Sillano vs. JGC Philippines, Inc.

A preventive suspension is valid when the employee's continued employment poses a serious and imminent threat to the employer's or co-workers' life or property pending investigation, and it does not exceed 30 days; the employer may act to protect property it deems its own where ownership remains unadjudicated. Claims for damages and benefits must be pleaded and supported by evidence; mere allegations are not proof.

JGC Philippines, Inc. is a corporation engaged in design engineering and construction management. Santiago dJ. Sillano was employed by JGC on June 1, 1994, initially as Junior Engineer and eventually as Senior Engineer. During his employment, Sillano developed five computer programs whose ownership later became contested between him and JGC. The dispute unfolded against the Labor Code's preventive-suspension regime under Book V, Rule XXIII of the Omnibus Rules Implementing the Labor Code, and the Intellectual Property Code's system of copyright registration and IPO adjudication.

JGC Philippines, Inc. is engaged in the business of design engineering and construction management. On June 1, 1994, it employed Santiago dJ. Sillano as Junior Engineer. By the time JGC terminated his employment on February 16, 2004, Sillano was already a Senior Engineer receiving a monthly salary of PHP 32,409.00. During his employment, Sillano developed five computer programs: "Connection Input Instant," "XSTEEL to STAAD Converter Ver. 1," "Windload Generator, Ver. 2," "Rebar Extractor," and "Compression Check."

Sometime in January 2004, Sillano and JGC began a dispute over ownership of the programs. Sillano claimed that as the creator he owned them; JGC countered that it owned them because Sillano created them within the course of his employment, and that any work product of an employee during employment automatically became its property. Sillano then activated the security features of the programs, making them inaccessible and ineffective for JGC's business projects.

On January 14, 2004, JGC served Sillano a Notice to Explain and Notice of Preventive Suspension for (a) unauthorized destruction, tampering, taking or concealment of company records, and (b) failure to comply with official orders and/or perform regular assigned duties or specific instructions related to his duties. On January 15, 2004, JGC sent a demand letter directing Sillano to unlock the security features. On the same day, Sillano submitted a written explanation, averring that as a compromise he would adjust the time-lock mechanism but refusing to remove the security features altogether. On January 22, 2004, JGC served a Final Demand to Unlock the Security Features and Turnover the Source Codes and Related Documentation. On January 27, 2004, Sillano contested his preventive suspension, arguing that JGC had yet to establish ownership. On February 16, 2004, JGC sent a Notice of Termination, finding Sillano guilty of willful disobedience of lawful and reasonable orders by violating company rules and policies in total disregard of his superior's authority and by deliberately refusing direction orders to unlock and surrender the source codes.

On March 15, 2004, JGC filed a complaint for breach of employment agreement against Sillano before the NLRC. On March 29, 2004, Sillano filed an administrative complaint against JGC before the IPO. On April 2, 2004, he filed a criminal complaint for violation of Section 217 of the Intellectual Property Code against JGC, and on the same day filed a complaint before the NLRC for illegal dismissal, illegal suspension, unpaid wages, actual, moral, and exemplary damages, and attorney's fees. Sillano alleged that his refusal to obey JGC's order was based on his claim of ownership; that his employment contract neither stated that creating, writing, or developing computer programs was among his functions nor provided that JGC automatically owned programs he created; and that allowing JGC and co-employees to use the programs did not mean he abandoned or waived ownership. JGC countered that it owned the programs because Sillano created them in the course of his employment and performance of regularly assigned duties, particularly the execution of engineering design projects using company facilities and resources; that as owner it could order removal of the security features; and that Sillano's refusal constituted insubordination, a ground for dismissal. Both parties presented Certificates of Copyright Registration and Deposit of the programs under their respective names, issued by the National Library.

At the time of the preventive suspension, no IPO ruling on ownership had yet been issued; the IPO later declared Sillano owner on September 28, 2007. Sillano was preventively suspended beginning January 14, 2004 and terminated on February 16, 2004. The labor tribunals and the CA found that Sillano belatedly submitted evidence for his claimed benefits and that these claims were not included in his complaint.

• Grave Abuse of Discretion and NLRC Ruling: Sillano argued that the CA acted with grave abuse of discretion by disregarding the Labor Arbiter's decision, misconstruing the NLRC's decision, and affirming an unconstitutional order; he claimed the NLRC ruling was ambiguous, did not state the facts and law on which it was based, and was therefore void and unconstitutional.
• Modification of IPO and Prior CA Decision: Sillano maintained that the CA modified the final IPO decision and the final CA decision in the earlier petition when it ruled that his preventive suspension was valid.
• Validity of Preventive Suspension and Equipoise Rule: Sillano argued that the IPO held copyright subsists from the time of creation of the programs, from 2001 to 2003, so that when he was preventively suspended in 2004 he was already the owner and the suspension had no basis; assuming ownership was still to be ascertained, the equipoise rule should favor him as the employee. He further stated that his preventive suspension lasted more than 30 days.
• Entitlement to Benefits, Damages, and Attorney's Fees: Sillano claimed he was entitled to all benefits even if not raised in his position paper, citing jurisprudence and his employment contract; he argued that JGC committed copyright infringement, illegally terminated him, and even asked him to pay PHP 2,000,000, entitling him to moral and exemplary damages and attorney's fees.

• Ownership of Programs: JGC countered that it owned the programs because Sillano created them in the course of his employment and in the performance of regularly assigned duties, particularly the execution of engineering design projects using company facilities and resources.
• Lawful Orders and Insubordination: JGC averred that as owner of the programs, it could order Sillano to remove their security features and unlock them, and that Sillano's refusal to comply with its lawful order constituted insubordination, which was a ground for dismissal.

• Validity of Preventive Suspension: Whether the CA erred in affirming the NLRC's ruling that JGC validly placed Sillano under preventive suspension despite the IPO's later ruling that he owned the computer programs.
• Thirty-Day Limit: Whether Sillano's preventive suspension exceeded the 30-day limit under the Omnibus Rules Implementing the Labor Code.
• Moral and Exemplary Damages and Attorney's Fees: Whether Sillano is entitled to moral and exemplary damages and attorney's fees.
• Unpaid Benefits: Whether Sillano is entitled to unpaid employment benefits not raised before the labor tribunals.
• Grave Abuse of Discretion and Modification of IPO/Prior CA Decision: Whether the CA acted with grave abuse of discretion in modifying the IPO's final decision and the prior CA decision.
• Scope of Rule 45 Review: Whether the issues raised are factual and beyond the scope of a petition for review on certiorari under Rule 45.

• Validity of Preventive Suspension: Yes, valid. Preventive suspension is justified when continued employment poses a serious and imminent threat to the employer's or co-workers' life or property; at the time of suspension no IPO ruling on ownership existed, and Sillano's restriction of access threatened JGC's claimed property.
• Thirty-Day Limit: No violation. Suspension began January 14, 2004; the 30-day period ended Friday, February 13, 2004; termination on the next working day, Monday, February 16, 2004, was within the prescribed period.
• Moral and Exemplary Damages and Attorney's Fees: No. No sufficient evidence showed the circumstances warranting these awards.
• Unpaid Benefits: No. Claims were not included in the complaint and evidence was belatedly submitted; they cannot be raised for the first time on appeal, and mere allegations are not proof.
• Grave Abuse of Discretion and Modification of IPO/Prior CA Decision: No. The issues are factual and a rehash of prior issues, beyond the scope of Rule 45 review.
• Scope of Rule 45 Review: No. Only questions of law may be raised; factual findings of labor tribunals affirmed by the CA are conclusive absent exceptional circumstances.

• Validity of Preventive Suspension: Preventive suspension is not a penalty but a disciplinary measure to protect the life or property of the employer or co-workers pending investigation of an alleged infraction. It is justified only when the employee's continued employment poses a serious and imminent threat to the employer's or co-workers' life or property; when justified, the preventively suspended employee is not entitled to salaries and benefits for the suspension period. At the time JGC imposed the suspension, there was still no IPO ruling on ownership of the programs. JGC, acting as owner, asked for turnover of the source codes; Sillano did not obey, and his restriction of access was viewed as a serious and imminent threat to JGC's property. Thus, JGC had a valid ground to suspend him.
• Thirty-Day Limit: Section 9 of the Omnibus Rules Implementing the Labor Code provides that no preventive suspension shall last longer than 30 days, after which the employer shall reinstate the worker or extend the suspension while paying wages and benefits. Sillano was preventively suspended starting January 14, 2004, when he received the Notice to Explain and Notice of Preventive Suspension. He was terminated on February 16, 2004. The 30-day period ended on Friday, February 13, 2004; on the next working day, Monday, February 16, 2004, JGC resolved the issue and terminated his employment. The termination was still within the prescribed period.
• Moral and Exemplary Damages and Attorney's Fees: The CA found no sufficient evidence showing the circumstances in which moral and exemplary damages and attorney's fees are awarded. Sillano belatedly submitted evidence pertaining to his claimed benefits, and these claims were not included in his complaint. Fair play dictates that they cannot be raised for the first time on appeal. Sillano cannot sweepingly conclude that because his appeal was granted, all benefits should also be granted; he must prove entitlement and present supporting evidence. Mere allegation is not evidence and is essentially self-serving and devoid of evidentiary weight.
• Unpaid Benefits: The same reasoning applies to the unpaid benefits. The records lacked evidence that the entitlement issue was previously raised in the labor tribunals; in his complaint and position papers, Sillano merely denominated them as "unpaid salaries." These claims were raised only for the first time on appeal and cannot be entertained. His belated submission of evidence, attributed to his former counsel, does not excuse the failure because clients are bound by the mistakes of their counsel.
• Grave Abuse of Discretion and Modification of IPO/Prior CA Decision: The Court found no error committed by the CA to warrant reversal. The issues raised were not only a rehash of the previous issues before the labor tribunals and the appellate court but also factual, which is beyond the scope of review. The CA's preventive suspension ruling rested on the absence of an IPO ruling at the time of suspension and on compliance with the 30-day limit, not on a modification of the IPO's final decision.
• Scope of Rule 45 Review: Factual findings of labor tribunals which are affirmed by the CA are afforded great weight and respect and are conclusive on the Supreme Court; only in exceptional circumstances will the Court deviate and conduct its own review. Such circumstances were not present. Only questions of law may be raised in a petition for review on certiorari under Rule 45. The Court is not a trier of facts and cannot rule on the truth or falsity of the facts alleged by the parties.

• Preventive Suspension — Preventive suspension is not a penalty but a disciplinary measure to protect the life or property of the employer or co-workers pending investigation of an alleged infraction. It is justified only when the employee's continued employment poses a serious and imminent threat to the employer's or co-workers' life or property. When justified, the preventively suspended employee is not entitled to the payment of salaries and benefits for the period of suspension. The Court applied this doctrine to uphold JGC's suspension because no IPO ruling on ownership existed at the time and Sillano's restriction of access posed a serious and imminent threat to what JGC deemed its property.
• Thirty-Day Limit on Preventive Suspension — Under Book V, Rule XXIII, Section 9 of the Omnibus Rules Implementing the Labor Code, no preventive suspension shall last longer than 30 days; thereafter, the employer must reinstate the worker or extend the suspension while paying wages and other benefits. The Court applied this rule by computing the period from January 14, 2004 to February 13, 2004 and holding that termination on the next working day, February 16, 2004, was within the prescribed period.
• Conclusiveness of Labor Tribunals' Factual Findings — Factual findings of labor tribunals affirmed by the Court of Appeals are not only afforded great weight and respect but are also conclusive on the Supreme Court. Only exceptional circumstances will warrant a deviation to serve the ends of justice. The Court applied this doctrine in denying Sillano's factual and rehashed issues.
• Rule 45 Limited to Questions of Law — A petition for review on certiorari under Rule 45 may raise only questions of law. The Court is not a trier of facts, and its jurisdiction is limited to questions of law; it cannot rule on the truth or falsity of the facts alleged by the parties. The Court applied this rule in rejecting Sillano's factual assertions.
• Mere Allegation Is Not Evidence — A mere allegation is not evidence and is not equivalent to proof; it is essentially self-serving and devoid of evidentiary weight. The Court applied this rule in denying Sillano's claims for damages, benefits, and attorney's fees absent supporting evidence.
• Legal Interest on Monetary Awards — Based on prevailing jurisprudence, monetary awards shall earn legal interest at the rate of 6% per annum from the finality of the decision until full payment. The Court applied this rule to the separation pay and backwages awarded to Sillano.

• "Preventive suspension is not a penalty but a disciplinary measure to protect life or property of the employer or the co-workers pending investigation of any alleged infraction committed by the employee." — This defines the nature and purpose of preventive suspension, framing the Court's analysis of its validity.
• "Thus, it is justified only when the employee's continued employment poses a serious and imminent threat to the employer's or co-workers' life or property. When justified, the preventively suspended employee is not entitled to the payment of his salaries and benefits for the period of suspension." — This states the controlling requisites for a valid preventive suspension and the consequence on salaries and benefits.
• "No preventive suspension shall last longer than 30 days. The employer shall thereafter reinstate the worker in his former or in a substantially equivalent position or the employer may extend the period of suspension provided that during the period of extension, he pays the wages and other benefits due to the worker." — This quotes Section 9 of the Omnibus Rules Implementing the Labor Code, which the Court used to reject Sillano's claim that his suspension exceeded the statutory period.
• "This is also in view of the basic rule that mere allegation is not evidence and is not equivalent to proof, the allegation is essentially self-serving and devoid of any evidentiary weight." — This supports the denial of Sillano's claims for damages, benefits, and attorney's fees for lack of evidence.

• Every Nation Language Institute, et al. vs. Dela Cruz, 871 Phil. 323, 340 (2020) — Cited by the majority in support of the rule on preventive suspension; followed.
• Menez vs. Status Maritime Corp., et al., 839 Phil. 360, 369 (2018) — Cited for the rule that mere allegation is not evidence; followed.
• Nacar vs. Gallery Frames, et al., 716 Phil. 267 (2013) — Cited as prevailing jurisprudence for the 6% per annum legal interest on monetary awards; followed.
• Tongonan Holdings and Dev't. Corp. vs. Atty. Escano, Jr., 672 Phil. 747, 756 (2011) — Cited for the rule that a Rule 45 petition may raise only questions of law and the Court is not a trier of facts; followed.

• Book V, Rule XXIII, Section 8, Omnibus Rules Implementing the Labor Code — Preventive suspension may be imposed if the employee's continued employment poses a serious and imminent threat to the life or property of the employer or co-workers. The Court applied this provision to uphold JGC's suspension of Sillano.
• Book V, Rule XXIII, Section 9, Omnibus Rules Implementing the Labor Code — No preventive suspension shall last longer than 30 days; the employer must thereafter reinstate the worker or extend the suspension while paying wages and other benefits. The Court applied this provision to find that Sillano's termination on February 16, 2004 was within the prescribed period.
• Rule 45, Rules of Court — A petition for review on certiorari may raise only questions of law. The Court applied this rule in rejecting Sillano's factual issues and rehashed arguments.

Caguioa (Chairperson), Inting, and Singh, JJ., concurred.

• Dimaampao, J. — Dissented from the majority's affirmance of the validity of the preventive suspension. He argued that under Book V, Rule XXIII, Sections 8 and 9 of the Omnibus Rules Implementing the Labor Code, preventive suspension requires a serious and imminent threat to the life or property of the employer or co-workers; without such a threat, preventive suspension is not proper. JGC's basis for the suspension was Sillano's withholding of access to the disputed computer software. Because Sillano was later confirmed as the rightful owner of the copyright, JGC never held title over the programs and could not act as owner by demanding turnover or access; Sillano's acts could not have constituted a serious and imminent threat against JGC or its property. Under Section 172(n) of the Intellectual Property Code, computer programs are protected from the moment of their creation, and copyright vests upon the sole fact of creation without need of registration; the IPO ruling merely confirmed what was already true in fact. Sillano acted within his rights in implementing security features and excluding JGC from use and access, and he even offered limited access subject to security features. JGC could have avoided the conflict through a contract or assignment agreement. JGC must therefore recompense Sillano for loss of salaries and benefits during the preventive suspension. He voted to grant the petition insofar as the legality of the preventive suspension is concerned.