Case Digest: Leopard Security v. Quitoy

G.R. No. 186344 : February 20, 2013




Alongside Numeriano Ondong, respondents Tomas Quitoy, Raul Sabang and Diego Morales were hired as security guards by petitioner Leopard Security and Investigation Agency (LSIA) which maintained its office at BCC House, 537 Shaw Boulevard, Mandaluyong City.All being residents of Cebu City, respondents were assigned by LSIA to the different branches of its only client in said locality, Union Bank of the Philippines (Union Bank). On 1 April 2005, it appears that Union Bank served a notice to LSIA, terminating the partiessecurity service contract effective at the end of business hours of 30 April 2005. Thru its representative, Rogelio Morales, LSIA informed respondents on 29 April 2005 of the termination of its contract with Union Bank which had decided to change its security provider. Upon Moralesinstruction, respondents went to the Union Bank Cebu Business Park Branch on 30 April 2005, for the turnover of their service firearms to Arnel Cortes, Union Bank Chief Security Officer.

On 3 May 2005, respondents and Ondong filed a complaint for illegal dismissal, unpaid 13th month pay and service incentive leave pay (SILP), moral and exemplary damages as well as attorney fees against LSIA, its President, Jose Poe III, Union Bank, its Regional Service and Operations Officer, Catherine Cheung, HerbertHojas, Protectors Services, Inc. (PSI) and Capt. Gerardo Jaro. With the complaint already docketed as RAB Case No. 07-05-0979-2005 before the Regional Arbitration Branch No. VII of the National Labor Relations Commission (NLRC) in Cebu City, it appears that LSIA sent on 10 May 2005 a notice requiring respondents to report for work to its Mandaluyong City office. In an Order dated 6 June 2005, Cheung and Hojas were later dropped as parties-respondents from the case upon motion of respondents. In view of Ondong execution of a quitclaim, on the other hand, his complaint was likewise dismissed with prejudice, resulting in the exclusion of PSI and Jaro as parties-respondents from the case.

In support of their complaint, respondents averred that they were hired and assigned by LSIA to the different Cebu City branches of Union Bank which directly paid their salaries and whose branch managers exercised direct control and supervision over them. Required to work from 7:30 a.m. to 9:00 p.m. daily, respondents claimed that they took orders and instructions from Union Bank branch managers since LSIA had no administrative personnel in Cebu City. Respondents further asserted that, after introducing himself as a representative of LSIA on 29 April 2005, Morales belatedly informed them that their services would be terminated at the end of the office hours on the same business day. Directed by Morales to report to Union Bank Cebu Business Park Branch the next day, respondents maintained that they surrendered their service firearms to Cortes who told them that Union Bank would be engaging the services of another security agency effective the next working day. Not even reimbursed their firearm bond nor told that Union Bank had no monetary obligation to them, respondents claimed they were constrained to file their complaint and to pray that the former be held jointly and severally liable with LSIA for their claims.

In its position paper, LSIA, on the other hand, asseverated that upon being hired, respondents opted for an assignment in Cebu City and were, accordingly, detailed at the different branches of Union Bank in said locality. Informed by Union Bank on 1 April 2005 of the termination of their security service contract effective 30 April 2005, LSIA claimed that it relieved respondents from their assignments by the end of the business hours of the latter date. Petitioners would, on 10 May 2005, direct respondents to report for work at itsMandaluyong City office. As respondents failed to do so, LSIA alleged that it issued show cause letters on 21 June 2005, requiring the former to explain why they should not be administratively sanctioned for their unexplained absences. As the avowed direct employer of respondents, LSIA also prayed that Union Bank be dropped from the case and that the complaint be altogether dismissed for lack of merit. Invoking the security service contract it executed with LSIA from which its lack of an employer-employee relationship with respondents could be readily gleaned, Union Bank, in turn, asserted that the complaint should be dismissed as against it for lack of cause of action.

On 6 April 2006, Labor Arbiter Violeta Ortiz-Bantug rendered a Decision, finding LSIA liable for the illegal dismissal of respondents. Faulting LSIA for informing respondents of the termination of their services only on 30 April 2005 despite Union Bank 1 April 2005 advice of the termination of its security service contract, the Labor Arbiter ruled that the 10 May 2005 report to work order did not show a sincere intention on the part of LSIA to provide respondents with other assignments. Although absolved from liability for the foregoing awards upon the finding that LSIA was an independent contractor, Union Bank was, however, held jointly and severally liable with said security agency for the payment of respondentsclaims for proportionate 13th month pay and SILP for the three years immediately preceding the institution of the case.

On appeal, the foregoing decision was modified by the Fourth Division of the NLRC, applying the principle that security agencies like LSIA are allowed to put security guards on temporary off-detail or floating status for a period not exceeding six months, the NLRC discounted the factual and legal bases for the illegal dismissal determined by the Labor Arbiter as well as the backwages awarded in favor of respondents. Finding that the filing of the complaint on 3 May 2005 was premature, the NLRC took note of the fact that respondents did not even protest against the report to work order issued by LSIA. Even then, the NLRC upheld the Labor Arbiter award of separation pay on the theory that reinstatement was no longer viable. Belatedly submitting documents to prove its payment of SILP, LSIA filed a motion for reconsideration of the foregoing decision which was, however, denied for lack of merit in the NLRC 23 July 2007 Resolution.

Dissatisfied, LSIA filed the Rule 65 Petition for Certiorari docketed before the CA. Calling attention to the impropriety of the award of separation pay absent a finding of illegal dismissal, LSIA also faulted the NLRC for ignoring the evidence it submitted alongside its motion for reconsideration to prove the payment of respondentsSILP for the years 2003, 2004 and 2005. On 26 September 2008, the then Twentieth Division of the CA rendered the herein assailed decision, affirming the NLRC 23 July 2007 Decision and denying LSIA petition for lack of merit.

ISSUE: Whether or not the Court of Appeals committed reversible error when it upheld the NLRC decision awarding to respondents separation pay and service incentive leave despite its finding that they were not illegally dismissed.

HELD: The petition is impressed with merit.

Applying Article 286 of the Labor Code of the Philippines by analogy, this Court has repeatedly recognized that security guards may be temporarily sidelined by their security agency as their assignments primarily depend on the contracts entered into by the latter with third parties. Temporary "off-detail" or "floating status" is the period of time when security guards are in between assignments or when they are made to wait after being relieved from a previous post until they are transferred to a new one. It takes place when, as here, the security agency clients decide not to renew their contracts with the agency, resulting in a situation where the available posts under its existing contracts are less than the number of guards in its roster. For as long as such temporary inactivity does not continue for a period exceeding six months, it has been ruled that placing an employee on temporary "off-detail" or "floating status" is not equivalent to dismissal.

In the case at bench, respondents were informed on 29 April 2005 that they were going to be relieved from duty as a consequence of the 30 April 2005 expiration of the security service contract between Union Bank and LSIA. While respondents lost no time in immediately filing their complaint on 3 May 2005, the record equally shows that they were directed by LSIA to report for work at its Mandaluyong City office on 10 May 2005 or a mere ten days from the time the former were effectively sidelined. Considering that a security guard is only considered illegally dismissed from service when he is sidelined from duty for a period exceeding six months, we find that the CA correctly upheld the NLRC ruling that respondents were not illegally dismissed by LSIA. Parenthetically, said ruling is binding on respondents who did not appeal either the decision rendered by the NLRC or the CA in line with the entrenched procedural rule in this jurisdiction that a party who did not appeal cannot assign such errors as are designed to have the judgment modified.

Having correctly ruled out illegal dismissal of respondents, the CA reversibly erred, however, when it sustained the NLRC award of separation pay on the ground that the partiesrelationship had already been strained. For one, liability for the payment of separation pay is a legal consequence of illegal dismissal where reinstatement is no longer viable or feasible. Under Article 279 of the Labor Code, an illegally dismissedemployee is entitled to the twin reliefs of full backwages and reinstatement without loss of seniority rights. Aside from the instances provided under Articles 283 and 284of the Labor Code, separation pay is, however, granted when reinstatement is no longer feasible because of strained relations between the employer and the employee.In cases of illegal dismissal, the accepted doctrine is that separation pay is available in lieu of reinstatement when the latter recourse is no longer practical or in the best interest of the parties.

As a relief granted in lieu of reinstatement, however, it consequently goes without saying that an award of separation pay is inconsistent with a finding that there was no illegal dismissal. Standing alone, the doctrine of strained relations will not justify an award of separation pay, a relief granted in instances where the common denominator is the fact that the employee was dismissed by the employer. Even in cases of illegal dismissal, the doctrine of strained relations is not applied indiscriminately as to bar reinstatement, especially when the employee has not indicated an aversion to returning to work or does not occupy a position of trust and confidence in or has no say in the operation of the employer business. Although litigation may also engender a certain degree of hostility, it has likewise been ruled that the understandable strain in the partiesrelations would not necessarily rule out reinstatement which would, otherwise, become the rule rather than the exception in illegal dismissal cases.

Absent illegal dismissal on the part of LSIA and abandonment of employment on the part of respondents, we find that the latter reinstatement without backwages is, instead, in order. In addition to respondent alternative prayer therefor in their position paper, reinstatement is justified by LSIA directive for them to report for work at its Mandaluyong City office as early of 10 May 2005. As for the error ascribed the CA for failing to correct the NLRC disregard of the evidence showing LSIA payment of respondentsSILP, suffice it to say that the NLRC is not precluded from receiving evidence, even for the first time on appeal, because technical rules of procedure are not binding in labor cases.Considering that labor officials are, in fact, encouraged to use all reasonable means to ascertain the facts speedily and objectively, with little resort to technicalities of law or procedure, LSIA correctly faults the CA for likewise brushing aside the evidence of SILP payments it submitted during the appeal stage before the NLRC.