labor Arbiter a complaint for illegal dismissal with prayer for reinstatement, backwages, and other monetary claims, including thirteenth month pay, holiday pay, service incentive leave pay, moral and exemplary damages, and attorneys fees. He alleged that petitioners had no valid and authorized cause to relieve him from duty and place him on “floating status.” He further asserted that petitioners still had a subsisting security services contract with East Greenhills Village when he was relieved.

He also alleged that his relief and placement on floating status were effected without due process and that petitioners’ acts made it unbearable for him to continue employment.

Petitioners denied illegal dismissal and insisted that Villareal voluntarily severed his employment. They relied on Villareal’s handwritten resignation letter, a Talaan ng Pakikipanayam sa Pagbibitiw (exit interview form) allegedly executed to show absence of coercion, and a notarized clearance showing receipt of P12,700.00 security deposits and waiver of claims.

The Labor Arbiter, in a decision dated July 30, 2003, found that there was no valid and effective resignation. It held that Villareal was constructively dismissed and that his dismissal was implemented without due process. It ordered immediate reinstatement to his former position without loss of seniority rights, payment of backwages for the period from July 3, 2002 to July 4, 2003 (subject to further adjustment to reinstatement or finality), and attorneys fees equivalent to ten percent (10%) of the total monetary award, while dismissing all other claims.

Proceedings Before the NLRC

Petitioners appealed. In a decision dated October 18, 2005, the NLRC affirmed in toto the Labor Arbiter’s findings. Petitioners’ motion for reconsideration was denied by the NLRC in a resolution dated March 20, 2007.

Proceedings Before the Court of Appeals

Petitioners filed a petition for certiorari with prayer for temporary restraining order or writ of preliminary injunction before the CA. Besides reiterating that Villareal had voluntarily resigned and was not entitled to awards, petitioners also informed the CA that they required Villareal to return to work in compliance with the reinstatement aspect of the Labor Arbiter’s decision.

On December 1, 2005, Villareal died. The CA required substitution of parties through a resolution dated August 22, 2007, directing Villareal’s counsel to cause the substitution of Villareal’s heirs as respondents. Counsel manifested that the heirs could not be located. Despite that circumstance, the CA proceeded to resolve the petition.

In its decision dated March 28, 2008, the CA upheld the NLRC. It found that petitioners failed to afford Villareal both substantive and procedural due process when they relieved him from duty and when they refused to provide a new assignment. The CA treated the conduct as constructive dismissal, reasoning that the unjustified relief and non-posting became unbearable, leaving Villareal with no choice but to forego continued employment. The CA also ruled that petitioners’ evidence failed to support the voluntariness of Villareal’s resignation.

The CA further discussed the monetary consequences of illegal dismissal. It applied the doctrine that an illegally dismissed employee is entitled to the twin reliefs of either reinstatement (or separation pay if reinstatement is no longer viable) and backwages. It held that full backwages should be computed inclusive of allowances and other benefits or their monetary equivalent, from the time compensation was withheld up to actual reinstatement; and if reinstatement is not possible, from illegal termination up to finality of the decision. Since it considered reinstatement impossible due to Villareal’s death, it computed backwages from July 3, 2002 until the finality of the decision and awarded separation pay at one month pay for every year of service, in lieu of reinstatement, plus attorneys fees at ten percent (10%) of the total monetary award.

The CA dismissed petitioners’ petition on March 28, 2008. In its resolution dated September 16, 2008, the CA denied reconsideration.

The Parties’ Contentions

Petitioners maintained that Villareal was not illegally dismissed and that he voluntarily resigned, thus negating entitlement to backwages and separation pay. They additionally argued that if backwages were due, the computation should run only from May 14, 2002 (the date of relief from duty) up to Villareal’s actual reinstatement, and not until finality of the decision. They also asserted that they already required Villareal to return to work and that Villareal rendered duty after reinstatement. Petitioners further opposed the award of attorneys fees, contending that there was no showing of bad faith.

For their part, Villareal’s heirs, through counsel, opposed the petition. They argued that it raised factual issues. They also pointed out an alleged procedural defect involving the verification and certification against forum shopping, noting that the verification was dated November 6, 2008 while the petition was actually dated November 10, 2008.

Technical Issue on Verification and Certification

Before addressing the substantive issues, the Court resolved the technical defect raised by respondents. The Court held that the variance between the date of the petition and the date it was verified/certified did not fatally impair the petition. It explained that under controlling rulings, verification is formal rather than jurisdictional and primarily serves to assure good faith and veracity in the allegations.

As to the certification of non-forum shopping, the Court emphasized its mandatory nature but recognized that strict compliance does not automatically preclude substantial compliance under justifiable circumstances. It relied on the principle articulated in Spouses Valmonte v. Alcala, which held that a variance in dates between the pleading and its verification/certification may be satisfactorily explained because the documents may be prepared separately. The Court also reiterated that procedural rules in labor cases should not be applied in a very rigid and technical sense when such application would override substantial justice. Consequently, the Court treated the variance as not fatal.

Constructive Dismissal: Voluntary Resignation Not Credited

On the merits, the Court agreed with the uniform findings of the Labor Arbiter, NLRC, and CA that Villareal was constructively and illegally dismissed. Petitioners anchored their theory of voluntary resignation on the resignation letter, the exit interview form, and the notarized clearance. The Court, however, found that the circumstances contradicted the asserted voluntariness.

When Villareal was relieved from duty, petitioners placed him on “floating status.” The Court explained that floating status requires the dire exigency of the employer’s bona fide suspension of operation, business, or undertaking. It also noted that floating status may arise when the security agency’s clients decide not to renew contracts, or when clients request replacement of guards assigned to them. In either case, the employer must prove that no other posts are available to which the employee can be temporarily assigned.

The labor tribunals found, and the Court upheld, that petitioners failed to discharge this burden. Petitioners did not provide a sufficient reason for Villareal’s relief and continued denial of a new assignment. The Court further held that the dire financial situation produced by petitioners’ unjustified acts pushed Villareal to resign and execute documents in a manner required by petitioners to recover his security bond deposits. Based on these circumstances, the Court rejected petitioners’ claim of voluntary resignation and concluded that Villareal was constructively dismissed—defined as an act marked by discrimination, insensitivity, or disdain so unbearable that the employee has no choice but to abandon employment, and as a cessation of work made unreasonable or unlikely, particularly where it resembles demotion or diminution in pay.

The Court also considered Villareal’s immediate filing of the illegal dismissal complaint seeking reinstatement as further negating the existence of a voluntary resignation.

Legal Basis on Monetary Awards and Adjustments

The Court corrected the CA’s computation of the monetary awards in light of Villareal’s actual reinstatement. The Court reiterated the controlling rule in Article 279 of the Labor Code, as amended by Republic Act No. 6715, that an unjustly dismissed employee is entitled to r

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