1|Case Digests/Summaries Labor Standards Mazo, Edward Jude S. Lex Leonum Fraternitas, Inc.

F. Employment Restriction a. Prohibition against competitive employment ROLANDO C. RIVERA, Petitioner, vs. SOLIDBANK CORPORATION, Respondent. FACTS: Rivera had been working for the Solidbank since 1977. In Dec 1994, deciding to devote his time and attention to his poultry business in Cavite, Rivera applied for retirement. Subsequently, Solidbank required Rivera to sign an undated Release, Waiver and Quitclaim, Rivera acknowledged receipt of the net proceeds of his separation and retirement benefits and promised that "[he] would not, at any time, in any manner whatsoever, directly or indirectly engage in any unlawful activity prejudicial to the interest of Solidbank, its parent, affiliate or subsidiary companies, their stockholders, officers, directors, agents or employees, and their successors-in-interest and will not disclose any information concerning the business of Solidbank, its manner or operation, its plans, processes, or data of any kind." On May 1995, the Equitable employed Rivera as Manager of its Credit Investigation and Appraisal Division of its Consumers' Banking Group. Upon discovering this, Solidbank First Vice-President for HRD Celia Villarosa wrote a letter informing Rivera that he had violated the Undertaking. She likewise demanded the return of all the monetary benefits he received in consideration of the SRP within five (5) days from receipt; otherwise, appropriate legal action would be taken against him, when Rivera refused, Solidbank filed complaint. ISSUE: WON the one year employment ban imposed by Solidbank upon Rivera is null and void for being unreasonable and oppressive and for constituting restraint of trade? HELD: Null and Void. The post-retirement competitive employment ban is unreasonable because it has no geographical limits. Article 1306 of the NCC provides that the contracting parties may establish such stipulations, clauses, terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good customs, public order or public policy. On the face of the Undertaking, the post-retirement competitive employment ban is unreasonable because it has no geographical limits; respondent is barred from accepting any kind of employment in any competitive bank within the proscribed period. Although the period of one year may appear reasonable, the matter of whether the restriction is reasonable or

2|Case Digests/Summaries Labor Standards Mazo, Edward Jude S. Lex Leonum Fraternitas, Inc.

unreasonable cannot be ascertained with finality solely from the terms and conditions of the Undertaking, or even in tandem with the Release, Waiver and Quitclaim. Employer is burdened to establish that a restrictive covenant barring an employee from accepting a competitive employment after retirement or resignation is not an unreasonable or oppressive, or in undue or unreasonable restraint of trade, thus, unenforceable for being repugnant to public policy. As the Court stated in Ferrazzini v. Gsell, cases involving contracts in restraint of trade are to be judged according to their circumstances, to wit: x x x There are two principal grounds on which the doctrine is founded that a contract in restraint of trade is void as against public policy. One is, the injury to the public by being deprived of the restricted party's industry; and the other is, the injury to the party himself by being precluded from pursuing his occupation, and thus being prevented from supporting himself and his family. In cases where an employee assails a contract containing a provision prohibiting him or her from accepting competitive employment as against public policy, the employer has to adduce evidence to prove that the restriction is reasonable and not greater than necessary to protect the employer's legitimate business interests. The restraint may not be unduly harsh or oppressive in curtailing the employee's legitimate efforts to earn a livelihood and must be reasonable in light of sound public policy. b. Prohibition on employment of relatives i. Based on Contract UNITED KIMBERLY-CLARK EMPLOYEES UNION PHILIPPINE TRANSPORT GENERAL WORKERS ORGANIZATION (UKCEU-PTGWO), Petitioner, vs. KIMBERLY CLARK PHILIPPINES, INC., Respondent. FACTS: P, a local chapter affiliate of the Philippine Transport General Workers Organization (PTGWO), is the certified collective bargaining agent of all rankand-file employees of the San Pedro milling plant of R, a multinational corporation engaged in the manufacture of bathroom and facial tissues, paper napkins, feminine care products, disposable diapers and absorbent cotton. P & R executed a CBA. Article XX, Section 1 of the CBA reads: Section 1. The Company agrees to employ, regardless of sex, the immediate member of the family of an employee provided qualified, upon the employee's resignation, retirement, disability or death. In case of resignation, however, employment of an immediate member of the family of an employee may be allowed provided the employee has rendered a service of ten (10) years and above and the resignation is not a forced resignation. For the purpose of this section, the phrase "immediate member of the family of an employee" shall refer to the

3|Case Digests/Summaries Labor Standards Mazo, Edward Jude S. Lex Leonum Fraternitas, Inc.

employee's legitimate children and in default thereof to the employee's collateral relative within the third civil degree. The recommendee of the retired/resigned employee shall, if qualified, be hired on probationary status. P did not set any other employment qualifying standards for the recommendees of retired, resigned, deceased or disabled employees and agreed to hire such recommendees who were high school graduates as an act of liberality and generosity. The provision remained unchanged. Through the years, several UKCEU members who resigned or were disabled availed of the said benefits and recommended their successors. Although such recommendees were merely high school graduates, KCPI nonetheless employed them. Danilo L. Guerrero retired and recommended his nephew as his replacement. KCPI rejected Guerreros recommendation because his nephew was not a member of his immediate family. The matter was brought to Voluntary Arbitrator Danilo Lorredo who ruled that Guerreros nephew should be employed as his replacement in accordance with the CBA. KCPI brought the matter to the Court. The Court affirmed the ruling of the VA. The phrase "in default thereof" has not been intended or contemplated by the parties as having a preclusive effect within the group. It simply sets a priority on who can possibly be recommendees for employment. The employee, in fine, need not be childless at all for him to be allowed to nominate a third degree collateral relative; otherwise, his ability to designate such relative is all but suddenly lost by the birth of an only child and regained by the latter's demise. This situation could not have been intended. The Court also ruled that KCPI was not obliged to unconditionally accept the recommendee since the latter must still meet the required employment standard theretofore set by it. Even a qualified recommendee would be hired only on a "probationary status." As such, KCPI was not left without its own safeguards under the agreement. KCPI issued Guidelines on the Hiring of Replacements of Retired/Resigned Employees for the effective implementation of Article XX, Section 1 of the existing CBA. The Guidelines require, among others, that: (a) such recommendees must be at least 18 years of age but not more than 30 years old at the time of the hiring, and (b) have completed, after graduating from high school, at least a two-year technical/vocational course or a third year level of college education. Moreover, where both husband and wife are employees of the company, they shall be treated as one family; hence, only one of the spouses would be allowed to avail of the benefit. The educational qualifications contained in the Guidelines prepared and issued by KCPI were not incorporated in the CBA. Neither were the proposed amendment of UKCEU. Article XX, Section 1 of the preceding CBA was retained without any modification. KCPI continued to hire employees pursuant to the CBA up to 1998. It had employed 44 employees from 1995 to 1998.

4|Case Digests/Summaries Labor Standards Mazo, Edward Jude S. Lex Leonum Fraternitas, Inc.

However, in the second half of 1998, KCPI started to suspend the implementation of the CBA. This was partly due to the depressed economic conditions then prevailing in the Philippines, and in compliance with the freeze hiring policy of its Asia-Pacific headquarters. It refused to hire, as regular employees, 80 recommendees of retiring employees. KCPI and UKCEU failed to settle the matter through the existing grievance machinery. The VA issued a Resolution in favor of UKCEU. The VA ruled that since the CBA is the law between the parties, KCPI could not just unilaterally change or suspend the implementation of the existing employment requirements, even in the light of the business situation then prevailing in the Philippines. Moreover, an unambiguous CBA provision must be interpreted according to its literal meaning and not beyond the parties' actual intendment, and, in case of doubts, the same should be resolved in favor of labor. The VA declared that management prerogative does not give license to a company to set aside or ignore what had been agreed upon through negotiation. According to the VA, since KCPI failed to explain why it continued to hire casual workers doing the jobs of regular employees, it failed to substantiate its contention that the economic crisis did not warrant the hiring of regular employees. The CA partially set aside the Resolution of the VA. The CA ruled that KCPI may validly exercise its management prerogative and impose the requirement that recommendees should have at least completed a two-year technical/vocational course or reached the third year of any collegelevel course. While the right of KCPI to set hiring standards for recommendees under the disputed provision of the CBA is apparent in the ruling of the Court in Kimberly Clark Philippines v. Lorredo, the CA concluded that the right of retired, resigned, disabled or deceased employees to recommend their replacements is not absolute. It emphasized that the recommendees must still meet the standard set by petitioner. The CA further opined that Article XX, Section 1 is not an inheritance the right to which attaches immediately upon an employee's death, disability, retirement or voluntary resignation. However, as to whether spouses employed by petitioner may separately recommend a replacement, the CA affirmed the observation of the VA that the provision was literally made to apply to "all" employees, and does not mean that only one of the spouses may avail of said benefit. The CA rejected the claim of KCPI that it (the court) should take judicial notice of the adverse effects of the Asian economic crisis to the operation of its business in the Philippines. As in the case of retrenchment, it was ruled that the company must still prove financial distress by sufficient and convincing evidence. Moreover, the CA held that for the theory of rebus sic stantibus to apply, it must be shown that the economic crisis made it extremely difficult for the company to comply with Article XX, Section 1 of the CBA, and that the change in the

5|Case Digests/Summaries Labor Standards Mazo, Edward Jude S. Lex Leonum Fraternitas, Inc.

circumstances of the parties must be one which could not be foreseen at the time the contract was executed. Only UKCEU moved for a partial reconsideration of the CA Decision with respect to its ruling on the upgraded educational qualification of the recommendees. The CA denied the motion in a resolution. ISSUE: WON the CA erred in ruling that, under Article XX, Section 1 of the 1997 CBA, respondent is required to hire only those recommendees of retired/resigned, deceased or disabled members of petitioner who had completed at least a twoyear technical/vocational course or a third-year level of college education. HELD: SC ruled against petitioner. A CBA is more than a contract; it is a generalized code to govern a myriad of cases which the draftsmen cannot wholly anticipate. It covers the whole employment relationship and prescribes the rights and duties of the parties. It is a system of industrial self-government with the grievance machinery at the very heart of the system. The parties solve their problems by molding a system of private law for all the problems which may arise and to provide for their solution in a way which will generally accord with the variant needs and desires of the parties. In the present case, the parties are in agreement that, on its face, Article XX, Section 1 of their 1997 CBA does not contain any provision relative to the employment qualification standards of recommendees of retired/resigned, deceased or disabled employees of respondent who are members of petitioner. However, in determining the employment qualification standards for said recommendees, the VA should have relied on theGuidelines issued by respondent. Respondent issued said Guidelines in light of the ruling of this Court in Kimberly Clark Philippines v. Lorredo. Respondent saw it imperative to do away with its practice of accommodating recommendees who were mere high school graduates, and to require higher employment standards for them. By agreement of the parties, the implementation of the Guidelines was deferred until January 1, 1997, unless revoked or amended by the 1997 CBA. Petitioner proposed that the practice of hiring recommendees of retired/resigned, deceased or disabled employees who were union members, who were at least high school graduates, be included in their CBA, but respondent did not agree. Hence, Article XX, Section 1 of the 1997 CBA of the parties remained intact. There was thus no more legal bar for respondent to implement the November 7, 1995 Guidelines. By executing the 1997 CBA, in its present form, petitioner is bound by the terms and conditions therein set forth.

6|Case Digests/Summaries Labor Standards Mazo, Edward Jude S. Lex Leonum Fraternitas, Inc.

The VA, however, ignored the plain language of the 1997 CBA of the parties, as well as the Guidelines issued by respondent. He capriciously based his resolution on the respondents practice of hiring which, however, by agreement of petitioner and respondent, was discontinued. The Court finds that respondent acted in accord with the CBA and the November 7, 1995 Guidelines, which, by agreement of the parties, may be implemented by respondent. The petition is DENIED for lack of merit. ii. Bona fide occupational qualification exception STAR PAPER CORPORATION, JOSEPHINE ONGSITCO & SEBASTIAN CHUA, Petitioners, vs. RONALDO D. SIMBOL, WILFREDA N. COMIA & LORNA E. ESTRELLA, Respondents. FACTS: Simbol was employed by the company on Oct 1993. He met Alma Dayrit, also an employee of the company, whom he married. Prior to the marriage, Ongsitco advised the couple that should they decide to get married, one of them should resign pursuant to a company policy to which Simbol complied. 1. New applicants will not be allowed to be hired if in case he/she has [a] relative, up to [the] 3rd degree of relationship, already employed by the company. 2. In case of two of our employees (both singles [sic], one male and another female) developed a friendly relationship during the course of their employment and then decided to get married, one of them should resign to preserve the policy stated above. ISSUE: WON the policy of the employer banning spouses from working in the same company violates the rights of the employee under the Constitution and the Labor Code or is a valid exercise of management prerogative? HELD: Petitioners' sole contention that "the company did not just want to have two or more of its employees related between the third degree by affinity and/or consanguinity" is lame. Article 136 of the Labor Code which provides:

7|Case Digests/Summaries Labor Standards Mazo, Edward Jude S. Lex Leonum Fraternitas, Inc.

It shall be unlawful for an employer to require as a condition of employment or continuation of employment that a woman employee shall not get married, or to stipulate expressly or tacitly that upon getting married a woman employee shall be deemed resigned or separated, or to actually dismiss, discharge, discriminate or otherwise prejudice a woman employee merely by reason of her marriage. The requirement that a company policy must be reasonable under the circumstances to qualify as a valid exercise of management prerogative. It is significant to note that in the case at bar, respondents were hired after they were found fit for the job, but were asked to resign when they married a co-employee. Petitioners failed to show how the marriage of Simbol, then a Sheeting Machine Operator, to Alma Dayrit, then an employee of the Repacking Section, could be detrimental to its business operations. e. The policy is premised on the mere fear that employees married to each other will be less efficient. If we uphold the questioned rule without valid justification, the employer can create policies based on an unproven presumption of a perceived danger at the expense of an employee's right to security of tenure. The questioned policy may not facially violate Article 136 of the Labor Code but it creates a disproportionate effect and under the disparate impact theory, the only way it could pass judicial scrutiny is a showing that it is reasonable despite the discriminatory, albeit disproportionate, effect. The failure of petitioners to prove a legitimate business concern in imposing the questioned policy cannot prejudice the employee's right to be free from arbitrary discrimination based upon stereotypes of married persons working together in one company. c. Prohibition marrying employees of competitor DUNCAN ASSOCIATION OF DETAILMAN-PTGWO and PEDRO A. TECSON, petitioners, vs. GLAXO WELLCOME PHILIPPINES, INC., Respondent. FACTS: Petitioner Pedro Tecson was hired by respondent Glaxo as medical representative, after Tecson had undergone training and orientation. Thereafter, Tecson signed a contract of employment which stipulates, among others, that he agrees to study and abide by existing company rules; to disclose to management any existing or future relationship by consanguinity or affinity with co-employees or employees of competing drug companies and should management find that such relationship poses a possible conflict of interest, to resign from the company. The Employee Code of Conduct of Glaxo similarly

8|Case Digests/Summaries Labor Standards Mazo, Edward Jude S. Lex Leonum Fraternitas, Inc.

provides that an employee is expected to inform management of any existing or future relationship by consanguinity or affinity with co-employees or employees of competing drug companies. Tecson was initially assigned to market Glaxo's products in the Camarines SurCamarines Norte sales area. Subsequently, Tecson entered into a romantic relationship with Bettsy, an employee of Astra, a competitor of Glaxo. She was Astra's Branch Coordinator in Albay and supervised the district managers and medical representatives of her company and prepared marketing strategies for Astra in that area. The two married even with the several reminders given by the District Manager to Tecson. In January 1999, Tecson's superiors informed him that his marriage to Bettsy gave rise to a conflict of interest. Tecson's superiors reminded him that he and Bettsy should decide which one of them would resign from their jobs, although they told him that they wanted to retain him as much as possible because he was performing his job well. This situation eventually led to his constructive dismissal. ISSUE: WON Glaxo's policy prohibiting its employees from marrying an employee of a competitor company is valid? HELD: Valid. Glaxo's policy prohibiting an employee from having a relationship with an employee of a competitor company is a valid exercise of management prerogative. Tecson's contract of employment with Glaxo being questioned, stipulates that Tescon agrees to abide by the existing company rules of Glaxo, and to study and become acquainted with such policies. In this regard, the Employee Handbook of Glaxo expressly informs its employees of its rules regarding conflict of interest. No reversible error can be ascribed to the Court of Appeals when it ruled that Glaxo's policy prohibiting an employee from having a relationship with an employee of a competitor company is a valid exercise of management prerogative. Glaxo has a right to guard its trade secrets, manufacturing formulas, marketing strategies and other confidential programs and information from competitors, especially so that it and Astra are rival companies in the highly competitive pharmaceutical industry. The prohibition against personal or marital relationships with employees of competitor companies upon Glaxo's employees is reasonable under the circumstances because relationships of that nature might compromise the interests of the company. In laying down the assailed company policy, Glaxo only aims to protect its interests against the possibility that a competitor company will gain access to its secrets and procedures. That Glaxo possesses the right to protect its economic interests cannot be denied. No

9|Case Digests/Summaries Labor Standards Mazo, Edward Jude S. Lex Leonum Fraternitas, Inc.

less than the Constitution recognizes the right of enterprises to adopt and enforce such a policy to protect its right to reasonable returns on investments and to expansion and growth. Indeed, while our laws endeavor to give life to the constitutional policy on social justice and the protection of labor, it does not mean that every labor dispute will be decided in favor of the workers. The law also recognizes that management has rights which are also entitled to respect and enforcement in the interest of fair play. G. Attorneys Fees PEPSI COLA PRODUCTS PHILIPPINES, INC. AND ERNESTO F. GOCHUICO, petitioners, vs. EMMANUEL V. SANTOS, respondent. FACTS: Respondent Emmanuel V. Santos was employed by petitioner Pepsi Cola Products Phils., Inc. He was promoted as Acting Regional Sales Manager at the Libis Sales Office. Respondent received from petitioner Ernesto F. Gochuico a memorandum charging him with violation of company rules and regulations and Article 282(a) of the Labor Code. The charges arose out of alleged artificial sales by the sales personnel of the Libis Sales Office allegedly upon the instruction of respondent. The alleged artificial sales resulted in damage to petitioners. The memorandum also apprised respondent of his preventive suspension and the scheduled hearings of the administrative investigation. After the termination of the hearings, petitioners found respondent guilty of the aforesaid charges with the exception of falsifying company records. As a result, respondent was dismissed. Respondent filed a case for illegal dismissal which the Labor Arbiter dismissed. On appeal, the NLRC remanded the case to the Labor Arbiter for further proceedings. The Labor Arbiter ruled that petitioners failed to satisfactorily prove the serious charges against respondent. The only relevant evidence adduced by petitioners was the notice of termination which narrated what happened during the administrative investigation. Petitioners appealed to the NLRC which affirmed the Labor Arbiters finding of illegal dismissal. It observed that after the case was remanded, the Labor Arbiter immediately conducted hearings. The NLRC deleted the award of moral and exemplary damages in the absence of evidence that respondents suspension and eventual dismissal were tainted with bad faith and malice.

10 | C a s e D i g e s t s / S u m m a r i e s L a b o r S t a n d a r d s Mazo, Edward Jude S. Lex Leonum Fraternitas, Inc.

The appellate court affirmed the NLRC decision. It agreed with the Labor Arbiter and the NLRC that the charges in the memorandum of suspension and the notice of termination were not satisfactorily proven. The only evidence submitted by petitioners was the notice of termination which narrated what happened during the administrative investigation. It also observed that while petitioners discovered the alleged fictitious sales in April 1996, it was only on February 14, 1997 that petitioners placed respondent on preventive suspension and commenced administrative investigation. It further ruled that the holding of a trial was discretionary on the Labor Arbiter especially where the parties had already presented their documentary evidence, as in this case. ISSUES: (1) WON respondent was validly dismissed; (2) WON a trial on the merits was necessary; and (3) WON the award of attorneys fees was proper. HELD: (1)Not being a trier of facts, the Court cannot re-examine and re-evaluate the probative value of evidence presented to the Labor Arbiter, the NLRC, and the Court of Appeals, which formed the basis of the questioned decision. Indeed, when their findings are in absolute agreement, the same are accorded not only respect but even finality as long as they are supported by substantial evidence. (2) SC reiterate that it is not legally objectionable, for being violative of due process, for the Labor Arbiter to resolve a case based solely on the position papers, affidavits or documentary evidence submitted by the parties. The holding of a formal hearing or trial is discretionary with the Labor Arbiter and is something that the parties cannot demand as a matter of right. The requirements of due process are satisfied when the parties are given the opportunity to submit position papers wherein they are supposed to attach all the documents that would prove their claim in case it be decided that no hearing should be conducted or was necessary. (3) On the matter of attorneys fees, we have ruled that attorneys fees may be awarded only when the employee is illegally dismissed in bad faith and is compelled to litigate or incur expenses to protect his rights by reason of the unjustified acts of his employer. In this case, the NLRC deleted the award of moral and exemplary damages precisely because of the absence of evidence that respondents suspension and eventual dismissal were tainted with bad faith and malice. We note that although the Labor Arbiter awarded attorneys fees, the basis for the same was not discussed in the decision nor borne out by the records of this case. There must always be a factual basis for the award of attorneys fees. This is consistent with the policy that no premium should be placed on the right to

11 | C a s e D i g e s t s / S u m m a r i e s L a b o r S t a n d a r d s Mazo, Edward Jude S. Lex Leonum Fraternitas, Inc.

litigate. For these reasons, we believe and so rule that the award of attorneys fees should be deleted. The instant petition is PARTIALLY GRANTED. The award of 10% attorneys fees made by the Labor Arbiter in his decision is DELETED. H. Quitclaims and Compromise Agreements a. Contents of a valid quitclaim/waiver EDI-STAFFBUILDERS INTERNATIONAL, INC., petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and ELEAZAR S. GRAN, respondents. FACTS: Petitioner EDI is a corporation engaged in recruitment and placement of Overseas Filipino Workers (OFWs). ESI is another recruitment agency which collaborated with EDI to process the documentation and deployment of private respondent to Saudi Arabia. Private respondent Gran was an OFW recruited by EDI, and deployed by ESI to work for OAB, in Riyadh, Kingdom of Saudi Arabia. It appears that OAB asked EDI through its letter for curricula vitae of qualified applicants for the position of "Computer Specialist." In a facsimile transmission, OAB informed EDI that, from the applicants' curricula vitae submitted to it for evaluation, it selected Gran for the position of "Computer Specialist." The faxed letter also stated that if Gran agrees to the terms and conditions of employment contained in it, EDI may arrange for Gran's immediate dispatch. After accepting OAB's offer of employment, Gran signed an employment contract that granted him a monthly salary of USD 850.00 for a period of two years. Gran was then deployed to Riyadh, Kingdom of Saudi Arabia. Upon arrival in Riyadh, Gran questioned the discrepancy in his monthly salary his employment contract stated USD 850.00; while his Philippine Overseas Employment Agency (POEA) Information Sheet indicated USD 600.00 only. However, through the assistance of the EDI office in Riyadh, OAB agreed to pay Gran USD 850.00 a month. After Gran had been working for about five months for OAB, his employment was terminated through OAB's letter, on the following grounds: non-compliance to contract requirements by the recruitment agency; non-compliance to prequalification requirements by the recruitment agency; insubordination or disobedience to Top Management Order and/or instructions. Gran received from OAB the total amount representing his final pay, and on the same day, he executed a declaration releasing OAB from any financial obligation or otherwise, towards him. After his arrival in the Philippines, Gran instituted a complaint against ESI/EDI, OAB, Country Bankers Insurance Corporation, and Western Guaranty Corporation

12 | C a s e D i g e s t s / S u m m a r i e s L a b o r S t a n d a r d s Mazo, Edward Jude S. Lex Leonum Fraternitas, Inc.

with the NLRC, National Capital Region, Quezon City for underpayment of wages/salaries and illegal dismissal. Labor Arbiter Manuel R. Caday, to whom Gran's case was assigned, ruled that there was neither underpayment nor illegal dismissal. The Labor Arbiter reasoned that there was no underpayment of salaries since according to the POEA-Overseas Contract Worker (OCW) Information Sheet, Gran's monthly salary was USD 600.00, and in his Confirmation of Appointment as Computer Specialist, his monthly basic salary was fixed at SR 2,500.00, which was equivalent to USD 600.00. Arbiter Caday also cited the Declaration executed by Gran, to justify that Gran had no claim for unpaid salaries or wages against OAB. With regard to the issue of illegal dismissal, the Labor Arbiter found that Gran failed to refute EDI's allegations; namely, (1) that Gran did not submit a single activity report of his daily activity as dictated by company policy; (2) that he was not qualified for the job as computer specialist due to his insufficient knowledge in programming and lack of knowledge in ACAD system; (3) that Gran refused to follow management's instruction for him to gain more knowledge of the job to prove his worth as computer specialist; (4) that Gran's employment contract had never been substituted; (5) and that Gran was paid a monthly salary of USD 850.00, and USD 350.00 monthly as food allowance. The Labor Arbiter decided that Gran was validly dismissed from his work due to insubordination, disobedience, and his failure to submit daily activity reports. The NLRC held that EDI's seemingly harmless transfer of Gran's contract to ESI is actually "reprocessing," which is a prohibited transaction under Article 34 (b) of the Labor Code. This scheme constituted misrepresentation through the conspiracy between EDI and ESI in misleading Gran and even POEA of the actual terms and conditions of the OFW's employment. In addition, it was found that Gran did not commit any act that constituted a legal ground for dismissal. The alleged non-compliance with contractual stipulations relating to Gran's salary and contract duration, and the absence of pre-qualification requirements cannot be attributed to Gran but to EDI, which dealt directly with OAB. In addition, the charge of insubordination was not substantiated, and Gran was not even afforded the required notice and investigation on his alleged offenses. The NLRC reversed the Labor Arbiter's Decision and rendered a new one. The NLRC then issued a Resolution21 denying petitioner's Motion for Reconsideration. for the charge of insubordination and disobedience due to Gran's failure to submit a "Daily Activity Report," the appellate court found that EDI failed to show that the submission of the "Daily Activity Report" was a part of Gran's duty or the company's policy. The court also held that even if Gran was guilty of insubordination, he should have just been suspended or reprimanded, but not dismissed.

13 | C a s e D i g e s t s / S u m m a r i e s L a b o r S t a n d a r d s Mazo, Edward Jude S. Lex Leonum Fraternitas, Inc.

The CA also held that Gran was not afforded due process, given that OAB did not abide by the twin notice requirement. The court found that Gran was terminated on the same day he received the termination letter, without having been apprised of the bases of his dismissal or afforded an opportunity to explain his side. Finally, the CA held that the Declaration signed by Gran did not bar him from demanding benefits to which he was entitled. The appellate court found that the Declaration was in the form of a quitclaim, and as such is frowned upon as contrary to public policy especially where the monetary consideration given in the Declaration was very much less than what he was legally entitled tohis backwages amounting to USD 16,150.00. As a result of these findings, on October 18, 2000, the appellate court denied the petition to set aside the NLRC Decision. ISSUES: (1) WON Gran's dismissal is justifiable by reason of incompetence, insubordination, and disobedience; (2) WON the waiver and quitclaim labeled a Declaration valid? HELD: In the present case, the employment contract signed by Gran specifically states that Saudi Labor Laws will govern matters not provided for in the contract. Being the law intended by the parties to apply to the contract, Saudi Labor Laws should govern all matters relating to the termination of the employment of Gran. Unfortunately for petitioner, it did not prove the pertinent Saudi laws on the matter; thus, the International Law doctrine of presumed-identity approach presumption comes into play. Where a foreign law is not pleaded or, even if pleaded, is not proved, the presumption is that foreign law is the same as ours. Thus, we apply Philippine labor laws in determining the issues presented before us. An allegation of incompetence should have a factual foundation. Incompetence may be shown by weighing it against a standard, benchmark, or criterion. However, EDI failed to establish any such bases to show how petitioner found Gran incompetent. The employment contract provides that the employment contract shall be valid for a period of two (2) years from the date the employee starts to work with the employer. Gran arrived in Riyadh, Saudi Arabia and started to work on February 7, 1994; hence, his employment contract is until February 7, 1996. Since he was illegally dismissed on July 9, 1994, before the effectivity of R.A. No. 8042, he is therefore entitled to backwages corresponding to the unexpired portion of his contract, which was equivalent to USD 16,150.

14 | C a s e D i g e s t s / S u m m a r i e s L a b o r S t a n d a r d s Mazo, Edward Jude S. Lex Leonum Fraternitas, Inc.

Petitioner EDI questions the legality of the award of backwages and mainly relies on the Declaration which is claimed to have been freely and voluntarily executed by Gran. Courts must undertake a meticulous and rigorous review of quitclaims or waivers, more particularly those executed by employees. Quitclaims, releases and other waivers of benefits granted by laws or contracts in favor of workers should be strictly scrutinized to protect the weak and the disadvantaged. The waivers should be carefully examined, in regard not only to the words and terms used, but also the factual circumstances under which they have been executed. The Court finds the waiver and quitclaim null and void for the following reasons: 1. The salary paid to Gran upon his termination is unreasonably low. 2. The Declaration reveals that the payment is actually the payment for Gran's salary for the services he rendered to OAB as Computer Specialist. If the Declaration is a quitclaim, then the consideration should be much much more than the monthly salaryalthough possibly less than the estimated Gran's salaries for the remaining duration of his contract and other benefits as employee of OAB. 3. The factual circumstances surrounding the execution of the Declaration would show that Gran did not voluntarily and freely execute the document. The foregoing events readily reveal that Gran was "forced" to sign the Declaration and constrained to receive the amount even if it was against his will. Thus, the Declaration purporting to be a quitclaim and waiver is unenforceable under Philippine laws in the absence of proof of the applicable law of Saudi Arabia. In order to prevent disputes on the validity and enforceability of quitclaims and waivers of employees under Philippine laws, said agreements should contain the following: 1. A fixed amount as full and final compromise settlement; 2. The benefits of the employees if possible with the corresponding amounts, which the employees are giving up in consideration of the fixed compromise amount; 3. A statement that the employer has clearly explained to the employee in English, Filipino, or in the dialect known to the employeesthat by signing the waiver or quitclaim, they are forfeiting or relinquishing their right to receive the benefits which are due them under the law; and 4. A statement that the employees signed and executed the document voluntarily, and had fully understood the contents of the document and that their consent was freely given without any threat, violence, duress, intimidation, or undue influence exerted on their person. The petition is DENIED.

15 | C a s e D i g e s t s / S u m m a r i e s L a b o r S t a n d a r d s Mazo, Edward Jude S. Lex Leonum Fraternitas, Inc.

b. Valid and binding agreement HYPTE R. AUJERO, Petitioner, vs. PHILIPPINE COMMUNICATIONS SATELLITE CORPORATION, Respondent. FACTS: It was in 1967 that the petitioner started working for respondent as an accountant in the latter's Finance Department. After thirty-four years of service, the petitioner applied for early retirement. His application for retirement was approved, entitling him to receive retirement benefits at a rate equivalent to one and a half of his monthly salary for every year of service. The petitioner executed a Deed of Release and Quitclaim in Philcomsats favor, following his receipt from the latter of a check. Almost 3 years thereafter, the petitioner filed a complaint for unpaid retirement benefits, claiming that the actual amount of his retirement pay he received from Philcomsat as supposed settlement for all his claims is unconscionable, which is more than enough reason to declare his quitclaim as null and void. According to the petitioner, he had no choice but to accept a lesser amount as he was in dire need thereof and was all set to return to his hometown and he signed the quitclaim despite the considerable deficiency as no single centavo would be released to him if he did not execute a release and waiver in Philcomsat's favor. Labor Arbiter Joel S. Lustria issued a Decision in the petitioners favor. The NLRC granted Philcomsats appeal and reversed and set aside LA Lustrias Decision. The NLRC dismissed the petitioners complaint for unpaid retirement benefits and salary in consideration of the Deed of Release and Quitclaim he executed following his receipt from Philcomsat of the amount which constitutes the full settlement of all his claims against Philcomsat. According to the NLRC, the petitioner failed to allege, much less, adduce evidence that Philcomsat employed means to vitiate his consent to the quitclaim. The petitioner is well-educated, a licensed accountant and was Philcomsats Senior Vice-President prior to his retirement; he cannot therefore claim that he signed the quitclaim without understanding the consequences and implications thereof. The petitioner likewise anchored his allegation of grave abuse of discretion against the NLRC on the latter's refusal to strike as invalid the quitclaim he executed in Philcomsats favor. According to the petitioner, his retirement pay as supposed settlement for all his claims against it is unconscionable and this is more than enough reason to declare his quitclaim as null and void. The CA found no merit in the petitioners claims, holding that the NLRC did not act with grave abuse of discretion in giving due course to the respondents appeal.

16 | C a s e D i g e s t s / S u m m a r i e s L a b o r S t a n d a r d s Mazo, Edward Jude S. Lex Leonum Fraternitas, Inc.

ISSUE: WON the quitclaim executed by the petitioner in Philcomsats favor is valid, thereby foreclosing his right to institute any claim against Philcomsat. HELD: Valid Absent any evidence that any of the vices of consent is present and considering the petitioners position and education, the quitclaim executed by the petitioner constitutes a valid and binding agreement. Not all waivers and quitclaims are invalid as against public policy. If the agreement was voluntarily entered into and represents a reasonable settlement, it is binding on the parties and may not later be disowned simply because of a change of mind. It is only where there is clear proof that the waiver was wangled from an unsuspecting or gullible person, or the terms of settlement are unconscionable on its face, that the law will step in to annul the questionable transaction. But where it is shown that the person making the waiver did so voluntarily, with full understanding of what he was doing, and the consideration for the quitclaim is credible and reasonable, the transaction must be recognized as a valid and binding undertaking. It is highly unlikely and incredible for a man of petitioners position and educational attainment to so easily succumb to private respondent companys alleged pressures without even defending himself nor demanding a final audit report before signing any resignation letter. Assuming that pressure was indeed exerted against him, there was no urgency for petitioner to sign the resignation letter. He knew the nature of the letter that he was signing, for as argued by respondent company, petitioner being "a man of high educational attainment and qualification, x x x he is expected to know the import of everything that he executes, whether written or oral. The petitioner is not an ordinary laborer. He is mature, intelligent and educated with a college degree, who cannot be easily duped or tricked into performing an act against his will. As no proof was presented that the said quitclaim was entered into through fraud, deception, misrepresentation, the same is valid and binding. The petitioner is estopped from questioning the said quitclaim and cannot renege after accepting the benefits thereunder. This Court will never satisfy itself with surmises, conjectures or speculations for the purpose of giving imprimatur to the petitioner's attempt to abdicate from his obligations under a valid and binding release and waiver. The Petition is hereby DENIED.

17 | C a s e D i g e s t s / S u m m a r i e s L a b o r S t a n d a r d s Mazo, Edward Jude S. Lex Leonum Fraternitas, Inc.

c. Quitclaims generally frowned upon LAND AND HOUSING DEVELOPMENT CORPORATION and ABV ROCK GROUP, Petitioners, vs. MARIANITO C. ESQUILLO, Respondent. FACTS: Respondent was hired as a structural engineer by petitioner based in Jeddah, Kingdom of Saudi Arabia. Private respondent Land & Housing Development Corporation, a local placement agency, facilitated respondents employment papers. Respondents employment contract was pre-terminated, through an Inter-Office Memo on Notice of Termination, for the reason of reduction of force. Petitioner however, claims that the reason adduced was negated by the fact that a lot of transferees from other sites were taken in and promotions as well as reclassifications in the lower ranks were done. Respondent subsequently received the amount from petitioner as final settlement of his claims and was issued an exit visa that required him to immediately go back to the Philippines. Respondent filed a complaint for breach of contract and/or illegal dismissal, before the Philippine Overseas Employment Administration which was referred to the National Labor Relations Commission, Sub-Regional Arbitration Branch No. IV, San Pablo City. The Hon. Labor Arbiter Andres Zavalla ruled in favor of herein respondent. The NLRC reversed the aforecited decision and dismissed the respondents complaint for lack of merit. Respondents motion for reconsideration was denied. The CA ruled that despite the absence of a written categorical objection to the sufficiency of the payment received as consideration for the execution of the quitclaim, jurisprudence supported the right of respondent to demand what was rightfully his under our labor laws. Hence, he should have been allowed to recover the difference between the amount he had actually received and the amount he should have received. The CA also found that the NLRC had erroneously applied RA 8042 to the case. The appellate court held that respondent was entitled to the salaries corresponding to the unexpired portion of his Contract, in addition to what he had already received. ISSUE: WON respondent, despite having executed a quitclaim, is entitled to a grant of his additional monetary claims. HELD: Affirmative.

18 | C a s e D i g e s t s / S u m m a r i e s L a b o r S t a n d a r d s Mazo, Edward Jude S. Lex Leonum Fraternitas, Inc.

Petitioners claim that the foregoing Release and Quitclaim has forever released them from "any and all claims, demands, dues, actions, or causes of action" arising from respondents employment with them. They also contend that the validity of the document can no longer be questioned. Unfortunately for petitioners, jurisprudence does not support their stance. The fact that employees have signed a release and/or quitclaim does not necessarily result in the waiver of their claims. The law strictly scrutinizes agreements in which workers agree to receive less compensation than what they are legally entitled to. That document does not always bar them from demanding benefits to which they are legally entitled. In the present case, petitioners themselves offered the Release and Quitclaim as a defense. Even though respondent -- in his pleadings before the labor arbiter -was silent on the matter, he nonetheless filed this case and questioned his dismissal immediately, a few days after setting foot in the Philippines. In asking for payment for the unexpired portion of his employment contract, he was eloquently taking issue with the validity of the quitclaim. His actions spoke loudly enough; words were not necessary. To determine whether the Release and Quitclaim is valid, one important factor that must be taken into account is the consideration accepted by respondent; the amount must constitute a "reasonable settlement." The NLRC considered the amount of US$6,716 or SR23,153 reasonable, when compared with (1) $3,900, the three-month salary that he would have been entitled to recover if RA 8042 were applied; and (2) US$9,447, his salaries for the unexpired portion of his Contract. It is relevant to point out, however, that respondent was dismissed prior to the effectivity of RA 8042. As discussed at the outset, he is entitled to his salaries corresponding to the unexpired portion of his Contract. For these reasons, the consideration stated in the Release and Quitclaim cannot be deemed a reasonable settlement; hence, that agreement must be set aside. That respondent is a professional structural engineer did not make him less susceptible to disadvantageous financial offers, faced as he was with the prospect of unemployment in a country not his own. This Court has allowed supervisory employees to seek payment of benefits and a manager to sue for illegal dismissal even though, for a consideration, they executed deeds of quitclaims releasing their employers from liability."19 To stress, "in case of doubt, laws should be interpreted to favor the working class -- whether in the government or in the private sector -- in order to give flesh and vigor to the pro-poor and pro-labor provisions of our Constitution. The Petition is DENIED and the assailed Decision and Resolution AFFIRMED.

19 | C a s e D i g e s t s / S u m m a r i e s L a b o r S t a n d a r d s Mazo, Edward Jude S. Lex Leonum Fraternitas, Inc.

AL ARELLANO, SOLOMON BRITANICO, VALERIANO MENDOZA, JOSE PERPETUA, REY PAMINIANO, FREDDIE JIMENA, JOEL UBANA, ALEX MABANTA, ALEXANDER ANTONIO, JERRY NACAYTUNA, ELIZER DELFIN, FRANCISCO CORPUZ, ALEX GARIDO, DANTE DIMAANO, NARCISO ALBAY, MAXIMO GAGARIN, APOLLO CAYABYAB, RONALD GESTIADA, SERGIO ESPERANZA, ROMEO CARPIO and RODRIGO ORDINIZA,petitioners, vs. POWERTECH CORPORATION, WILLIE CABOBOS and COURT OF APPEALS (Former Special Ninth Division), respondents. FACTS: Focus of this case is the validity of a quitclaim based on a broad special power of attorney affecting the rights of twenty-two (22) employees. The case stems from a complaint for illegal dismissal and other money claims filed by the Nagkakaisang Manggagawa Ng Powertech Corporation in behalf of its 52 individual members and non-union members against their employer, Powertech. The case was dismissed as to twenty-seven (27) employees by virtue of duly executed affidavits of repudiation and quitclaim. The case proceeded with respect to the remaining twenty-five (25) employees, petitioners in this case. Labor Arbiter rendered a Decision declaring illegal the termination of 20 of petitioners and granting their monetary claims. Powertech appealed to the NLRC. During its pendency, Carlos Gestiada, for himself and on behalf of other petitioners, executed a quitclaim, release and waiver in favor of Powertech in consideration of a sum of money. Earlier, Gestiada was appointed by his co-petitioners as their attorney-in-fact. The appointment was evidenced by a special power of attorney. Relying on the quitclaim and release, Powertech filed a motion for the withdrawal of the appeal and cash bond. The NLRC granted the motion, dismissed the appeal and ordered the release of the cash bond. Aggrieved, petitioners moved to nullify the release and quitclaim for lack of consideration. In a resolution, the NLRC declared the quitclaim, release and waiver void for lack of consideration, reinstated the appeal and ordered Powertech to post a cash or surety bond for the monetary judgment less the amount it had previously posted. Powertech paid a sum of money to Gestiada purportedly as compromise amount for all of petitioners. That same day, Gestiada, through Atty. Felipe, and Powertech filed a joint motion to dismiss with the NLRC based on the compromise agreement. Iy was opposed, alleging that the compromise agreement is unconscionable, that he was illegally terminated as counsel for the other petitioners without their consent, and that the amount was received by Gestiada as payment solely for his backwages and other monetary claims. The NLRC issued a resolution denying the joint motion to dismiss. The amount received by Gestiada did not cover the monetary claim of petitioners against Powertech.

20 | C a s e D i g e s t s / S u m m a r i e s L a b o r S t a n d a r d s Mazo, Edward Jude S. Lex Leonum Fraternitas, Inc.

Undaunted, Powertech elevated the matter to the CA via petition for certiorari under Rule 65 of the 1997 Rules of Civil Procedure. The CA rendered a decision in favor of Powertech. The CA upheld the validity of the compromise agreement between petitioners and Powertech. ISSUE: WON the NLRC erred in declaring the compromise agreement void. HELD: All the circumstances indicate that the P150,000.00 was received by Gestiada solely as payment for his backwages and not a whit of a settlement for the monetary claim of petitioners. In line with Our conclusion that Powertech colluded with Gestiada, the CA gravely erred in upholding the compromise agreement. The appellate court decision was premised on the compromise agreement being entered into by Powertech and Gestiada in good faith. It is now clear that there is ample evidence indicating that Powertech was negotiating in bad faith and, worse, it colluded with Gestiada in shortchanging, nay, fraudulently depriving petitioners of their just share in the award. As a final note, We rebuke Powertechs unscrupulous and despicable act of using an apparently valid compromise agreement to evade payment of its legal obligation to petitioners. We will not allow employers to make a mockery of our legal system by using legal means to perpetrate fraud. This should serve as a warning to parties in labor cases to endeavor to achieve a just and equitable resolution of their disputes and to enter into compromise agreements in good faith. Further, there would have been no opportunity for collusion between Powertech and Gestiada without the blanket authority given by petitioners to Gestiada in the special power of attorney. This should serve as a caveat to principals, particularly to laborers in labor disputes, to be wary of giving too broad an authority to their agents. The powers of the agent may be circumscribed either (a) by putting a clause in the special power of attorney providing a minimum amount upon which the agent may compromise on behalf of the principal or (b) by providing that some acts of the agent are conditional and subject to the approval of the principal. These conditions may impose additional burden on the negotiating parties. But it will better protect them since the agent will only be authorized to settle for an amount predictably acceptable to the principal, and the third party will have full knowledge of the terms and conditions the principal would not disown or disclaim. The petition is GRANTED.