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CASE 2011-0178: CO GIOK LUN, as substituted by his legal heirs namely: MAGDALENA D. CO, MILAGROS D. CO, BENJAMIN D. CO, ALBERT D. CO, ANGELITA C. TENG, VIRGINIA C. RAMOS, CHARLIE D. CO, and ELIZABETH C. PAGUIO VS. JOSE CO, as substituted by his legal heirs namely: ROSALINA CO, MARLON CO, JOSEPH CO, FRANK CO, ANTONIO CO, NELSON CO, ROLAND CO, JOHNSON CO, CORAZON CO, ADELA CO, SERGIO CO, PAQUITO CO, JOHN CO, NANCY CO, and TERESITA CO (G.R. NO. 184454, 03 AUGUST 2011, CARPIO, J.) SUBJECT: CO-OWNERSHIP OF LAND. (BRIEF TITLE: LUN VS. CO).

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August 19, 2011

CASE 2011-0178: CO GIOK LUN, as substituted by his legal heirs namely: MAGDALENA D. CO, MILAGROS D. CO, BENJAMIN D. CO, ALBERT D. CO, ANGELITA C. TENG, VIRGINIA C. RAMOS, CHARLIE D. CO, and ELIZABETH C. PAGUIO VS. JOSE CO, as substituted by his legal heirs namely: ROSALINA CO, MARLON CO, JOSEPH CO, FRANK CO, ANTONIO CO, NELSON CO, ROLAND CO, JOHNSON CO, CORAZON CO, ADELA CO, SERGIO CO, PAQUITO CO, JOHN CO, NANCY CO, and TERESITA CO (G.R. NO. 184454, 03 AUGUST 2011, CARPIO, J.) SUBJECT: CO-OWNERSHIP OF LAND. (BRIEF TITLE: LUN VS. CO).

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SUBJECT/DOCTRINE/DIGEST:

WHAT IS ESSENTIAL IN AN ACTION FOR PARTITION?

THAT THE CLAIMANT HAS RIGHTFUL INTEREST OVER THE PROPERTY. WITHOUT THIS, AN ACTION FOR PARTITION WILL NOT LIE. Ocampo v. Ocampo,¹⁰

The original complaint filed by Lun involves an action for partition and damages. A division of property cannot be ordered by the court unless the existence of co-ownership is first established. In Ocampo v. Ocampo,¹⁰ we held that an action for partition will not lie if the claimant has no rightful interest over the property. Basic is the rule that the party making an allegation in a civil case has the burden of proving it by a preponderance of evidence.

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WHEN IS THERE CO-OWNERSHIP?

Article 484 of the Civil Code which defines co-ownership, states:

Art. 484. There is co-ownership whenever the ownership of an undivided thing or right belongs to different persons. x x x

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WHAT DID THE PARTIES PRESENTED TO PROVE THEIR ALLEGED RESPECTIVE CLAIMS TO OWNERSHIP OF SUBJECT PROPERTIES?

In the present case, petitioners insist that their predecessor-in-interest Lun co-owned the Gubat and Barcelonaproperties with his brother Fieng. To prove co-ownership over the Gubat property, petitioners presented: (1) tax declarations from 1929 to 1983 under the name of Fieng but paid by Lun; (2) the renewal certificate from Malayan Insurance Company Inc.; (3) the insurance contract; and (4) the statements of account from Supreme Insurance Underwriters which named Lun as administrator of the property. Likewise, to prove their right over the Barcelonaproperty as legal heirs under intestate succession, petitioners presented a Deed of Sale dated 24 August 1923 between Chaco, as buyer, and Gabriel Gredona and Engracia Legata, as sellers, involving a price consideration of P1,200.

On the other hand, respondents presented notarized documents: (1) Deed of Sale dated 13 October 1935, and (2) Sale of Real Property dated 6 August 1936 showing that the former owners of the Gubat property entered into a sale transaction with Fieng, as buyer and Lun, as a witness to the sale. They also presented tax declarations in the name of Fieng from 1937 to 1958. After Fieng’s death, Co declared the Gubat property in his name in the succeeding tax declarations. Likewise, the respondents presented documents proving the declaration of theBarcelonaproperty in the name ofCo.

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WHAT IS THE RULING OF THE COURT?

PETITIONERS’ EVIDENCE WERE INSUFFICIENT TO PROVE CLAIM OF OWNERSHIP OVER ANY OF THE PROPERTIES.

After a careful scrutiny of the records, we hold that the evidence of petitioners were insufficient or immaterial to warrant a positive finding of co-ownership over the Gubat and Barcelonaproperties. The CA correctly observed that petitioners failed to substantiate with reasonable certainty that (1) Chaco gave Fieng a start-up capital of P8,000 to be used by Lun and Fieng in setting up a business, (2) that the Philippine Honest and Company was a partnership between Lun and Fieng, and (3) that the Deed of Sale dated 24 August 1923 involving the Barcelona property is sufficient to establish co-ownership. Also, petitioners were not able to prove the existence of the alleged Chinese custom of placing properties in the name of the eldest child as provided under Article 12¹¹ of the Civil Code.

In contrast, respondents were able to show documents of sale from the original owners of the Gubat property rendering the claim of custom as immaterial.¹² Also, respondents sufficiently established that Fieng was the registered owner of the Gubat andBarcelona properties while Lun was merely an administrator.

……………………………..

We see no reason to disturb the findings of the CA. Petitioners failed to substantiate their claim of co-ownership over the Gubat andBarcelonaproperties. The action for partition cannot be acted upon since petitioners failed to establish any rightful interest in the properties. Petitioners also failed to prove that co-ownership existed between the parties’ predecessors-in-interest. Thus, respondents, as legal heirs of Fieng, are entitled to the exclusive ownership of the Gubat andBarcelonaproperties.

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SECOND DIVISION

CO GIOK LUN, as substituted by his legal heirs namely: MAGDALENA D. CO, MILAGROS D. CO, BENJAMIN D. CO, ALBERT D. CO, ANGELITA C. TENG, VIRGINIA C. RAMOS, CHARLIE D. CO, and ELIZABETH C. PAGUIO,Petitioners,

– versus –

JOSE CO, as substituted by his legal heirs namely: ROSALINA CO, MARLON CO, JOSEPH CO, FRANK CO, ANTONIO CO, NELSON CO, ROLAND CO, JOHNSON CO, CORAZON CO, ADELA CO, SERGIO CO, PAQUITO CO, JOHN CO, NANCY CO, and TERESITA CO,

Respondents.

G.R. No. 184454Present:

CARPIO, J., Chairperson,

LEONARDO-DE CASTRO,^*

BRION,

PEREZ, and

SERENO, JJ.

Promulgated:

August 3, 2011

x- – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – x

DECISION

CARPIO, J.:

The Case

Before the Court is a petition¹ for review on certiorari assailing the Decision² dated 23 April 2008 and Resolution³ dated 10 September 2008 of the Court of Appeals (CA) in CA-G.R. CV. No. 85920.

The Facts

This case involves two lots allegedly co-owned by two brothers, petitioner Co Giok Lun (Lun) and Co Bon Fieng (Fieng), the father of respondent Jose Co (Co). The lots, which are situated in Sorsogon province, one in the town ofGubatand the other in the town ofBarcelona, are described as:

Gubat Property

A parcel of commercial/residential land, located at Poblacion, Gubat, Sorsogon, containing an area of 720.68 square meters, more or less, bounded on the North by Angel Camara, on the East by Rodolfo Rocha, on the South by Guariña Street and on the West by Zulueta Street declared under Tax Declaration No. 11379 in the name of Co Bon Fieng and assessed at P12,370.00.⁴

Barcelona Property

Terreno cocal radicada en el sitio de Telegrafo barrio de Luneta, Barcelona, Sorsogon, I. F. cabida de sesenta y cinco (65 a.) lindates por Norte Hertrudes Casulla, por sur Antonio Evasco, por Este con los manglares y por Oeste Atanacio Espera y Eugenio Esteves.

Terreno cocalero ubicado en el barrio de Luneta, Barcelona, Sorsogon, I.F. cabida de una hectaria dies y ocho areas y sesenta y ciete centiarias (1 hects. 18 hareas 67 centiareas) lindantes al Norte Cementerio Municipal antes Eugenio Esteves, al Este Gabriel Gredoña y Laudia Asis, al Sur Amando Torilla y Florentino Mercader, y al Oeste Carretera Provincial.

Terreno solar con doce ponos de coco situada en el barrio de Luneta, Barcelona, Sorsogon, I.F. cabida de dos riales y quevalente a trienta y cuatro areas y un camarin de materiales fuertes y deficada dentro de la misma lindante al Norte Camino para S. Antonio, al Sur Eugenio Esteves, al Este Carretera Provincial y al Oeste a los herederos del defunto Feliciano Fontelar.⁵

Petitioners, the legal heirs of Lun who died on 12 January 1997, filed a complaint⁶ for partition and damages against Co with the Regional Trial Court (RTC) of Gubat, Sorsogon, Branch 54.

Claim of Petitioners

Petitioners claimed that Lun and Fieng came to the Philippinesfrom Chinain 1929. Lun allegedly acquired the Gubat property from the P8,000.00 capital the brothers inherited from their father, Co Chaco (Chaco), before Chaco returned toChina in 1926 due to old age. The Gubat property was named under Fieng only since it has been a common practice and custom inChina that properties intended for the children are placed in the name of the eldest child. TheBarcelona property, on the other hand, was acquired byChaco in 1923 while he was still doing his business in Gubat.

Lun and Fieng set up a business, selling and trading of dry goods, called the Philippine Honest and Company. Using the company’s funds, they rented the property of Crispina Rocha (Rocha), which was mortgaged and finally sold to them in 1935. Later, from the income of the business, they acquired the two adjoining residential and commercial lots which increased the size of the Gubat property to its present area of 720.68 square meters.

In 1946, Lun and Fieng dissolved and liquidated the business. After receiving his share of P26,000 from the liquidation, Lun established his own dry goods business called Shanghai Trading. Fieng, on the other hand, entered into other businesses with different partners.

Petitioners claimed that Lun stayed at the Gubat property from the time he arrived inChinain 1929. Lun was the one who religiously paid for the realty taxes and made several repairs on the building to make the Gubat property habitable. It was only sometime in 1946 when Lun and Fieng decided to divide the two lots. However, the partition did not push through on the insistence of their mother, Po Kiat, who wanted to preserve and maintain close family ties.

Petitioners also alleged that Lun prevented the Gubat property from being appropriated when the lot was used by Fieng as a loan guarantee. Fieng incurred the P4,500 obligation from Erquiaga Corporation which Lun assumed and paid without any contribution from respondents, specifically Co. After Fieng suffered financial bankruptcy in Manila, he went back to Gubat. Upon the request of their mother, Lun lent his brother P30,000 which Fieng used to start up a business. However, until Fieng’s death on 8 July 1958, the amount which Lun lent was never returned to him.

Lun even extended financial assistance to Co amounting to no less than P30,000 which remained unpaid. Later, when Lun already refused to lend money to Co, the latter made himself the administrator of the Gubat property without Lun’s knowledge. Thereafter, Co filed a case for unlawful detainer against Lun with the Municipal Trial Court (MTC) of Gubat, docketed as Civil Case No. 210. This case was decided by the MTC in favor of Co but was reversed by the RTC in its Decision dated 28 April 1994. The RTC’s decision was later affirmed by the CA and this Court.

Claim of Respondents

On the other hand, respondents, in their Amended Answer, maintained that the Gubat property is the exclusive property of their father. They asserted that Fieng acquired the lot by purchase from Rocha in 1935 or nine years after Chaco left for Chinain 1926. While Lun was still in China, Fieng and Rocha entered into an agreement for the use of the lot where Fieng built a “camalig” and started his sari-sari store business. On 13 March 1929, Fieng and Rocha entered into another contract extending Fieng’s right to occupy the lot until 17 August 1938. On 16 March 1930, another extension was given until 19 August 1940. On 13 October 1935, Fieng and Rocha executed a Deed of Absolute Sale where Rocha sold the lot to Fieng for P3,000. On 6 August 1936, Ireneo Rocha also sold a parcel of the adjoining land to Fieng which increased the size of the Gubat property to its present area. Both documents had been properly notarized.

Fieng used the property not only as the family’s residence but also for business and trade purposes until his death in 1958. It was even Fieng who had constructed the commercial building on the property in 1928. From 1937 to 1983, the land and tax declarations of the property was in the sole name of their father. In 1983, Co became the administrator of the Gubat property and had the property declared in his own name in substitution of his father without any objection from Lun.

Respondents denied that Lun and Fieng entered into any business together. Respondents claim that it was only in 1956 or 1957 when Lun was taken in by Fieng, who was then ill and could not manage his general merchandising business. Fieng allowed Lun to use the lower portion of the Gubat property and let him manage his business and properties as administrator. Lun was in possession of the property even after Fieng’s death in 1958 because of the consent and tolerance of the respondents who were still young at that time.

Respondents further insisted that Chaco gave theBarcelonaproperty to Fieng exclusively as advance inheritance and denied that Co ever borrowed money from Lun. As a counterclaim, respondents asked for the payment of rent for the use by Lun of the Gubat property, as well as moral damages, attorney’s fees and litigation expenses.

The RTC’s Ruling

In a Decision⁷ dated 21 July 2004, the RTC decided the case in favor of petitioners. The RTC stated that the documentary evidence presented in court showed that the Gubat property is indeed under Fieng’s name. However, the chain of events prior to the purchase of the property and the evidence submitted by the petitioners prove the presence of co-ownership. The dispositive portion of the decision states:

WHEREFORE, in view of all the foregoing and by preponderance of evidence, judgment is hereby rendered that the Heirs of Co Chaco are pro indiviso owners of the Gubat andBarcelona properties which are to be partitioned among these heirs. They are hereby directed to cause the survey of the property and to submit to this Court the plan of partition for approval.

No costs.

SO ORDERED.⁸

The Court of Appeals’ Ruling

Respondents appealed to the CA. In a Decision dated 23 April 2008, the CA reversed the decision of the RTC and ruled in favor of the respondents. The dispositive portion states:

WHEREFORE, in view of the foregoing, the instant appeal is GRANTED. The assailed decision of the Regional Trial Court of Gubat, Sorsogon (Branch 54) in Civil Case No. 1601, is REVERSED. The order of the trial court to cause the survey of the subject properties for the partition thereof is SET ASIDE. The subject properties are declared exclusively owned by Co Bon Fieng, and now by his legal heirs, herein appellants.

SO ORDERED.⁹

Petitioners filed a motion for reconsideration which the CA denied in a Resolution dated 10 September 2008.

Hence, this petition.

The Issue

The main issue is whether the CA erred in holding that no co-ownership existed between Lun and Fieng over the Gubat andBarcelonaproperties and in declaring Fieng as the exclusive owner of both properties.

The Court’s Ruling

The petition lacks merit.

Article 484 of the Civil Code which defines co-ownership, states:

Art. 484. There is co-ownership whenever the ownership of an undivided thing or right belongs to different persons. x x x

The relevant portions of the CA decision provide:

x x x As to the Gubat property, appellee (petitioner Co Giok Lun in this case) failed to establish the following with reasonable certainty: a) that Co Chaco gave Co Bon Fieng P8,000.00 as business capital for him and his brother; and b) that Philippine Honest and Company is a partnership between him and Co Bon Fieng. Appellee’s testimony is that his father told him that the latter gave Co Bon Fieng P8,000.00 is hearsay since he had no personal knowledge of the fact that Co Chaco gave Co Bon Fieng said amount. Even if the trial court admitted said testimony, it remains without probative value. x x x Allegedly, this amount was the contribution of appellee and Co Bon Fieng to the capital of their partnership – Philippine Honest and Company. Nevertheless, by reason of appellee’s failure to prove the existence of this amount, the existence of the partnership remains doubtful. Appellee present[ed] the certification of registration of the Philippine Honest and Company to prove the existence of the partnership but the registration indicates only the name of Co Bon Fieng as the owner thereof. Without the capital contribution and the partnership, appellee’s claim of co-ownership over the Gubat property does not have any basis.

To further prove his claim of co-ownership over the Gubat property, appellee presents Tax Declarations pertaining to the subject property from 1929 to 1983, renewal certificate from Malayan Insurance Company, Inc., insurance contract and statements of accounts from Supreme Insurance Underwriters. These documents, however, uniformly indicate Co Bon Fieng as the owner of the subject property and appellee as mere administrator thereof. Too, appellee proffers utility bills and receipts indicating payment to Erquiaga, Inc., a creditor of Co Bon Fieng, in support of his claim of co-ownership. These documents however, find no relevance in this case. Appellee’s assumption of Co Bon Fieng’s liabilities and his payment of utilities without getting any contribution from appellants are kind acts but certainly do not prove his claim of co-ownership. Neither do the court declarations in Civil Case No. 210 prove appellee’s claim of co-ownership, for only issues concerning possession were resolved in said unlawful detainer suit. Lastly, contrary to the claim of appellee, the affidavit of Co Che Bee, which recognizes appellee as a co-owner of the subject property, cannot bind Co Bon Fieng, for well-settled is the rule that the rights of a party cannot be prejudiced by an act, declaration, or omission of another. Hence, appellee’s claim of co-ownership over the Gubat property must fail.

Concerning theBarcelonaproperty, appellee proffers a deed of sale dated 24 August 1923 to support his claim that he and Co Bon Fieng are co-owners thereof. Under said deed, the subject property was sold to Co Chaco. Nevertheless, the deed proves just that – Co Chaco purchased the subject property. It does not establish subsequent events or validly dispute the transfer of the subject property by Co Chaco to Co Bon Fieng. Moreover, said document does not have any probative value to refute the real property tax declarations of the subject property in the name of appellant Jose Co. This document is inadequate to establish co-ownership between appellee and Co Bon Fieng over theBarcelonaproperty.

In fine, appellee’s evidence in support of his claim is either insufficient or immaterial to warrant the finding that the subject properties fall under the purview of co-ownership. Appellee failed to prove that he is a co-owner of the subject properties.

In contrast, appellants offer convincing evidence that their father, Co Bon Fieng owns the subject properties exclusively. In the “Deed of Sale” dated 13 October 1935 and the “Sale of Real Property” dated 6 August 1936, the former owners of the Gubat property sold the same to Co Bon Fieng only. Although appellee’s signature appears in the first document as a witness to its execution, there is no indication in said document or in the other that he was purchasing the subject property together with Co Bon Fieng. Appellee interjects that the foregoing deeds indicate Co Bon Fieng as the owner of the subject property because of the Chinese custom that in similar transactions, the eldest son of the family is normally placed as the purchaser of a property. Appellee, however, failed to prove this custom as a fact; hence cannot be given weight.

x x x

After purchasing the Gubat property, Co Bon Fieng declared the same in tax declarations from 1937 to 1958 as his property. After the death of Co Bon Fieng, appellant Jose Co declared the Gubat property in his name in ensuing tax declarations over the same. As well, theBarcelonaproperty is declared in the name of Jose Co. TheBarcelonaproperty was even surveyed for the benefit of appellants, as heirs of Co Bon Fieng.

x x x

x x x Here, we find compelling reasons to reverse the findings of the trial court and hold that the subject properties were owned exclusively by Co Bon Fieng, and now by his legal heirs.¹³

WHEREFORE, we DENY the petition. We AFFIRM the Decision dated 23 April 2008 and Resolution dated 10 September 2008 of the Court of Appeals in CA-G.R. CV. No. 85920.

SO ORDERED.

ANTONIO T. CARPIO

Associate Justice

WE CONCUR:

TERESITA J. LEONARDO-DE CASTRO

Associate Justice

ARTURO D. BRION JOSE PORTUGAL PEREZ

Associate Justice Associate Justice

MARIA LOURDES P. A. SERENO

Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

ANTONIO T. CARPIO

Associate Justice

Chairperson

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairperson’s Attestation, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

RENATO C. CORONA

Chief Justice

* Designated Acting Member per Special Order No. 1006 dated 10 June 2011.

1 Under Rule 45 of the 1997 Revised Rules of Civil Procedure.

2Rollo, pp. 11-23. Penned by Justice Marlene Gonzales-Sison with Justices Lucenito N. Tagle and Monina Arevalo Zenarosa, concurring.

3Id. at 6-10. Penned by Justice Marlene Gonzales-Sison with Presiding Justice Conrado M. Vasquez, Jr. and Justice Monina Arevalo Zenarosa, concurring.

4Id. at 66.

5Id. Roughly translated as:

“Cocoa land situated in Telegrafo Luneta barrio, Barcelona , Sorsogon, with a capacity of 65 “areas” bordered in the North by Hertrudes Casulla, in the south by Antonio Evasco, in the east by the mangroves, and in the west by Atanacio Espera and Eugenio Esteves.

Cocoa land located in Luneta barrio, Barcelona, Sorsogon, with a capacity of 1 hectare, 18 hareas and 67 centiareas, bordered in the north by the Municipal Cemetery before Eugenio Esteves, to the east by Gabriel Gredoña and Laudia Asis, to the south by Amanda Torilla and Florentino Mercader, and to the West by the provincial road.

Undeveloped land with 12 cocoa (or coconut) located in Luneta Barrio, Barcelona, Sorsogon, with a capacity of 2 river inlets equivalent to 34 areas, and a house within the same borders to the North: S. Antonio, to the South: Eugenio Esteves, to the East: provincial road, and to the West: the heirs of the deceased Feliciano Fontelar.”

6 Docketed as Civil Case No. 1601.

7 Rollo, pp. 66-78.

8Id. at 78.

9Id. at 22.

10471 Phil. 519 (2004).

11 Art. 12. A custom must be proved as a fact, according to the rules of evidence.

12 Supra note 10.

13 Rollo, pp. 18-22.

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SUBJECT/DOCTRINE/DIGEST:

WHAT IS ESSENTIAL IN AN ACTION FOR PARTITION?

THAT THE CLAIMANT HAS RIGHTFUL INTEREST OVER THE PROPERTY. WITHOUT THIS, AN ACTION FOR PARTITION WILL NOT LIE. Ocampo v. Ocampo,¹⁰

WHEN IS THERE CO-OWNERSHIP?

Article 484 of the Civil Code which defines co-ownership, states:

Art. 484. There is co-ownership whenever the ownership of an undivided thing or right belongs to different persons. x x x

XXXXXXXXXXXXXXXXXXXXXXXX

WHAT DID THE PARTIES PRESENTED TO PROVE THEIR ALLEGED RESPECTIVE CLAIMS TO OWNERSHIP OF SUBJECT PROPERTIES?

XXXXXXXXXXXXXXXXXXXXXXXX

WHAT IS THE RULING OF THE COURT?

PETITIONERS’ EVIDENCE WERE INSUFFICIENT TO PROVE CLAIM OF OWNERSHIP OVER ANY OF THE PROPERTIES.

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SECOND DIVISION

– versus –

Respondents.

G.R. No. 184454Present:

CARPIO, J., Chairperson,

LEONARDO-DE CASTRO,^*

BRION,

PEREZ, and

SERENO, JJ.

Promulgated:

August 3, 2011

DECISION

CARPIO, J.:

The Case

Before the Court is a petition¹ for review on certiorari assailing the Decision² dated 23 April 2008 and Resolution³ dated 10 September 2008 of the Court of Appeals (CA) in CA-G.R. CV. No. 85920.

The Facts

Gubat Property

Barcelona Property

Petitioners, the legal heirs of Lun who died on 12 January 1997, filed a complaint⁶ for partition and damages against Co with the Regional Trial Court (RTC) of Gubat, Sorsogon, Branch 54.

Claim of Petitioners

Claim of Respondents

The RTC’s Ruling

No costs.

SO ORDERED.⁸

The Court of Appeals’ Ruling

Respondents appealed to the CA. In a Decision dated 23 April 2008, the CA reversed the decision of the RTC and ruled in favor of the respondents. The dispositive portion states:

SO ORDERED.⁹

Petitioners filed a motion for reconsideration which the CA denied in a Resolution dated 10 September 2008.

Hence, this petition.

The Issue

The Court’s Ruling

The petition lacks merit.

Article 484 of the Civil Code which defines co-ownership, states:

Art. 484. There is co-ownership whenever the ownership of an undivided thing or right belongs to different persons. x x x

The relevant portions of the CA decision provide:

x x x

x x x Here, we find compelling reasons to reverse the findings of the trial court and hold that the subject properties were owned exclusively by Co Bon Fieng, and now by his legal heirs.¹³

WHEREFORE, we DENY the petition. We AFFIRM the Decision dated 23 April 2008 and Resolution dated 10 September 2008 of the Court of Appeals in CA-G.R. CV. No. 85920.

SO ORDERED.

ANTONIO T. CARPIO

Associate Justice

WE CONCUR:

TERESITA J. LEONARDO-DE CASTRO

Associate Justice

ARTURO D. BRION JOSE PORTUGAL PEREZ

Associate Justice Associate Justice

MARIA LOURDES P. A. SERENO

Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

ANTONIO T. CARPIO

Associate Justice

Chairperson

CERTIFICATION

RENATO C. CORONA

Chief Justice

* Designated Acting Member per Special Order No. 1006 dated 10 June 2011.

1 Under Rule 45 of the 1997 Revised Rules of Civil Procedure.

2Rollo, pp. 11-23. Penned by Justice Marlene Gonzales-Sison with Justices Lucenito N. Tagle and Monina Arevalo Zenarosa, concurring.

3Id. at 6-10. Penned by Justice Marlene Gonzales-Sison with Presiding Justice Conrado M. Vasquez, Jr. and Justice Monina Arevalo Zenarosa, concurring.

4Id. at 66.

5Id. Roughly translated as:

6 Docketed as Civil Case No. 1601.

7 Rollo, pp. 66-78.

8Id. at 78.

9Id. at 22.

10471 Phil. 519 (2004).

11 Art. 12. A custom must be proved as a fact, according to the rules of evidence.

12 Supra note 10.

13 Rollo, pp. 18-22.

Comment

CASE 2011-0177: FRANCIS BELLO, REPRESENTED HEREIN BY HIS DAUGHTER AND ATTORNEY-IN-FACT, GERALDINE BELLO-ONA VS. BONIFACIO SECURITY SERVICES, INC. AND SAMUEL TOMAS (G.R. NO. 188086, 03 AUGUST 2011, BRION J.) SUBJECTS: VERIFICATION, CONSTRUCTIVE DISMISSAL. (BRIEF TITLE: BELLO VS. BONIFACIO SECURITY).

Filed under: LATEST SUPREME COURT CASES — 1 Comment

CASE 2011-0177: FRANCIS BELLO, REPRESENTED HEREIN BY HIS DAUGHTER AND ATTORNEY-IN-FACT, GERALDINE BELLO-ONA VS. BONIFACIO SECURITY SERVICES, INC. AND SAMUEL TOMAS (G.R. NO. 188086, 03 AUGUST 2011, BRION J.) SUBJECTS: VERIFICATION, CONSTRUCTIVE DISMISSAL. (BRIEF TITLE: BELLO VS. BONIFACIO SECURITY).

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SUBJECT/DOCTRINE/DIGEST:

WHAT IS THE NATURE OF VERIFICATION?

IT IS A FORMAL NOT JURISDICTIONAL REQUIREMENT.

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WHAT IS THE PURPOSE OF VERIFICATION?

TO SECURE ASSURANCE THAT THE MATTERS ALLEGED IN A PLEADING ARE TRUE AND CORRECT.

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HOW IS IT SUBSTANTIALLY COMPLIED?

IT IS DEEMED SUBSTANTIALLY COMPLIED WITH WHEN ONE WHO HAS AMPLLE KNOWLEDGE TO SWEAR TO THE TRUTH OF THE ALLEGATIONS IN THE COMPLAINT SIGNS THE VERIFICATION AND WHEN MATTERS ALLEGED IN THE PETITION HAVE BEEN MADE IN GOOD FAITH OR ARE TRUE AND CORRECT.^{^[1]}^[17]

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WHAT WILL THE COURT DO WHEN VERIFICATION IS DEFECTIVE?

THE COURT MAY SIMPLY ORDER THE CORRECTION OF UNVERIFIED PLEADINGS OR ACT ON THEM AND WAIVE STRICT COMPLIANCE WITH THE RULES.^{^[2]}^[16]

Verification of a pleading is a formal, not jurisdictional, requirement intended to secure the assurance that the matters alleged in a pleading are true and correct.^{^[3]}^[15] Thus, the court may simply order the correction of unverified pleadings or act on them and waive strict compliance with the rules.^{^[4]}^[16] It is deemed substantially complied with when one who has ample knowledge to swear to the truth of the allegations in the complaint or petition signs the verification, and when matters alleged in the petition have been made in good faith or are true and correct.^{^[5]}^[17]

XXXXXXXXXXXXXXXXXXXXX

THE DAUGTER OF PETITIONER SIGNED THE VERIFICATION. THE DAUGTHER HAS SPA. IS THIS SUFFICIENT?

YES. AS THE DAUGHTER OF BELLO, BELLO-ONA IS DEEMED TO HAVE SUFFICIENT KNOWLEDGE TO SWEAR TO THE TRUTH OF THE ALLEGATIONS IN THE PETITION, WHICH ARE MATTERS OF RECORD IN THE TRIBUNALS AND THE APPELLATE COURT BELOW.

In this case, we find that the petition’s verification substantially complied with the requirements of the rules. The SPA authorized Bello-Ona to represent Belloin the case entitled “Francis Bello v. Bonifacio Security Services, Inc. and/or Samuel Tomas, (CA) Case No. 047829-06; NLRC-N[CR] Case No. 00-11-09529-2002”^{^[6]}^[18] – the case from which the present petition originated. As the daughter ofBello, Bello-Ona is deemed to have sufficient knowledge to swear to the truth of the allegations in the petition, which are matters of record in the tribunals and the appellate court below.

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WHAT IS CONSTRUCTIVE DISMISSAL?

CESSATION OF WORK BECAUSE CONTINUED EMPLOYMENT HAS BEEN RENDERED IMPOSSIBLE, UNREASONABLE, OR UNLIKELY, AS WHEN THERE IS A DEMOTION IN RANK OR DIMINUTION IN PAY, OR BOTH, OR WHEN A CLEAR DISCRIMINATION, INSENSIBILITY, OR DISDAIN BY AN EMPLOYER BECOMES UNBEARABLE TO THE EMPLOYEE.^{^[7]}^[19]

On the merits of the case, we find no reason to disturb the CA conclusion that there was no constructive dismissal. Case law defines constructive dismissal as a cessation of work because continued employment has been rendered impossible, unreasonable, or unlikely, as when there is a demotion in rank or diminution in pay, or both, or when a clear discrimination, insensibility, or disdain by an employer becomes unbearable to the employee.^{^[8]}^[19]

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IS TRANSFER OF EMPLOYEE FROM ONE AREA OF WORK TO ANOTHER, CONSTRUCTIVE DISMISSAL?

THE MANAGEMENT’S PREROGATIVE OF TRANSFERRING AND REASSIGNING EMPLOYEES FROM ONE AREA OF OPERATION TO ANOTHER IN ORDER TO MEET THE REQUIREMENTS OF THE BUSINESS IS GENERALLY NOT CONSTITUTIVE OF CONSTRUCTIVE DISMISSAL.^{^[9]}^[21]

We note that, other than his bare and self-serving allegations, Bellohas not offered any evidence that he was promoted in a span of four months since his employment as traffic marshal in July 2001 to a detachment commander in November 2001. During his six-month probationary period of employment,^{^[10]}^[20] it is highly improbable that Bello would be promoted after just a month of employment, from a traffic marshal in July 2001 to supervisor in August 2001, and three months later to assistant detachment commander and to detachment commander in November 2001. At most, the BSSI merely changed his assignment or transferred him to the post where his service would be most beneficial to its clients. The management’s prerogative of transferring and reassigning employees from one area of operation to another in order to meet the requirements of the business is generally not constitutive of constructive dismissal.^{^[11]}^[21] We see this to be the case in the present dispute so that the consequent reassignment ofBello to a traffic marshal post was well within the scope of the BSSI’s management prerogative.

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SECOND DIVISION

FRANCIS BELLO, represented herein by his daughter and attorney-in-fact, Geraldine Bello-Ona,Petitioner,

– versus –

BONIFACIO SECURITY SERVICES, INC. and SAMUEL TOMAS,

Respondents.

G.R. No. 188086

Present:

CARPIO, J.,

Chairperson,

LEONARDO-DE CASTRO,^*

BRION,

PEREZ, and

SERENO, JJ.

Promulgated:

August 3, 2011

x————————————————————————————x

DECISION

BRION, J.:

We resolve the petition for review on certiorari,^{^[12]}^[1]filed by petitioner Francis Bello, to challenge the decision^{^[13]}^[2] and the resolution^{^[14]}^[3] of the Court of Appeals (CA) in CA-G.R. SP. No. 105402.^{^[15]}^[4]

The Factual Background

Respondent Bonifacio Security Services, Inc. (BSSI) is a domestic private corporation engaged in the business of providing security services. In July 2001, the BSSI hired Bello as a roving traffic marshal to manage traffic and to conduct security and safety-related operations in the Bonifacio Global City (BGC). In August 2001,Bello was posted at the Negros Navigation Company in Pier 2,NorthHarbor, to supervise sectoral operations. In November 2001, he was assigned at BGC as assistant detachment commander. After a week, he was transferred toPacificPlazaTowers as assistant detachment commander and later as detachment commander. In June 2002, he was assigned at Pier 2,NorthHarbor as assistant detachment commander, but later reassigned to BGC. In August 2002, the BSSI hired a new operations manager, resulting in the reorganization of posts. In October 2002,Bello was assigned as roving traffic marshal at the BGC. On October 25, 2002, he filed an indefinite leave of absence when his new assignment took effect.

On November 5, 2002, Bello filed a complaint against the BSSI and its General Manager, respondent Samuel Tomas, with the National Labor Relations Commission (NLRC),^{^[16]}^[5] claiming that he had been constructively dismissed when he was demoted from a detachment commander to a mere traffic marshal. He alleged that he received a series of promotions from 2001 to 2002, from traffic marshal to supervisor, to assistant detachment commander, and to detachment commander.^{^[17]}^[6]

The BSSI denied Bello’s claim of constructive dismissal, arguing that no promotion took place; Bello’s designation as assistant detachment commander or detachment commander was not an employment position but a duty-related assignment; Belloabandoned his job when he went on an indefinite leave of absence and did not report for work.^{^[18]}^[7]

The Labor Arbiter’s Ruling

In his December 29, 2005 decision,^{^[19]}^[8] Labor Arbiter Cresencio G. Ramos, Jr. found that Bello was illegally dismissed, noting that the BSSI failed to adduce evidence that Bello abandoned his employment. Thus, he ordered Bello’s reinstatement and awarded him backwages amounting to P391,474.25.

After the NLRC dismissed the BSSI’s belated appeal and subsequent motion for reconsideration,^{^[20]}^[9] the latter filed a petition for certiorari with the CA. The CA granted the petition,^{^[21]}^[10] thus reinstating BSSI’s appeal with the NLRC.

In its March 26, 2008 resolution, the NLRC affirmed the labor arbiter’s decision, finding that Bellohad been constructively dismissed when he was demoted to the rank-and-file position of traffic marshal after occupying the supervisory position of assistant detachment commander and detachment commander.^{^[22]}^[11] The denial of BSSI’s subsequent motion for reconsideration led it back to the CA on a petition for certiorari under Rule 65 of the Rules of Court.^{^[23]}^[12]

The CA Ruling

The CA nullified the NLRC resolutions, finding the records bereft of evidence substantiating the labor arbiter’s and the NLRC’s conclusions that Bellohad been constructively dismissed.^{^[24]}^[13] It noted that Bello offered no evidence to prove that there was a series of promotions that would justify his claim of subsequent demotion. The CA denied the BSSI’s motion for reconsideration,^{^[25]}^[14] paving the way for the present petition.

The Petition

Belloinsists that he was constructively dismissed when he was demoted to a mere traffic marshal after having been promoted to the positions of supervisor, assistant detachment commander, and detachment commander.

The Case for the BSSI

The BSSI prays for the petition’s outright dismissal due to a defective verification, arguing that the special power of attorney (SPA) of Bello’s attorney-in-fact, Geraldine Bello-Ona, was limited to representing him in the NLRC case only and not to the present petition; and that Bello-Ona has no personal knowledge of the allegations in the petition. On the merits of the case, the BSSI contends that the CA correctly ruled that there was no evidence to substantiate the NLRC’s finding of constructive dismissal.

The Issues

The core issues boil down to: whether the petition should be dismissed outright for defective verification; and whether the CA erred in annulling the NLRC’s resolutions.

The Court’s Ruling

The petition lacks merit.

Verification of a pleading is a formal, not jurisdictional, requirement intended to secure the assurance that the matters alleged in a pleading are true and correct.^{^[26]}^[15] Thus, the court may simply order the correction of unverified pleadings or act on them and waive strict compliance with the rules.^{^[27]}^[16] It is deemed substantially complied with when one who has ample knowledge to swear to the truth of the allegations in the complaint or petition signs the verification, and when matters alleged in the petition have been made in good faith or are true and correct.^{^[28]}^[17]

In this case, we find that the petition’s verification substantially complied with the requirements of the rules. The SPA authorized Bello-Ona to represent Belloin the case entitled “Francis Bello v. Bonifacio Security Services, Inc. and/or Samuel Tomas, (CA) Case No. 047829-06; NLRC-N[CR] Case No. 00-11-09529-2002”^{^[29]}^[18] – the case from which the present petition originated. As the daughter ofBello, Bello-Ona is deemed to have sufficient knowledge to swear to the truth of the allegations in the petition, which are matters of record in the tribunals and the appellate court below.

We note that, other than his bare and self-serving allegations, Bellohas not offered any evidence that he was promoted in a span of four months since his employment as traffic marshal in July 2001 to a detachment commander in November 2001. During his six-month probationary period of employment,^{^[31]}^[20] it is highly improbable that Bello would be promoted after just a month of employment, from a traffic marshal in July 2001 to supervisor in August 2001, and three months later to assistant detachment commander and to detachment commander in November 2001. At most, the BSSI merely changed his assignment or transferred him to the post where his service would be most beneficial to its clients. The management’s prerogative of transferring and reassigning employees from one area of operation to another in order to meet the requirements of the business is generally not constitutive of constructive dismissal.^{^[32]}^[21] We see this to be the case in the present dispute so that the consequent reassignment ofBello to a traffic marshal post was well within the scope of the BSSI’s management prerogative.

WHEREFORE, we hereby DENY the petition and AFFIRM the assailed CA decision and resolution in CA-G.R. SP. No. 105402. Costs against the petitioner.

SO ORDERED.

ARTURO D. BRION

Associate Justice

WE CONCUR:

ANTONIO T. CARPIO

Associate Justice

Chairperson

TERESITA J. LEONARDO-DE CASTRO

Associate Justice

JOSE PORTUGAL PEREZ

Associate Justice

MARIA LOURDES P. A. SERENO

Associate Justice

A T T E S T A T I O N

I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

ANTONIO T. CARPIO

Associate Justice

Chairperson, Second Division

C E R T I F I C A T I O N

RENATO C. CORONA

Chief Justice

[1][17] Id. at 597.

[2][16] Altres v. Empleo, G.R. No. 180986, December 10, 2008, 573 SCRA 583, 596.

[3][15] Ramirez v. Court of Appeals, G.R. No. 182626, December 4, 2009, 607 SCRA 752, 766.

[4][16] Altres v. Empleo, G.R. No. 180986, December 10, 2008, 573 SCRA 583, 596.

[5][17] Id. at 597.

[6][18] Rollo, p. 48.

[7][19] La Rosa v. Ambassador Hotel, G.R. No. 177059, March 13, 2009, 581 SCRA 340, 346-347.

[8][19] La Rosa v. Ambassador Hotel, G.R. No. 177059, March 13, 2009, 581 SCRA 340, 346-347.

[9][21] Bisig Manggagawa sa Tryco v. NLRC, G.R. No. 151309, October 15, 2008, 569 SCRA 122, 130.

[10][20] Labor Code, Article 282.

[11][21] Bisig Manggagawa sa Tryco v. NLRC, G.R. No. 151309, October 15, 2008, 569 SCRA 122, 130.

* Designated as Acting Member of the Second Division per Special Order No. 1006 dated June 10, 2011.

[12][1] Filed under Rule 45 of the Rules of Court; rollo, pp. 8-26.

[13][2] Dated March 6, 2009; penned by Associate Justice Andres B. Reyes, Jr., and concurred in by Associate Justices Jose C. Reyes, Jr. and Normandie B. Pizarro; id. at 34-47.

[14][3] Dated June 1, 2009; id. at 31-32.

[15][4] Entitled “Bonifacio Security Services, Inc. v. National Labor Relations Commission, National Capital Region Second Division, and Francis Bello.”

[16][5] Docketed as NLRC NCR Case No. 00-11-09529-2002; NLRC records, p. 2.

[17][6] Id. at 10-20.

[18][7] Id. at 43-47.

[19][8] Id. at 81-87.

[20][9] Resolutions dated July 10, 2006 and September 27, 2006 in NLRC CA No. 047829-06; id. at 249-251 and 316-317.

[21][10] Decision dated August 23, 2007 in CA-G.R. SP No. 96696, entitled “Bonifacio Security Services, Inc., petitioner v. NLRC, National Capital Region – Second Division and Francis Bello”; id. at 323-332.

[22][11] Id. at 335-350.

[23][12] CA rollo, pp. 2-28.

[24][13] Supra note 2.

[25][14] Supra note 3.

[26][15] Ramirez v. Court of Appeals, G.R. No. 182626, December 4, 2009, 607 SCRA 752, 766.

[27][16] Altres v. Empleo, G.R. No. 180986, December 10, 2008, 573 SCRA 583, 596.

[28][17] Id. at 597.

[29][18] Rollo, p. 48.

[30][19] La Rosa v. Ambassador Hotel, G.R. No. 177059, March 13, 2009, 581 SCRA 340, 346-347.

[31][20] Labor Code, Article 282.

[32][21] Bisig Manggagawa sa Tryco v. NLRC, G.R. No. 151309, October 15, 2008, 569 SCRA 122, 130.

Comment

LEGAL NOTE 0097: CAN EMPLOYER CHANGE ASSIGNMENTS OF EMPLOYEES OR TRANSFER THEM? CAN EMPLOYER PLACE EMPLOYEES ON FLOATING STATUS?

Filed under: LEGAL NOTES — Leave a comment

August 16, 2011

LEGAL NOTE 0097: CAN EMPLOYER CHANGE ASSIGNMENTS OF EMPLOYEES OR TRANSFER THEM? CAN EMPLOYER PLACE EMPLOYEES ON FLOATING STATUS?

SOURCE: NIPPON HOUSING PHIL. INC., and/or TADASHI OTA, HOROSHI TAKADA, YUSUHIRO KAWATA, MR. NOBOYUSHI and JOEL REYES VS. MAIAH ANGELA LEYNES (G.R. NO. 177816, 03 AUGUST 2011) SUBJECTS: ILLEGAL DISMISSAL; FLOATING STATUS; REDUNDANCY; EMPLOYER UPHELD; (BRIEF TITLE: NIPPON HOUSING VS. LEYNES)

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CAN EMPLOYER CHANGE ASSIGNMENTS OF EMPLOYEES OR TRANSFER THEM?

YES. THE RIGHT OF EMPLOYEES TO SECURITY OF TENURE DOES NOT GIVE THEM VESTED RIGHT TO THEIR POSITIONS.

Indeed, the right of employees to security of tenure does not give them vested rights to their positions to the extent of depriving management of its prerogative to change their assignments or to transfer them.^{^[1]}^[38]

CAN THE EMPLOYER PLACE EMPLOYEES ON FLOATING STATUS?

YES. OFF-DETAILING IS NOT EQUIVALENT TO DISMISSAL SO LONG AS SUCH STATUS DOES NOT CONTINUE BEYOND A REASONABLE TIME AND IT IS ONLY WHEN SUCH A “FLOATING STATUS” LASTS FOR MORE THAN SIX MONTHS THAT THE EMPLOYEE MAY BE CONSIDERED TO HAVE BEEN CONSTRUCTIVELY DISMISSED.^{^[4]}^[39]

The record shows that Leynes filed the complaint for actual illegal dismissal from which the case originated on 22 February 2002 or immediately upon being placed on floating status as a consequence of NHPI’s hiring of a new Property Manager for the Project. The rule is settled, however, that “off-detailing” is not equivalent to dismissal, so long as such status does not continue beyond a reasonable time and that it is only when such a “floating status” lasts for more than six months that the employee may be considered to have been constructively dismissed.^{^[5]}^[39] A complaint for illegal dismissal filed prior to the lapse of said six-month and/or the actual dismissal of the employee is generally considered as prematurely filed.^{^[6]}^[40]

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WILL COURTS INTERFERE IN THE BUSINESS DECISIONS OF EMPLOYERS?

COURTS ARE NOT INCLINED TO INTERFERE IN THE LEGITIMATE DECISIONS OF EMPLOYERS PROVIDED THERE IS NO SHOWING OF ILLEGALITY, BAD FAITH OR ARBITRARINESS.

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SECOND DIVISION

NIPPON HOUSING PHIL. INC., and/or TADASHI OTA, HOROSHI TAKADA, YUSUHIRO KAWATA, MR. NOBOYUSHI and JOEL REYES

Petitioners,

– versus –

MAIAH ANGELA LEYNES,

Respondent.

G.R. No. 177816

Present:

CARPIO, J.,

Chairperson,

LEONARDO-DE CASTRO,*

BRION,

PEREZ, and

SERENO, JJ.

Promulgated:

August 3, 2011

x – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – -x

D E C I S I O N

PEREZ, J.:

Assailed in this petition for review on certiorari^{^[8]}^[1] filed pursuant to Rule 45 of the 1997 Rules of Civil Procedure is the 23 November 2006 Decision rendered by the Sixteenth Division of the Court of Appeals (CA) in CA-G.R. SP No. 84781,^{^[9]}^[2] the decretal portion of which states:

WHEREFORE, the foregoing considered, the petition is GRANTED and the assailed Decision and Resolution are REVERSED and SET ASIDE. Accordingly, the Decision of the Labor Arbiter is REINSTATED.

SO ORDERED.^{^[10]}^[3]

The Facts

From its original business of providing building maintenance, it appears that petitioner Nippon Housing Philippines, Inc. (NHPI) ventured into building management, providing such services as handling of the lease of condominium units, collection of dues and compliance with government regulatory requirements. Having gained the Bay Gardens Condominium Project (the Project) of the Bay Gardens Condominium Corporation (BGCC) as its first and only building maintenance client, NHPI hired respondent Maiah Angela Leynes (Leynes) on 26 March 2001 for the position of Property Manager, with a salary of P40,000.00 per month. Tasked with surveying the requirements of the government and the client for said project, the formulation of house rules and regulations and the preparation of the annual operating and capital expenditure budget, Leynes was also responsible for the hiring and deployment of manpower, salary and position determination as well as the assignment of the schedules and responsibilities of employees.^{^[11]}^[4]

On 6 February 2002, Leynes had a misunderstanding with Engr. Honesto Cantuba (Cantuba), the Building Engineer assigned at the Project, regarding the extension of the latter’s working hours. Aside from instructing the security guards to bar Engr. Cantuba from entry into the Project and to tell him to report to the NHPI’s main office in Makati, Leynes also sent a letter dated 8 February 2002 by telefax to Joel Reyes (Reyes), NHPI’s Human Resources Department (HRD) Head, apprising the latter of said Building Engineer’s supposed insubordination and disrespectful conduct.^{^[12]}^[5] With Engr. Cantuba’s submission of a reply in turn accusing Leynes of pride, conceit and poor managerial skills,^{^[13]}^[6] Hiroshi Takada (Takada), NHPI’s Vice President, went on to issue the 12 February 2002 memorandum, attributing the incident to “simple personal differences” and directing Leynes to allow Engr. Cantuba to report back for work.^{^[14]}^[7]

Disappointed with the foregoing management decision, Leynes submitted to Tadashi Ota, NHPI’s President, a letter dated 12 February 2002, asking for an emergency leave of absence for the supposed purpose of coordinating with her lawyer regarding her resignation letter.^{^[15]}^[8] While NHPI offered the Property Manager position to Engr. Carlos Jose on 13 February 2002^{^[16]}^[9] as a consequence Leynes’ signification of her intention to resign, it also appears that Leynes sent another letter to Reyes by telefax on the same day, expressing her intention to return to work on 15 February 2002 and to call off her planned resignation upon the advice of her lawyer.^{^[17]}^[10] Having subsequently reported back for work and resumed performance of her assigned functions, Leynes was constrained to send out a 20 February 2002 written protest regarding the verbal information she supposedly received from Reyes that a substitute has already been hired for her position.^{^[18]}^[11] On 22 February 2002, Leynes was further served by petitioner Yasuhiro Kawata and Noboyushi Hisada, NHPI’s Senior Manager and Janitorial Manager,^{^[19]}^[12] with a letter and memorandum from Reyes, relieving her from her position and directing her to report to NHPI’s main office while she was on floating status.^{^[20]}^[13]

Aggrieved, Leynes lost no time in filing against NHPI and its above-named officers the 22 February 2002 complaint for illegal dismissal, unpaid salaries, benefits, damages and attorney’s fees docketed before the arbitral level of the National Labor Relations Commission (NLRC) as NLRC-NCR South Sector Case No. 30-02-01119-02.^{^[21]}^[14] Against Leynes’ claim that her being relieved from her position without just cause and replacement by one Carlos Jose amounted to an illegal dismissal from employment,^{^[22]}^[15] NHPI and its officers asserted that the management’s exercise of the prerogative to put an employee on floating status for a period not exceeding six months was justified in view of her threatened resignation from her position and BGCC’s request for her replacement.^{^[23]}^[16] During the pendency of the case, however, Reyes eventually served the Department of Labor and Employment (DOLE)^{^[24]}^[17] and Leynes with the 8 August 2002 notice terminating her services effective 22 August 2002, on the ground of redundancy or lack of a posting commensurate to her position at the Project.^{^[25]}^[18] Leynes was offered by NHPI the sum of P28,188.16 representing her unpaid wages, proportionate 13^th month pay, tax refund and service incentive leave pay (SILP).

On 14 January 2003, Labor Arbiter Manuel Manansala rendered a decision, finding that NHPI’s act of putting Leynes on floating status was equivalent to termination from employment without just cause and compliance with the twin requirements of notice and hearing. Likewise finding that NHPI’s officers acted with bad faith in effecting Leynes’ termination,^{^[26]}^[19] the Labor Arbiter disposed of the case in the following wise:

WHEREFORE, premises considered, judgment is hereby rendered:

1. Declaring respondent Nippon Housing Philippines, Inc. (NHPI) guilty of illegal dismissal for the reasons above-discussed. Consequently, the aforenamed respondent is hereby directed to reinstate complainant Maiah Angela Leynes to her former position as Property Manager without loss of seniority rights and with full backwages from the time of her unjust dismissal up to the time of her actual reinstatement. The backwages due to complainant Leynes is initially computed at P471,844.87 x x x subject to the finality of this Decision.

Be that as it may, on account of strained relationship between the parties brought about by the institution of the instant case/complaint plus the fact that complainant Leynes occupied a managerial position, it is better for the parties to be separated. Thus, in lieu of reinstatement, respondent NHPI is hereby directed to pay complainant Leynes the sum of P80,000.00 representing the latter’s initial separation pay subject to the finality of this Decision x x x.

2. Declaring respondent NHPI and individual respondents Tadashi Ota (President), Hirochi Takada (Vice President for Finance), Yasuhiro Kawata (Senior Manager), Noboyushi [Hisada] (Janitorial Manager), and Joel Reyes (HRD Manager) guilty of evident bad faith in effecting the dismissal of complainant Leynes from the service. Consequently, the aforenamed respondents are hereby directed to pay, jointly and severally, complainant Leynes the sum of P20,000.00 for moral damages and the sum of P20,000.00 for exemplary damages;

3. Directing respondent NHPI to pay complainant Leynes the total sum of P56,888.44 representing her unpaid salary, proportionate 13^th month pay, and proportionate service incentive leave pay x x x

4. Directing the aforenamed respondent NHPI to pay complainant Leynes ten (10%) percent attorney’s fees based on the total monetary award for having been forced to prosecute and/or litigate the instant case/complaint by hiring the services of legal counsel.

5. Dismissing the other mon[e]y claims and/or charges of complainant Leynes for lack of merit.

SO ORDERED.^{^[27]}^[20]

On appeal, the foregoing decision was reversed and set aside in the 30 September 2003 decision rendered by the NLRC in NLRC NCR CA No. 035229. In ordering the dismissal of the complaint for lack of merit, the NLRC ruled that NHPI’s placement of Leynes on floating status was necessitated by the client’s contractually guaranteed right to request for her relief.^{^[28]}^[21] With Leynes’ elevation of the case to the CA on a Rule 65 petition for certiorari,^{^[29]}^[22] the NLRC’s decision was, however, reversed and set aside in the herein assailed 23 November 2006 decision, upon the following findings and conclusions: (a) absent showing that there was a bona fide suspension of NHPI’s business operations, Leynes’ relief from her position – even though requested by the client – was tantamount to a constructive dismissal; (b) the bad faith of NHPI and its officers is evident from the hiring of Engr. Jose as Leynes’ replacement on 13 February 2002 or prior to her being relieved from her position on 22 February 2002; and, (c) the failure of NHPI and its officers to prove a just cause for Leynes’ termination, the redundancy of her services and their compliance with the requirements of due process renders them liable for illegal dismissal.^{^[30]}^[23]

The motion for reconsideration of the foregoing decision filed by NHPI and its officers^{^[31]}^[24] was denied for lack of merit in the CA’s 8 May 2007 resolution, hence, this petition.^{^[32]}^[25]

The Issues

Petitioners NHPI and Kawata urge the grant of their petition on the following grounds, to wit:

I. THE HONORABLE COURT OF APPEALS’ RULING THAT PETITIONERS’ DECISION TO PLACE RESPONDENT ON FLOATING STATUS IS TANTAMOUNT TO CONSTRUCTIVE DISMISSAL IS CONTRARY TO LAW AND SETTLED JURISPRUDENCE.

II. THE HONORABLE COURT OF APPEALS’ DECLARATION THAT NHPI’S DECISION TO REDUNDATE RESPONDENT IS UNJUSTIFIED, IS CONTRARY TO LAW AND SETTLED JURISPRUDENCE.^{^[33]}^[26]

The Court’s Ruling

We find the petition impressed with merit.

Petitioners argue that the CA erred in finding that Leynes was constructively dismissed when she was placed on floating status prior to her termination from employment on the ground of redundancy. Maintaining that the employee’s right to security of tenure does not give him a vested right thereto as would deprive the employer of its prerogative to change his assignment or transfer him to where he will be most useful, petitioners call our attention to the supposed fact that Leynes was unacceptable to BGCC which had a contractually guaranteed right to ask for her relief. Rather than outrightly terminating Leynes’ employment as a consequence of her threats to resign from her position, moreover, petitioners claim that she was validly placed on floating status pursuant to Article 286 of the Labor Code of the Philippines which provides as follows:

Art. 286. When employment not deemed terminated. – The bona fide suspension of the operation of a business undertaking for a period not exceeding six (6) months, or the fulfillment by the employee of a civic duty shall not terminate employment. In all such cases the employer shall reinstate the employee to his former position without loss of seniority rights if he indicates his desire to resume his work not later than one (1) month from the resumption of operations of his employer or from his relief from the military or civic duty.

Although the CA correctly found that the record is bereft of any showing that Leynes was unacceptable to BGCC, the evidence the parties adduced a quo clearly indicates that petitioners were not in bad faith when they placed the former under floating status. Disgruntled by NHPI’s countermanding of her decision to bar Engr. Cantuba from the Project, Leynes twice signified her intention to resign from her position to Ota on 12 February 2002. Upon receiving the copy of the memorandum issued for Engr. Cantuba’s return to work, Leynes inscribed thereon the following handwritten note addressed to Ota, “Good Morning! I’m sorry but I would like to report to you my plan of resigning as your Prop. Manager. Thank You.”^{^[34]}^[27] In her application letter for an immediate emergency leave,^{^[35]}^[28] Leynes also distinctly expressed her dissatisfaction over NHPI’s resolution of her dispute with Engr. Cantuba and announced her plan of coordinating with her lawyer regarding her resignation letter, to wit:

This is in line with the Management decision re: Return to work order of Mr. Honesto Cantuba atBayGardens. I would like to express my deepest disappointed (sic) for having received this kind of decision from Nippon Housing Philippines, Inc.

Mr. Ota, I have been working with NHPI, as your Building Property Manager, for almost a year now. I had exerted all my effort to set-up the Property Management, experienced each and every pain and sacrifice[d] everything before we were able to get theBayGardensproject. Mr. Hiro Matsumoto, Hiroshi Takada and Yasuhiro Kawata had witnessed these things.

Given your decision, I am respecting this. The most painful thing for me is that the management did not value my effort for what I have done to the Company.

I am therefore submitting my letter for emergency leave of absence starting today, while I am still coordinating with my Lawyer re: my resignation letter.

Thank you for your support.^{^[36]}^[29]

In view of the sensitive nature of Leynes’ position and the critical stage of the Project’s business development, NHPI was constrained to relay the situation to BGCC which, in turn, requested the immediate adoption of remedial measures from Takada, including the appointment of a new Property Manager for the Project. Upon BGCC’s recommendation,^{^[37]}^[30] NHPI consequently hired Engr. Jose on 13 February 2002 as Leynes’ replacement.^{^[38]}^[31] Far from being the indication of bad faith the CA construed the same to be, these factual antecedents suggest that NHPI’s immediate hiring of Engr. Jose as the new Property Manager for the Project was brought about by Leynes’ own rash announcement of her intention to resign from her position. Although she subsequently changed her mind and sent Reyes a letter by telefax on 13 February 2002 announcing the reconsideration of her planned resignation and her intention to return to work on 15 February 2002,^{^[39]}^[32] Leynes evidently had only herself to blame for precipitately setting in motion the events which led to NHPI’s hiring of her own replacement.

Acting on Leynes’ 20 February 2002 letter protesting against the hiring of her replacement and reiterating her lack of intention to resign from her position,^{^[40]}^[33] the record, moreover, shows that NHPI simply placed her on floating status “until such time that another project could be secured” for her.^{^[41]}^[34] Traditionally invoked by security agencies when guards are temporarily sidelined from duty while waiting to be transferred or assigned to a new post or client,^{^[42]}^[35] Article 286 of the Labor Code has been applied to other industries when, as a consequence of the bona fide suspension of the operation of a business or undertaking, an employer is constrained to put employees on floating status for a period not exceeding six months.^{^[43]}^[36] In brushing aside respondents’ reliance on said provision to justify the act of putting Leynes on floating status, the CA ruled that no evidence was adduced to show that there was a bona fide suspension of NHPI’s business. What said court clearly overlooked, however, is the fact that NHPI had belatedly ventured into building management and, with BGCC as its only client in said undertaking, had no other Property Manager position available to Leynes.

Considering that even labor laws discourage intrusion in the employers’ judgment concerning the conduct of their business, courts often decline to interfere in their legitimate business decisions,^{^[44]}^[37] absent showing of illegality, bad faith or arbitrariness. Indeed, the right of employees to security of tenure does not give them vested rights to their positions to the extent of depriving management of its prerogative to change their assignments or to transfer them.^{^[45]}^[38] The record shows that Leynes filed the complaint for actual illegal dismissal from which the case originated on 22 February 2002 or immediately upon being placed on floating status as a consequence of NHPI’s hiring of a new Property Manager for the Project. The rule is settled, however, that “off-detailing” is not equivalent to dismissal, so long as such status does not continue beyond a reasonable time and that it is only when such a “floating status” lasts for more than six months that the employee may be considered to have been constructively dismissed.^{^[46]}^[39] A complaint for illegal dismissal filed prior to the lapse of said six-month and/or the actual dismissal of the employee is generally considered as prematurely filed.^{^[47]}^[40]

Viewed in the light of the foregoing factual antecedents, we find that the CA reversibly erred in holding petitioners liable for constructively dismissing Leynes from her employment. There is said to be constructive dismissal when an act of clear discrimination, insensitivity or disdain on the part of the employer has become so unbearable as to leave an employee with no choice but to forego continued employment.^{^[48]}^[41] Constructive dismissal exists where there is cessation of work because continued employment is rendered impossible, unreasonable or unlikely, as an offer involving a demotion in rank and a diminution in pay.^{^[49]}^[42] Stated otherwise, it is a dismissal in disguise or an act amounting to dismissal but made to appear as if it were not.^{^[50]}^[43] In constructive dismissal cases, the employer is, concededly, charged with the burden of proving that its conduct and action or the transfer of an employee are for valid and legitimate grounds such as genuine business necessity.^{^[51]}^[44] To our mind, respondents have more than amply discharged this burden with proof of the circumstances surrounding Engr. Carlos’ employment as Property Manager for the Project and the consequent unavailability of a similar position for Leynes.

With no other client aside from BGCC for the building management side of its business, we find that NHPI was acting well within its prerogatives when it eventually terminated Leynes’ services on the ground of redundancy. One of the recognized authorized causes for the termination of employment, redundancy exists when the service capability of the workforce is in excess of what is reasonably needed to meet the demands of the business enterprise.^{^[52]}^[45] A redundant position is one rendered superfluous by any number of factors, such as overhiring of workers, decreased volume of business, dropping of a particular product line previously manufactured by the company or phasing out of service activity priorly undertaken by the business.^{^[53]}^[46] It has been held that the exercise of business judgment to characterize an employee’s service as no longer necessary or sustainable is not subject to discretionary review where, as here, it is exercised there is no showing of violation of the law or arbitrariness or malice on the part of the employer.^{^[54]}^[47] An employer has no legal obligation to keep more employees than are necessary for the operation of its business.^{^[55]}^[48]

Considering that Leynes was terminated from service upon an authorized cause, we find that the CA likewise erred in faulting NHPI for supposedly failing to notify said employee of the particular act or omission leveled against her and the ground/s for which she was dismissed from employment. Where dismissal, however, is for an authorized cause like redundancy, the employer is, instead, required to serve a written notice of termination on the worker concerned and the DOLE, at least one month from the intended date thereof.^{^[56]}^[49] Here, NHPI specifically made Leynes’ termination from service effective 22 August 2002, but only informed said employee of the same on 8 August 2002^{^[57]}^[50] and filed with the DOLE the required Establishment Termination Report only on 16 August 2002.^{^[58]}^[51] For its failure to comply strictly with the 30-day minimum requirement for said notice and effectively violating Leynes’ right to due process, NHPI should be held liable to pay nominal damages in the sum of P50,000.00. The penalty should understandably be stiffer because the dismissal process was initiated by the employer’s exercise of its management prerogative.^{^[59]}^[52]

Having been validly terminated on the ground of redundancy, Leynes is entitled to separation pay equivalent to one month salary for every year of service but not to the backwages adjudicated in her favor by the Labor Arbiter.^{^[60]}^[53] Hired by NHPI on 26 March 2001 and terminated effective 22 August 2002, Leynes is entitled to a separation pay in the sum of P40,000.00, in addition to her last pay which, taking into consideration her proportionate 13^th month pay, tax refund and SILP, was computed by NHPI at P28,188.16.^{^[61]}^[54] For lack of showing of bad faith, malice or arbitrariness on the part of NHPI, there is, however, no justifiable ground for an award of moral and exemplary damages.^{^[62]}^[55] For lack of factual or legal bases, we find no cause to award attorney’s fees in favor of Leynes. In the absence of the same showing insofar as NHPI’s corporate officers are concerned, neither is there cause to hold them jointly and severally liable for the above-discussed monetary awards.

WHEREFORE, premises considered, the petition is GRANTED and the assailed 23 November 2006 Decision is, accordingly, REVERSED and SET ASIDE. In lieu thereof, another is entered ordering NHPI to pay Leynes the following sums: (a) P40,000.00 as separation pay; (b) P28,188.16 representing her unpaid wages, proportionate 13^th month pay, tax refund and SILP; and (c) P50,000.00 by way of nominal damages.

SO ORDERED.

JOSE PORTUGAL PEREZ

Associate Justice

WE CONCUR:

ANTONIO T. CARPIO

Associate Justice

Chairperson

TERESITA J. LEONARDO-DE CASTRO ARTURO D. BRION

Associate Justice Associate Justice

MARIA LOURDES P. A. SERENO

Associate Justice

ATTESTATION

I attest that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

ANTONIO T. CARPIO

Associate Justice

Chairperson, Second Division

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution and the Division Chairperson’s Attestation, it is hereby certified that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

RENATO C. CORONA

Chief Justice

[1][38] Mendoza v. Rural Bank of Lucban, G.R. No. 155421, 7 July 2004, 433 SCRA 756, 766.

[2][37] Coca-Cola Bottlers Philippines, Inc. v. Del Villar, G.R. No. 163091, 6 October 2010, 632 SCRA 293, 312.

[3][38] Mendoza v. Rural Bank of Lucban, G.R. No. 155421, 7 July 2004, 433 SCRA 756, 766.

[4][39] Megaforce Security and Allied Services, Inc. v. Lactao, G.R. No. 160940, 21 July 2008, 559 SCRA 110, 117.

[5][39] Megaforce Security and Allied Services, Inc. v. Lactao, G.R. No. 160940, 21 July 2008, 559 SCRA 110, 117.

[6][40] Sasan, Sr. v. National Labor Relations Commission 4^th Division, G.R. No. 176240, 17 October 2008, 569 SCRA 670, 696.

[7][37] Coca-Cola Bottlers Philippines, Inc. v. Del Villar, G.R. No. 163091, 6 October 2010, 632 SCRA 293, 312.

* Associate Justice Teresita J. Leonardo-De Castro is designated as Acting Member of the Second Division as per Special Order No. 1006 dated 10 June 2011.

[8][1] Rollo, pp. 8-34, Petition.

[9][2] CA rollo, CA-G.R. SP No. 84781, CA’s 23 November 2006 Decision, pp. 283-295.

[10][3] Id. at 295.

[11][4] Record, NLRC NCR (South) Case No. 30-02-01119-02, Leynes’ Position Paper, pp. 9-10.

[12][5] Leynes’ 8 February 2002 Letter, id. at 31-33.

[13][6] Cantuba’s 8 February 2002 Letter, id. at 34-36.

[14][7] Takada’s 12 February 2002 Memorandum, id. at 38.

[15][8] Leynes’ 12 February 2002 Letter and Application for Leave, id. at 39-40.

[16][9] Carlos Jose’s 10 June 2002 Affidavit, id. at 262.

[17][10] Leynes’ 13 February 2002 Letter, id. at 18.

[18][11] Leynes’ 20 February 2002 Letter, id. at 19.

[19][12] Marlette Lagradilla’s 20 April 2002 Affidavit, id. at 62.

[20][13] Reyes’ 22 February 2002 Letter and Memorandum, id. at 41-42.

[21][14] Leynes’ 22 February 2002 Complaint, id. at 1-2.

[22][15] Leynes’ 20 March 2002 Position Paper, id. at. 7-14.

[23][16] NHPI’s 18 March 2002 Position Paper, id. at 23-29.

[24][17] DOLE Establishment Termination Report, id. at 269.

[25][18] Reyes’ 8 August 2002 Letter, id. at 266.

[26][19] Labor Arbiter’s 14 January 2003 Decision, id. at 298-316.

[27][20] Id. at 314-316.

[28][21] NLRC’s 30 September 2003 Decision, id. at 472-484.

[29][22] CA rollo, CA-G.R. SP No. 84781, Leynes’ Rule 65 Petition for Certiorari, pp. 2-33.

[30][23] CA’s 23 November 2006 Decision, id. at 283-295.

[31][24] NHPI’s 19 December 2006 Motion for Reconsideration, id. at 299-314.

[32][25] CA’s 8 May 2007 Resolution, id. at 320-321.

[33][26] Rollo, p. 19

[34][27] Records, NLRC-NCR South Sector Case No. 30-02-01119-02, p. 38.

[35][28] Id. at 39.

[36][29] Id.

[37][30] Chan Say Lim’s 19 April 2002 Affidavit;Id., at 227, Lian Lian Lim’s 24 April 2002, id. at 76-77.

[38][31] Eng. Carlos Jose’s 10 June 2002 Affidavit, id. at 262.

[39][32] Id. at 18.

[40][33] Id. at 19.

[41][34] Id. at 42.

[42][35] Nationwide Security and Allied Services, Inc. v. Ronald P. Valderama, G.R. 186614, 23 February 2011.

[43][36] JPL Marketing Promotions v. Court of Appeals, 501 Phil. 440, 449 (2005).

[44][37] Coca-Cola Bottlers Philippines, Inc. v. Del Villar, G.R. No. 163091, 6 October 2010, 632 SCRA 293, 312.

[45][38] Mendoza v. Rural Bank of Lucban, G.R. No. 155421, 7 July 2004, 433 SCRA 756, 766.

[46][39] Megaforce Security and Allied Services, Inc. v. Lactao, G.R. No. 160940, 21 July 2008, 559 SCRA 110, 117.

[47][40] Sasan, Sr. v. National Labor Relations Commission 4^th Division, G.R. No. 176240, 17 October 2008, 569 SCRA 670, 696.

[48][41] Soliman Security Services, Inc. v. Court of Appeals, 433 Phil. 902, 910 (2002).

[49][42] Endico v. Quantum Foods Distribution Center, G.R. No. 161615, 30 January 2009, 577 SCRA 299, 310 citing Blue Dairy Corporation v. NLRC, 373 Phil. 179, 186.

[50][43] Uniwide Sales Warehouse Club v. National Labor Relations Commission, G.R. No. 154503, 29 February 2008, 547 SCRA 220, 236.

[51][44] Philippine Veterans Bank v. National Labor Relations Commission (Fourth Division), G.R. No. 188882, 30 March 2010, 617 SCRA 204, 212.

[52][45] Edge Apparel, Inc. v. National Labor Relations Commission, G.R. No. 121314, 19 February 1998, 286 SCRA 302, 311.

[53][46] AMA Computer College v. Garcia, G.R. No. 166703, 14 April 2008, 551 SCRA 254, 264.

[54][47] DOLE Philippines, Inc. v. National Labor Relations Commission, 417 Phil. 428, 440 (2001).

[55][48] Almodiel v. National Labor Relations Commission, G.R. No. 100641, 14 June 1993, 223 SCRA 341, 348.

[56][49] Serrano v. National Labor Relations Commission, 380 Phil. 416, 439 (2000).

[57][50] Record, NLRC NCR (South) Case No. 30-02-01119-02, pp. 266-268.

[58][51] Id. at 269.

[59][52] Smart Communications, Inc. v. Astorga, G.R. Nos. 148132, 151079, 151372, 28 January 2008, 542 SCRA 434, 452 citing Jaka Food Processing Corporation v. Pacot, G.R. No. 151378, 28 March 2005, 454 SCRA 119, 125-126.

[60][53] Lowe, Inc. v. Court of Appeals, G.R. Nos. 164813 & 174590, 14 August 2009, 596 SCRA 140, 154.

[61][54] Record, NLRC NCR (South) Case No. 30-02-01119-02, p. 267.

[62][55] Lambert Pawnbrokers & Jewelry Corporation v. Binamira, G.R. No. 170464, 12 July 2010, 624 SCRA, 705, 720-721.

Comment

J.A.B. Bulao & Associates

Archive for 2011

CASE 2011-0177: FRANCIS BELLO, REPRESENTED HEREIN BY HIS DAUGHTER AND ATTORNEY-IN-FACT, GERALDINE BELLO-ONA VS. BONIFACIO SECURITY SERVICES, INC. AND SAMUEL TOMAS (G.R. NO. 188086, 03 AUGUST 2011, BRION J.) SUBJECTS: VERIFICATION, CONSTRUCTIVE DISMISSAL. (BRIEF TITLE: BELLO VS. BONIFACIO SECURITY).

LEGAL NOTE 0097: CAN EMPLOYER CHANGE ASSIGNMENTS OF EMPLOYEES OR TRANSFER THEM? CAN EMPLOYER PLACE EMPLOYEES ON FLOATING STATUS?

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